COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

Report
Restoring Profit for the
Beef Producer

(Continued)

40.

Mr McLaughlin: Right. The Northern Ireland beef industry, I think the reflection on Northern Ireland farmers, they are tenacious, they actually will hang on to a piece of string, hang on out there as it stands. We are still in the situation in Northern Ireland where basically the primary producer is receiving approximately a third of the retail price of the product. That still has not changed significantly. The speculation would be that perhaps until we get into an export situation Northern Ireland producers are in the stranglehold of: A) the multiples; and, b) the primary processing industry of Northern Ireland because we don’t have the possibility of live exports. That situation hopefully will change in the spring of next year. Again meat and bone the other cost advantages which may be paid back to the industry, they are not to be that significant in the form that they are probably going to amount to £5.00 a beast, but it is significant that it will be to the benefit to the primary processors yet again. If they are able to sell meat and bone into ROI, but if their end of industry in Northern Ireland are still confined or don’t have a critical mass of BSE product to operate with, that is going to be an extra cost to their end of industry here. So the benefit is going to be very tenacious, if any, on the fifth quarter. So as it stands we are still basically involved here with the major multiples. Again, what we have been talking about before with the standards that are being set down, we have a plethora of standards being set down from the retail industry. One of the things we are working on in the LMC and the red meat industry is the EM 4 50 11 accreditation which is a European standard which we think, if it is brought down and set down in Northern Ireland and we can apply it to our farms, we have a European standard bench mark which is going to be internationally accepted as an add on to the FQA scheme. I think it is one of the good things we can have. As it stands we are still in the grip where we are still pedaling behind the rest of the UK in meat prices.

41.

The Chairman: Thank you very much. You know there is a big move to achieve low incidence BSE status for Northern Ireland. Say we did achieve this speedily, is the industry able to respond to market demands on the continent? If we are not ready, how can farmers get prepared to be ready? What can others such as processors, retailers and Government be doing to help towards this, keeping in mind of course that we have lost our market in Europe and keeping in mind we would have to start not from the first floor but from the basement to build it?

42.

Mr McLaughlin: Right, well I think there is a large sense of apathy there in Northern Ireland and that producers feel that whatever they do, they are not going to get an economic return anyway. If we get low BSE status, as it stands approximately 37% of our herd product meets export standard. I think if we get low BSE status we are going to move into the situation where a lot of the loss of BSE status and a lot of the traceability is because of late notification of calf births which is ridiculous because it doesn’t happen anywhere else. That is to say a calf born on a Northern Ireland farm that doesn’t move off it but hasn’t been notified to the Department within the specified number of days it loses its traceability, which is ridiculous, it is not applied in any other European state except for the UK. However if we get low BSE status then that should cease to be. Overnight that would mean that approximately 80% of our calf births will then move to export status. So that is going to be a major significant move as it stands. It will be a benefit to the beef industry. I think the first beneficiary of it is going to be dairy industry. If we have a significant European market for our black and white calves, that is going to get a financial input into the Northern Ireland industry immediately and it is going to open up a market place. If we can get live cattle into Europe and on to European feed lots it is going to provide competition and the life of the trade is competition. That is a major impetus, we see, of low BSE as it stands. It is probably one of the best red meat markets in Europe because of the value of Sterling as it stands, but that value is not being paid back to the primary producer. If we have competition and competition is the life of the trade and to have competition is — I remember one person, a farmer himself: There is never going to be a market for Northern Ireland beef until we can get stuff out of here on the hoof. I think that is as true today as it has always been.

43.

The economic returns are going to be the biggest impetus. Farmers are economic animals and they do respond to a pound sign.

44.

The Chairman: Well then you would agree that if we are going to have "good times" with the Northern Ireland beef industry it has got to be export led, that that is really the key to getting us out of the mess we are in?

45.

Mr McLaughlin: Well prior to May 1996, 95% of Northern Ireland meat was export led. We had the highest price for red meat through Green Fields into Albert Heyjn that any part of the UK had. I think that to go from that after 26th May to getting the lowest price in the British Isles I think was a major blow to the Northern Ireland industry. It was one which Northern Ireland took the brunt of the BSE crisis. Scotland still had their premium for Scot beef, the English beef market still had their local butchery trade and domestic trade, so the brunt was born by Northern Ireland unfairly, but export is essential for the survival and even possibly the restructuring and re-development of the Northern Ireland meat industry.

46.

The Chairman: One complementary question I would like to put to you on that: We were competing well in the European market before the BSE thing, do you think that while we have been out of the market the other competitors have reached the standards that we were setting?

47.

Mr McLaughlin: I don’t think they have. I think that the standards set down by Northern Ireland, the traceability we had, the farm assurance schemes that were in place through the producer clubs into Albert Heyjn have yet to be replicated anywhere else. I think the main or immediate competitors with Albert Heyje are ROI and the feeling would be that they haven’t met our standards.

48.

The Chairman: What way do you think the production of beef on the farm structures need to alter to meet future changes and how can such changes be brought about?

49.

Mr McLaughlin: Well I think we are going to find that while we were dealing with major multiples we are dealing with a commodity product and that has been reflected in the carcass classification of beef throughout Northern Ireland as it has dropped. Two reasons for that was the breeding input, the influence of extremes of both types into beef production and the market returns for it was it wasn’t just economically feasible to feed cattle to an aspired finish. If we can get back to having the sale product for a top quality weanling I think that what has happened in ROI through the (inaudible) clubs is that the standard of breeding has improved dramatically within two to three years where they are going from a situation of having maybe 50% meeting our standard to over 80% meeting our grade within two years. I think if the economic incentive is there that beef farmers are going to source beef from beef type animals and we are going to move into a two tier system where we have got prime beef product meeting a specific market be it two tier beef or prime type bull beef out of Northern Ireland, but it is going to meet all the market assurance standards that are required out of the niche and the high value markets. We are still going to hopefully have our beef from our dairy industry which is going to be farm assured, it is going to meet the highest welfare standards, it is going to hopefully attain a high value commodity type product.

50.

I think the opportunities for the Northern Ireland meat industry are immense if we can get back into the market place again. For the survival of the industry it is essential we get back in there within the next year.

51.

The Chairman: Thank you, right.

52.

Mr Armstrong: Just on the quality assurance, I did notice this week on the wee note that they weren’t giving any extra money for quality assured beef, so there is no incentive to do that. What’s the point if we do have these quality assurance schemes there and there is no incentive?

53.

Mr McLaughlin: Part of that is the standard, Billy, of Quality Assurance. For an animal to obtain a Quality Assurance standard if it is sourced on your farm or Boyd’s it only has to be on my farm 70 days to get quality assurance standard. You don’t have to be quality assured, nobody else has. One of the things being talked about in the industry is the move towards lifetime Quality Assurance. There’s pluses and minuses with every development, but I think if we can move towards lifetime assurance standards for all meat product in Northern Ireland then we are going to have a major and very important marketing tool.

54.

Mr Armstrong: That wasn’t my question, just an observation.

55.

Mr McLaughlin: Quality Assurance, well again as plants require meat to have critical mass they are operating mass. We are into a time now of low supply.

56.

Mr Armstrong: Farmers have no control over their marketing. I think that farmers do deserve some control but most of the control is there in the abattoirs and Live Meat Exporting Commission. What way would you suggest that meat should be marketed? How would it be marketed and what can you do with NIAPA to give encouragement to the farmer and to abattoirs and other people?

57.

Mr McLaughlin: To answer that question, Northern Ireland meat industry, farmers co-operatives has a share in one of the plants in Dungannon and it is a part sharing and the feeling I would have is that they haven’t been doing enough. I think if we are going to go down the avenue of having live exports I would like to see the Northern Ireland meat industry having a feed into the power base and supplying prime Northern Ireland product solely through that. It is a very adventurous statement to make, but I think that if Northern Ireland meat industry can own similarly as what they are doing in New Zealand, the meat industry in New Zealand is owned by farmer co-operatives. They are not hoping to access the private meat processors like what we have done here. I think their success speaks for themselves. That is a major change in that I think there is going be to a lot of competing economic pressures against that statement. But I think it is something that Northern Ireland yet again, if we can use some of the marketing funds, if we can use some of the development funds and develop a scheme whereby farmers own the product from birth to retail and take out the cost that everybody else, and take out the processing costs and their development costs whatever else, their shelf space and everything else out of that, in between, but that chain needs to be owned by a farmer responsible co-operative or organisation. But yet again on that there, farmers are notoriously bad marketers, you are going to need and what has been reflected in the ROI where the co-operative movement has worked well, they have specialist marketing people and management people there, but I think they have to be responsible.

58.

The Chairman: We will have to move on because Billy has had an observation then he has had his question. We will have to ask to you try and make your answer a wee bit more succinct.

59.

Mr Douglas: Thanks Chair. We have heard that under Agenda 2000 beef prices are heading in the direction of world market prices with farmers being compensated for lower prices through increased subsidies - I suppose you might wonder where the subsidies are coming from - in your view will this lead to production to collect subsidy rather than production to meet market demands? I think where we are coming from, the emphasis seems to be on quality product so we could be five years down the line and not any further forward if we get don’t get into quality production.

60.

Mr McLaughlin: Yes, definitely what you are saying, Boyd, is that the envelope is going to make a more and more important part of the farmers return. But then, on the flip side of that is that to justify produce there is no point in farming if the subsidy is more than 100% of the net return of the animal. If you are dipping into the subsidy package to produce a sub-standard product I think you are on the road to slippery ruin. What’s happening now at the present time with the Hill proposals that are going on where we are having to move to an area base is the first major watershed we have had in the meat industry since May 1996. Although the farmers are still going to get that packet of money but it is not going to be tied to suckler cow or yield to get that, that means that animal has to sustain its own economic viability. So I think the only way that can be done is by producing a quality product that meets a market, a premium market. I think that is five years down the line. I think we are going to have a highly specialised beef industry and highly specialised dairy industry and sheep also meeting a variation of themes, be it organic, be it semi-organic or be it quality.

61.

The Chairman: Jim, do you want to add something?

62.

Mr Carmichael: Just fairly quickly in relation to premium there are two or three things to be taken in, one is European enlargement in relation to available funds which I would estimate will reduce the available funds for premium. We know that the Agenda 2000 discussions were 2005/2006, we now know they are for review in 2002. The other thing is the premium actually which is in place for this year, for example, I would estimate or we would estimate that it could be 10% lower than last years without agri-monetary compensation because we are only talking 60% as opposed to 100%. But I think for the industry to rely on premium payments over the next few years as being the way forward I think the industry itself will find out as it goes along finance might not be there, there is the possibility of reduced payments with enlargement and, as Nigel says, there are a lot of people now know the benefit or can see the benefit of a better quality of product perhaps in markets. So I would suggest that the improvement in quality in the marketing will take precedence over the premium.

63.

Mr Paisley Jnr: Are we in danger in Northern Ireland of winning the battle in terms of achieving low BSE status, but losing the war in terms of - I’m thinking particularly of beef labelling categorisation - that any benefits that we could accrue to the industry here in terms of getting our product out will then be lost on how we have to go through another process of standard and welfare in terms of labelling our product? Secondly, you mentioned New Zealand and the co-operative scheme, have you been out to New Zealand and looked at any particular projects there or have you more than just anecdotal evidence about the New Zealand co-operative scheme?

64.

Mr McLaughlin: No I haven’t been to New Zealand unfortunately, if the offer stands I will take it certainly. It is largely anecdotal and it is coming through —.

65.

The Chairman: The whole Agriculture Committee may want to go to New Zealand.

66.

Mr McLaughlin: I have been to South Africa, I have observed marketing and meat production systems there. The whole South African meat industry is basically operated by four companies, its affiliations and it is economically driven that the feed lots own major shares in the meat processing industry. So it is co-operation but through an economic thing. Again, there’s a lot of difference there in the type of product, the product that they are marketing. To move further than that, for Northern Ireland to lose out on labeling I think there is a possibility that there will be a lot of anecdotal evidence if we get low BSE we won’t be seen as a British product any more. To my mind we are still there, we still have a part to play there, because we get low BSE is, I think, an upmark, a star in our picture that we have got a good product to sell, that we have traceability, we have got all the standards that are required through welfare. I think it will actually be a marketing benefit to us. There are threats on labeling on the way it is implemented. I think we have to develop new products. We would like labeling just basically to be endemic, that is UK product. We don’t want differentiation between heifer beef, bull beef, steer beef and that having to be followed through the supply chain and through the processing chain where the product has to be done in three time separation and also been replicated in retailing where it is going to have to be stored and marketed separately. That is an impossible cost.

67.

Mr Carmichael: I think we did make representation to the MEP’s at one stage there on the initial beef labelling, whenever the first drafts came out it was ridiculous the amount of labeling, as Nigel said, they required. As a matter of fact some of the butchers in local shops would have found it more than hard to comply with. The additional costs as we asked the industry at various meetings was who was going to take on the burden of additional costs, we know where that finished at. So the response back, I think they actually have reviewed it, it is going to be somewhat less than initially thought and to the batching and all the rest.

68.

The Chairman: The issue, of course, is you see the battle in Europe, there are people who want one label - European Union, well that doesn’t suit us. I mean we need to have sourced here from Northern Ireland. That actually doesn’t suit us but that could eventually come because it was a very strong debate in the House out in Strasbourg on that issue. It is coming up again this week but I think it is in the melting pot. There are some requirements in present proposals that the housewives are not going to ask about. The gender of a piece of meat, is the housewife going to say: Is this female or male? I think that is ridiculous. But, you see, there are people there whose meat is not up to our standard and they just want European Union on it so that covers a multitude of sins. I think that the debate is probably going on, but I don’t think that we are going to be bothered with the amount of minutiae that originally was declared.

69.

Mr Carmichael: We talked about the labeling of product coming in here, whether it is packed in the UK or produced, it is back to this —

70.

The Chairman: Sourced, that’s right.

71.

Mr Carmichael: Yes

72.

The Chairman: We have to move on. Gardner?

73.

Mr Kane: Just two brief matters, Chair, to Nigel and Jim here, what additional solutions, gentlemen, other than has been just mentioned does NIAPA have to the current difficulties? Your submission this morning alleges that the retail price of beef is not reduced, other evidence we have heard claims that the values obtained by retailers per animal have followed the same pattern as prices obtained by producers. Who has got it right?

74.

Mr McLaughlin: Well yet again I think the cost, everybody is maintaining their mark-up costs, Gardner, in the supply chain after the farmer after the marketplace. That share of cost has not varied, as you say, in Northern Ireland. The element of competition between those costs, between the plants in Northern Ireland I think is, I wouldn’t say surprisingly, I would say amusingly similar in that there doesn’t seem to be an awful lot of variation within their costs. So I think that speaks for itself, I can’t talk about those things. Again, we are marketing yet again at the major multiples and we are targeting them as our major marketing source and our sole marketing source, namely two main supermarket groups have the Province carved up between them. Now there are other supermarket groups, other marketing areas in the UK that I think could be targeted. But I think through reluctance on both the part of the meat plants and on the part of DARD that they are not willing to look towards marketing anywhere other than the two major supermarket groups.

75.

Mr Kane: I would support that.

76.

Mr McLaughlin: I think that is reflected in all aspects of development of the food industry that is going on here. I think it is something that they are up for criticism.

77.

Mr Kane: Thanks Chair.

78.

Mr McHugh: Just in relation to our last sitting here, I had a difficulty with the meat exporters, they are supposed to be the experts in terms of selling the product beyond the farm gate and as you say the farmers are not good at that nature. What they actually said was that the farmers didn’t bother getting into Quality Assurance and I made the point that you made yourself, you have to have returns, you have to have an incentive. How do you see them actually getting to the point where they start to give farmers a positive return in terms of going down the road of Quality Assurance or even taking the bother out of all the paper work in terms of sending in returns to the Department on time and so on? You have to get a return for this. The two parts of the industry, if we are to have an industry here at the end of day, not just those who can source the stuff or the product at any part of the world, if we are to have an industry that survives it has got to take the whole industry on, the whole industry and those involved in it; stakeholders are going to have to take it forward otherwise one is going to cut out the other. How do you see them inputting into that?

79.

Mr McLaughlin: I think, Gerry, in all fairness they will have that whenever they have to compete with a boat in (inaudible) harbour or wherever. I think that they are going to have to start then and do what they have been paid to do and that is market the product and obtain a market premium there that is going to ensure their viability. As it stands I think they will be prepared now to look towards the aspect of bringing in a commodity product and cutting it up and further processing and putting it out of Northern Ireland and forgetting about a Northern Ireland sourced product. I think they have to be tied into trying to source their product from Northern Ireland and market it. We have been a capital supply base, because of the difficulties we have in moving cattle across the water and getting markets in the rest of GB for meat I think that the fact that over 50% of the GB meat processing industry is controlled by three Irish companies. So if we have live exports I think we have got a major lever there that we can say: Right guys, unless you are giving us the right price on to the boat it goes. Whenever that happens they are going to have a major impetus there that they are going to have a traceable product, they are going to have to have all the bells and bobs on it to try and get a market premium. They are going to be out there actively trying to drive it on further. I think that DARD, the marketing groups - LMC, that we have to develop and actively pursue the live exporting of Northern Ireland product out of here. Now to me, there is a responsibility there, LMC are funded by the Northern Ireland farming industry primarily so I think the responsibility there to market that product to the most economic return that can be obtained, both in the long term and short term so there is a responsibility on their part, there is a responsibility there for DARD and a responsibility for everybody to do their part to get the best possible return from the market place wherever it may be, rather than just saying: Right, we just want to have a processing industry in Northern Ireland and farmers only supply part of that. So I think the impetus is going to have to come from you, you are political people, to say to the DARD people: There is going to be a market next year for Northern Ireland product, target it. They will say: No, we have the money in through from IDB or whoever into building up processing plants and we want that, we need Northern Ireland product for that. We want a fair share. I think there is a major opportunity in the spring of next year to do something.

80.

The Chairman: Well, Jim and Nigel, thank you for being with us and thank you for your contribution, we found it very helpful. The time always beats us on these things but at least we have probed into some things and we have got answers which will be useful to us when we make our report. Our first report will come out next Wednesday, but it is dealing with the chain from the farmer to the retailer - that is dealing with that - and then we are bringing one out on pigs and one on beef.

81.

We are going to have a break now for 15 minutes. There will be coffee and something to eat so you are welcome to join us.

82.

Mr McLaughlin: Mr Chairman, Committee, I would like to thank you for having us. We found this discussion very good and very thorough and the involvement of all of your Committee in that.

83.

The Chairman: We are looking forward to seeing you in the very near future.

84.

Mr McLaughlin: Thank you Dr Paisley.

85.

The Chairman: We are adjourned now until 11 o’clock.

MINUTES OF EVIDENCE

Friday 30 June 2000

Members Present:

Rev Dr Ian Paisley (Chairman)

Mr Armstrong

Mr Bradley

Mr Douglas

Mr Dallat

Mr Ford

Mr Kane

Mr McHugh

Mr Paisley Jnr

Witnesses:

Mr D Rowe )

Mr C Pogue ) Ulster Farmers Union

Mr K Sharkey )

86.

The Chairman: We would like to have a submission from you first of all on the pigs and then go for half an hour and then have a submission on the beef and go for half an hour.

87.

Mr Rowe: Mr Chairman, can I first of all thank you very much for inviting us along to this illustrious Committee? It is nice to be able to talk to those who are in the seat of power in our new dispensation. Can I start by introducing the team that we have brought along today? On my left is Mr Charlie Pogue, Chairman of our Pigs Committee - he will talk on the pigs; on my right is Mr Kenneth Sharkey, Chairman of our Cattle and Sheep Committee - he will deal with the cattle and sheep issues. We have also taken the liberty to bring along with us some of our other members and I will introduce them to you. Sitting in the public gallery is John Gilliland, Deputy President of Ulster Farmers’ Union; Lynn Martin, who is Secretary to our Pigs and Poultry and Intensive Industry; Wesley Aston, who is the Director of Commodities; Moyra McMaster, in the second row, who looks after our legislation and commercial affairs in that department, and then Ian Stevenson who is Secretary to our Cattle and Sheep Committee.

88.

The Chairman: Mr President, I was telling them they were going to keep an eye on you fellows today.

89.

Mr Rowe: I’m glad you said it, because I thought it and I’m not allowed to say it, in case we step out of line today. But if we need technical backup they are there in the background to support us. There is no point in you gentlemen listening to me because you have already had the submission in writing from us. There is no point in listening to the monkey when you get the organ grinders along, I brought two organ grinders along to do the speaking. At your request, Mr Chairman, I will hand over to Charlie and start on the pigs, okay?

90.

The Chairman: Thank you very much. You are all very welcome. I’m glad you have your team behind you because it shows the importance that you men reckon that this matter has. It is a matter of the utmost importance to us, a matter of life or death for our industry.

91.

Mr Rowe: Mr Chairman, yes, we regard the matter as very important. We also regard the setting as important as well. So we would like to give at all times our best possible shot.

92.

Mr Pogue: Thank you, Mr Chairman, thank you for your welcome. As you are well aware and you have worked with us considerably closely for the last two years and we appreciate your help, pigs have suffered greatly especially since the fire at Lovell and Christmas which was in June 1998. Since then we have been in disaster and at the present point we are beginning to rise above that, put our head before the parapet and say we are now at break even point or almost there. Having said that, there is still the big debts created during that period as you know, there are high interests to be paid at the present time and there is no maintenance of farm buildings. In fact the average age of herd has gone up considerably and a lot of replacement stock needs to be bought. So it will be a long time yet before pig producers say they are back in profit, having to take all that into consideration. We have, as you have before you, made a joint submission with the Pork and Bacon Forum, it covers all aspects and we did not want to have duplications so we have moved together with them. I am a member of that Forum as well.

93.

The first item that we had on the report was the fairness of the Northern Ireland pig price. We felt there was unequal distribution of profits and throughout the whole time when we are in a loss situation we felt in the producer, processor and retail chain there was sufficient money if the cake had been divided more evenly, producers would not have suffered to the same extent. The Forum carried out at that time and quite recently an exercise to determine what a farmer was getting for the pig and what the retail outlet was getting. You can see from that the difference. I will leave it at that, if you don’t mind, to Mr Overend who will go into it later - he was in charge of that exercise and knows exactly how it was carried out, but no doubt he will explain that to you.

94.

Moving on from that, there’s the price differential between the Northern Ireland pig and the pig in GB. This has been traditional throughout the years, at times 8p/10p. We felt that because of the fire in Lovell and Christmas and the pigs were being exported to England it reduced the price over there as well as reducing the price here which plunged us into a far deeper crisis than the oversupply of pigs throughout the world created. We were brought into the crisis much earlier and much deeper than any other region or member state of the European Union. And we felt that we should have had some assistance from the Government in finding ourselves in the disaster that we were in because of the exceptional circumstances of the fire, but although we made representation, and you and many others made representation to them, nothing happened. We felt that throughout that period the Government had no vision or will to assist the pig farmers in Northern Ireland. Our pig industry has suffered to a great extent since that, as is indicated by the present number of sows in Northern Ireland which is now, we would estimate, at half what it was at that time. Apart from pig producers losing money —

95.

The Chairman: What would the figure approximately be now?

96.

Mr Pogue: We would estimate at a maximum 35,000 sows in Northern Ireland. That is a guess. The June census has not come out yet, the latest census we have is December 1999 which is 42,000. The number of producers are down to half what they were two years previously to that. A lot of other jobs and ancillary businesses were lost because of that and are still lost so it has created a lot of unemployment within Northern Ireland.

97.

The restrictions placed on us by Government with the stall and tether ban where we had additional welfare standards to meet with, those came into operation on 1st January 1999 at a time when we were at a very low ebb in the pig industry at a cost to the UK pig farmer of around £220 million. We had the BSE tax which added extra costs to our production of £5.26, we estimated, a pig. We had offal disposal, we have the disposal of fallen animals and that is another item which is relevant to the beef industry and all livestock industries in Northern Ireland. We feel that the Government, in order to keep the environment right, should be providing us with a free fallen animal collection service especially now with BSE and all that goes along with it.

98.

The strength of Sterling — what could one say about that? That it has hit us all especially in the pig industry, it has brought a great number of product coming into the market from other member states that are in Euro. We have a land boundary with Euroland which has added more to our difficulty here Northern Ireland because live pigs can be imported and bought in a currency which is a lot lower than ours; that keeps the lid on the prices that we get here in Northern Ireland. So the strength of the Sterling or the weakness of the Euro has added a lot to our problems in the pig industry.

99.

There was a general oversupply of pigs throughout Europe. We understand and we believe that this is now over and we are coming out of that. As I said the Northern Ireland pig herd has decreased much more than other member states - we have fallen by 50% possibly. Some member states might have fallen by 0.5% which is a big difference which, to me, shows how we were affected so much more than any place else.

100.

Factors that are specific to Northern Ireland we feel is, as I have mentioned, the fire at Lovell and Christmas, our additional feed costs, which are somewhere in the region of £10 to £15 per tonne higher in Northern Ireland than in GB - that roughly equates to somewhere in the region of £2.85 per pig. And as I have said earlier, the differential between the GB and the Northern Ireland price. At times we have come up even with the English price and we would like that to be maintained or indeed surpassed if we could to retain a business in Northern Ireland.

101.

Steps to ensure the survival of our pig industry in Northern Ireland. We would like to think that what we have left of a pig industry could be salvaged and a sustainable and viable pig industry could be created in Northern Ireland because it keeps a lot of the family farms going; it also provides other work in the rural communities with meal compounders, ancillary businesses connected with pigs, and we feel that the Government while they, I feel, lack vision and will to do something should, apart from what they have offered us at the Summit in March of this year, and have not yet delivered and may not for the ongoers deliver until this time next year, it is far too late and far too long for pig producers in Northern Ireland to wait. There is the possibility at the present time when prices of stock have gone up that a lot of farmers can now realise that their assets would clear their debt and may get out which may lower our pig numbers even more at the present time. If there was some influx of money into that pig producer’s pocket, a supplement on a par with our colleagues on the Southern side of the border - Cavan, Monaghan and Donegal have got, £12,000 to a 100 sow unit, a maximum of that would be very, very useful and we feel that should be looked at and come to Northern Ireland.

102.

The Chairman: You could wind down now so that we get some time for questions because half an hour goes in very quick.

103.

Mr Pogue: Right, impact as I have mentioned, steps taken by the retailers. The first one would be to ensure that a fair price is paid to the processors so that we in return as producers can get a fair price. We would like the promotion at all times of local product. We feel that the processors should supply adequate slaughter capacity here in Northern Ireland. There is a pig industry review on an all Ireland basis going on at the minute. Hopefully there will be a report quite soon from that and we would await the outcome of that review and then state what we would like to see in the processing line in Northern Ireland.

104.

I think that the producers themselves can work together, possibly if we had more co-operation and between producer, processor and retailer we would be in a much better position to continue in the pig industry. I would ask this Committee, if at all possible now that pigs have got back into at least break even in some cases showing a bit of profit, to keep the banks from putting pressure on producers to clear their debt to allow them to get their maintenance back into shape again, get everything structurally sound to retain, as I have said before, a sustainable and viable pig industry for Northern Ireland.

105.

The Chairman: Thank you very much. I have three short questions, probably they have been dealt with in the evidence that you have already given us, but we want it for the record because when we draw up our report we will have to have the record of what happened here in this public session and why we drew certain conclusions because of certain evidence which was given us. The first question is this: In previous evidence, the argument that producing high quality produce for premium markets is the only way to secure the future of our industry; do you agree with that assessment or not?

106.

Mr Pogue: I agree, yes, that quality pig meat will sell and will provide us with a more stable industry in Northern Ireland. If we can work for quality that is what the producers will aim for and have been aiming for for a considerable time.

107.

The Chairman: In a market like ours, is it not also true that perhaps the housewife is prepared to buy meat that is not up to the highest standard, but is indeed a good standard of meat?

108.

Mr Pogue: There will be a market for that, but there is always sufficient, even if you strive for top performance you will always have stuff in the bottom layer to supply that market we feel.

109.

The Chairman: Thank you, that’s a very honest answer I must say. Some farmers wouldn’t like that. Do you support the idea of farmers joining Quality Assured schemes and do you feel these are a necessary part of future marketing? If so, how can farmers be encouraged to get into these schemes because we are told that numbers currently participating are actually poor in their percentage?

110.

Mr Pogue: I support Quality Assurance schemes, most farmers do, but the problem has been that we haven’t been given the incentive to produce that quality. I think that we must have some incentive there to produce that quality and get the extra money that it costs us to put it up.

111.

The Chairman: You are actually saying if they were more beneficial to the farmer more would participate in them?

112.

Mr Pogue: No doubt. I mean the farmer will work if he is getting money in his pocket, there is no doubt about that.

113.

The Chairman: Now we have heard from the Department of £400,000 to be made available for marketing in pig meat - I have to ask this question, I already know your answer - is that enough? How do you feel that this money towards marketing should be used?

114.

Mr Pogue: A joint submission has been already been put to Government and I understand it has gone to Brussels for approval. Half of that money we have asked for to go towards the Forum for promotional activities. We know that we can’t stress that it must be Ulster pork and bacon, that it is solely a generic promotion for pork and bacon. Part of the problem that I would see there is the 50% matching funding. Where do we get that in all cases that has been asked for? So if the Government gave us £400,000 the industry has to provide £400,000 as well for that. With the low number of pigs now and little income to the Forum, a lot less than there had been previously, that could be our difficulty. As well as that the PPDC, which, as I understand it, may be the only central testing station in the European Community - the only independent one and we feel honoured to have it here in Northern Ireland - has asked for some of the money for research for genetic improvement, as I mentioned before, to improve the quality of our pigs. I think that end will be financed where there is a statutory levy on producers to pay to the Forum. Producer groups, both farmer orientated and processor orientated, have asked for some of the money to assist them with marketing of their pigs rather than of pig meat. I think that as far as the farmer is concerned the marketing of pigs is as important as pig meat.

115.

The Chairman: Thank you. Just one other point that you had given in your submission, you say the Republic of Ireland Government announced an aid package in February to compensate pig producers in the border counties for losses incurred as a result of the fire at the Lovell & Christmas plant - that package was to provide up to £12,000 per unit. You say that we should have a similar scheme in Northern Ireland. You know what the argument of the Department was, that because they gave some money to pig farmers to get rid of pigs in the market that that was the same type of scheme? Would you agree with this Committee, because this Committee took an opinion that that was nonsense, it wasn’t comparing like with like?

116.

Mr Pogue: Wholeheartedly. I think that scheme that the Government provided was very, very useful at the time. They provided it for the welfare of the pigs; it did not do an awful lot for the pig producer. We feel that being in the one marketing area with the three border counties supplying the same plants, the same factories, that they may have benefitted as much from that scheme as we did because it freed places in the processing plants. They have the added benefit now - and we don’t think they shouldn’t have got it, we believe they should have got it - but we would like to get it as well, something similar.

117.

The Chairman: Thank you very much. Now some of our members want to come in. Gardner?

118.

Mr Kane: Thanks Chair. Charlie, you have mentioned the need for some form of compensation for BSE charges. These charges are alleged to account for half of the losses pig producers were making in recent times; in your opinion is it realistic compensation? Assuming there will be none can the rules be used to any marketing advantage?

119.

Mr Pogue: Yes, there is a marketing advantage, we think. Not feeding meat and bone meal to pigs, we would not want to go back to feeding that to livestock in Northern Ireland. We think there is a marketing advantage there. There is a judicial review, as I am sure you are aware, taking place in England; Meryl Ward has submitted a case for the British Pig Industry Support Group against the Government because of lack of compensation. They are awaiting the outcome of that quite soon on whether the Government were right or wrong on what they did. We would hope when the result of that comes out we may be eligible for compensation and we all live in hope.

120.

The Chairman: That’s the voice of the optimist.

121.

Mr Paisley Jnr: First of all, do you agree with me that the way in which the stall and tether ban was implemented in the UK, in particular in Northern Ireland, it was an unmitigated disaster as far the as the industry was concerned? Do you not think as well as accelerating the decline in the industry it also exposes the fact that the whole philosophy lying behind quality, welfare, that that whole philosophy is misplaced because the consumer seems to be interested in one thing and that is price on shelf. Despite your best intentions to meet all those standards, those exacting standards, at the end of the day if the product is too dear the consumer ain’t going to buy it. Therefore should you not be trying to get away from that philosophy on to a more surefooted market based philosophy?

122.

Mr Pogue: Number one, I and many producers in Northern Ireland and, in fact, I would say in the UK, but more so in Northern Ireland, do not think that the ban on stalls especially was to benefit of the welfare of the animal. In fact, we think it was the other way - a pig in a stall was less abused than one put into loose housing and most of us who have changed over to loose housing would have found a difficulty in going back to that. In fact, when stalls were brought into being here in Northern Ireland 10/15 years ago we thought it was a Godsend to have them that way. We agree that the Government should not impose something on the producers here that is going to make that the production of anything more costly because the cheaper we can produce food, quality food, with reasonable welfare, the better.

123.

Mr Rowe: If I might just add to that, that’s the view of the Union, that this was not something that we should have done when the other states in the EU were not willing to go down it. Our competitors didn’t go into it, but this Government laid down the law and being law abiding people the pig producers of Northern Ireland had to follow suit. There was no way at any time and we said this all along, that we should wait until the rest of Europe at least was doing it so that the competition would be level across Europe because I would have doubted if the rest of Europe will ever do it.

124.

Mr Paisley Jnr: The general philosophy behind pushing for quality and pushing for welfare, is that misplaced then?

125.

Mr Rowe: The general philosophy of pushing for welfare standards, quality, yes. But then the quality, removing stalls and tethers does not produce a better quality of pig, it gives you a more welfare friendly pig according to those, but as Charlie said it doesn’t actually do the job, it is a mistake.

126.

The Chairman: I’m sure you would agree with me a woman going to buy a piece of pork is not going to ask: Was that tethered or in a stall? It is absolutely ridiculous that should have been made and then to take us into this against everything that was running against it in Europe was adding fuel to the fire that was burning up our industry.

127.

Mr Rowe: It showed a lack of understanding, Mr Chairman, in the decision making process of what actually goes on on the ground, both in the retail marketing of what drives the retailer and what is suitable for the production side of the industry as well.

128.

Mr Bradley: Thank you Chairman. Can I say, Mr President, I share your view of a free fallen animal collection service so much so that I have written to the Minister this week with the EU regulations coming in in 2003 there will be no fallen animals buried on land, to investigate the system in France where it is a free service already.

129.

You mentioned the lack of maintenance on farms; can you assess what the long term result of this would be and have you any hope that funds for capital investment will be made available by the Department?

130.

Mr Pogue: It would be great if it could be. The Department haven’t given us much help so far, but I think we should still keep lobbying to see if we could get something for structured funds like that. I think part of our problem may be the rules laid down in Brussels, but we would still like to think that we could get some help. Maybe there is the other case where saying we had to go out of stalls and tethers at a time when there was no money on farms and there was a very low ebb in the industry a lot of us made utility jobs for loose housing. And we feel now if the industry was back into the profit we may wish to do something which would be an improvement on what we have and would like to think that maybe grant aid could be brought to us to help us to do that. A lot was done just on a shoestring during 1999, at the end of 1998/1999 to keep within the law. If we had money there are other ways that they could be kept which would be better than what we have at the minute.

131.

The Chairman: We have to move on.

132.

Mr McHugh: Thank you, Mr Chairman. Firstly, can I congratulate Douglas as Chairman of the Ulster Farmers Union. We are both Fermanagh men, we have worked on this crisis in agriculture for quite some time now, I believe he has a good grasp of the difficulties. In relation to the funding that has been given by the package, the funding package, and in terms of the Government’s commitments, the fact that they are leaving quite a lot of it off until next year before the farmers will gain anything from it, I would have great concern in relation to the point that was made of the 50% funding that has to come from the industry. That would be very, very difficult. What I’m saying is is there a possibility that we can lose that side of the £400,000 if the joint funding isn’t able to be produced?

133.

Mr Pogue: The £400,000, it was not part of the Summit announcement in March that was previously there and I think will be available quite soon. I would hope that the matched funding could be found, that is one difficulty I can see in it. If it is not found I would like to think that our Government would look sympathetically on the situation.

134.

Mr McHugh: It is a very important part of their commitment in terms of marketing anyway. The other thing is: How do you see us getting to a point where we can avoid the peaks and troughs, especially the trough that we have found again which has been the history of the pig industry? We have to get to a point where the industry will be sustainable for the future in avoiding these troughs; is there anything in particular that can be done in terms of ourselves in relation to trying to make sure that it doesn’t happen again?

135.

Mr Pogue: Pigs have always been cyclical, peaks and troughs, I think that is market led. It has to be that way. I don’t think we, in Northern Ireland, would favour quotas for sow number or anything like that, but I think what’s going to restrict us in the future is the environment situation. The numbers that we have in Northern Ireland are so small in relation to what is there throughout Europe, and Europe is such a small place now that bears no significance, I feel, on the overall picture. I think that would double our numbers and would have very little effect on the total picture within Europe.

136.

Mr Armstrong: Thank you Chairman. Would you agree with me that Government has a negative approach to agriculture and the pig industry and would more encourage diversification in other areas and then expect agriculture to pay for the diversification instead of the area that we go into and take the funding out of there? Also, the £5.26 per pig which is a BSE related issue, would that not be coming out of the budget for BSE related incidents? What way would you see that £5.26?

137.

Mr Pogue: The first point there in relation to the Government’s position on diversification, farmers in this country have been brought up to produce food to the best of their ability, they are not hoteliers or bed and breakfast people, and I feel that farmers should be kept going on the production end of food for the community.

138.

BSE charges, we would like to think that some of those could be recouped. We understand, as I have said before, we don’t want meat and bone meal back into the food stuff at all or into the food chain, we would be happy to do without that. We would like to think that other aspects of that like your offal disposal, fallen animals, everything related to that, assistance would come from the Government for that.

139.

The Chairman: We will have to leave it there and come to the beef.

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