COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

500.

Mr Pogue: In Great Britain, producer groups are affiliated to one body. We looked at this in the pig sector when we brought Scotlean over to assist us in the development of our co-op, but it did not work out. If we got our co-op going here we could be affiliated to the Great Britain body and many groups are incorporated into that body.

501.

Mr Paisley Jnr: The House of Commons Northern Ireland Parliamentary Affairs Select Committee, in its last report on agriculture, stated that it was essential for farmers and processors to work together to establish co-operative groups. In our first report, at the end of the last session, we made a similar suggestion that we would like to see the development of existing producer groups, new producer groups and also branding of products.

502.

With regard to your written submission, and with what you have said today, you seem to be reluctant to pick up on those suggestions. If you are reluctant to pick it up is there any other way to develop the industry to a successful outcome? Or is your reluctance one of not that it should happen, but how it happens?

503.

Mr Rowe: There are some ways this could happen but we are not as reluctant as we seem. We see the practicalities of it working on the ground at all times. So the practicalities have to be taken into account. If you do not take good enough cognizance of the practicalities, the theories do not really work. There is no point building up the theory that co-operation will solve our problems overnight. They will be useful in solving our problems and when the co-ops develop, and those who are successful continue, that will be a big help. Both sectors, but particularly the pig sector, need a commercial solution in the short term.

504.

If the price for the finished pig product in Northern Ireland stays at 85p much longer we will see those who are breaking even coming to a stage where they will not. They will have to continue putting money into the business to keep it going and that will bring them down. We will start to go down further. Critical mass will drop, and we will fall off the edge.

505.

Mr Paisley Jnr: As regards the commercial goal, how do we get there? What should the industry do? What should the Committee do? What should the Department of Agriculture and Rural Development do to get us there?

506.

Mr Rowe: We have got to keep pushing at why there is a 20p differential between Northern Ireland and Great Britain. Why is it there? Why is it that — and I do not want to say anything which could be sub judice and for which I could be hauled across the coals — there is seemingly a price slump even in the South for pig meat at the present? We have been told that it is a case of supply and demand. However, where will supply and demand end? Will someone say, in three months’ time, that it will or will not have happened? Will someone give us direct guidance about where we are going?

507.

Mr Paisley Jnr: Are you saying that there is price fixing in the market?

508.

Mr Rowe: I did not say that. You are inferring that from what I have said.

509.

The Chairman: A pig, called by any other name, is still a pig. We are in a serious commercial war. The war is not to the farmers’ advantage. The farmers are not even allowed to fight because their hands have been tied and their arms have been taken away. That is the trouble, and we are saying that a properly organised co-operative is the long-term solution. We are facing the short term, and the short-term solution is putting money into saving jobs and the industry. It is not putting £890 million into a dome. We need to insist — and keep insisting — that a massive cash injection is needed to save our industry. What about the debts? The debts are evidently forgotten by the Government. We are in difficulty, and I was rather grieved when I read the budget that was presented to the European Parliament this week. There is nothing in that budget that would adequately face up to the dire needs of Northern Ireland’s agriculture. I see from the ‘Financial Times’ that the Scottish Farmers’ Union is mad about the proposals that are going to put them into Queer Street. We need to accept that we must work towards a long-term solution. In the meantime, we must keep working at one of the most important things, which you mentioned, and that is to get the same money for our pigs that they get in England.

510.

Mr Pogue: Part of the problem with the differential in the pig industry is that we have a land border with "Euroland". Pigs are obtainable from the South at £1·05, which is the same as for those from England. I do not object to pigs coming from the South. There has to be two-way traffic, and the pig industry in Ireland, as a whole, has to be looked at in its entirety. As long as there is a differential in currency, I do not think it will be easy for us to achieve the price that they have in Great Britain.

511.

The Chairman: That war of money is going to increase because the whole basis of finance is shaky when one looks at the American and German stock markets. We get the German Chancellor speaking up for the euro one day, and the next day it plunges.

512.

Mr Pogue: In respect of the pig industry Ireland has to be considered as a whole. One of our problems with exporting live pigs to Great Britain, and I do not think that this has been made clear, is that neither Northern Ireland nor the South of Ireland are Aujeszkys- free. Now that our sow numbers are low it is an opportune moment to clear Ireland of Aujeszkys, and some assistance should be given to that.

513.

The Chairman: We will take that on board.

514.

We will now move on to the beef issue. The quality of the composition of the average beef herd in Northern Ireland appears to have deteriorated in recent years, yet we are being told that the best of Northern Ireland beef is good enough to command a premium price in discerning markets such as those in Holland. Do you agree that improving the quality of the total beef herd to be the best is an urgent industry objective? What proposals does the Ulster Farmers’ Union make to the Committee in order to reach that objective and make a contribution to that important cause?

515.

Mr Rowe: Yes, the beef herd has deteriorated in quality over the last number of years but there are a number of reasons for this. One of these reasons is that we are comparing the quality of today’s beef herd to that of the 1970s and 1980s. However, in the 1970s and 1980s we were legally allowed to use hormones which resulted in leaner, fitter cattle. Then we had the onset of BSE. When that happened people lost heart in breeding and a lot of us, myself included, decided to sell the best heifers and breed the worst ones because they were not worth anything anyway. Then when they came to be cows they were worth something under the 30-months scheme — and we are reaping the rewards of that.

516.

There are a number of ways out of this problem. But remember one thing — when we start to talk about beef quality we are looking at objective grading as a beef quality. Recently I was at a seminar given by the Australian Beef Board, and it was interesting to note that for some of their markets they are going away from objective grading and going on to the taste and eating quality of beef. It is very important that we do not lose sight of this. If the housewife buys a piece of beef — no matter if it is from an E steer or an O minus P — if it eats badly she will buy something else the following week. It is important that we look at the issue correctly and realise the importance of the eating quality.

517.

That is an overview. At the present time farmers and those in the meat industry trade are on the European grid with regard to beef. The European grid was used for intervention, and it has been allowed to carry over into the present time. How we improve cattle on that dead weight grid scale is a long-term position. A decision is made on the day of conception as to what the meat is going to be like — three years before it is on the plate. There is a number of things that we can do. One thing that could be done in the short term is the provision of a subsidy for the synchronisation of heat in cows in suckler herds and the use of good AI at a subsidised price. In 12 months time that would probably give a crop of calves of superior value and would immediately increase the quantity of quality cattle on the European grid until we get someone who can devise more tender beef. That would particularly help those farmers who are keen to do the job both on a part-time and full-time basis. They can then synchronise their herds to calve in a certain period, and they will know exactly what bulls they are going to use.

518.

They can lay out their plans. The best laid plans of mice and men come apart, but it would be a good starting point. It is something practical that can be suggested by the Committee and is not going to cost the earth.

519.

Mr Douglas: I am interested to hear you admit that the breeding policy needs to change. Unfortunately, most farmers will say that they are producing the best beef in the world and that someone has to buy it. That is a very poor way to go forward, and I am glad that you are prepared to admit that.

520.

Regarding the grading system, people do not mind a poor price for poor quality animals, but they would like a better price for the good ones. The problem with grading is that we do not get the price. We are aiming for quality. That admission is a start and that is what we need. Could that go down the line to the farmers or is it possible to get that throughout? Could we have this better quality grading?

521.

Mr Rowe: Yes. The present pricing and grading structures for animals — whatever we think about the grading structure — are tied together. The six-pence differential between grades was brought in to accommodate intervention when that made up the main market for beef before and during the times of the BSE crisis. Intervention is no longer a market for beef, and we need to be recompensed for what goes to the commercial market. During my time at the headquarters of the Ulster Farmers’ Union, we have been trying to get the powers that be and the meat plants to pay on a more simplified classification system and to pay better for higher quality animals. It is very frustrating. I, and other union members, the chairmen of the Cattle and Sheep Committee, Mr Aston, and Mr Pogue, put a lot of time and effort into going round to meet the meat plants. They would not talk to us about pricing and grading together for fear of the Office of Fair Trading saying they were price fixing. The Ulster Farmers’ Union had the Office of Fair Trading look into that situation in 1997. They reported back in late 1998 and early 1999 that there was no case to answer as far as collusion on price was concerned. Mark my words. Others think that they have introduced this into the community as a new idea, but it was already checked years ago.

522.

It is important that we, as farmers, manage to get the bands of grading brought closer together. Instead of having 42 bands — or 36 bands of pricing if one band is removed — we could get down to a four-band pricing system. That would ensure that good cattle are well paid for, medium cattle are reasonably well paid for, and poor cattle can be penalised or sold to the appropriate market. Do not get me wrong. There is a market for poor quality cattle. There is a market for the Holstein animal in the processing world. Cows, in the distant future, will fill that market. At this moment it is a developing market — the catering market. But the upper end of the market must be better recompensed.

523.

Mr Aston: Overall, in the longer term, it is about where we have come from in relation to how BSE has helped the deterioration of quality and the grading structure. How do you compare a piece of beef sitting on your plate to a grid system that somebody happened to devise? The bottom line is that if there is a proper reward for producing quality animals then farmers are the marketeers producing that animal. It is a combination of those factors.

524.

Mr Rowe: That is a much more precise answer.

525.

Mr Dallat: Earlier we made reference to co-operatives and, even earlier, we learnt how the pig industry has virtually lost control of itself. Co-operatives represent people power at its best. They are already in control of the large supermarkets who have shown no loyalty whatsoever to Northern Ireland or its distinctive rural community. Is there a need for the farming industry to be seen as part of the greater rural community? A rural community with farmers and no people, or vice versa, is useless. A number of independent butchers have survived the onslaught of the large supermarkets and have done it exceptionally well. Are there opportunities for help and co-operation from the Department of Agriculture and Rural Development to develop the relationship between the farmers and the independent butchers who are loyal to Northern Ireland?

526.

Mr Rowe: The farmers are members of the community and must be kept there. That is something that is very important for the future. Farming in general needs to be sure that it has a relationship with its nearest market which is its local market, because the cheapest place to sell any produce is locally. Farmers do have a relationship with the local butchers, and a number of local butchers buy beef from farmers, have it slaughtered on a contractual basis and then sell it to local people. You can go into your local butcher and in some cases, they can tell you who provided the produce. The older family butchers are keen to do this. I can think of a very renowned butcher in Enniskillen who still does this. There is an opening there for some products, but some may be different. We have to market these products on a wider scale to gain market share and sell the produce. We need a bigger market share, not only of the local market, but of the other retail market.

527.

As far as marketing in Northern Ireland is concerned, the Ulster Farmers Union has run a food initiative for the last two years, and are still looking at one for this year, to try to enhance the position of Northern Ireland agriculture in the home market. It was very successful in the last two years, and if we are able to run one in the future, we hope it will be successful also. As an organisation, we are trying to highlight this from our own headquarters in order to get the co-operation, not only of the local supermarkets, but also from the multi-nationals, so that their Northern Ireland branches will demonstrate what we have for sale and, it is to be hoped, increase sales of Northern Irish produce in their national areas also.

528.

The Chairman: We are now very short for time. Will you please keep your answers short, Mr President.

529.

Mr Savage: I have listened very carefully to what you were saying about quality. There are so many people living off the backs of farmers, and they have been doing for a long time. You said you wanted short-term solutions. What are these, and will they be compatible with the long-term requirements?

530.

Mr Rowe: I do not want to be a politician or move in political circles — we represent all political walks of life — but you mentioned one solution that would be of use in any industry, never mind agriculture. The subsidisation of interest payments by those who are in debt would be very useful in the short term, and everybody across the political scene in Northern Ireland would have to agree that this is something that should be looked at more carefully and brought into play. It is not unique across Europe, but I know that when I was at college over 30 years ago, it was a recognised fact that on the continent, some of the farmers did not get grants and subsidies, but they got cheap money, and that was a big help to them.

531.

That was a big help to them. We do not get grants and subsidies, and cheap money from any source would be useful.

532.

Mr Bradley: Whom do you think should be exploring the branding concept which you mentioned in your submission?

533.

Mr Rowe: Everybody in the industry needs to explore the branding concept. This industry has a big Department with a lot of expertise, and that sort of thing is in its remit. If one used a brand across Europe, one could get money to promote it. Sadly, Northern Ireland never had a brand that it could use. It had the Greenfields brand, but that is no longer unique, as it is used in Holland and Belgium — a firm there owns it now. We can use it in the rest of Europe, but Northern Ireland needs a brand of its own. It is a pity that the agriculture industry does not have a brand as distinctive as that of Bushmills whiskey.

534.

Mr Bradley: Who should lead it?

535.

Mr Rowe: The Department of Agriculture and Rural Development should lead it. It is recognised by all other Governments as part of our body. It should lead; it has the cash and the expertise.

536.

Mr Aston: There are two organisations which could lead. One is the Red Meat Industry Strategy Group; it works with all parts of the industry and with the Department to see what can be done with red meat. There is also the vision group set up by the Minister. It is to issue a report soon, and it is crucial that it tells us if it considers it worthwhile to pursue this.

537.

Mr Bradley: EU regulations 201 and 202 will mean that they probably will need a brand.

538.

Mr Rowe: If all Northern Ireland products are to be branded, it should be done by the Northern Ireland authority. If one particular sector is to be branded, the obvious one is the red meat sector.

539.

Mr Kane: Are the existing groupings too small to have any significant effect on prices or on the monitoring of the product? Why is a major co-operative, in your view, too big a leap?

540.

Mr Rowe: The small co-operatives do make a difference for those who are in them. They can help make substantial reductions in costs at the buying end of the business. The United Dairy Farmers’ Co-operative has kept the milk price. Although it remains bottom of the league at every stage in Northern Ireland’s pricing, it has ensured that Northern Ireland’s milk prices have been much better than the United Kingdom’s. It has handled 50% of the milk, so it is not impossible. It is something that we can aspire to; but we cannot aspire to it on 10 September 2000. This is where the problem is. We can aspire to those higher ideals, but we must do it in time; we must save the industry soon.

541.

The Chairman: Thank you very much. We are sorry for being so pressed for time, but we have a report to compile. When you have read the Hansard report, we will welcome feedback from you.

542.

Mr Rowe: Thank you very much.

MINUTES OF EVIDENCE

FRIDAY 8 SEPTEMBER 2000

Members Present:
Rev Dr Ian Paisley (Chairman)
Mr Savage (Deputy Chairman)
Mr Armstrong
Mr Bradley
Mr Dallat
Mr Douglas
Mr Kane
Mr McHugh
Mr Paisley Jnr

Witnesses:

Mr M McCoy ) Northern Ireland
Mr N McLaughlin ) Agricultural Producers’
Mr J Carmichael ) Association

543.

The Chairman: Thank you very much for coming here today. I have to leave at about 12.40 pm, and my Vice-Chairman will then take over. Could you give us a 10-minute introduction on pigs and meat together. Then we will go straight into questions — there are a lot we need answers to.

544.

Mr McCoy: Thank you for giving us the opportunity to speak about the debt situation and, particularly, thank you for the documentation we received, and to which we have responded. The debt has not gone away. There is a self-perpetuation of the debt, and it is not just in the beef and pig industry. We were worried about the small amount of investment into the agriculture industry. The reason that the pig sector is suffering excruciating pain now could be due to the present financial crisis. That could start to move across into other sectors. We would like to discuss the financing of the debt and also the possibility of putting micro-finance in place for the future development of farming families.

545.

Mr McLaughlin: I will try to target the main questions of co-operation and organisation, co-operatives and branding. Branding is of particular relevance to Northern Ireland. The Green Fields brand was undoubtedly a success while it ran. Hopefully it will be relaunched with a major effort from Northern Ireland, if we get the ban eased. Then other initiatives such as EM45011 and FQS can be beefed up and used more as a marketing tool. We will have to take the industry forward by doing that.

546.

We highlighted the pluses and minuses in developing beef products. We would like to focus on having it more market-orientated and targeting specific markets. The Livestock and Meat Commission has someone who researches markets and opportunities throughout the world which could possibly apply to a small producer region like ourselves. The fact that Northern Ireland is so small is also one of our strengths. We can carry an industry forward with the same production parameters and the most uniform product achievable. We can start the whole process next March. Hopefully there will also be a bit of competition, and we can inject that into the process via live shipping.

547.

Competition is essential in all aspects of meat production. One of the lessons learned through Malton is that when we put all our eggs in one basket we become very vulnerable. We need to take the initiative now. My colleague mentioned that debt is hampering a lot of development from farmers. This has been compounded by the increase in values and the strength of sterling which is making us very uncompetitive on the world stage, particularly in Europe.

548.

The Chairman: We have the short term and the long term to deal with. We are concerned that the whole farming industry in Northern Ireland will have to be changed because we need a table for the producer to meet, on an equal plane, with the meat plant man and also with the big international retailers. At the moment the farmer is not at that table and that is our big problem. There will be a lot of blood, sweat and tears to get us to that place. We have this crippling debt and the answer to this is that cheap money must be available, as it is on the Continent, to the farming community. Today we are interested in getting your views on the long-term strategy.

549.

It seems that you strongly support the creation of a better organised producer base for pig meat and beef. Presumably you have looked at the financial resources which could bring that about and you have also looked at how your organisation can contribute to that. Could you put on record that you support the creation of a better organised producer base for beef and pig meat? What could be done to bring that about? The first part is with regard to pigs and the second part with regard to beef.

550.

Mr Carmichael: I will be brief because not a lot has happened since we last addressed the Committee. At that time, we talked about the increasing debt and, as Mr McLaughlin said, that interest is still there. The income received by pig producers in comparison to the rest of the United Kingdom was one bone of contention. At that time, we talked about restructuring the scheme — having an out-goers and an on-goers scheme — and I am sure you are aware that there have been further delays. More questions have been asked from Brussels. We cannot have an on-goers scheme to assist those who want to stay in the industry if we do not have an out-goers scheme, because of state-aid measures and so forth. That is something that needs to be moved forward. The longer the situation stays as it is, the more difficult it is for people to stay in the industry.

551.

We have seen the possibility of another company taking on exports for pig meat. We are looking at all the possibilities and the returns to the producer compared to returns in other areas, and we have to ask the question — and it is the same for beef — why, out of the final product price, is the producer getting so little return? Apart from that, nothing has changed except that pig producers are getting into debt and prices are fluctuating. In fact, prices rose slightly and went down again. If something is not done in the short term in order to have an on-goers scheme — and then we can look at long-term measures — there is not going to be an industry to look at.

552.

The Chairman: That is very important because some people thought we were out of the quagmire we were in. We are far from that. Some of the Department of Agriculture and Rural Development’s officials, and even the Minister, were trying to illustrate that there was great encouragement. That is not the same story I got from the pig producers. We are apt to forget about the terrible crippling debt, which means that the farmer cannot invest because he has no money. What is your organisation’s attitude to the long-term co-operative scheme that we have been speaking about?

553.

Mr McCoy: We categorically state that we fully support a co-operative system. We have been involved in this issue over a long period since we took the matter to the meat plants and organised an orderly picket outside meat plants at the beginning of this year. We have been involved in a series of meetings with the Northern Ireland Meat Exporters Association (NIMEA) who represent the processors. We have also been involved in a wider industry forum comprised of the Ulster Farmers’ Union and NIMEA looking at the Farm Quality Assured Scheme and how that is funded.

554.

Returning to some of the questions in your paper and the issues involving 50% of the beef producers, we have some concerns. Unless the primary producer, the suckler cow farmer, is involved in the whole process of providing quality and that involvement goes back down the line to hill farmers, we are not going to go forward with any unity as an industry. We need to put in place issues and funding that will involve suckler beef producers so that we are incorporating a total quality lifetime assurance throughout the industry.

555.

As far as long term strategy is concerned — and we have the task force and other different strategies — it is important to have strategies but not to get hung up on the issue of long term. In the short term, many things can happen. The meat processing industry must realise that it needs us as suppliers of product otherwise it cannot add any value to whatever is coming through. The processing industry must also be pragmatic. It cannot continue to eke out every last drop of financial return from the beef and pig industries without putting something back in.

556.

We cannot ignore the financial situation; you mentioned cheap money, and we talked about the self-perpetuation of debt in our opening remarks. We can look at lots of different initiatives and co-operative ideas. However, if we do not look past the debt, and the financing of the debt, we are eluding the real question.

557.

We have got to grapple with the issue. In one way, we are looking for a cure rather than at prevention. We need to make sure that the financial institutions are made more aware. They gave evidence to your Committee the last time we put forward proposals, and I think that was in closed session. There needs to be more openness about what is happening in the agriculture industry in Northern Ireland. The financial institutions have a big part to play, otherwise we are going to have a lot of people moving away from the industry and lots of other inherent problems emanating from that.

558.

We totally support a co-operative. However, there are issues about finance, operations and making the best use of other organisations — for example, the Livestock and Meat Commission and the Pig Forum. It is a matter of being able to come together to make sure we are all doing the same thing and working towards the same goal.

559.

The Chairman: To create a well organised and market responsive producer group would require leadership. Would your organisation be prepared to help in that leadership?

560.

Mr McLaughlin: We had a number of co-operative movements in the 1960s and 1970s and a lot of them failed due to the lack of having focussed individuals running them as a company. The classic example is Kerry Co-op, which has developed into a mega-business because it has been run on economic grounds. A lot of co-operative initiatives have lost pace because they are being run by people who were farmers or by people who are still trying to farm on a part-time basis.

561.

We would like a co-operative to work, and we would fully support that. However, we would also say that any major initiative is going to need suitable personnel who will be there to provide focus and achieve objectives. We need people who will look at the long term, as you mentioned, but who will also take cognisance from the players involved in the industry, representatives such as the LMC or UFU, and other farming clusters and consumer groups. We could not let a co-operative be run into the ground because of a very narrow-viewed aspect.

562.

The Chairman: You are telling us that a successful co-operative requires a brilliant commercial man at the top, not those with no experience of the commercial world because they have never lived in that world. Although such people might be practical farmers, there is a bailiwick into which they cannot enter because they have neither the knowledge nor experience. Therefore a co-operative would have to be run as a commercial undertaking and in such a way that confidence and trust could be placed in it. It would also need to be run in such a way that it carries with it the various organisations and people involved in farming.

563.

Mr McCoy: I do not think it would work without the farm organisations. They have been fully behind it. We do have a co-operative in Northern Ireland at the moment, although a lot of people are a little disappointed with what is coming forward. If you put a commercial head on any of these co-operative units, they must come back to the terms of reference on which they were built, and that would be to provide more income for farm families.

564.

The Chairman: We believe that there has been a deterioration in the average beef herd in recent years. We have to get quality beef on the market if we are going to contend on an even playing field. How can we do that?

565.

Mr McCoy: The first step is to decipher the word "quality". A lot of people, particularly the meat processors, bandy that word about. They mean the European EUROP classification. There is nothing in that about eating quality or about how it was reared and processed. If we are going to use the word "quality" in the way that the processors use it, then certainly the confirmation has come down. There is a Holstein influence. The percentage of dairy cows achieving EUR grades is 48%, as against 32% in Scotland. There is a massive differential, and a lot of that comes from the branding of Scotch beef and the suckler units and devolving a lot of new mechanisms and feeding regimes into that sort of product. That is the sort of thing we have to get to.

566.

Mr Carmichael: If we are going to have a beef industry, we have to start with suckler cows. As an organisation, we have worked with various groups, over a number of years, to improve quality and to make the producers understand that quality has to be improved. With reference to the organisations being involved in a co-operative, if we talk about a food chain, the start of the chain is the primary producer. I suggest that the farming organisations at the coalface could have quite an influence on producers, as opposed to those other people who they see making a living off them.

567.

The Chairman: The first questions will refer to the pig industry.

568.

Mr Savage: Recently there has been an attempt to create a strong producer group, which seems to have developed very slowly. The pig industry is in deep crisis, and the need for such a group seems to be widely accepted. Why has progress been so slow? Is it that Northern Ireland pig producers do not believe in co-operation, or is the concept itself flawed?

569.

Mr Carmichael: Since the introduction of additional funding, groups have applied for funding. The concept of groups is still alien to quite a few farmers, and not just pig farmers. In the pig industry, as in every other industry, there are individuals who have their own contracts which they might not be willing to share with others. We always believed that producers had to get together in some way. I have had meetings with pig industry people, and I know that there are various groupings. Having one co-operative group would improve the situation.

570.

I do not know why more people are not involved. Before now, we have had various people producing and supplying various plants. There are those in the industry who have their own contacts and contracts. Presumably they wish to stay with those at the moment. The concept of producer groups and larger-scale production should benefit the producer. The unfortunate thing is that a lot of farmers still regard their neighbours as the opposition. That is something that has to be sorted out throughout the whole industry, not just among pig farmers. Farmers must realise that unless they produce together in both quantity and quality, the way forward could be bleak.

571.

Mr Savage: All farmers are in it together.

572.

Mr McCoy: Farming and farming agricultural businesses are individual businesses. As such, economic factors come into play. They all want to develop themselves individually. There has not been that collective activity which has been seen to work really well in Northern Ireland over recent years. It is only in a time of crisis, such as now, that farmers will start to realise the net worth of putting some scope and scale together. It is very useful that the Committee is bringing that forward.

573.

Mr Carmichael: One thing that could be said against the formation of a single group is that many producers still see competition as providing more income for themselves. As Mr McLaughlin said, if you have all your eggs in one basket and something happens to that, you have difficulties. That problem has been highlighted in cases where other groups have tied themselves to one particular plant, for instance, where there would not be the same competition.

574.

Mr McLaughlin: In the pig industry, many of the producers were vulnerable after the fire at the Malton factory. They had major problems moving pigs after that. There would still be an inferred threat there from some of the processors. If farmers do anything to disenfranchise them or move toward any other influences in their marketing, they could have problems getting their pigs slaughtered.

575.

The Chairman: We are agreed on that. There is still a fear.

576.

Mr McLaughlin: I personally know farmers who have been told that if they move anywhere else, or even look to price anywhere else, they will not get their pigs slaughtered the next week.

577.

Mr McCoy: One issue that comes up all the time, and people say this is a strength, is the size of Northern Ireland. We are small enough to do things. We are also small enough to have that inference of "if you move, you will not be able to market this back here again". It is a double-edged sword.

578.

Mr McHugh: May I ask a question about beef? Will I have time to come in again later?

579.

The Chairman: That will depend on the generosity of the Deputy Chairman who will be in the Chair at that time. If you want to ask a question about beef now, go ahead. I am trying to give every party an opportunity.

580.

Mr McHugh: Considering the contribution of late payment by the Department of Agriculture and Rural Development to the debt situation and the new rural development plan in the next programme for Government, is the Department, with its vision group, going in the right direction to take farmers forward?

581.

Mr McCoy: That is a fair question. The local authority people were here on Wednesday to meet the Minister, lending their support to agriculture and the rural economy in this financial crisis.

582.

Business, whether it be farm business or any other economic enterprise, revolves around cash flow. That is the bottom line in economics. For too long, the Department has not been prepared to look at a ready rollout of programmes and the necessity to get the money out as quickly as possible. We have talked, both to the current Minister and to her predecessors prior to devolution, about a protocol whereby payments of whatever kind would be made in a timely way. There should be an imperative upon the civil service to get them out as quickly as possible. That is absolute. It should not be a once-and-for-all thing. We should continually revisit that table and make sure that once the Department sets out a standard, we see exactly how well it lives up to its obligations, and how well the expectations of farmers have been met in that process. It is a continuing thing.

583.

The Department’s vision for the future is a long-term strategy. It looks at a lot of different things. There are real cash problems in Northern Ireland’s agricultural economy at the moment. We need a cash injection; we need a stimulation of new enterprises within the agricultural and rural economy. Otherwise we will not have time to see the long-term strategy. It will be a book that will be written for the demise of agriculture. On one hand we have to look towards the long-term future, but we have to live in the present and try and get as much out of the present situation as possible. Timely payments are crucial at this point in time, because the marketplace is not giving back enough.

584.

The Chairman: We have taken that up with the Minister. We got an explanation, and in the case of one particular payment, we got quick movement. We told the Minister that it was intolerable. We are in such a debt situation that if people are entitled to their money, the Department should be paying it even before time. This idea of having two or three months while they draw the interest is not on. The farmers should be getting the money they are owed, and getting it promptly. We will be revisiting that.

585.

Mr Armstrong: One processor of great size dominates the pig sector in Northern Ireland. This processor has the market power to assess the best markets and the ability to build brands. One strategy for the pig producers would be to seek, by every means possible, to become such a high-quality supplier to the major customer as to earn preferential place in the range of supply options. Is there a better option for Northern Ireland pig producers? If not, what steps are needed to pursue the goal? We know that Malton’s would have a monopoly.

586.

Mr Carmichael: We have been discussing this, in relation not only to pigs, but to other products. You talked about branded product. Again it is back to having all your eggs in one basket. One way that producers can look for a way forward is to try to source outlets for the product themselves. We produce a quality product. There are rules and regulations with regard to pigs — tether stalls, and so on — in the United Kingdom that are not adhered to in other parts of the European Union. That adds to our costs. Obtaining market share with large retailers would be quite difficult, because Malton’s have the retail markets there. We produce a quality product. The only way to get a consistent market share of quality production is to show that you are able to produce what the market demands when it demands it, continually.

587.

Our ability to put together a brand and producers and go to the retailers to see if we could get a market share would have to be assessed. It would have to be quite a share, because we are facing imports from other regions. I do not like to use the words "dubious quality". However, because of the quality of our product — and we reckon we have the best quality product in the world — questions must be asked about the quality of the product being imported and sold because of lower production costs. I am referring to the quality of beef and bacon.

588.

Mr Armstrong: Some would say that quality is not the sole method for selling meat; there is also taste. Perhaps the meat coming from other places tastes better even though it is not as high in quality.

589.

Mr McCoy: That is the whole issue. There are misconceptions about quality and about the procedures through which animals are put. The situation with pigs in the United Kingdom is that we are trying to introduce a gold-plated industry and show that the other member states of the European Union have not followed our lead. There is no point in having a gold-plated regulated pig industry if everyone else does not follow suit and it is going to go down the tubes. We have been endowed with too many regulations over the years, and that is a major problem, especially in the pig industry, which has demonstrated this problem about quality and the need for having to put in new quality regimes and new tethering.

590.

Let me return to the monopoly situation as regards pig farmers, beef farmers and farmers in general. Unless they get the opportunity to speak to retailers from a position of power, there is no point. We are having to make do with people who have vested interests in their own financial bottom line as limited companies. Companies that have been deregulated, acting as sole traders and not having to pose public accounts are making enormous profits from the agriculture industry. It does not benefit them to allow farmers round the table with retailers or consumers so that they can talk about good product, eating quality, welfare systems and where the animals are coming from. As far as beef labelling is concerned, there is so many things coming in that will be utilised to disenfranchise the farmer even further. It is very timely that your debate is about moving forward as one — the co-operative issue. It will take a lot of time and development, but it will be well worth while.

591.

Mr Armstrong: It seems that these companies put their names forward. The farmer is only a minority in the production of the product in that he does not make a profit and they do.

592.

Mr McCoy: Absolutely.

593.

Mr Paisley Jnr: We are trying to explore the benefits of establishing strong producer groups and the branding of Northern Ireland products. One of the things in your paper, and I welcome it, is that you have suggested an audit and a strengths, weaknesses, opportunities and threats (SWOT) analysis and feasibility study, which I assume will be driven forward by the Department of Agriculture and Rural Development. However, has the development of groups and brands been stymied by the allegations — and I am sure you are aware of them, they have been quoted quite widely in the ‘Sunday Times’, in particular — of price fixing and supply rigging within the meat sector. A former executive of one of these meat plants has made dangerous allegations about a meat cartel’s operating. Is there a meat cartel operating? Has it affected prices? Is it destroying the industry in Northern Ireland, and can these suggestions of branding and new co-operative groups deal with that?

594.

Mr McLaughlin: There is very strong incidental support to the issue of a cartel operating in Northern Ireland. We are looking at the possibility of live exports from next March injecting some competition. The cartel is even bigger than just Northern Ireland. Over 50% of the meat industry in the United Kingdom, including the Republic of Ireland, is operated and controlled by three Irish companies.

595.

If you want to expand the idea of a cartel or rename it as "focused buying and processor groups" and consider the amount of strength and muscle they have, then there is significant evidence that one exists. That is reflected in the profit levels those companies are enjoying, and, as Mr McCoy said, they have deregulated so that they do not have to disclose profit levels.

596.

If we go into the aspect of branding, the brand will have to be part owned by the producers to the extent that the processors will not be able to bring in produce from elsewhere and market that as branded product.

597.

Mr Paisley Jnr: What proportion of ownership should there be? Should it be 30%, or 50%?

598.

Mr McLaughlin: I am not familiar with the appropriate legislation. It would be whatever percentage share it requires. There would be a legal requirement that produce not sourced in Northern Ireland or that does not meet our standards, particularly if it is not sourced in Northern Ireland, could not be branded as Northern Ireland product.

599.

Mr McCoy: The IFA scheme is a tremendous tool, but it is one that we need to develop even further. We have to fine-tune it. One of the major things we have said about Northern Ireland produce is that it is fully traceable as regards quality, eating, and the environment from which it comes. I do not see many registered veterinary surgeons running private IT companies in the private sector, and I cannot understand why the IFA scheme in the Department of Agriculture and Rural Development has been totally controlled by veterinary surgeons.

600.

The IFA scheme was put in place to be more about veterinary issues. However, we have moved on in the last four or five years throughout the BSE crisis, and IFA should become more of a public health information service, which can be utilised more by a co-operative that would then have relevant information. It seems to be that if you want to access any information about the supply of product in Northern Ireland it is locked up in the Department’s IFA scheme, and you cannot get near it. It is absolutely crucial in developing any co-operative programme, that there is access to information and market trends. More importantly, you need to know the market trends and availability of your own product otherwise you are not going to be in the market place.

601.

Mr Kane: Recently, the pig industry had a unified marketing board, a farmer owned processing plant and strong farmer owned brand. These have either gone to the wall or have passed from farmer control. What are the implications of this and what lessons can this Committee draw from what has happened in the past?

602.

Mr McLaughlin: They have gone to the wall. The pig industry has taken the same approach. When we had the Pigs Marketing Board we had a healthy pig industry in Northern Ireland. Since then, it has gone from difficulty to difficulty. If we draw an analogy with New Zealand lamb. All New Zealand lamb is processed through New Zealand co-operatives. Meat plants then tender for supply and processing facilities. However, that is statutory. The plants cannot compete for supply directly from farms, whereas the weakness with the Pigs Marketing Board was that meat plants were able to compete with it. Perhaps that is where the thin edge of the wedge drove in and leaner and meaner companies were more successful. Marketing in Northern Ireland in the 1970s was not as focused and we did not have individuals who were focused on where to drive the industry in the long term.

603.

You can compare that with milk marketing. Strathroy tackled the liquid milk market in England, while we kept to our agreement of working with milk powder. Strathroy got a premium, and that is where it came back to. Perhaps those who have been running companies should have been running our industry — but under our control.

604.

Mr Kane: It is a pity that some of the boards have been dissolved.

605.

Mr McLaughlin: When people join a board they have a vision. However, they become complacent with age. Boards should be rotated regularly, rather than have sitting members.

606.

The Deputy Chairman: We will move on to the beef market. The quality of the average beef herd in Northern Ireland appears to have deteriorated recently, yet we are told that the best of Northern Ireland’s beef is good enough to command a premium price in the discerning markets, such as Holland. Have we improved the quality of the beef herd as an urgent industry objective? What does NIAPA propose to do about this urgent matter? What else needs to be done to reach this important goal?

607.

Mr McLaughlin: You will see in our paper that if in 1995 and 1996 I fed a bullock on, I could get a yield from feeding it on to a desired finish. However, for the last three years as soon as the beast has collected all the necessary premia, it starts to lose money. I cannot feed it for the return that I get from the marketplace; that will not pay to feed the animal. I know that I am pushing out underfinished cattle, but I cannot afford to carry them on to the desired finish.

608.

That is a major problem to emerge in the finishing industry, and it has been replicated in the pig and other industries. This is because the processing sector is taking a substantial chunk. It does not have to compete with the product or with meat plants in the South of Ireland. It has a captive supply base and has been milking it. Debt is compounding this problem for farmers. People have to earn a living; they cannot hold a product.

609.

There is evidence that farmers are substantially worse off now than five years ago. We have to address the debt problem. Every problem is interlinked, and they are feeding on themselves. Why does Malton pay a different price in Northern Ireland from the one it pays in England?

610.

The Deputy Chairman: There is a big question mark over that.

611.

Mr McCoy: The pig industry had no premia built into it, yet it was all orientated towards the end product. Consequently, pig producers had to prepare the product to the ultimate, and they were continually losing money as a result — no matter how much money was pumped in. We in the beef industry, however, have premia which are a sort of backup. It is another resource. Once the premia for an animal have been exhausted, it has to be slaughtered. There is no point in adding money to something which is reducing in value.

612.

One can see direct correlation between the beef industry and the pig industry; if we go down that road we are going to end up exactly where the pig industry is. It is vital that the premia are paid as quickly as possible so that we can be competitive and start to export calves. It is essential that we put competition back into meat plants. At the moment there is no competition at all.

613.

The choice is between the incinerator and the meat plant. If the meat plants are focused with buying and processing groups rather than cartels, where else will one get a return?

614.

Mr Carmichael: The primary producer is paying, whether there are cartels or not. The middlemen have a mark-up because they have to make a profit. The producer does not have control over the profit margin; he has no guaranteed profit margin, and this will affect meat plants in the long term. After all, if they cannot maintain primary production, they will not have a profit. We are discussing beef and pigs, but poultry, meat and dairy incomes are all depressed. The primary producers are paying for everything.

615.

The Deputy Chairman: There is no point in pumping cash into a product when the market is falling.

616.

Mr McCoy: In the past structural period we had a number of area-based incentives such as leader for Northern Ireland’s rural economy. Many of them were orientated towards bull or heifer quality improvement schemes. Perhaps in the next structural period the Committee might try to introduce some sort of cohesion. If not, we are going to put more money into lots of little bits and pieces with absolutely no strategic aim.

617.

The Deputy Chairman: You said that we need another outlet for our produce. Outside buyers come to Northern Ireland to buy calves as soon as they are born from one of its top suckler herds — I will not mention any names. These are exported live at £1 per kilo plus £300 for the steers, and £1 a kilo plus £250 for the heifers. The cream of the cattle are leaving the country. The sooner the boats sail down Belfast Lough or out of Warrenpoint carrying live cattle, the better for the industry in Northern Ireland.

618.

Mr McCoy: A processor told me recently that we are going to be just a grazing area for the continent. I do not care as long as I get a proper return. If local processors cannot give me that return, I will go to the best market place — and that may well be the boat.

619.

The Deputy Chairman: Too many people have lived off the farmers for too long, and the sooner we stop it, the better.

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