COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

620.

Mr McCoy: The producer pays for everything in the agricultural line, for processors, retailers, boxing, packaging — everything. It is about time that there was an equitable redistribution of profit back into the primary producer.

621.

Mr Douglas: All Northern Ireland’s good bulls go to Perth to be sold — few return. That affects the quality of our suckler herd. The Chairman emphasised the long term. Surprisingly, you were reluctant to do that, despite farms’ financial situation. You agreed, however, that there should be future co-operation. You mentioned collective action, while at the same time being reluctant to put all your eggs in one basket. There must be a balance.

622.

The Farmers’ Union and this Committee could talk about co-operation for the next 10 years, but who can unite the remaining producers, and what part can you play?

623.

Mr McCoy: NIAPA and the Ulster Farmers’ Union met the local authorities’ crisis committee several times. Before the meeting Douglas Rowe and I signed a joint letter on behalf of the two organisations and sent it to all the chief executives, imploring them to continue the collective action. It tells the Civil Service and the Assembly that something needs to be done. That can be replicated for many different issues.

624.

There are differences of opinion in the agricultural sector, and we have our opinions on which we base policies. However, where it is in the common good to work together, we will not be found wanting. It is only in times of crisis that people come together to develop new ideas and ways of working. The new dispensation is allowing us to do that, otherwise we would not have been able to be present in the Chamber today.

625.

While we may not have instant answers for you, we are working solidly at developing methods and initiatives to allow us to examine the problem more deeply and broadly. We need an audit of the situation to help us form an opinion. We do not want to be ad hoc about this; we do not want to be fragmented. We want to drive the industry forward. Too many people are taking much needed revenue out of the industry, and our objective is to bring that back down the line.

626.

Mr Carmichael: One of the difficulties in uniting the industry is fragmentation. We are at one end of the food chain, while processors and retailers control the other. There must be a complete link through this food chain. We have more than one purchaser for pigs in the Province. Obviously, purchasers and processors have their own markets and niches and need their own producers and links. The poultry industry wants reliable quality producers. I do not know whether we are going to get one large co-operative.

627.

We talked about one co-operative in the pig sector. There is more than one group, and each has its identity. It is the same with the lamb producer groups. A number of those sprung up, each intent on getting its own deal. Mr McCoy alluded to this when he spoke about the leader groups and about trying to improve quality.

628.

We must get producers and processors to talk to find out what exactly we want and whether some kind of movement is possible.

629.

I return to what you said about competition. Unfortunately, if everyone goes the same way, you do not have competition. Today we are talking about processing. Perhaps the wrong word to use is "guilty", but where we talk about processing, instead of taking livestock out, we are talking about processing all product here, and that is in relation to the creation of jobs. Ultimately, the producer will pay for all this and he is not getting an adequate return. The reality is as Mr McCoy said "Where my product goes is irrelevant to me if I get a proper return".

630.

Northern Ireland producers, like those in other areas, have been reluctant to go further than the farm gate. We are now facing the results of that where producers, for example in the suckler area, produce a number of animals for their local market — it is the same for pigs — and that is as far as their interest in marketing goes. That is coming back to haunt the industry. People throughout the industry need to talk.

631.

Mr Dallat: The first successful co-operative in Britain was set up in 1844 by the Rochdale weavers. They put the education of workers, so that they understood the concept of co-operatives, at the top of their list. There have been too many failures in the agriculture industry in the past. There is an indication now that the Department of Agriculture and Rural Development may well play a helpful role in developing the agriculture industry. What can your organisation do to ensure that any co-operative set up will succeed and will not find itself in the private sector a few years down the road, or worse still lost altogether?

632.

Mr McCoy: We talked about an audit. If you are putting down new strictures about the way to move forward, you examine what has happened in the past and you look at those strengths, weaknesses, opportunities and threats, and you learn from past mistakes. At the same time, you have to be pragmatic. Past mistakes happened in a certain timeframe, and within a certain regime, which does not bear any resemblance to that existing now. It is not as simple as chalk and cheese; there are a lot of grey areas when it comes to co-operatives.

633.

One of the major issues regarding the co-operative movement has been the lack of turnover of boards of directors. Directors nearing 70 and 80 years of age are still sitting on boards, still having old ideas. It is good to have people of that age group to provide experience, but you also have to inject vitality and entrepreneurialism by introducing young blood. That is a nice balance to have. We have an opportunity to do something in that context. NIAPA would be more than willing to get involved and to move things forward. You mentioned that the Department is going to develop the agriculture industry. The Department should only assist development; it should not develop it. It is up to farm organisations and the farm population to do that. The Department should provide incentives for farmers and the farm population to develop it, and allow guidance from the perimeter. For too long, the Department has been putting us down one route. It was the old situation of putting trees in, taking them out, putting ditches in, taking ditches out. It was just a fluctuation backwards and forward. We do not need that. We need pragmatism in the industry.

634.

You talked about the education and training of the Rochdale weavers. That is absolutely imperative. How do we move older folk out in retirement in order to move younger people in to educate them and create the vitality? There is no point in educating the old dog to do new tricks.

635.

We want to educate and train young people to give them the opportunity to be pioneers. The Department has got to look at the process of agricultural education and how that is carried out. A lot of different issues need to be tackled. They lie within a wider forum and are perhaps for another day. The short reply is that we will do our utmost to provide for the farmers we represent. If that means the co-operative route, we will follow it.

636.

The Deputy Chairman: We are a vehicle that can bring both organisations together. We are very much involved. We have agriculture at heart, and it is the backbone of Northern Ireland. Nobody can dispute that. The reason you are here today is that we are very concerned about the future of the industry in the Province. We will do all in our power to try to get farming back into a profit-making situation.

637.

The agriculture industry in Northern Ireland needs an injection of finance. That is essential. If it does not come, there are going to be fewer people in the industry in a few months’ time because they cannot survive.

638.

Thank you very much for your contribution. If there is something that arises from today’s meeting that you want to add, get in touch with our Committee clerk. He will bring it to our attention.

639.

Mr McCoy: Thank you very much for the opportunity to relate this information to you. With the rubric of your political allegiances, would go back to your political parties and implore whoever is responsible for making decisions on a programme for Government to give the rural economy and agriculture priority over the next two weeks. That is essential for us as an industry.

640.

The Deputy Chairman: That is definitely not being overlooked.

MINUTES OF EVIDENCE

WEDNESDAY 4 OCTOBER 2000

Members present:
Mr Savage (Deputy Chairperson)
Mr Armstrong
Mr Bradley
Mr Dallat
Mr Ford
Mr Kane
Mr McHugh
Mr Paisley Jnr

Witnesses:

Mr B Dynes )
Mr H Hamill ) Ulster Curers’
Mr I Hamill ) Association
Mr A Forbes )

641.

The Deputy Chairperson: I declare this morning’s meeting open and formally welcome you. I am sorry that we are running slightly behind time, but I am sure you understand that such things can happen when one gets into a discussion. I did not want to be sharp with anyone; I wanted to give everyone an equal opportunity to speak. That is how we stand at the moment. Do some of you wish to make an opening statement?

642.

Mr Hamill: I should like to thank you for asking us along here today to state the case for the much-maligned pig processors.

643.

The Deputy Chairperson: You may have 10 minutes, if you wish.

644.

Mr Hamill: My company and the smaller processors have, for a number of years, consistently paid the highest prices in Ireland. At the moment, the pig price we are paying is the third-highest in Europe when converted back to punts. We were foremost in pushing for and paying a £1 quality-assurance bonus, which was introduced to Northern Ireland in 1992. We stopped that late last year, because we could not afford it. However, we still pay farmers’ costs for quality- assurance inspections.

645.

We buy pigs direct from the farms. I speak for ourselves and smaller processors. We do not use dealers or auctions; all pigs being bought direct. We arrange open days for farmers to visit the factory and meet the veterinary people, allowing them to see condemnations and so on. This helps to reduce the cost of condemnations to ourselves and the farmers. We have supported schemes to help pig farmers. We pay a grant for farmers buying pedigree boars. We pay for the ultrasonic testing of sows. We have also helped some farmers who were in serious financial trouble. We work closely with Greenmount College regarding student visits.

646.

We are Northern Ireland companies committed to local farmers. I come from a farming background. My sisters are married to farmers. We understand and think like farmers. Records show that the selling price of pork and bacon is reflected in the pig price. At the moment, the industry is Europe-wide and market-driven. Pig processors would like to pay more for pigs, but they do not have the funds to do so. All processors have spent millions over the last few years upgrading their plants to meet new hygiene regulations demanded by supermarkets and veterinary people.

647.

We all have had to employ additional staff, keep daily records and record temperatures and hygiene standards. These things were not required a few years ago. In addition to that we have had to pay for a full-time veterinary officer and four meat inspectors.

648.

The Deputy Chairperson: A recent attempt to create a strong producer group seems to have developed very slowly. Yet the pig industry is in deep crisis, and the need for such a group seems to have been widely accepted. Why has progress been so slow? Do Northern Ireland pig producers not believe in co-operation, or is the concept beneath them?

649.

Mr Forbes: The curers would welcome the opportunity to talk to local pig groups, however, there must be accommodation and ground rules to safeguard the interests of curers and pig groups. In a very strong market a group moving from curer to curer could do very well, but in a weak market, that group may have difficulty moving their pigs. Curers need to be assured of a steady supply of pigs, so that they do not let their customers down. If any of your wives go out to buy the bacon for breakfast in the morning, they want to be assured that the bacon is in the shop. If curers do not get a steady flow of pigs because a group is selling to somebody who can afford better price, the smaller curers have no chance. For years there was only one group in Northern Ireland which was the Pig Marketing Board, and for some people, it worked very well. We want to accommodate everybody, but we need pigs. I come from a farming background which is a homespun company.

650.

We appreciate that you have asked the small people to come here today and that you were good enough to bring your Colleagues along to a small company in Mid Ulster when this Committee was first established. We also appreciate the hard work that you are putting in to this. We are happy to talk to groups as long as it is fair. The problem is, however, that there are some very strong farmers who want to pick us off against each other. That is not fair, and we will not wear it. We have had a very rough playing field as a result of the sterling crisis, the BSE crisis, the overproduction of pigs and all that we have come through. In 1993, the Departments gave us grants, but we still had to spend £1·5 million to bring our factory up to EU standards. My boss and I had to pay out everything we had ever earned just in order to survive. When I started in this industry, there were 60 or 70 curers, and the number of pigs has been depleted from 45,000 to 25,000 a week. If the English-based company, Maltons, goes tomorrow, that number will be reduced further. We are up against the wall.

651.

Mr Hamill: Farmers approached me and told me not to buy pigs from the group and not to join it. I met the group, and then news got out that I had been talking to them. Some farmers phoned my pig procurement manager and told me not to have anything to do with the group.

652.

I can give you the names of those farmers, if you want them. We were told to have nothing to do with that group.

653.

The Deputy Chairperson: Members, I ask you to keep your questions brief and to the point. I also ask the Gentlemen at the bottom of the table to keep their answers brief, as it gives everyone a chance to speak.

654.

Mr Kane: You are welcome, Gentlemen. It is good to see you here, and we will try to work with you as much as we can.

655.

Your submission has interesting price comparisons over the 19-year period, and these appear to suggest that the retailer has done very well in respect of the price of pork. Assuming your average selling price is that paid by the retailer, the pig price has, however, reduced by twice as much in percentage terms as, for example, the price of loins. Can you account for this, and has the price reduction been passed on to the consumer?

656.

Mr Hamill: The prices I quoted to you are wholesale prices. These can be verified if you want to visit the plant. The prices to wholesalers that I quoted for September are current today — some current prices are, in fact, lower. We could not sell legs last week; we were offered 57p, and another three or four pence on top of that for shipping to England. We had to put the legs into cold storage, for there was no demand.

657.

The fact that we are not paying a similar price to that in England is often cast up to us. I could pay more for pigs if I cut down on my throughput and bought product from the Republic and Denmark as Maltons is doing. Maltons is purchasing 50% of their product from Denmark and Holland. They can afford to pay more for their pigs, as that product is cheaper. It would pay me not to handle Northern Ireland pigs at all and import the product and sell it, but I have a commitment to the Northern Ireland pig producers and I will not take that course of action.

658.

That is the predicament we are in, and through no fault of pig producers or processors, the main costs have resulted from the BSE problem. My financial year finished in September, and I am paying £300,000 to get rid of waste material, but three years ago, we were receiving money for bones. Who pays for that? The pig farmer — he has to pay for everything. Water has gone up; the price of getting rid of sewage is rising; the price of electricity has increased; wages, everything is going up. At the end of the day, the pig farmer has to bear the cost. Processors are losing and have lost money over the last two years, and their accounts will show that. We are on a sticky wicket.

659.

Mr Kane: I welcome Mr Hamill’s response and his commitment and honesty.

660.

Mr Bradley: To be honest, I was not aware of your role, and I must express admiration in respect of your effort to support the local industry.

661.

Your submission paints a very bleak picture of cheaper imports from the Republic of Ireland, Denmark and Holland forcing the price of Northern Ireland pig meat down. Is it not possible to market our pig meat on the strength of the additional welfare and hygiene standards here?

662.

Mr Hamill: We do that already — our pigs are 100% quality-assured. That is why we have paid a bonus since 1992 to encourage the farmer. We got business from Sainsbury’s because we could prove to them that our pigs were all quality-assured. We had another company with us a few weeks ago, who had to go to a farm to see for themselves that the pigs were quality-assured. If that is not the case nowadays, you cannot sell, especially across the water.

663.

We are asked for quality-assured pork, not Ulster pork, Irish pork or Stevenson’s pork, what the customer across the water is asking for is British quality-assured pork, and that is the standard our farmers are aiming for and that some of them have reached.

664.

Mr Bradley: Do Sainsbury’s dictate to you in relation to the price?

665.

Mr Forbes: Unfortunately, it was the multiples that pushed for this quality assurance, and we were quite prepared to go along with it, but they have not come up with the price. They buy foreign stuff which defeats the whole thing.

666.

The Deputy Chairperson: That defeats the object of the whole exercise.

667.

Mr Armstrong: You have suggested a number of steps to ensure the survival of the industry. However, you must accept that the currency situation is not going to change, and there is not likely to be compensation for the so-called BSE tax. How achievable are your other suggestions, and who must do what to achieve them? We used to have a steady supply of pigs, and there would be a steady supply of pigs again if it were profitable.

668.

Mr Forbes: I have no doubt about what Mr Armstrong is saying. I was listening to some of the remarks made to the previous witnesses — that you were filling the vacuum that has been going for so long. I hear and read about what the French, Danish, and German Governments, amongst others, have done for their own people, and, unfortunately, we are not doing enough for our own home produce. I have said it time and time again, and you have seen the posters which say "Home Produced". Think of the number of people employed in Government, in the Health Service, and the schools. If you could persuade them all to buy British, to buy home-produced products, think what you could do for your own people. We have to look to ourselves for help; nobody else is going to help us. We have brought in foreign companies, and we have fed them with IDB money. What do they do? In a few years, they are up and away, and you are left with the likes of us wee fellers — homespun companies. Please, Gentlemen, support us, and we will repay you. That is all we are asking. Support home-produced products.

669.

Mr Hamill: For 10 or 12 years, we had a contract to supply hospitals with pork and bacon. Three years ago, we lost it to a smaller company in the north-west which was importing produce from the Republic to Northern Ireland. Bríd Rodgers opened Pork Produced Ltd three weeks ago. We supplied them with pork, until they were taken over by Dairygold Food Products Ltd. All its products are imported, and it was all blown up to be of benefit to Northern Ireland farmers. We have not sold them a sausage since then. Practically all of their produce is imported from the South of Ireland.

670.

Mr Forbes: Before the multiples came in I had a portfolio of about 300 customers. Now they are all closing as the multiples take over their business. We are trying to get some of that business back, but it is a hard fight.

671.

The Deputy Chairperson: It is a hard slog?

672.

Mr Forbes: It is.

673.

Mr McHugh: You listened to what we were asking the other groups. I agree with what you say about the awful costs associated with BSE, and how the British Government did not take their responsibilities seriously. What do you think of what we are doing as a Committee, in terms of trying to reach the bottom of the debt situation? What is your own relationship, as a curer, with the processors as opposed to the retailers? Where are the profit levels? The retailers tell us that they are not making much profit, so we need to be able to find out who is telling us the truth.

674.

You heard allegations and counter-allegations earlier. What is your perspective on how we are dealing with the situation as a Committee, and what would you like us to do to help your situation, or that of small groups or small industry?

675.

Mr Hamill: We are telling you the truth. My business has been built through reputation, not high-flying advertising. It has been growing steadily over the years through my reputation. My word is my bond; it has always been. What we are telling you is the truth. Pig processors are not currently making money, and that is the case even for the Maltons of this world, and Glanbia. There will be a massive shakeout across the water in the next few months. I do not know what the future holds; I do not think anybody does. I think the Committee is doing a good job. Something should be done to help those industries that are in dire straits, but I cannot see the Government doing anything.

676.

Mr Forbes: I should once again like to add that I am full of admiration for the Committee, both for the way you came into my factory and before that when you were being established. You are all most welcome to come and visit at any time. We will be only too glad to see you, and we will show you everything and work with you in every way you wish.

677.

Mr Paisley Jnr: How do you respond to the trading and commercial regulations? We can do absolutely nothing for you, since, at the end of the day, this has to do with the very weak Euro and strong pound. Little can be done to help the industry until that rectifies itself, if it ever can. If you had the ability to take a blank sheet of paper to the Minister at the Department of Agriculture and Rural Development, what changes, within the bounds of EU regulations, would you ask her to make for the industry?

678.

Mr Hamill: A level playing field for sterling would assist the industry most. There is no doubt about that. On a level playing field, we can compete with the continentals and the Irish Republic. Things started to go bad for processors because of the difference in sterling when Britain did not join the Euro. Before that, we made reasonable money, paying a fairly good price for pigs, but it is mainly since the big difference between sterling and —

679.

Mr Paisley Jnr: If we joined the Euro now, would that change?

680.

Mr Hamill: It would make Republic of Ireland and continental produce more expensive.

681.

Mr Paisley Jnr: There would be a disadvantage if there were a flip in the market and the Euro suddenly became too strong, and the pound were weak.

682.

Mr Hamill: A strong Euro would undoubtedly help UK and Northern Ireland producers. Agriculture would have done much better had we not gone into the European Community. Pig farmers, in particular, and intensive farmers, in general, could then have bought cheaper American and Canadian grain.

683.

Mr Paisley Jnr: What are the changes you would like the Department of Agriculture and Rural Development to put in place to assist your industry?

684.

Mr Hamill: We met the Department of Agriculture and Rural Development and came up against a brick wall. Their hands are tied by Brussels and the Ministry of Agriculture, Fisheries and Food.

685.

Mr Forbes: Perhaps I can answer part of Mr Paisley Jnr’s question. If we were allowed to bring grain into the ports directly, the way we used to do — and I believe the poultry people have also said this to you — instead of having to go to Rotterdam and pay the levy over there, it would certainly help us. We are on the periphery of Europe. We are an island out on our own, and if we were able to bring grain directly into Derry — or Londonderry, if you prefer — and Belfast, that would save us money. Everything has to be brought in and out of the country, and transportation and fuel costs are a problem.

686.

Mr Paisley Jnr: But what could the Department of Agriculture and Rural Development do specifically?

687.

Mr Forbes: We could persuade Brussels that we should be allowed to bring our grain in direct from our English-speaking American friends.

688.

Mr Dallat: I should declare immediately that I am not a farmer at all.

689.

The Deputy Chairperson: But he eats a power of bacon.

690.

Mr Dallat: Despite everything that was said in the Assembly on Monday, I do go into supermarkets occasionally. My eyesight is not bad, but I find it virtually impossible to identify where a product is made, and I get extremely angry at seeing labels which say "sourced in Northern Ireland", a phrase which we now know means nothing.

691.

Can anything more be done? I cannot resist asking you if the existence of a strong, independent retail sector is important for you in your industry? I want to hear that. Also, on the issue of importing — and this is not political — I am aware that lorryloads of bacon come in from Denmark are labelled in Northern Ireland and sent off to the South. I suspect, therefore, that farmers are being penalised on both sides of the border. There is a need for a collective approach to a very serious problem, and you do not have to tell us any more about that. There are pig farmers who are selling sites to try to survive.

692.

These are things that immediately come to my mind, as a consumer. I have seen the difficulty in identifying Northern Ireland products, because the writing on the labels is so small. There are deceptive signs on them about sourcing. When I have the choice, I shop in independent shops. How important is that? We take evidence here from all sorts of groups, but there seems to be no collective approach, no Northern Ireland loyalty to anything. We are all on our own, hanging by our own tails. When I go to France it is a culture shock for me to see how people there can stick together. They even organise their diet around what farmers produce locally, for whatever reason. We do not do that. We almost go out of our way to do something different.

693.

Mr Forbes: I have been a member of the Pig and Bacon Forum since the demise of the Pig Marketing Board (PMB), and I believe that the present chairman has done a great job for the Pig Forum and the promotion of pork and bacon. That organisation is made up of millers, processors, and farmers. In a very small way it is trying to promote home produce, and any money it can get will be welcome. It involves homespun companies trying to sell directly to local people.

694.

Mr Dallat: With regard to home industry, I once heard a very clear message from grain producers, and I have never forgotten it. If half of the people in the UK could be encouraged to take a cereal breakfast twice a week, it would eliminate all the grain mountains in the UK. Just two cereal breakfasts in the week.

695.

The Deputy Chairperson: That would be good for them, as well.

696.

Gentlemen, one processor of great size appears to dominate the pigmeat sector in Northern Ireland. Others which you represent are also important players. The biggest processer appears to have the market power to assess the best markets and the ability to build brands. One strategy for pig producers would be to try, by every means possible, to become such a high-quality supplier to this major customer as to earn a preferential place in the range of supply options. Is there a better option for the Northern Ireland pig producers?

697.

Mr Hamill: It is a very difficult question. I have a long list of pig suppliers to the Malton Bacon Factory Ltd, who want to leave and come to me. I cannot take them, because I am frightened of upsetting Maltons. Maltons are powerful enough to put my light out overnight, if they so decided. There is no rush of people going to Maltons. They are going, because they have no option. I think we are going to see changes there. It is widely known that it is for sale. There are rumours of different groups’ being involved in it. I do not know what will happen in the Northern Ireland plant. I just trust that it does not close. If it closes, we, as an industry, are in dire straits.

698.

The Deputy Chairperson: If the trading losses and the increasing costs you outline for processors are to be believed — and I do not disbelieve what you have told me — is there any realistic hope for the pig industry here?

699.

Mr Hamill: That is what concerns us. If I have no pigs, I have no business. It is the same with the rest of us. You could depend on imported product for a while, but once the currencies levelled up, you would be squeezed out altogether. As far as we are concerned, we need pigs. I know pig farmers have found it very difficult in recent years, but there are still pig farmers who pay their bills every month. The millers will tell you that. There are still pig farmers who say they are breaking even, maybe making a shilling or two. Others are in deep debt, and I have helped them. I may never get the money back again. I have guaranteed them a price that allows them to pay their bills in the form of a loan. If the pig price were to go up above a certain figure, I would hope to get my money back again. If not, I would not get my money back. If they were to go bust, or if the bank were to foreclose, I would be in difficulty. We are doing our level best to assist producers to stay in business.

700.

Mr Forbes: Yesterday at the Forum we were asking the same question of farmers around the table. There is no doubt that there are very efficient pig farmers, and it is all about economies of scale. If they can up their numbers of sows and if they can get their compounds and things sorted out — buy them at the right price, mix their own, or whatever — there is no doubt that the efficiency of the Ulster Northern Ireland pig farmer will keep us in business, to some extent. There is an economic circle which is going round, and it will come round again in time.

701.

Mr Hamill: Feeding costs have come down during the last couple of years and have been a big help to farmers.

702.

The Deputy Chairperson: The pig meat industry, in recent times, had a unified marketing board, a farmer-owned processing plant, and, as you referred to earlier today, a strong farmer-owned brand. All of these have either gone or have passed out of farmers control. What are the implications of this, and what lessons can this Committee draw from what has happened?

703.

Mr Hamill: The largest pig processor in Northern Ireland was the Pig Marketing Board, which had, at one time, five factories slaughtering 40,000 pigs a week. They could not make it pay, and they closed one factory after another. In the end, they had to sell the offices in Newforge Lane to keep Unipork going. PMB sold for £3 with £3 million or £4 million of debt to Willie Wilson. He is the only man who has made money out of this, when he sold to Malton.

704.

The Deputy Chairperson: He knew, and there was no doubt about it. I am used to working with pigs myself, and I remember the time when the Pig Marketing Board was going and you had to put your card in to give so many pigs away. Can you, Gentlemen, in your wisdom, see that situation coming back again? If it was getting Government support, do you think we could make it a viable situation?

705.

Mr Hamill: Can the farmers run it to make a profit? I do not think they can; I think it needs to be in private industry. They were not able to run it in the past. If farmers come up with enough money, I will sell them my business.

706.

The Deputy Chairperson: Supposing some individual person took this on board as another outlet to Maltons, could that person be guaranteed to supply pigs to make a viable situation?

707.

Mr Hamill: I do not know, Mr Chairman. As you know, there were three large pig farmers brought together, and are telling me they are struggling and have not made any money since they started up two or three years ago.

708.

The Deputy Chairperson: Are there any other points you would like our Committee to take up with the Department on your behalf? This Committee genuinely wants to support you people. We do genuinely want to support you. I am telling you this, because industries like yourselves and small groups like yourselves are the backbone of this country, whether we like it or not. We will do all in our power to support you in any way that is possible.

709.

If you have any ideas that you want to put forward to us that we can take to the Department, please let us have them.

710.

Mr Hamill: I have a friend who retired a year ago, and he went to the north of France on holiday this year. He got talking to someone in the pig processing business, and they were comparing notes. Here, we have meat inspectors — I have one all the time, and we have to pay these people — but the man in France told my friend that there is one meat inspector in Normandy. He lives in the south of France, so it does not cost them anything. We pay money every month to keep these people, whereas our French counterparts do not pay anything.

711.

The Deputy Chairperson: I am a member of the Committee of Regions in Brussels. I see the groups that started up in France get a lot of support from their Government. I am convinced that our Government are trying to run the agriculture industry down in Northern Ireland. If I were to sell my farm here and move over to France, the support that I would get there is unbelievable. A number of years ago the French Government neglected the farmers, and the farmers started to leave the land. If our Government does not start to support the farmers here, they will have to turn around and do the same. The farmers cannot work for nothing. I am glad that you have come in today to give us another side to this story.

712.

Mr Forbes: I have left some history of the industry with the Committee members so that they may have a browse. If any of you can put forward suggestions for us, we would be glad to hear from you. Thank you for having us.

713.

The Deputy Chairperson: On behalf of the Committee, I thank you for coming here today.

MINUTES OF EVIDENCE

WEDNESDAY 4 OCTOBER 2000

Members present:
Mr Savage (Deputy Chairperson)
Mr Armstrong
Mr Bradley
Mr Dallat
Mr Ford
Mr Kane
Mr McHugh
Mr Paisley Jnr

Witnesses:

Ms B Rodgers ) Department of
Mr P Small ) Agriculture and
Mr P Toal ) Rural Development

714.

The Deputy Chairperson: Minister, I welcome you, Mr Toal and Mr Small here this morning. Before we start our meeting, is there anything you want to say?

715.

Ms Rodgers: Yes. I would appreciate setting out a few things at the beginning. Thank you for inviting me this morning to help with your inquiry into the circumstances facing the pigs and beef sector. I know you are interested in exploring the possibilities offered by producer co-operation as a means of addressing some of the problems in these sectors. We have had an exchange of correspondence on this matter, and it is clear that a misunderstanding has arisen in my approach to the issue of producer co-operation.

716.

I would like to foster a better understanding of the role and aims of my Department. We must work constructively together to resolve some of the problems affecting the industry. Therefore I would like to explore the Committee’s thinking and its idea of a single large producer co-operative as a means of tackling the problems facing the industry.

717.

My Department is very supportive of producer co-operation and of encouraging collaboration in marketing initiatives within the food chain. When I say supportive, it is not just in terms of moral support, but also in practical and financial terms.

718.

My Department works extensively with the industry and provides substantial financial and advisory support to groups of producers who aim to improve their marketing performance and build links in the food chain. There are examples of this work in all sectors of the industry. In the past year officials from my Department have worked with over 100 groups of producers, 42 of which have included beef and sheep producers. In most cases the groups had the objective of improving both their technical competence and their market awareness. They also placed a strong emphasis on meeting the needs of the market and on the quality and continuity of supply. I strongly believe in this collaborative approach, which aims to build an integrated food chain. I am seeking to increase the resources that can be devoted to this, and I am willing to respond positively to coherent proposals from the industry in relation to co-operation.

719.

I would like to hear what evidence the Committee has found to show that a large single co-operative could work in practice. As I said in the Assembly last week, the Government should not impose co-operation, or any other structure, on the industry. Successful co-operation is a ground-up process with a clear view to meeting market demands. Our role is to work with the industry and to help it develop initiatives that will have a positive impact. To be truly successful producer co-operation must avoid engaging in a power struggle, which results in a stand-off situation between various parts of the food chain. Instead it must embrace the concept of partnership with processors and retailers and be more visionary in its goals. This is the approach of my Department, and I believe it is the right approach.

720.

Having clarified my position on co-operation, I will return to the main subject of your inquiry. We all know about the difficulties that beef and pig producers have faced in recent years. To a large extent these problems originated with the BSE crisis. The specific impact of BSE on beef consumption is now largely over, but we still have to live with the very stringent controls that were implemented to protect and reassure consumers. We still have to destroy cattle over the age of 30 months at the end of their working life, and we face the onerous conditions that currently apply to beef exports, which, if not met, result in bans.

721.

The pig sector has also been adversely affected by the BSE crisis. The surge in demand for pig meat in the aftermath of the initial panic meant that the industry expanded production. However, this high level of demand was not sustained and a market correction was inevitable. Unfortunately, just as the market was entering this period of adjustment there was a serious outbreak of swine fever on the Continent. This led to a temporary shortfall in pigs and encouraged further expansion. When the downturn came it was more severe and more prolonged than anyone had expected.

722.

The problems in both the pig and beef sectors were compounded by the strength of sterling, which made the UK market attractive for imports, in turn making our pig-meat exports uncompetitive. I am very concerned about the continuing poor prices that our pig producers are receiving, particularly the doubling of the already wide price differential in favour of GB producers. It has been suggested that carcass confirmation issues may account for part of the difference, but I have received no evidence to substantiate this. I suspect that the lack of local competition and the dominant position of one processor in the Northern Ireland market place is also a factor.

723.

You will be fully aware of the stringent EU constraints on our ability to provide direct help to the producers, but we remain hopeful that the pig industry restructuring scheme will soon be approved by the EU Commission after a frustratingly long delay. This will allow us to help those wishing to leave the industry, as well as those who need help to restructure their business. I also hope to have discussions with Unigate, Malton’s parent company, to see whether it can do something to help improve the fortunes of the Northern Ireland pig producer. You will recall that a £400,000 package was announced in the special assistance for agriculture last October specifically to assist with the marketing of pig meat in Northern Ireland.

724.

My Department has fully consulted with the industry on how to best utilise this money, and we are currently awaiting EU state aid approval of the proposals that have been agreed. These include measures to improve quality and promotional activities.

725.

I will now move on to beef. You all know the efforts that my officials and I have been making to achieve a relaxation of the restrictions on beef and live cattle exports from Northern Ireland, in recognition of our very low incidence of BSE. Following intensive discussions with the EU Commission, our proposals went out to public consultation throughout the United Kingdom at the end of July, and the consultation period finishes at the end of this week. Once the response to this has been considered, my fellow United Kingdom Ministers and I will decide how to progress the case.

726.

I have discussed this issue personally with Commissioner Byrne, who is responsible for health and consumer protection, and who will take the lead in guiding our proposals through the EU decision-making process. He has indicated that he is sympathetic to the principle of relaxing the restrictions on Northern Ireland beef exports. I have also discussed the matter with Joe Walsh, and I know that he is also very supportive. However, we have a lot of hard work to do to secure the agreement of enough of the other member states to see our proposals succeed. Therefore I will be actively involved in lobbying their support in the months ahead.

727.

If we get over the hurdles of achieving a relaxation of the export restrictions, which is by no means a foregone conclusion at this stage, we then face the massive challenge of fighting our way back into the European Union market. Already, £2·5 million of public money has been provided to support the red meat marketing strategy developed by the industry to ensure that Northern Ireland was best placed to take advantage of the lifting of the ban. I was pleased to be able to secure an additional £500,000 under the Agenda for Government announcement at the beginning of the summer to assist the industry further. I am currently considering proposals from the industry as to how this might be used to best effect.

728.

This is by no means the only challenge facing the livestock sector. Those include changing consumer tastes and lifestyles, changing market structures and the need to strive for higher quality, to name a few. That is why, in addition to the recommendation of this Committee, I am looking forward to seeing the recommendations emerging from the Vision Group of industry experts. By now you will have seen their ‘Emerging Themes’ paper, outlining their suggested issues to be addressed under the forthcoming Agenda for Government. In that paper you will see recommendations relating to marketing, quality assurance, education, training, research and development. All of these are highly relevant to tackling the current and future problems of the industry, and I am pleased to note that the Committee has taken up my suggestion to meet with the chair of the Vision Steering Group and the four chairs of the sub-groups to discuss these issues: I understand a meeting is being scheduled for the near future.

729.

I believe there is a great opportunity for a cross-fertilisation of ideas and views between this Committee and the Vision Group. This could open up new avenues of thought and help generate a commonality of purpose in the industry and in political circles as to how we move forward and meet the challenges and opportunities that lie ahead. You have undertaken a challenging and very worthy project. I look forward to seeing your recommendations in due course.

730.

The Deputy Chairperson: May I apologise for the absence of the Chairman. He has other business. You made a number of points, but one thing that is on the mind of many people is when the outgoer scheme for the pigs will take place.

731.

Ms Rodgers: I hope by the end of October we will have got clearance from the European Union. After that we will begin with the outgoer scheme as soon as possible and then the ongoers will come after it. We have to achieve a 16% reduction in the United Kingdom in the pig production. That is one of the conditions.

732.

The Deputy Chairperson: I do not think you will have any problems getting a reduction of 16% — you probably have that at the minute.

733.

The Committee is concerned first to analyse the reasons why the beef and pig meat producers are in such difficulties at a time when the rest of the industry — the processors and the retailers — appear to be trading their commodities very profitably. All the evidence the Committee has seen so far points inexorably towards the exploitation of a weak producer base. If farmers were employees we would be driven to fixing a minimum wage or setting up of the equivalent of a wages council. This is not just the farmer’s view. The Livestock and Meat Commission is clear about the situation too, and we know from informal contacts that many of your most able professional colleagues share this view. It is our belief that a major contributory factor to this state of affairs is the market weakness of the producers who are fragmented and lie at the bottom of a badly disjointed supply chain. They are, as a result, prey to exploitation by the immensely stronger players further up the chain. Do you share this macro-analysis of the situation? If not, then what is your analysis?

734.

Ms Rodgers: This relates to the belief that the major contributory factor to the state of weakness of the producers at the moment is the fragmentation within their own group. I am aware that farmers are experiencing great difficulties, that they have been for some time, and that there are many factors underlying this. There is the strength of sterling, the EU, global overproduction, the after-effects of the BSE crisis and the versatility of the world markets.

735.

The Committee seems also to be suggesting the exploitation of primary producers as another factor. I would be interested to hear what evidence there is of this. The Committee’s earlier report into retailing pointed out that there was no evidence of excess profits among processors and retailers. I do not see how that can be compatible with the idea of exploitation.

736.

I do not know if the Committee has revised its earlier conclusion or not. I am not here to defend processors or retailers. However, you will be interested to know that the recent study in the Republic has been published. That has come to the conclusion that there is no evidence of exploitation of producers by processors. Work by economists has also shown that, in the United Kingdom, reductions in farm gate prices are reflected in reductions in retail prices— although with a bit of a time lag.

737.

Nevertheless, if there is exploitation, and if this is verified by the Office of Fair Trading, I would treat that as an extremely serious matter, and I will be pushing for immediate action to curtail it.

738.

I am acutely aware of the difficulties the primary producers are facing and of the huge fall in their incomes. When costs are incurred or things change, everybody else is in a position to respond to the market quickly, more quickly than the primary producers, who are at the bottom of the food chain, and who, very often, get the raw end of the deal.

739.

The answer to it is to find how to face those difficulties. I firmly believe that we can address those difficulties by creating partnerships throughout the food chain, but not just within one group because that can be counterproductive. You can create a partnership with primary producers on the basis of strengthening their position in the market, and you can have the processors on the other end, refusing to deal with it. This has happened once with the pig people.

740.

The real answer is to create partnership along the chain, to build a better understanding, to create an awareness of what the market requirements and demands are, and to help the primary producers meet those demands. I do not want to go into a big list, but the Department has been working on that with the lamb beef and pigs groups, and with the seed-potato industry. The lamb group is one very obvious example. We worked with 11 producer groups, helping them to understand the requirements of the processors and the market. At the end of this month, we are organising a visit to SIAL (Salon International de L’Alimentation) in Paris for those groups so that they can be exposed to the European Market as well, to see why they are there, and help them to meet the requirements of that market.

741.

The Deputy Chairperson: That is good news.

742.

Mr Ford: DARD’s remit is primarily to ensure the efficiency and effectiveness of the agriculture industry into which massive public funds are being invested. Do you agree that this must primarily be focused on whether the producer sector is performing as it should? In other words, is your first loyalty as Minister of Agriculture to the farming community and the end consumer as opposed to being an advocate for the processors or the retailers, who are well able to look after themselves anyway?

743.

Do you share the view that the lack of profitability of farmers and their exploitation by more powerful partners is a matter of the most serious concern for your Department? Also what about the taxpayer whose inputs in the form of grants and subsidies are being harvested by those powerful enough to exploit the processing and retail possibilities of the farmers’ work?

744.

Ms Rodgers: You are asking about how the producers are performing, and I am asked whether, as Minister of Agriculture, my loyalty is to the farming community or to the end consumers. I am Minister of Agriculture and Rural Development and my responsibilities are quite wide. I have responsibility for rural development, the rural community and the farming community and, of course, responsibilities to taxpayers and consumers.

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