COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

745.

The Committee has accepted the interdependence of the links of the food chain. Consumer demand must be met, but at the same time there must be a fair return along every link of the chain. In recent years producers have received £200 million per annum in direct payments and £100 million in indirect payments. By comparison, the processors have received £5 million per annum. It is incorrect to claim that there is too much emphasis on one end of the chain and not enough emphasis on the other. As Minister of Agriculture, I have to make sure that the industry survives and thrives. This cannot happen if one link of the chain is focused on and the others are forgotten. As the Committee accepts, the links are interdependent, with individuals and companies depending on each other. If one body fails to deliver and the links do not work together in partnership, none of them will reach their true potential.

746.

My task is to build an integrated approach rather than pit one part of the chain against another in what could be a pointless and self-destructive battle for control. This would not work. The idea of building up a producer or one strong producer group with the view to strengthening its clout in the market can backfire. Indeed, this idea has backfired because the processors do not have to deal with the producers. I am not saying that this is acceptable, but the reality of the market place is that the processors can decide to source their produce from elsewhere.

747.

A partnership approach is needed right across the chain where each link recognises that it is dependent on another. I would also say to the processors that if they squeeze out the primary producers, they will not have a ready source of raw materials.

748.

Mr Ford: This Committee perceives part of the problem to be that the processors sometimes have alternative sources of primary produce, which in many cases is imported from outside the European Union. You referred to the "dominant position" of one pig processor in Northern Ireland. While you have talked about support for co-operation, the Committee has concerns about whether to discuss the issue of` partnership and what the ideal number of co-operatives is. The Ulster Agricultural Organisation Society (UAOS) receives less funding from the Department of Agriculture and Rural Development than comparable bodies in Scotland and the Republic receive. This does not demonstrate that you are supporting co-operation at the desired level, whether the Committee regards one co-operative rather than any assistance toward co-operation as the solution. The Committee is still uncertain about how prices are seen and whether the real support is being given at primary producer level rather than across the whole industry. The support sometimes appears to be being creamed off by the industry’s processing sector.

749.

Ms Rodgers: I am going to ask the secretary to deal with the question of the Ulster Agricultural Organisation Society in a short time.

750.

This Committee would benefit from a visit to our colleges or Hillsborough to see the amount of work done on the ground by officials from the Department to help the industry and the primary producers in the area to increase their efficiency and co-operate with processors. We are also working with the processors to give them innovative new products.

751.

We are working with the primary producers to help them understand what the requirements are. There is a huge amount of work going on, and it is very impressive. I have been to the colleges, to various farms, and I have seen what is happening. I suggest that the Committee visits the colleges and Hillsborough to see the amount of work that is being done. I would be prepared to arrange the visits.

752.

I am sure that you are aware of the amount of work that has been done on the ground with the advisers who work with individual farmers. As I have already said, we are working with producer groups. I have mentioned a few of them in response to the first question. Therefore I do not accept that we are not assisting the co-operation among the primary producers. However, we cannot impose co-operation. Co-operation means working together and it cannot be forced, but in every sense possible we are encouraging, facilitating and helping the people to co-operate.

753.

Mr Small: I refer to the point made by Mr Ford regarding UAOS. We support UAOS and there is the frequent comparison between bodies in other parts of the UK and the Republic of Ireland which receive more cash support. However, we have the unique agri-food development service in the Department, and no one else in the UK has that. It does work on the ground with farmers and in support of UAOS. If you are trying to compare support in co-operation in Northern Ireland with other parts of the UK you must take into account the direct input from the Department, which is enormous.

754.

The Minister’s idea is superb. If you see what is happening on the ground you will appreciate more the strength of the link between the grassroots of the industry and the people in the Department. That is over and above what UAOS does. Therefore it is not comparing like with like when you look at the equivalent Scottish body.

755.

The Deputy Chairperson: I was speaking to a number of people the other day and two of them in particular were critical of the Department of Agriculture and Rural Development regarding our processing plants. Apparently under EU regulations the Department has instructed that in Northern Ireland two or more officials are required down the killing line. That is all very well, but who covers the cost of this? As far as I am aware the cost has to be covered by the farmer. That is totally wrong. All these extra expenses are the start of the core of the problem. The farmer is the fall guy.

756.

If the EU introduces these regulations, does the farmer have to cover the cost? I am told that this particular cost would amount to as much as £40 a beast. This is the complaint that was put to me, and I said that I would put it to the Minister and her officials today.

757.

Mr Small: That point was made to us as well. I do not wish to be pedantic, but I want to explain exactly what our staff do. Our staff will not say that extra staff must be present. But they will tell the processors that if they wish to comply with EU regulations the Department recommends that they strengthen their checking. This is a debate we have with the processors all the time. We tell them that if they do not take these steps and then have an EU inspection visit, they run the risk of failing and all that flows from that. That is our role. Our people are there as advisers. You are correct that that does put an additional cost on the processor, but there is nothing that we can do about that.

758.

The Deputy Chairperson: The cost then comes down the line to the farmer.

759.

Mr Small: It is all part of the cost of the chain.

760.

Ms Rodgers: We charge the minimum rate which is recommended by the EU for our staff.

761.

The Deputy Chairperson: The costs are coming down to the farmer and, as far as I am concerned, that is a hidden cost.

762.

Mr Dallat: Chairman, before you go to that, may I say that the points made by the Minister and his officials should be taken up. This Committee has not had a run out since that day in Portavogie.

763.

Mr Small: And you enjoyed it so much.

764.

Mr Dallat: We are spending two days a week, almost full time, in here, and we talk about things in theory. We need to be out on the ground to see what is happening. That is my view.

765.

Mr Kane: I was not in Portavogie that day, John.

766.

Mr Dallat: I think you stayed in for the Public Accounts Committee meeting.

767.

Ms Rodgers: I assure you that you will get a better welcome in Greenmount, Loughry and Enniskillen. I have been in all of those places on several occasions, and they are well worth visiting. Very impressive.

768.

The Deputy Chairperson: Minister, we have a tight time schedule to keep. We have a number of questions, and we want answers to them today. I intend to take your point up at the end of the meeting.

769.

Mr Kane: If this major structural weakness in the beef and pig meat sectors is as fundamental as everyone in the industry knows it to be, then we should surely be seeking to remedy it. Your reply to our serious inquiry appears to imply that it is of little or no concern to your Department. You will understand that the Committee cannot agree with this. We have heard much evidence that there is a strategic weakness in the beef and pig meat supply chain which cannot simply be ignored because it is a difficult subject to tackle. Taking the example of the milk producers, the milk industry in Northern Ireland is performing well with rewards to all the major supply chain players. Do you agree that this would not be possible if the milk producers were as fragmented and unorganised as are those in pig meat and beef?

770.

Ms Rodgers: Question three is about structural weakness. I agree that if the milk producers can do it, why can everybody else not? I am concerned with any structural weakness in the beef and pig sector, and the perception that milk producers are doing extremely well has not been shared by those in the industry whom I have met over recent months.

771.

Yes, there is a milk producer co-operative, United Dairy Farmers. The majority of milk producers are members, but that body was established in very different circumstances to those which exist in the beef and pig sectors, given that around 85% of producers supplied the Milk Marketing Board for Northern Ireland, the predecessor of United Dairy Farmers.

772.

A significant number of Milk Marketing Board members chose not to join the successor co-operative. This illustrates my believe that co-operation must be a ground-up process and cannot be imposed. The demise of the pig marketing board may be a further example. The milk sector operates in very different markets, with much of Northern Ireland’s product marketing being underpinned by EU export refunds. These do help Northern Ireland products to be competitive. When such refunds reduce, there will be price implications for Northern Ireland milk. The milk sector is actually different to the pig and beef sector.

773.

Mr Kane: In light of the assessment that the industry is in a severely weakened position and the Department of Agriculture and Rural Development is reluctant to intervene, how much longer will the sectors continue to be viable?

774.

Ms Rodgers: The Vision Group was set up because I recognised the dangers and difficulties of changing global markets for the agricultural industry. I hope they remain viable. The way to ensure that they remain viable is the way my Department is directing. By providing both advisory and financial assistance to the primary producers, it enables them to increase their efficiency, to buy co-operation along the chain which we are supporting, to be aware of what demands are on the market and to capably meet those demands, to improve the quality of their product and work with the processors to ensure that they are able to meet the demands of retailers and the supermarkets.

775.

My own officials have been working with processors through Loughry College, for instance, and have been able to assist them to produce products which are now being taken up by Tesco and other supermarkets. That is the way forward — working with all links in the chain to increase efficiency, competitiveness and market awareness. The Vision Group is looking at those areas, and I look forward to getting the result of their studies early next year.

776.

There is some disagreement about how to tackle the problem, but I am convinced that our way is the only way forward. If you create confrontations — blaming one sector of the food market by saying that is all the fault of the big bad wolf out there — you will get nowhere. The big bad wolf might be bad, but he is dealing with a bigger, badder wolf in the rest of the world. We must recognise that and ensure that we work in partnership to overcome it.

777.

Mr Paisley Jnr: The Committee is surprised that you appear to have swept aside any suggestion that your Department should assist producers to better organise themselves. In considering the beef sector for a moment, what we are talking about is the creation of real partnerships, measures to create a supply chain that is responsive to the market’s requirements and the creation of sufficient scale through co-operation to offer a new deal to both processors and retailers.

778.

The Committee’s concern is that the content and tone of your letter both appear to say very loudly "This is not the Department of Agriculture and Rural Development’s business". Yet it is commonplace for Departments to assist in industry restructuring. Is not the All Ireland Pig Processing Study just that, albeit further up the supply chain? Surely almost every initiative taken by your Department is an intervention in the free market. Your programmes of education are one praiseworthy example of the state intervening to provide assistance which in its scale and impact is far beyond that normally provided to other sectors of industry. It could be argued that the major part of your Department’s activity is, in one way or another, interventionist. Is it really your Department’s stance that you will stand idly by even if the beef and pig meat producer structure is fundamentally flawed? Is this not to ignore market forces at your peril? Do you not agree that this is obviously to the detriment of the industry for which you are ultimately responsible?

779.

Ms Rodgers: Again, I will correct the misconception about my attitude to co-operation and collaboration between the producers. I am fully committed to the principle of building partnerships, both horizontally between the producers and vertically between the different stages of the food chain. There are many examples of this being put into practice, as the Chairman acknowledged in the letter. Support has been given to the United Pig Producers and various other producer groups, of which there are many. I could take up all the time allocated naming other groups that my Department is working with, but I do not want to waste time. That information is readily available to you.

780.

To assist, as my Department does, is one thing but to impose is another thing. Co-operation means working together. If we have learned anything in Northern Ireland, in the general sense, working together is a good thing. Unfortunately, if there are people who refuse to do it, you cannot impose it on them, and that is the reality of life. I want them to work together and co-operate. To create a co-operation between the producer groups, on one basis, in order to strengthen their marketing can backfire and is not the answer. We have to do it along the chain. If there is a demand for one large co-operative from the primary producers, and I am not aware of any evidence of that, then we will co-operate.

781.

Mr Paisley Jnr: I welcome what you have said about being fully committed to co-operation.

782.

When you wrote to the Committee on 7 September you said, "I would be extremely reluctant to have Government interfere in a free market which exists between producers, processors and retailers". We do not find that a consistent position with what the Department of Agriculture and Rural Development does in the other areas you mentioned. We are concerned that the Department is withdrawing from giving assistance.

783.

To clear up what you described as a misunderstanding, this morning you said that you work with over 100 co-operative groups — 42 involved in beef and sheep. Your involvement is to improve their market awareness, and you described this collaborative approach, which is not against EU regulations, and we welcome that. What direct help can farmers expect, in practical terms, from the Department of Agriculture and Rural Development to establish these co-operatives? What can we expect to see in the delivery of this collaborative approach?

784.

Ms Rodgers: If you speak to some of the farmers that have been working with my officials, they will be able to tell you the impact of the direct help. Talking about direct help, you will be aware of the problem of EU state aids. I presume that you are talking about advising, enabling and helping them to be more competitive and to compete in a changing market. I have seen farmers benefiting from the work that my departmental advisers are doing on the ground and the work in the colleges. There is a lot of evidence of that around, if you care to look. That is why this Committee should go and see what is happening on the ground.

785.

I do not know what you mean by intervention. If you call it intervention when my Department intervenes in recognising what is required to improve the industry and doing that through education, re-skilling training, assisting farmers to benchmark and learn from those who are more efficient, then I suppose that is good intervention, in one sense

786.

However I think we have to draw the line at telling people they must do something that they are really not prepared to do. We could have an argument here about the rights and wrongs of the free market, but the reality is that there is a market out there, and we have to deal with that. The best way to deal with it is to enable our farmers to meet that market’s requirements. My Department is doing that, has been doing that and continues to do that. Indeed I am seeking more money in the spending review so that I will be able to increase the amount of work we do in that area.

787.

Mr Paisley Jnr: If the farming industry was to come to you and ask for assistance to organise itself on a co-operative basis in order to create a responsive and effective beef supply chain with its focus on superior quality for the end consumer, are you saying that there is nothing your Department could or would do to facilitate this? Are you saying that the Department, which has in the past been very pro-active in creating such co-operative market-focused groupings, has now decided to withdraw this kind of assistance?

788.

Would the Department be prepared to assist with feasibility studies in which groups of farmers show a desire to form well-organised producer co-operatives of the kind so badly needed? If such studies showed real benefit to the industry would your Department be willing to assist with their implementation?

789.

If you take questions, those five and six, together they really follow on quite neatly. It would save time and instead of asking a third supplementary, I could just come in with a second one after five and six.

790.

Ms Rodgers: Well, in relation to five I am afraid I am becoming repetitive, but a lot of the questions are pretty repetitive too.

791.

My Department and I are committed to working with the industry to create, as I have said, an efficient and effective supply chain for both beef and pork. The recent Suckler 2000 event— which was very worthwhile and was well received by the industry— is a good example of the practical steps that we have taken. I was at Enniskillen and I saw how much the farmers appreciated the benefits of the event and how it was enabling them to improve their own profitability.

792.

Far from withdrawing from assisting market focus groupings, I am seeking additional funds for a marketing development scheme. My officials are also developing proposals under the Peace II programme to provide training, mentoring and financial support for farmers to work together in groups to improve beef and sheep quality. They will continue to work with individual producers, groups of producers and industry organisations to create an integrated food chain.

793.

I have no evidence that a large single co-operative is the right approach, which the industry itself considers to be the most practical and effective way forward— indeed I would be grateful to know what evidence or analysis the Committee has to support that particular proposition.

794.

With regard to question six, we already assist feasibility studies through the marketing development scheme and this is an area which I hope we will be able to devote additional resources to. We have already spent £300,000 in market development, and I am seeking an extra £500,000. I am fully prepared to assist the implementation of the findings from these studies provided they satisfy the usual requirements in relation to value for money, affordability and compatibility with EU state aids, which is always one of our problems.

795.

Mr Paisley Jnr: If a producer group, or a prospective producer group, came to you with an idea of setting up a new co-operative, would the Department be prepared to assist them by providing a feasibility study and other resources? You said that the Department does give direct help to address flaws in the market place. The Committee believes there is a fundamental flaw in how the market operates and, therefore, it is in the interest of the Department of Agriculture and Rural Development and the agriculture sector to have that addressed. One way to do this is to look at assisting the establishment, in a practical way, of the group.

796.

In your letter of 7 September, you express extreme reluctance for the Government to interfere with the market. The way the Committee views it there is no reason why producers should not let themselves come together but, to go further than that as a Department, would involve the Government sponsoring funding of marketing organisations, which is against EU law. Your comments today are welcome because they are different to the stance you took in your letter.

797.

Will you put substance to your words by telling us the sort of resources you would give to prospective co-operative groups seeking direct assistance to get established? Would you be prepared to sponsor that?

798.

Ms Rodgers: That is a hypothetical question. There is no difference in anything I have said today to anything I have said in my response to the Committee’s initial letter. Today the evidence that I have given of the work that we have been doing in supporting, assisting and enabling producer groups speaks for itself — for instance, there are 11 lamb groups working at the moment with processors. That is the way to go across the chain rather than just one link in the chain. We will look at everyone who comes to us on the basis of what ideas they are putting to us. Any producer group who comes to us with an idea will be helped by the Department and my officials, as they have been in the past.

799.

Mr Paisley Jnr: Would you be prepared to allow the direct assistance to address the fundamental flaw of the lack of these groups which the Committee feels could help to strengthen the whole industry? It has been demonstrated in the past that there was some reluctance to set them up.

800.

Ms Rodgers: Do you mean when people come asking for assistance or are you asking me to go looking for people to assist?

801.

Mr Paisley Jnr: I am talking about groups coming to you.

802.

Ms Rodgers: If a group comes to me or the Department with an idea seeking direct assistance, advice or finance, we will certainly look at that. We have done it in the past, and we will do it again. Our duty is to assist groups in strengthening their position to be able to meet the demands of the processors and to be able to improve the products. There has never been a problem with that.

803.

Mr Paisley Jnr: Is that not against EU regulations?

804.

Ms Rodgers: No it is not a direct financial assistance. It is about help in advising and training in education and assisting them to meet market requirements, which is not a direct aid. It is not against the EU rules.

805.

Mr Paisley Jnr: You could help to set up the management structure of those groups.

806.

Ms Rodgers: Of which groups?

807.

Mr Paisley Jnr: Of a co-operative group, if it came to you.

808.

Ms Rodgers: We would do everything possible with advice and assistance. I am not going to go into every single detail of what we do. It would be useful for Members if I let them know, as I have already offered, what the Department has been doing, for instance, with the lamb groups and the potato growers and to see what can be done. If other groups want to benefit in the same way we would be very happy to help them. It is impossible to go into every detail of all possible angles today.

809.

The Deputy Chairperson: As far as I am aware, that is available to the Committee at the moment.

810.

Ms Rodgers: There is a whole range of areas where people can be helped. If anybody in the Committee is aware of a producer group or anywhere where there is a demand, the Department will be willing, able and ready to help.

811.

The Deputy Chairperson: Is it available in the Rural Development Committee?

812.

Ms Rodgers: Yes it is.

813.

Mr Dallat: In the past your Department has seconded key staff to provide the intellectual impetus to get such ventures going. In the right circumstances would you be prepared to do so again?

814.

Ms Rodgers: I am not sure that the industry feels that it lacks the intellectual impetus. I do not know if it would be very flattered to know that there is a view in the Committee that there is a lack of intellectual capacity somewhere in the industry. I am happy to see my staff seconded from the Department, where it is possible and appropriate. It has happened in the past, and I am sure it will happen again in the future.

815.

We have seconded staff to Wilson’s Country Ltd, to John Thompson and Sons, to The Food & Drink Industry Training Advisory Council and to the Livestock and Meat Commission. Indeed, the LMC helped to establish the extremely important farm quality assurance scheme, which has been taken up by the bulk of our producers. Seconding staff, where possible, is not a problem, although we do not have infinite resources. Departmental staff are stretched at the moment due to the demands of the new situation. But it will not be a problem.

816.

Mr Kane: Minister, your Department has grant-aided herd improvements and co-operative producer groups all across the country. Has your policy changed in this area?

817.

Ms Rodgers: No. My policy has most certainly not changed.

818.

Mr Kane: I detest harping on about this, but how does the Department believe it can best protect its financial stake in agriculture if it remains reluctant to intervene?

819.

Ms Rodgers: To intervene in what sense?

820.

Mr Kane: I believe that the Department should be doing more.

821.

Ms Rodgers: In what way? I have told you what the Department is doing. Do you mean do more to help the producers?

822.

Mr Kane: Yes.

823.

Ms Rodgers: It depends on what is meant by intervention. I have already answered Mr Paisley’s question on the amount of work that my advisers are doing. I am sorry to keep repeating this, but I really do think that this Committee needs to go out to see for itself what is happening on the ground.

824.

I am not trying to insult you, as I know that some of you are farmers and may know more about it — I know that John Dallat is not a farmer.

825.

Perhaps it would help if you were to go out to see just how much work the Department is doing to help farmers and farmers’ groups to better themselves by increasing their profitability and efficiency. If, however, you mean direct financial intervention, you should be aware that I am constrained by the EU state aid rule, which prevents me from giving farmers financial aid directly.

826.

Mr Kane: Minister, I am not being disrespectful, but a number of us work at the coalface.

827.

Ms Rodgers: Yes, I know that there are quite a number of farmers here, and that is why I sometimes feel a bit intimidated when I come before you.

828.

The Deputy Chairperson: You have left yourself wide open for a comment. If the Department’s officials visited farms, they would get an education.

829.

Ms Rodgers: I can assure you that my advisers do that day and daily. When I visit a farm — and I have been to quite a few — I always find one or two advisers there, who deal directly with that particular farm, who know everything about it, and who can tell me what is being done. There is direct contact at all the times between the Department and the farmers.

830.

Mr Kane: Minister, I invite you and your Department to North Antrim.

831.

Ms Rodgers: I should be very pleased to accept.

832.

The Deputy Chairperson: The Committee simply does not have the time to accept all the invitations that it receives. We certainly will take up your invitation.

833.

Ms Rodgers: It is crucial that this Committee visit the colleges. I have formed the distinct impression, judging by the questions which I have been asked, that there is not sufficient awareness of what my Department is doing. If we are to work together, and I hope that we are, we need to understand one another perfectly. If you find that the colleges are falling short in some way, I would be very glad to hear about it. However, you need to visit them to see what is happening.

834.

Mr Kane: I think we should take up that invitation.

835.

The Deputy Chairperson: We will finish these questions first and have a five-minute discussion afterwards. Mr Dallat is next. I would ask him to keep his question brief.

836.

Mr Dallat: I am always very brief.

837.

The Deputy Chairperson: I know you are, but there are others who wish to ask questions and as some members were late arriving they missed the first round.

838.

Ms Rodgers: You are quite right, Mr Deputy Chairman. You may slap them across the knuckles.

839.

Mr Dallat: We would need to see another Minister about road congestion.

840.

Your reply states that your Department has very little evidence that producers see the need for more co-operatives. Can you advise the Committee how many producer groupings your officials were involved in helping last year? Were there not a significant number of suckler calf groups, for example, trying to work together to improve their herds and work more closely together? Would you agree that your Department was involved with facilitating these initiatives?

841.

Ms Rodgers: My officials have already worked with upwards of 100 groups of producers over the past year. Forty-two have consisted of beef and sheep farmers. In virtually every case, the group’s objective is to enhance business performance by improved technical competence linked to market awareness with a strong emphasis on the needs of the market, the importance of quality and the continuity of supply, which is extremely important to the retailers.

842.

This is a further illustration of our commitment to supporting initiatives from the industry rather than seeking to impose any particular agenda such as one large single co-operative.

843.

Mr McHugh: I am not sure I take the reprimand for being slightly late. We insist on having meetings at 8.30am or 9.00am in Belfast, and that goes for all Departments. I wonder how many people would turn up if I asked them to Fermanagh for 8.30am.

844.

Even if we were to accept that demand for new co-operative structures is as weak as you allege, is it not fair to say that one of the Department of Agriculture and Rural Development’s great strengths over the years has been to identify weaknesses not necessarily recognised by the farmers and then take steps to remedy the deficiency. Your role in developing the leading traceability system in Europe and your support for the setting up of the farm quality assurance systems are just two major moves that have arguably had a major effect on market forces at global level. Is not the creation of an efficient and well-organised supply chain at least as important as either of these two initiatives? Why then, are you so reluctant to address this issue which is at least as significant as the two mentioned above?

845.

I agree with some of what you have said about ecologists and the work they are doing, and some of the flag projects. They have been very useful in the rural areas and they have done a good job. I would not be so sure that the advisers are getting to all the places that are in need of them. I am fairly well in touch people at grass roots level. We know that there are major losses in the industry and that is as good an indicator as we need.

846.

Your letter mentions the risks associated with producers organising themselves to improve their bargaining position with processors and retailers. Such efforts will only be fully effective if those organisations have no other sources of supply.

847.

That vindicates our position from the point of view of the exploitation of farmers. The fact is that processors and retailers will go somewhere else, but they will only stay with the people who are here as long as they get the produce at the low price that will give them an adequate profit.

848.

I am not sure that position is a good one for farmers to leave themselves in. As regards organising amalgamation in the wider industry, if you look at the strategies of major industries such as BT you will see that they are all using amalgamation and getting- together techniques in order to strengthen their position worldwide. I cannot see why that cannot be applied to farmers. It is a widely used strategy, and it is a modern concept. Therefore, farmers and small industries — as long as they remain individual — are weaker in terms of competitiveness.

849.

Ms Rodgers: You are saying that the advisers are not getting to everyone who requires their advice. If you have any examples of that or if you have any problems in that area bring them to me or to the Department, and we will deal with them. We want to be able to help everyone that needs help. If we do not know about a problem we cannot do anything about it.

850.

In relation to what I said in my letter about the risks, you seem to be taking the view that if farmers organise themselves into a strong lobby to take on those who are "exploiting them" then that is the answer.

851.

I pointed out in my letter that in taking any action one has always to look at what the consequences might be. In reality if a huge farming co-operative ignores other issues, such as the need to meet market requirements and improve quality, for the sole purpose of strengthening its bargaining power and nothing else, it runs the risk of those who are buying from it threatening to go elsewhere. I am not saying that that is a good thing or that I agree with it, but that it is reality.

852.

As Minister of Agriculture I have to look at the consequences of everything that happens on the ground. The best way forward is not to create confrontation by saying that the primary producers are at the bottom of the pile and doing badly, although that may well be the case. How are we going to address that situation, and what are we going to do about it? We must try to have co-operation across the chain and emphasise the fact to the processors that if the primary producer goes out of business everyone will be hurt since they are all interdependent. Therefore the need for co-operation and partnership right across the chain, and recognition of the risk of failure to do so, is a reality in the market place.

853.

In relation to amalgamations, you are underlining my point that those were not a result of Government imposition but simply happened and can be supported.

854.

Mr McHugh: I am trying to say that there is an interdependence, of that there is no doubt. We want to see the whole industry working together. Until the Committee members, as elected representatives, decided to try to make a difference, it was a very "them and us" situation. We want to get this industry on a better footing than in the past. Unlike large food chains and processors, farmers do not have the option to sell outside to some other market, and perhaps this is something that should be looked at. At present there is a ban on live exports which puts them in an even more vulnerable position.

855.

My other question relates to pigs —

856.

The Deputy Chairperson: I am sorry, Mr McHugh, but I have got to cut in. Other members wish to ask questions. Please be brief.

857.

Mr McHugh: Other members have spoken twice.

858.

In relation to my question on pigs, you mentioned that there were two elements of help offered to pig producers in October last year. How soon can that come on stream? Farmers and farm organisations say that they have not received any of that money yet.

859.

Ms Rodgers: As I have already said, we are hoping for EU clearance by the end of the month and to implement the scheme immediately, but, realistically, payments will not be made until early next year. Am I correct, Mr Toal?

860.

Mr Toal: Yes, Minister.

861.

Ms Rodgers: The first of these payments will be made to the outgoers, before the ongoers. This relates to the restructuring of the industry and interest payments. I would have preferred it to happen four or five months ago after the agricultural summit, but unfortunately we have had to go through the EU hoops.

862.

Mr Ford: I want to ask a question and supplementary, Minister. You referred earlier to the pre-interim paper from the vision group, which was included in our papers today. I wonder whether the chairperson of that group could pass comment on theme 12, ‘the industry factors’, relating to communications and trust among other elements in the supply chain and organisation and collaboration among farmers, which is what question 11 is driving at. Perhaps I can ask a supplementary at the same time?

863.

Ms Rodgers: I will pass on that question to the permanent secretary and chairperson of the Vision Group.

864.

Mr Small: One of the things that we have been anxious about since the start of the Vision Group was that there was no focus solely on what Government could do to help the industry. While that is an element of the work, and you will see in the paper that there are a wide range of measures which the Vision Group believes that the Government should be involved in, we were anxious to tackle the very issue that this Committee is now identifying — that there has been mistrust in the chain. I do not think that either the primary producers or processors would deny that.

865.

We have tried to bring that into the open and encourage those representing the processors on the Vision Group and those representing primary producers to work together to achieve a higher level of trust. The processors do not totally accept the proposition that primary producers are not getting a fair share of the overall cake. They have their own issues and problems to deal with. However, through the Vision Group we probably, for the first time, have a sensible and open dialogue between these two very important components of the chain.

866.

On 27 October we are spending the day with a range of speakers from outside the Vision Group. Joanne Denny, who is one of the United Kingdom’s experts in the area of relationships between the retail sector and the processors, will be speaking on the day. All of this is geared to bring into the open the very issue that you have identified. It is one which we saw very early on. No matter what the Department does, or what Ministers or even the Committee do, unless this chain works as a commercial chain it is going nowhere, and we should not delude ourselves. Getting that relationship right is crucial, and that is one of the focal points of the work we are doing. The Committee has already taken up the suggestion of a session with the four sub-group chairmen and myself, where there will be an opportunity to explore that in more depth.

867.

The Deputy Chairperson: It is about time the farmer was getting a fair slice of that cake as it revolves around that chain. Up until now he has not been getting it, and there have been too many people living off the farmers’ backs.

868.

Mr Armstrong: The Committee has noted that you have been unable to address some of our questions because the analysis required would tie up your staff for months. It might be helpful to indicate that we were not seeking detailed economic analyses but responses, at the strategic level, from officials whose expertise is such that sound replies could have been made without the need for labour intensive analysis. Can you say whether your senior policy advisers are addressing these important issues and, if so, can you respond along the lines suggested above to the matters we have raised?

869.

Ms Rodgers: I would have been required to divert resources on a huge scale from the Department in order to have answered all those questions. I am not sure that investigating a proposal that has no evidence of any significant industry demand would have been justified. I do not have to spell out to you how scarce the resources are and how careful I have to be in using those resources. If you are suggesting that I address the question in a very general way my answers would be meaningless. I would add little to what you could have learnt from a casual look at any standard text on agricultural marketing. The real issues in the food chain are building trust, understanding and a common focus on meeting the needs of the consumer. The Chairman’s last remarks would indicate that that is necessary.

870.

The problem is that the primary producers feel very hard-done-by. I sympathise with them because they are at the bottom of the pile and have nowhere to pass the costs to. We have to build a new understanding and common partnership approach. My officials are actively pursuing that agenda, and as I indicated earlier, the Vision Group is also looking it at.

871.

Some examples of my Department’s work include the support of enhancement of marketing capabilities of primary producers through education and grant assistance towards non-capital costs involved in developing new industries and assisting the industry to develop new products, which I referred to earlier, and there has been some success in this. We also marry the retailers’ understanding of consumer demand with the production expertise of farmers and processors, and we work with the industry and multiple retailers to improve the level and quality of business they undertake with each other. Mr McHugh referred earlier to getting produce out to other areas. We have worked with the retailers, and we are trying very hard to ensure that the retailers source local produce and suggest that they use that produce for their chains here as well as across the water.

872.

The chain can only do that by working together to ensure that we can produce the product that the consumer wants. The customer is always right, and if we cannot produce something that the consumer wants to buy, then we can shout from here to eternity but we are going nowhere. As a Department and as a Committee, with a real interest in helping the primary producer, we must make sure that, from the very beginning of the chain to the end, we are producing something of quality that will meet the customer demand, will be profitable and will be bought.

873.

Mr Armstrong: The problem is the legislation. The farmer has to pay for all legislation that comes forward and that comes out of the product at the very start and leaves no profit for the farmer. Everybody else in the chain has their profit but there is no profit at the start for the farmer. That has to be addressed.

874.

Ms Rodgers: I do not disagree with a word you have said. The Department and I are attempting to address this. We want to ensure that the farmer is in a position to produce a quality product which is marketable, sought after and profitable, and that he is able to do so in a competitive way and is able to increase his output and decrease his input. There are many things going on in the improvement of grass and feed, and how farmers can benchmark what they are doing against the best and improve their profitability. All of that is an attempt to ensure that the farmer — the primary producer — is profitable and can get his fair share. That is how I am approaching it; it is the only way to approach it.

875.

Mr Bradley: I was admiring the skill of Mr Paisley Jnr earlier when he managed to ask about 11 questions in one go, and then the skills of the Minister in giving him 13 replies.

876.

Mr Paisley Jnr: All eventualities covered.

877.

Mr Bradley: Indeed. There is something which I thought might have been touched upon in the supplementaries and has not been. On co-operation of another kind, a few sessions ago we heard serious allegations made by the National Beef Association regarding the cartel that once existed at our meat plants. I am sure you are aware, Minister, that names were named. What steps can the Department of Agriculture and Rural Development take to give an assurance that cartels will not be allowed to get off the ground in future?

878.

Ms Rodgers: I am not aware that names were named. We are back to the problem of pointing the finger and confrontation. The Office of Fair Trading is looking at this. The investigation that was carried out in the Republic has come forward with the conclusion that there is no exploitation or excess profitability. This Committee, in its report on retailing, concluded that there was no excess profit in the retail sector. Having said that, if the Office of Fair Trading finds that there is exploitation and unfair practices, I will push very hard to see that something is done about that. My Department has co-operated fully with the Office of Fair Trading, and I ask anyone who has any evidence of such practices to give it to the Office of Fair Trading to enable it to reach its conclusions. If there is any evidence of that, I will take it extremely seriously, and I will push hard for action to be taken.

879.

Mr Bradley: In particular, we asked for your view of the respective roles of your Department, the farmers’ unions, the Livestock and Meat Commission, individual farmers, and the processors in tackling the herd quality issue. This was flagged up in the Red Meat Strategy, sponsored by your own Department nearly four years ago in 1996-97, as a major strategic issue that the industry needed to tackle. Why has there been so little progress in the meantime, and how much urgency is currently attached to the implementation of these strategies? Your earlier reply seems to indicate that the parties are still at the earliest stages of strategic planning and that very little is happening on the ground. Is that correct?

880.

The Deputy Chairperson: I know the questions are in reverse order.

881.

Ms Rodgers: You are being very kind. You are giving them all two or three questions and, as Mr Bradley said, you gave Ian Paisley 11 questions.

882.

The Deputy Chairperson: Minister, you do not need to be told that if you give some members of this Committee any leeway at all, they tend to pick three or four.

883.

Ms Rodgers: The Red Meat Strategy identified three main areas for action. One was market research, another was the development of promotional strategy, and the third was the expansion of focus on quality at both producer and processer levels. There has been progress in all areas, despite the fact that we have not been able to export beef in a commercially meaningful way. The Livestock and Meat Commission (LMC) has appointed a market researcher to research and identify future market opportunities. The number of producers in the Farm Quality Assured Scheme (FQAS) has significantly increased, with over 10,500 members and virtually 80% of all beef cattle qualifying for the FQAS status. We are committed to supporting the LMC and the industry in implementing the red meat strategy, but in the circumstances I am not clear as to what the Committee means by "lack of progress" in the question. It is not for the Department alone to secure an improvement in beef quality, but it is important that processors, the LMC, producer organisations and individual farmers take all possible steps to produce better quality livestock.

884.

There are a number of initiatives. The Livestock Breeding Initiative, for example, is already in operation. It involves the AI services, the LMC and the Department, and is designed to bring about an improvement in beef quality. I referred to Suckler 2000, which is a further contribution to this process. As I said, this was very well received and appreciated by the industry. Another attempt to improve the quality of our beef, and work on the development of a more strategic approach in integrating these various initiatives, and also involving all parts of the industry, has been commissioned. I expect that this will focus on securing a recognition by producers of the need to improve suckler herd genetics, as well as ensuring that producers clearly understand the market signals in relation to quality and have the ability to respond to these. I am not sure, therefore, what is meant by saying that somehow we are not making progress.

885.

Mr Dallat: It is important to say that there was no hard evidence given to the Committee that there was any cartel. Names were named, and the Office of Fair Trading was referred to, but other than that there was no hard evidence given.

886.

The Deputy Chairperson: The conclusion we arrived at that day was that we will not go into it in any depth until we hear the evidence and the report back from the Office of Fair Trading. We have to be fair to those people and not prejudge anything, but I know that in the minds of many people there is a suspicion, and it will take a lot of hard evidence before that suspicion is removed.

887.

Are the arrangements regarding the ongoing costs from inspection arrangements and inspection fees common to all other European countries?

888.

Ms Rodgers: Yes, they are. I am going to ask Pat Toal to deal with that.

889.

Mr Toal: As far as meat inspection costs are concerned, yes. Those are laid down in EC legislation, but there is an option for member states not to charge the full rate. There is a reference rate which is below the total full recovery cost, and that is what we charge here. The producer is not bearing the full cost of all of the Department’s input into meat inspection and into all the activity. We do not charge for all the other activities that we do in the meat plants.

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