Northern Ireland Assembly

5.15 pm

The Minister of Agriculture and Rural Development (Ms Rodgers): I wish to place on record once again that I welcome this report by the Committee of Agriculture and Rural Development as part of its wider examination of agricultural debt. I thank all Members for their comments and interest in the debate. Comments have been helpful and constructive. I recognise that they reflect Members' interest in an industry which has been going through an extremely difficult time.

The report deals with a subject that is both topical and important, as evidenced by the level of interest among Members and by the quality of the debate. I commend the Chairperson of the Committee, Dr Paisley, for bringing all shades of political opinion, as represented in the Agriculture Committee, together in the production of this report.

The consensus of opinion represented by the Committee and the industry - [Interruption]

I hope that this is not being taken as a joke, for it is a very serious issue.

The consensus of opinion represented by the Committee and industry -

Rev Dr Ian Paisley:

Will the hon Member give way? I was smiling at my Friend Mr McGrady.

Ms Rodgers:

I was not referring to the hon Member.

The consensus of opinion represented by the Committee and the industry will clearly benefit farmers, the rural community and the wider community in Northern Ireland, whose interests we all have at heart. Without this consensus, made possible by the new institutions, all of us would be much the poorer. This debate has made an important contribution to the building of trust, understanding and co-operation across the food chain and also within the Assembly.

I commend the Committee for producing a report with such a wide scope, and which aims to create improved opportunities for producers to meet existing and future market demands, thereby increasing their potential profitability and market share.

It is fair to state that up to now there has been a degree of suspicion and lack of understanding among the links in the food chain, and this has hindered efforts to build trust among people and organisations that are ultimately dependent on each other for survival. Achieving trust in commercial relationships is absolutely essential in a fast-moving market place.

Trust can only be built on the basis of confidence that every link in the chain is getting a fair share of the profit. In relation to that, and to the remark that I think was made by Mr McHugh about beef cartels, I am aware of those allegations. The Office of Fair Trading is investigating the matter, and any evidence of a breach of competition rules should be submitted to the Office of Fair Trading. My Department will assist the Office of Fair Trading in any way possible, and I deplore any abuse of power should that be proven. I look forward to the outcome of the investigations.

If we can encourage greater understanding and transparency then we will have taken an important step in building an agri-food industry that can compete with the best and face the future with confidence.

I see this report as an excellent attempt to move beyond the all too familiar practice of assigning blame, seeking instead to find workable and long-lasting solutions to difficult problems. I was particularly pleased to be able to confirm in my reply to the Committee's report that, for most of the recommendations directed towards my Department, work is already in progress, aimed at addressing the underlying issues and concerns. Examples include the ongoing efforts to encourage collaboration in the marketing of agricultural produce, the promotion of partnerships in the food chain, supporting marketing initiatives and quality assurance programmes, encouraging local sourcing and significant research and development in technology transfer commitments.

Some Members spoke about co-operation and collaboration. Dr Paisley was the first to raise it. Collaborative marketing efforts, particularly those involving vertical links in the marketing chain, can generate significant benefits. My Department has actively encouraged collaboration in the marketing of agricultural produce by providing support to its marketing development scheme.

Initiatives may involve the creation of producer groups or, preferably, integrated partnerships involving different parts of the food chain. I have seen an example of that very recently on a visit to a processing plant, and it is indeed working very successfully. This provides one means by which the industry can start to address the various structural concerns that were raised in the Committee's report.

Funding totalling £300,000 per annum has been available for this scheme, and I hope to increase this under the new Structure Funds proposals. I am also considering a proposal for inclusion within the Peace II programme which would provide funding to assist the establishment and development of suitably constituted producer groups which are responsive to market demands and are focused on the production of high quality agricultural produce and services.

However, I would caution those who believe that producer co-operation is the panacea for all our problems. Co-operation among producers can only generate worthwhile, sustainable benefits if it goes beyond the very narrow remit of seeking to acquire bargaining power. To be truly successful, producer co-operation must embrace the concept of partnership with other links in the marketing chain. It must move beyond the simple function of selling and into the much broader realm of marketing and all that that entails. That has been referred to by a number of Members. What is absolutely clear to me is that co-operation cannot be imposed by anyone, least of all by the Government. Business dealings in the food chain must be governed by commercial considerations and driven by the needs of the market. Nevertheless, My Department and I stand ready to help the different parts of the industry in developing whatever structures are appropriate to the circumstances, be they farmer co-operatives or other arrangements.

The group that I established to bring forward a strategic vision for the development of the agri-food industry in Northern Ireland is considering the issue of partnership and co-operation in the supply chain and will no doubt, come forward with recommendations in due course.

I want to turn briefly to the issue of markets. The Committee's report noted that external markets are essential to the local agri-food industry. Over half of the sales of the Northern Ireland food and drinks processing sector are made outside Northern Ireland. Although the entry of UK retail multiples into the Northern Ireland market created some difficulties for local suppliers, it has also created a significant opportunity for those wishing to gain access to the wider UK, Continental distribution networks of these companies. In the beef sector, for example, a number of our local processors have been extremely successful in building up very substantial trade with major retail groups in Great Britain. Prior to the beef export ban, there were also significant trading links with the Dutch supermarkets, and we all hope that those will open up again soon.

There have been similar success stories with poultry, potatoes and vegetables. The efforts of all those who helped bring about these successes are to be applauded. Although export marketing is the primary responsibility of the Department of Enterprise, Trade and Investment, my Department works closely with it to assist as far as possible in the efforts to improve the marketing of Northern Ireland produce. Dr. Paisley raised this issue earlier, and I want to make the point that significant resources have already been spent in identifying market opportunities and promoting Northern Ireland food at food fairs and in helping companies to take advantage of export opportunities. I asked the vision group to consider how Northern Ireland food might be marketed to best advantage, and I look forward to its recommendations. Its members will, of course, be aware that £300,000 has already been committed to marketing and processing, and £400,000 to the promotion of pig meat.

I hope to take advantage of the advice from the Vision Group, but as Members will doubtless be aware, all of this will have to be in the context of the spending review. I will be competing with bids from other Departments, but I assure Members that I will do my very best to ensure that the interests of the agriculture industry will be to the fore.

I am also keen to promote the opportunities offered by new technology: e-commerce and information and communication technology will undoubtedly play an increasing role and offer new opportunities in market development. My recent announcement of our plans to develop a farmers' portal is just one example of our efforts in this field.

Another, which is reflected in the recommendations of the Agriculture Committee, is the efforts of my Department to assist the development of the industry in the area of quality assurance. The Department of Agriculture and Rural Development is very supportive of quality assurance schemes, having been actively involved in encouraging their establishment and auditing their standards. However, such schemes tend to set the minimum acceptable product standard for many outlets. These minimum standards are readily available from alternative suppliers, and Northern Ireland farmers and processors should seek to exceed them if they wish to differentiate their products and achieve a price premium as a consequence.

The issue of local sourcing has been the subject of much comment, some made during today's debate. Increased local sourcing has for some time been a key issue for my Department and for the Department of Enterprise, Trade and Investment. Retailers are encouraged to increase their uptake of local produce, not only for sale in Northern Ireland, but also in Great Britain. All of the multiple retailers report that they have significantly increased their levels of business with Northern Ireland suppliers since they came to Northern Ireland. However, meeting the challenge of increased local sourcing is not just something for the Government, retailers or marketing bodies. The agri-food industry itself must make every effort to meet the demands of potential customers in terms of price, quality and service, and must be proactive in marketing those attributes.

That said, my Department can and does help Northern Ireland suppliers, particularly through technical advice and support, to take advantage of any identified opportunities to increase their business with retailers. I have seen evidence of that as I go around the various shows and see the amount of co-operation between my departmental advisers and the people working on the ground in the industry, both the farmers and the processors. I also believe that while there may be a natural desire to pursue the goal of import substitution, this should never be at the expense of restricting consumer choice; nor should we seek to avoid the competition posed by imports. Healthy competition in domestic markets will help ensure that our industry is also competitive in external markets where such a large part of its output must be sold. We have to remember that over 50% of our processed food goes to the export markets, and we have to compete globally. It is also worth bearing this in mind, lest we become too engrossed in the domestic market issue at the expense of the wider picture. A diversified marketing strategy is in the best long-term interests of the local industry.

The issue of prices is at the heart of many of the current problems of the agriculture industry. I know that there is a general perception that food processors and retailers are profiteering at the expense of primary producers and that there is an unfair distribution of profit through the food chain. I was therefore particularly interested in the conclusions of the Agriculture Committee that there is no evidence of excess profits among suppliers and retailers. I entirely agree with the Committee that primary producers must achieve a fair return for their efforts if the food chain is to remain viable. I also fully appreciate the good motives of those people who suggest that prices should be regulated in some way to ensure a fair return to all.

However, aside from the question of legality, I do not believe that this offers a long-term solution to the problems of the industry; rather, it would introduce a significant number of additional problems.

5.30 pm

Even if we could regulate prices, that would generate fierce resistance from numerous quarters, not least consumers. Moreover, it would only work if Northern Ireland could be isolated from external market influences. Clearly this is impossible, illegal and highly undesirable. Northern Ireland must sell to, and be competitive in, external markets for over half of its produce. Isolating the Northern Ireland agri-food sector from external competitive forces would do great damage to its long-term development, hampering increases in both productivity and innovation. This would do no favours to the farming community, the processors or the industry as a whole.

I also believe that there is a risk of lasting damage to the local supply base, our countryside and the quality and choice available to consumers, if processors, retailers and consumers become over-reliant on the cheapest source of raw material that may be available at any given time.

I want to deal with some issues raised by the debate. Mr Savage referred to brown rot in potatoes being imported. In Scotland, for example, where some of our seed potatoes come from, they have to be certified as healthy before they are exported. We do not have to accept them if they do not have that certification. The same does not apply to ware potatoes. I understand that brown rot has been found in a watercourse, not in the actual product. We are also constrained by EU regulations on restriction of imports. It is a matter of some concern, and I will watch the situation very carefully.

Mr McHugh referred to an all-Ireland approach to agriculture. I agree that that would be desirable. I am working to build improved co-operation, for instance in animal health. The vast bulk of agri-policy derives from the common agricultural policy, which tries to create a so-called level playing field. It is wrong to suggest that agri-policy differs markedly across the border, or generally in Europe.

Dr Paisley raised the issue of diversification. I agree that farm diversification is essential for the development of the industry. I have said on many occasions that it is high on my list of priorities. There are already some proposals on agri-forestry and organic farming in the rural development plan. I am looking to my vision group to provide definitive advice in that area.

Mr Dallat referred to Loughry College. I thank the Member for his remarks about co-operation between the college and my Department and, indeed, the industry as a whole. I have seen some very exciting examples in recent times of co-operation between Loughry College and the industry and how that has benefited people. Products are now on the market as a result of that co-operation. I agree with Mr Dallat's remarks about the need for co-operation right across the industry and between all of us, in relation to the problems that are facing us at the moment.

Dr McCrea explained that state aid inhibits direct financial aid to producers. We have done everything possible to help the Northern Ireland pig producers. For instance, we paid half a million pounds after the Maltons fire. At the moment, there is additional money which was made available at the agricultural summit in England.

We are currently looking at the Pig Restructuring Scheme, which is going through Europe. Animal welfare is a serious concern of consumers here. I accept that certain other member states may not be as assiduous as we are in enforcing standards, and I have raised those concerns with fellow Ministers in London and in Europe. I have the support of the other Ministers in the United Kingdom on that area, and we will be strongly promoting the idea that all European countries should follow our example in it.

In looking at this report, we need to be creative in our thinking on how to improve the returns to producers. I am looking forward to the ideas that will emerge from my vision group of industry experts, which assists us in this matter.

I finish on a very important point. In our desire to improve the functioning of the food chain and, in particular, the rewards to the primary producer, we should at no point forget the primacy of the consumer. That point was also made by Dr Paisley. Satisfying consumer demand must always remain our central focus. If we ever forget this, then all our efforts will come to nothing, because if there is one thing that is true in all relations of this kind, it is the old adage that the customer is always right. It is the customer that we have to satisfy. Thank you.

Mr Speaker:

Before calling the Chairman of the Committee for the winding-up speech, I wish to make reference to a matter which arose at a meeting of the Agriculture Committee on 30 June. I refer to it because it is relevant to other meetings of the Agriculture Committee, to meetings of other Committees and to sittings in the Chamber. At that meeting, those members who were milk producers properly declared their interest in the subject under debate, and went on to contribute to the discussions. However, at the point where a decision on the advice to be given to the Minister was being taken, they decided to withdraw from the meeting. Any decision on a withdrawal from Committee proceedings at any time is, of course, entirely a matter of conscience for the members, but I want to underline what the Chairman of the Committee advised at that stage. He indicated that while it was quite proper, and indeed a requirement, for members to declare an interest, whether it is of an agricultural or any other matter, in a Committee or in the Chamber, it was not necessary for them to withdraw from the proceedings or, indeed, to refrain from voting.

That matter was made clear by the Chairman, but I want to underline it, not least because some Members may not be fully familiar with these requirements and may be excessively cautious. It is a good fault, but it can sometimes leave proper representation unmade. That is why I want to put this on the record for these proceedings and for other proceedings of the Assembly, in the Chamber and in Committee.

Rev Dr Ian Paisley:

Mr Speaker, I welcome the statement you have made, because it seems that outside the Committee there was some misunderstanding and comments were made about it. I made it clear that if there was an interest, it had to be declared. However, that did not mean that members had to leave the meeting or not cast their votes.

Those who left the meeting, and did not cast their votes, did so because they did not want the general public to think that they were voting to put money into their own pockets, as they were engaged in that part of the industry. That was a very honourable thing to do, but it was not necessary under the law. The law says that a member has to declare, and then whatever action he takes after that is his own responsibility. I welcome your statement.

I welcome part of the Minister's statement. I am glad that she extends a little welcome to our report, but she seems to think that her vision committee is going to have better things to offer.

The Minister has been defending the Department's activities. We are not asking the Department to mount a defence today. We have not criticised it, but we have made recommendations about what it should do now. The Minister has not informed me if she is going to implement the recommendations we have made. She has focused on defending her department and her officials very well, but she has said nothing new about the recommendations in this report. We have squeezed from the retailers a promise to offer their expertise to help the producers achieve expert marketing and trade development. We have insisted that her Department is one of the best agricultural departments in the world, in both science and business realms.

Some time ago I visited the universal headquarters of potatoes in Peru, and the person in charge, right at the top of the table, was an Ulsterman, trained here by the Department. The expertise of her Department should be tapped, along with the retailers' expertise, to help the primary producers.

The farmers have little chance when negotiating with the big retailers. They can only say that they have a quality product and want a fair price for that product. They cannot get that at present because all the big retailers and the meat producers have divided and conquered producers. We need the primary producers to unite and give themselves a fighting chance to save their industry and help their people.

There is a battle between import substitution and consumer choice, but the Department should be encouraging consumers to buy Ulster produce. Across the water, authorities encourage consumers to buy British produce. There is no reason for the Department here not to lend its weight to this idea. We need to ensure that local producers give the consumers the choice they want. If we have consumer choice backing our own farms, the supermarkets will be forced to source here and not outside. This is a very big battle that we need to face.

Secondly, the Minister is concerned about the confidentiality of the statistics on the targets for local sourcing. This does not concern me, because ultimately the big retailers will willingly reveal their profits to their investors. They are not afraid to reveal the extent of their profit-making to those who invest money in their companies.

The other day I received an interesting piece of correspondence from Sainsbury plc., in which the company highlighted its commitment to doubling the amount of Northern Ireland produce that it sources.

5.45 pm

If it is prepared to give that commitment, surely all the other retailers should be forced to do the same. If that were to happen, farmers would be assured that their produce would be bought at a price which paid them for producing it. You cannot ask the farmers to go on when you look at how their incomes have tragically, catastrophically, fallen.

I am pushing these recommendations to the Minister. We need help from her Department; we need the expertise of her Department; and we need finance to help us with this price determination. The Committee is not saying to people that we want them to fix prices. That is not what we are about at all. Perhaps the Minister will take note that the Office of Fair Trading found that some time ago a cartel was operating in Northern Ireland, and it was all covered up. In fact, we only found out from one person when we were examining him at our Committee. How was it that nobody knew that a cartel was operating in the meat market in Northern Ireland? It was before the Minister took office, but I am asking her today to put her weight and her Department's weight behind a fair reward for the farmers and to tell the big men in this business that they must see that farmers get a fair price for their produce.

It is interesting to note that Sainsbury's is now on record as saying it invests a significant margin each week to ensure that its potato packers remain profitable and cover their overhead costs. That is a big undertaking. It is now in a relationship with its potato packers to ensure that they get a fair price and that when there is a fluctuation in price, is taken account of. If that can be done for potato packers, it can be done for other producers, and these things must be done. Sainsbury's has said that our report is excellent and well balanced, but my Committee will not be looking for words from Sainsbury's, we will be looking for action.

Likewise, I am saying to the Minister today that we are looking for action from her and from her Department. We want to see how many of these recommendations are going to be acted upon, and if we can make progress. It is all very well for the Minister to say that we are all very happy in the Committee and that it is nice that we are united. We ask her now to join the band, to come into step with what we have put before her today and to apply her Department to bringing these recommendations to fruition for the good of the farming community.

I welcome this debate today. I appreciate the contributions that were made by the members of the Committee who took part, and I appreciate the contributions from the three Members who are not members of the Committee. We have had a good debate. I do regret, Sir, that it was at this hour. This debate should have taken place in the morning when all the press would be here. Nevertheless, many positive recommendations have been made. The Committee does not want to be at war with the Minister or her officials. We do want to ensure that our reasonable recommendations are examined.

If the Minister wants to knock them, we will be glad to meet with her in the Committee and to hear from her own lips what she accepts or rejects. I say that these are reasonable points. The Minister has admitted that we have not been attributing blame but have been offering something positive. The Committee was determined not to be strong in diagnosis but to be strong in prescription.

This is the first item on the prescription; there are two others coming and probably a fourth one in connection with fishing. I say to the Minister "Be gracious and kind to the patient. Do not let Mr McGrady put you off. Tell yourself that you will do something for the farming community." If she succeeds in doing that, people will always be under obligation to her. She has a great challenge before her and she should take it up. Along these lines there are opportunities for her, and her Department, to help us in our hour of need.

Question put and agreed to.

Resolved:

That this Assembly accepts and endorses the findings and recommendations contained in the Agriculture Committee's report 'Retailing in Northern Ireland - A Fair Deal for the Farmer?' and urges the Minister of Agriculture and Rural Development and everyone associated with the industry to take all necessary steps to implement the recommendations.

The sitting was suspended at 5.51 pm.

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