Examination of Witnesses (Questions 98 - 119)
MONDAY 16 FEBRUARY 1998
MR WIN
GRIFFITHS, MP, MR
HUW BRODIE,
MRS ALISON
JACKSON and MR
JASPER ROBERTS
Chairman
98. Welcome, Mr Griffiths, to the Welsh Affairs Committee.
We are now, as you are aware, looking at the crisis in the livestock
industry of Wales. Would you like to introduce your panel and
say a few words?
(Mr Griffiths) Yes. We have Mrs Jackson on my right,
and Mr Brodie and Mr Roberts on my left, and it may be from time
to time if there are some particular issues of more detailed information
I will call on them to provide some advice and guidance to pass
on to the Committee.
99. Thank you. We have heard from the farmers already, as
I am sure you are aware—you will have seen the evidence
they have put in—that they are going through the worst crisis
in recent memory. Milk, meat and grain have all been falling and
farm incomes for some hill farmers will be down to £5,000
for this fiscal year. In your view, how serious is the situation
within Wales?
(Mr Griffiths) Chairman, if I could make an introductory
statement to the Committee, of course, I think the important thing
for me to say on behalf of the Government is that we fully understand
the concerns of the farming industry at the present time and I
certainly recognise that here in Wales farmers are facing a very
difficult situation. As you know, in the short term the Government
has responded positively to these current difficulties with a
substantial aid package, with £85 million to the livestock
industry, and of this just over £12 million will come to
Wales. This aid is in addition to the very substantial aid worth
£1.4 billion already budgeted to support the beef sector
during the current financial year. These are very large sums indeed
and I think clearly demonstrate the Government's continuing commitment
to the livestock industry. I recognise, too, as set out in my
memorandum to the Committee, the issues which exist in the retail
sector. I am aware from my discussions with the farming unions
of their worries about the power and influence of the retail companies
and their impact on livestock markets. Nevertheless, a great many
farmers are very keen to come together and sell to the retail
sector at a premium. Where there are legitimate concerns of market
control these are matters for the Office of Fair Trading, who
can look at such matters. I am keen to help farmers to produce
the right product for the client, not just for the sake of production
but to meet the customers' requirements. We have been supporting
Welsh Food Promotions Ltd and Welsh Lamb and Beef Promotions Ltd
to help farmers directly to come together and set up a farm quality
assurance scheme such as the Farm Assured Welsh Livestock scheme.
We have also supported the development of effective branding of
Welsh products. We have seen the success of these schemes in,
for example, the export of lamb from Wales. Our support for WFP
and WLBP helps them to operate the Welsh Lamb Exporting Market
Initiative Co-ordinating Group—that is worth a couple of
slices of lamb in itself!—set up in 1992 to co-ordinate
the activities of Welsh Lamb Export. In addition, WFP support
marketing activities aimed at specific retail functions and broader
technical and marketing support from the Meat and Livestock Commission
in execution of the MLC lamb export plan which runs in parallel
with the Welsh programme. The Welsh Office is also helping livestock
farmers themselves directly through sheep and beef development
schemes such as the Welsh Sheep Strategy and the beef development
project and the Welsh Black Cattle Society project. The total
cost of these three projects is some £4 million over the
next four to five years, including a contribution of some £2.5
million from EAGGF Objective 5b grant and rural development grant.
The projects will provide vital support for farmers to develop
their products and improve breeding stock in line with what consumers
want and will help with other technical and marketing developments.
Over 40 schemes have been approved under the Welsh Office's processing
and marketing plans, with some £3.5 million grant aid to
projects worth over £10 million. £1 million of grant
has gone to five projects in the meat sector alone to support
projects worth some £5 million. As part of these grant schemes,
the Welsh Office is considering proposals by three local authorities,
subject to the satisfactory resolution of planning issues, for
grant aid from the Department under the PMG scheme to modernise
and upgrade the livestock marketing facilities in their areas.
Having said this, we are acutely conscious that there is a great
deal more which can be done and the Secretary of State and I want
to develop a food strategy in Wales to help our farmers and the
food processing industry. We need to address changes in two areas:
on the farm and in the food processing industry in Wales. As I
have said, we are already doing a great deal to support the food
industry as well as the farming industry through support for branding
and marketing and through farm assurance and traceability schemes
by WFP and WLBP. We will continue to support and develop this
work in future, subject to clearance by the EEC and the state
aid rules for any proposals. We are currently discussing WFP's
business plans with the company and the Secretary of State will
make an announcement shortly about their funding next year. The
Welsh Office will be leading the process of reviewing and developing
the food strategy in Wales. We will set up three working groups
to identify the developing needs of the key primary agricultural
sectors of beef and lamb, dairy and organic production in Wales.
In the longer term we also propose to review the needs of the
horticultural sector, which also has an important role to play
in producing speciality and other high-quality products. We will
also consider how we can make better use of the conservation grade
quality of much of our agricultural land in Wales to promote products
which meet the environmental and welfare expectations of consumers
as well as food quality. We will also be concerned with downstream
activities in the food processing and manufacturing sectors, such
as the slaughter and processing of meat cuts, so that more of
our quality raw materials stay inside Wales to be processed, and
we do, indeed, produce more premium and added-value products in
Wales. This will help ensure that jobs and added value also stay
in Wales and Welsh communities and help to support our farmers'
incomes. There will be a number of cross-cutting and general issues
between the sectors, for example in developing the food chain
and distribution links to markets across Wales, elsewhere in the
United Kingdom and overseas. We will involve the farming unions
and the industry itself in the working groups and, therefore,
in formulating these plans for the development of the industry,
and will consult widely with other interested parties, including
the local authorities and development agencies. Action is needed
urgently to develop our response to the needs of our farmers in
Wales and we plan to constitute working groups and put the work
out to tender to consultants very shortly. I want to leave you
in no doubt about the importance I attach to the farming and food
industries in Wales, including the livestock sector. We can, in
fact, exploit Wales's natural advantages in farming on welfare,
environment and quality through, for example, organic and conservation
grade farming to turn the market to our advantage. We can make
a virtue of the character of our farming and make better use of
what we have to meet changing consumer demands and the needs of
the market. The outcome is crucial to Wales in many different
aspects of our national life—economically, culturally, socially
and environmentally. As the farming industry develops and the
pattern of EC reforms becomes clearer, we will continue to ensure
that the interests of Welsh farmers and consumers are taken into
account at the heart of Government decision-making and we will
do our best to help our farmers meet the challenges which undoubtedly
are to come.
100. Thank you, Minister. I am pleased to hear you are doing
such a lot and planning to do even more for farming within Wales,
because I agree with you, it is an important element of the economy
within Wales, but can I take you back to the question I asked,
which was, how serious do you consider the present situation to
be? For example, how many farmers are likely to go bust in the
less favoured areas this year?
(Mr Griffiths) Obviously I do not under-estimate the
seriousness of the situation for the agricultural sector in Wales.
It is an across-the-board difficulty. The strong pound has been
a major factor behind the falling prices in all sectors. We have,
of course, provided this £85 million I have talked about
to try and provide some compensation in the short term and perhaps
we concentrate too much on the present difficulties without looking
at the positive things which are happening too. We are working
very hard to try and boost meat sales. The MLC have a £2
million livestock advertising campaign for British meat products
helping in particular on the consumption of beef. We are asking
all major retailers to take part in the promotion at the national
level, and hotel and catering establishments, because that is
an area where more and more people are going out to eat. You will
be interested to know that my own commitment extends to pressing
into the wilds of deepest Essex to attend a Welsh week at Tesco's
Extra Store in Pitsea in Essex on 24 February to promote Welsh
beef. At the same time there is an increased awareness of farm
assured meat products and farmers in Wales have responded to the
Farm Assured Welsh Livestock scheme. Membership has increased
sixfold; we now have over 4,000 members who have come to it in
the last two years. There is a Beef Labelling scheme, which will
be formally introduced in April this year. All the major supermarkets
are behind this initiative. So, whilst acknowledging that the
situation is a serious one, we are certainly trying to do as much
as possible to promote Welsh meat products.
Mrs Williams
101. Last week I asked a question of the Ministry of Defence
as to how the procurement of United Kingdom produce, for instance,
was escalating and I welcomed the reply that we had. How closely
is the Welsh Office working with local education authorities to
try and persuade them to use British beef and lamb, indeed British
produce? I know my own authority have recently decided but there
has been a gap of a few months when that was not done and I was
wondering how closely are you working with local authorities within
Wales?
(Mr Griffiths) I think all local authorities will
know that within the rules of public purchasing they are encouraged
to make sure that beef gets back on to their menus. You will also
know that there are very clear rules about public contracts for
all sorts of food products and, as far as the public sector is
concerned, within those specific rules we are doing what we can
to encourage local authorities and others to buy British, but
we cannot do it in a way which contravenes the rules of the European
Union and there are issues of best value for money, for example,
open competition, but contracts can be drawn to meet all the requirements
and to encourage the use of British and Welsh beef and I am pleased
to say that the canteen here in the Welsh Office does serve British
beef.
102. Is the response of the unitary authorities in Wales
being monitored? Is the Welsh Office monitoring the response as
to which authorities are following that good practice and, indeed,
have decided? I am not just talking about schools, I am talking
about old people's homes and the other services within local authorities
within Wales?
(Mr Griffiths) I do not believe we actually monitor
in the sense that we do not write to every local authority saying,
"Are you buying British beef or British food for the purpose
of your contracting process?" because if we were seen to
be being too artificially pushing public contracts only to buy
British beef or British meat or food products, we would fall foul
of European Union rules, but certainly there is a clear indication
given to local authorities and other parts of the public service.
I know, for example, from my discussion with Welsh trusts that
they are trying to frame their contracts to give British produce
a reasonable chance of being able to make a competitive tender.
Mr Livsey
103. Is it not true to say, though, Mr Griffiths, that you
are hamstrung as a Government because of the 1988 Act which, in
fact, specified to local authorities that they could not necessarily
favour British produce because they had to look for value for
money, and that is a very difficult legal matter for local authorities
and health authorities actually to get around? Are you assisting
in that?
(Mr Griffiths) All I can say is that obviously local
authorities and other public bodies purchasing meat cannot break
the law but, as I have already indicated, there are public bodies
in Wales which frame their contracts in a perfectly legal way
which gives local producers, British producers, the opportunity
of putting in effective tenders. There cannot be any question
of any public body not seeking value for money but because we
know that many public bodies do buy British beef and meat, it
is possible to frame your tender documents in such a way as to
give everybody an opportunity, including British beef producers,
meat producers, to make competitive tenders.
104. Could I follow that up because the original question
really was, how serious was the situation. Is it your view that
farmers and farming in Wales have been hit much harder than other
parts of Britain because of the farm structure, and is it not
really a question that the high pound policy pursued by the Government
and the failure to give adequate compensation for movements in
currencies are actually at the basis of the problems that we have?
What representations have the Welsh Office made in Cabinet to
persuade the Government to reduce their high pound policy and
actually to pay up more compensation to livestock farmers?
(Mr Griffiths) As I said right at the beginning, the
high value of the pound has been a problem and, of course, that
adds to all British exporters, whichever sector they are in. You
will also know that there have been many Cabinet meetings and
meetings of Cabinet Ministers over the last few months discussing
these very issues. That is one of the reasons why we had the £85
million package announced just before Christmas and, of course,
there is a continuing review of the situation of farmers across
the United Kingdom and I can confirm that the Secretary of State
for Wales has been putting the case very strongly in the Cabinet
for Welsh farmers. We do recognise that because of the structure
of Welsh farming, we have had more difficulties than other parts
of the United Kingdom, and, of course, to a certain extent that
is recognised in the division of the money. Proportionately speaking,
you could argue that in terms of the United Kingdom economy we
have got a bit more than perhaps on a simple proportionate basis
we might have expected. Having got that money, we are still talking
within Government to see if there are other ways of helping farmers
in Wales.
Ms Lawrence
105. Can I come back to the issue of local authorities and
sourcing of their produce. The previous Government's attitude
towards the authorities that tried contract compliance was that
that was not permitted. Are you saying then, from what you said
earlier, that this Government could take a different view on local
authorities that insert items into their contracts that would
require sourcing of local materials and this Government would
take a different view to contract compliance?
(Mr Griffiths) No, the issue is not that the contract
is written in such a way that it would mean that you have to source
the product locally. The issue is in writing the contract, as
has already been done in some areas, to make sure that the British
producers have a better chance than they have had previously of
being able to put in a tender which is competitive. So we cannot
insist that the beef must come from within a 25-mile radius or
must be locally sourced, but it is up to the local authority to
decide what they want without specifying that it must come from
a particular source, and provided they can write the contract,
and it is being done in some places, to allow British beef producers,
Welsh beef producers, a reasonable chance of being able to put
in a competitive bid.
Chairman
106. Can I ask a more general question, Minister. What do
you think is the primary purpose of the Welsh Office's help for
the agricultural industry in Wales? Is it to produce food within
Wales, to prevent rural depopulation or to preserve the rural
environment, or all three?
(Mr Griffiths) I think we want to sustain a vibrant
rural economy. That is important for economic, social, cultural
reasons. We want that to happen, but we also want to make sure
that it is done in an environmentally sustainable way and that
is why we are moving to an all-Wales agri-environment scheme.
Of course, for these things to happen we have to be able to sell
more of what is produced in Wales and that is why we are putting
so much emphasis on quality food products. So we want to see an
efficient Welsh agriculture but one in which we can show to the
world outside full cognizance has been given to environmental
factors, to the welfare of animals, and that is what is driving
us both through the agri-environment scheme and through our efforts
to promote Welsh produce.
Mr Edwards
107. You have mentioned a number of reviews that you are
undertaking. Can we expect a White Paper on this in due course?
(Mr Griffiths) I do not think there is any intention
to produce a White Paper. What we want the work we are doing to
conclude in is a strategy because we are already consulting farmers
in doing this. In fact, even before the present crisis in a sense
broke on us, the Secretary of State and I had already decided
with the Welsh farming unions that we would come together and
meet together to try and develop a Welsh Food Strategy. So all
the work that is being done at the moment is directed towards
producing effective measures to promote Welsh food products and
to sustain farmers and the rural economy.
108. Do you not agree that part of the crisis might relate
to the fact that there has not been a co-ordinated Government
strategy in agriculture or the food industry as well for a long
time in this country?
(Mr Griffiths) That may well be the case but what
I think we are trying to do, without producing a White Paper,
I agree, in this very close relationship we are trying to develop
with farmers in Wales and through bodies like Welsh Food Promotions
with the wider food and catering industry, is actually to develop
a strategy which is on-going and to which we can respond quickly
with measures to put it into action. What I would fear with a
White Paper is that it could hold things up for a year or 18 months
or maybe more, whereas what we are doing now will result, I believe,
in agreements being developed as the work progresses so that we
will have the food assurance scheme, then we will be looking at
ways of promoting food processing in Wales and we believe we have
a strategy which can make a difference in some things in a relatively
short period of time and in other things, such as the development
of our livestock, to a much higher quality. That will take a slightly
longer time but we are already investing in that. So overall I
believe that what we are doing now is to try to achieve as quick
a response as possible to the needs of Welsh industry.
109. Do you feel that the Ministry of Agriculture, Fisheries
and Food might have a White Paper in due course?
(Mr Griffiths) I cannot really comment on what MAFF
are thinking of doing. They obviously have plenty of problems
of their own to deal with and I think I had better leave that
to the Ministers there.
Mr Livsey
110. Would you agree, Minister, that at the present time
the main objective is for Welsh farmers to produce food and there
is a huge crisis there in the food production industry in Wales
at the present time and that when we have Canadian companies coming
into Wales recruiting farmers to emigrate, which is the case at
the moment, then things have come to a pretty poor pass? Is it
not the case really that there is a very urgent short-term emergency
that needs to be addressed immediately, otherwise these long-term
strategies are just not going to be put in place?
(Mr Griffiths) Yes, I think that is what I was trying
to get across in some of my earlier remarks. There are some things,
like the raising of the quality standards of Welsh livestock,
which will take a little time to do. They are already good but
we believe they can be made better and that is why we have the
livestock programme. But then in other ways the link-ups we are
making with the farming industry to try and develop these food
assurance schemes, to get over the message that Welsh food means
quality food, these things are all happening now. We have put
quite a substantial amount of money into Welsh Food Promotions
Ltd. We are looking at and discussing with them now what the programme
is likely to be for next year. So yes, we are aware of the need
to do some things immediately. We are trying to do those things.
The additional aid was part of that package, realising that it
was not going to solve every problem, but we did hope that it
would help and will help to ease the burden a little.
Mr Livsey: But it is a cash flow problem, Minister, that
the cash is just not coming into the industry. Young people, farmers'
sons, are not coming back into the industry. The average age of
farmers is getting greater and greater. There is a huge short-term
crisis connected with prices of products and there is a quite
a bit that the Government could do about that.
Mrs Williams
111. Chairman, before the Minister answers, could I ask the
Minister, would he agree that perhaps that has been the fault
of previous governments of different colours, different make-up,
that we have had "knee-jerk" reactions to different
crises and because of that there has not been a long-term strategy
for agriculture? I come from a farming background, albeit small
farming, and I can well remember my father saying Governments
always seem to be merely carrying out a patching up exercise.
It is a patching-up exercise and a long-term strategy for agriculture
is long overdue. Indeed, I repeat myself, that has been the fault
in the past and we need to take strides in a different direction?
(Mr Griffiths) Before the election we certainly, in
opposition, put a lot of work into trying to develop a long-term
strategy for promoting prosperity in the Welsh countryside, and
whilst to a certain degree there has been a crisis, which has
certainly come at a time which does make for difficulties in trying
to find additional moneys to cope with the immediate crisis whilst
at the same time trying to develop plans to help put Welsh agriculture,
and the livestock industry in particular, on a firm footing again,
as I said earlier, there still continue to be meetings at Cabinet
level to see what further measures may be helpful to the farming
industry in the United Kingdom and, from our point of view, in
Wales in particular. But in addition to that, we are also trying
very strongly to develop the issue of quality food from Wales
and we believe that the work that is being done there will firmly
underpin the future of Welsh agriculture.
Mr Caton
112. In the factual analysis in your memorandum, Minister,
you quote aggregated figures relating to the Great Britain situation
concerning the sourcing of meat sales. Do we have any idea of
the position for Wales as part of that? For instance, is the proportion
of Welsh food going to supermarkets increasing, and if so, is
it by the same percentage as in the rest of Britain, by more or
by less?
(Mr Griffiths) First of all, on the issue of household
consumption of meat, the average for the United Kingdom is 240
grams per person per week and in Wales is 241 grams. You just
have to think about all the research that has gone into working
that out, although we are the second highest eaters of meat in
the United Kingdom. As far as the proportion of Welsh meat going
to supermarkets is concerned, supermarkets currently sell some
65 per cent of red meat in the United Kingdom and we would be
failing the industry in Wales if we did not try to maximise the
opportunity to increase the amount of Welsh meat going into stores.
Welsh Food Promotions has been very successful in this area, with
the number of outlets stocking Welsh meat increasing from 964
in 1996-97 to 1,408 in 1997-98. So yes, we are getting more Welsh
meat into supermarkets and that is the growth area for direct
meat sales. Two areas in particular in 1997-98 where Welsh Food
Promotions were successful were deals with Waitrose and Sainsburys
and both of those were for Welsh lamb, and, of course, there are
negotiations going on with other major supermarket chains to try
and improve the position for Welsh farmers.
Ms Lawrence
113. One of the strongest messages that is coming to me from
my constituents who are farmers—and I have quite a lot of
them—is their sense of frustration in the face of their
powerlessness against the strength of the supermarkets. In paragraph
2 you say: "The growth in the share of the market by supermarkets
is expected to increase for the foreseeable future." What
is the basis of this prediction?
(Mr Griffiths) Because simply consumers, customers,
are more and more shopping in supermarkets and I suppose it is
the convenience of being able to buy everything in one place,
and that trend looks to be continuing. That is why we believe
it is very important for Welsh Food Promotions to negotiate on
behalf of Welsh farmers with the major supermarket chains. On
top of that we think it is very important for Welsh farmers themselves
to work much more co-operatively, because one of the things that
supermarkets want is guaranteed large volumes and the only way
this can be done really successfully is for more Welsh livestock
farmers to come together in a co-operative way and be able to
have these large contracts with the supermarkets.
114. It is interesting you mentioned there about farmers'
co-operatives because it does seem that the supermarkets are the
ones that have isolated the farmers individually, but bearing
in mind that it appears you are saying we do not have to accept
their market power is inevitable and you see the encouragement
of co-operatives amongst farmers to combat that, how can the Welsh
Office influence that and help and assist?
(Mr Griffiths) I think through the support we are
giving to Welsh Food Promotions, because that is a part of the
strategy that we should get the farmers co-operating. Of course,
there are a whole range of grants available.
(Mr Brodie) The processing and marketing grants that
the Welsh Office Agricultural Department makes available have,
indeed, already been used in a number of instances to help groups
of farmers come together and we are very keen for that to continue
and increase. That would be one dimension we would hope would
be looked at very closely in the development of the Food Strategy
that we referred to earlier on.
Mr Livsey
115. Could I ask the Minister whether, in his opinion, the
supermarkets have far too great a monopoly of the marketplace?
We hear this afternoon, for example, that Somerfield has made
a bid for Kwik Save. The power is being concentrated in far too
few hands, in my view, and this leaves the farming community very
exposed, particularly in Wales. Have the MMC investigated?
(Mr Griffiths) I think the Office of Fair Trading,
if there was evidence that this was happening. You will know that
the Meat and Livestock Commission did a study of the cost of the
product, so to speak, from when sold in the market as livestock
to when it appears on the supermarket shelves, and found that
there was not any evidence, certainly not sufficient evidence,
to suggest that any of the current problems were caused by the
supermarkets raking off a profit beyond what might be expected,
and I think that whatever the trends are among supermarkets, that
is something for Monopolies and Mergers and the Office of Fair
Trading to look at. Given these trends in the market, I think
it becomes even more important that farmers should come together
and act co-operatively. I think the lesson we can learn from most
of the Continental mainland is that it is the farmer co-operatives
which have helped to provide a bargaining strength with the supermarkets
and other retail outlets.
116. We understand that most supermarkets propose to label
fresh and frozen meat with "Country of Origin" marks.
One would assume by that that it would display where it has been
processed, packaged and produced, all in one message. What effect
do you think this will have on the market for Welsh produce and
will you be monitoring that situation?
(Mr Griffiths) There is a scheme, which is voluntary
until the year 2000 and from then on it becomes compulsory, for
labelling. Yes, we want labelling to be clear and we believe that
this will help to promote Welsh food products, because we already
have the strategy to make sure that Welsh products are quality
products and, therefore, any labelling scheme which gives clear
indications of country of origin I believe will be helpful to
Welsh farmers.
Mr Caton
117. During our early discussions on the topic that we are
talking to you about this afternoon, Minister, two ideas that
might help offer a way forward have cropped up. One is to encourage
better regional sourcing and the other is to develop more sustainable
and organic food supply chains for a variety of markets from the
local to the international level. Do you see those as ways forward
and what role could the Welsh Office Agricultural Department play
in encouraging that?
(Mr Griffiths) Yes, most certainly on the organic
side that is one of the specific areas where we set up a working
group to help promote organic produce, and again on the issue
of regionalisation, in our case it is promoting the Welsh national
product and again that is a very clear part of our strategy and
we believe that what we are already doing here gives us a chance
to make sure that by the year 2000 when the labelling scheme,
for example, becomes compulsory, we will already have firmly established
the quality of Welsh food in the marketplace.
Mrs Williams
118. In paragraph 2 of your factual analysis, Minister, you
state that the catering market has also grown in recent years.
Could you tell us, has the market for Welsh products such as beef
and lamb grown with that?
(Mr Griffiths) What we do know is that more meat is
definitely eaten away from home, the restaurants, fast food. You
only have to think of the way certain companies—whom I will
not promote by naming—have mushroomed across the United
Kingdom, across Europe. You just find them everywhere and it is
reckoned that the 1996 National Food Survey showed that the expenditure
on food and drink eaten outside the home was up 12 per cent. on
the year before. We do not have specific figures for Wales, but
as far as Welsh food consumption of meat and meat products eaten
out is concerned, we do know that we were second only to the North
West as a region in Britain where 114 grams per person is the
amount that it is calculated was eaten. So I think we can deduce
from this that in Wales there is a market for Welsh beef and lamb
and Welsh Food Promotions have been actively promoting Welsh beef
and lamb to catering outlets over the last few years. The major
wholesaler Bookers, for example, which supplies many catering
establishments, stocks Welsh lamb now. We know that the Llandudno
hoteliers will be promoting Welsh beef and lamb shortly. Again
these are all positive developments and we certainly in the Welsh
Office will be doing all we can, either directly or indirectly
through our support for organisations like Welsh Food Promotions,
to make sure this work continues.
Ms Lawrence
119. You say in paragraph 3: "The Meat and Livestock
Commission (MLC) monitor the difference between producer prices
and retail prices", and the figures given here show that
the price spread for beef in Great Britain increased from 48.6
per cent in 1996 to 54.4 per cent in November 1997. What, in your
opinion, are the reasons for the growth in the price spread?
(Mr Griffiths) It is partly to do with the way in
which the retailers have changed the balance of the cuts they
sell over the last few years. Processing costs have also increased.
The manufacturing and the catering market for forequarter cuts,
for example, has been exceptionally depressed, and with the additional
costs arising out of the banning of specific risk materials, the
withdrawal of the rendering subsidy and a fall in the value of
offal by-products and cattle hides and, of course, most unfortunate
of all, the loss of the beef export market. All these have contributed
to the growth in this price spread. I do not pretend to be an
expert in this field but I think that the Meat and Livestock Commission
looked at this and obviously they had an interest to make sure
that the livestock producers were being protected, if you like,
or not exploited, and the outcome of their study was that, despite
this increase in price spread, it was not because the supermarkets
were taking advantage of the position; it was these other factors
that affected it.
|
