Examination of Witnesses (Questions 140 - 161)
MONDAY 16 FEBRUARY 1998
MR WIN
GRIFFITHS, MP, MR
HUW BRODIE,
MRS ALISON
JACKSON and MR
JASPER ROBERTS
Ms Lawrence
140. You have said several times, and also in paragraph 6,
that the costs of marketing and distributing meat are increasing.
At the risk of being told you do not have the figures for Wales,
is the position worse for Welsh farmers than for farmers in England?
(Mr Griffiths) Not that I am aware of, in the sense
that obviously you could argue that Wales is a little bit further
from some of the markets, so there could be an element of added
cost there, but I do not think we can argue that there are, as
far as I am aware anyway, any significant differences. I do now
know whether Huw has any information on that.
(Mr Brodie) No.
141. Just the farmers having to pay extra costs to have their
cattle taken to an abattoir further away?
(Mr Griffiths) I do not have the figures for the whole
of England but I am fairly sure that if you looked at the distribution
of abattoirs across the country and the distribution of abattoirs
in Wales, you would not get figures to show that Wales is particularly
disadvantaged as compared with other parts of England and Scotland,
but we can always have a look at that just to be absolutely sure.
142. Is there any way of obtaining figures at all?
(Mr Griffiths) We can obtain figures of where the
abattoirs are in relation to farmers.
143. I meant in relation to the costs for the Welsh farmer
as opposed to the costs for farmers throughout England, to do
a comparison?
(Mr Griffiths) Do the Meat and Livestock Commission
have such figures?
(Mr Brodie) We can certainly look at it. I am certainly
aware that it is a developing issue in the milk sector obviously,
that collection charges are a particularly worrying factor there.
The same message has not reached us at all on the livestock side
but we will certainly check it out.
Mrs Williams
144. Before I ask my next question, can I go back to Welsh
Food Promotions. If there is criticism from different quarters,
apart from reading about it in the Western Mail and other
newspapers, have they been told that they do need to smarten up
their act, if that indeed is the case?
(Mr Griffiths) Yes. The Secretary of State has had
a meeting with them recently to discuss their strengths and the
areas where they need to improve and so they are well aware of
that.
145. Could I come back to the price spread between farm gate
prices and retailers to ask to what extent are we dealing with
different problems when we treat the lamb, the beef and the milk
sectors separately? Are there, indeed, different or distinctive
reasons for the variations in price spreads between farm gate
prices and retailers?
(Mr Griffiths) I think in the case of beef and lamb
a lot is to do with the way in which you can get more prime cuts
off beef than you can off lamb, so that has an impact. As far
as milk is concerned, I think the principal issue there for Welsh
farmers is the one that Huw has just mentioned about the costs
of collection in areas which are quite a way from creameries.
I do not know if there is anything else that can be added to that.
(Mr Brodie) No, I do not think so.
(Mr Griffiths) Those are the principal points really.
Ms Morgan
146. You have already mentioned additional costs as a result
of the need to comply with the new hygiene regulations, and you
mention that in paragraph 6 of your document. The farmers told
us that they were very concerned that these were making it harder
for them to compete with imports. Have you any proposals to ease
the situation?
(Mr Griffiths) At the moment the Government is consulting
with the industry and other interested parties on the details
of the proposals to introduce charging from 1 April 1998, and
basically the Government is now waiting for that consultation
to be completed and then they will look carefully at the comments
there. Really that is how it is at the moment.
147. What will be the longer-term effect on Welsh agriculture
of setting up the Food Standards Agency?
(Mr Griffiths) What we want to achieve with the Food
Standards Agency, one of the things which has bedevilled the food
industry and the meat industry in particular, especially following
the BSE crisis, was the feeling that it was not best that both
the promotion of the producers and the protection of the consumers
was to be found in one government department, and so the Government
took a decision quite early on to set up a separate Food Standards
Agency. What we are looking for that Food Standards Agency to
do is to provide independent advice, to give assurance to consumers
that British-produced food is of a high quality and absolutely
safe, and to do this without raising unjustified alarms, in fact,
by having a process where there can be independent evaluation
for people not to be doubtful about it, because it is part of
the same government department which is responsible for promoting
the producer interests, so we hope that the outcome will be more
confidence in British food and, therefore, more sales of British
food and, therefore, greater income for farmers in the United
Kingdom and in Wales.
148. You think it will have a good effect on agriculture?
(Mr Griffiths) I think so, particularly because we
ourselves are taking steps to make sure that Welsh food is recognised
as a quality food and by making sure we meet the demands of the
Food Standards Agency by making sure we meet the hygiene demands
that are currently with us, that overall there will be a positive
effect on the possibilities for Welsh farmers to sell more of
their product.
Mr Livsey
149. I would like to ask you two questions, Minister. There
is great concern about the cost of the hygiene regulations at
the moment. I know a number of small butcher/slaughterers with
their own slaughterhouses who are having pretty intensive inspections
at the moment costing them £95 a day and inspectors are being
employed at £15.50 an hour. In some cases I have known of
five inspectors being in one slaughterhouse. Farmers are working
for £2.50 an hour and this seems a great distortion and perhaps
some of the inspectors ought to be down at the ports doing something
about some of the imports coming in. Surely there is a bit of
"over the top" going on here. Some of the small butchers
themselves cannot afford to sustain this amount of cost for very
much longer.
(Mr Griffiths) Of course, one of the problems that
we have had since the BSE crisis is that we have to be hyper-sensitive
to issues relating to hygiene and the food safety standards, and
this is not just for the sake of British consumers but actually
for the sake of the industry, because unless we can show the Commission
that we have the highest possible hygiene standards and that on
top of that we have independent checks on those standards, then
we are not going to get the beef export ban removed and it is
critical that this is seen as one of the major efforts we are
making to make sure the Commission and the Council can be confident
about the quality of our food, the safety of our food and the
standards of inspection that we have. Unfortunately, you could
argue that because of what has happened we need to have done this
and I do not think there is any way we can avoid doing that because
anything that is done which seems to imply we are not imposing
the highest standards could cause difficulties in getting the
beef export ban removed. As far as these same inspectors carrying
out more inspections at ports is concerned, you will know that
it is not possible in the normal run of business to be carrying
out those sorts of checks at ports because of rules relating to
intra-Community trade. There are places, such as food processing
plants, where these checks can be made and, of course, we have
offered an open invitation to the farming industry that if they
ever have any doubts about meat that has been imported ending
up in processing plants for resale within the United Kingdom,
then we will follow up any lead that we are given.
150. I do not, Minister, under-estimate the importance of
inspection. It is just that it appears to be over the top as far
as British producers are concerned in comparison with their counterparts.
There is one other question, Mr Chairman. There is something that
I believe could be done now which would not actually cost very
much at all, in fact, it would increase the price that farmers
receive for their livestock, and that is in relation to the regulations
as far as the removal of specified risk materials, SRM materials,
is concerned in relation to sheep in particular. As you know,
Minister, in some of the Continental countries they prefer to
receive a whole carcase instead of its actually being dismembered
here. Would it not be possible to lift some of these regulations
in relation to exports to France, for example, where they have
precisely the same regulations as ourselves as far as removing
specified risk materials is concerned, but they would prefer to
do it there? This would move a lot more lamb at the present time
and would improve marketing and it would not cost a great deal
and it does not require a great deal to lift those regulations
in this particular instance?
(Mr Griffiths) I do not know, Richard, whether you
have any particular country in mind because I know we have received
representations in the Welsh Office in connection with sheep exports
to France, but when we made some enquiries, because obviously
we were anxious to try to find out what the legal position was,
basically the new SRM legislation actually followed a Commission
decision and this means that sheep carcases can only be exported
to France in split form with the spinal cord removed. Certainly
I am aware that the different requirements of the French market
have raised concern about the export demand for carcases reducing
and also live sheep exports increasing, but there is no prospect
of amending our legislation to permit the spinal cord to be removed
in French meat plants because, in fact, France already has controls
on SRM from sheep and this legislation has a derogation exempting
imported sheep carcases until 1 January, but I understand that
the French government now prohibits the import of sheep carcases
containing SRM and, of course, this is in line with our own legislation.
So there may have been an opportunity but the French have removed
it pretty quickly.
151. It is just that I think that some of these regulations
apply in other countries than France as well. I cannot name them
off the top of my head. Possibly Spain is one of them but I may
not be correct in saying that. Would it be possible for the Welsh
Office to investigate that a bit further in relation to other
countries?
(Mr Griffiths) We can look at it but, of course, it
is a Commission-wide, a European-wide, regulation, so I cannot
hold out any hope that we could get this reduced, but we will
look at the situation in individual countries and let you know
the outcome.
Chairman
152. You suggested in paragraph 9 of your memorandum, Minister,
that collaboration between retailer and producer is the key to
successful marketing. That is probably true, but what should the
policy be concerning those producers who are unable or unwilling
to enter into specific contracts with retailers? Bearing in mind
we live in the real world, do you see it as an even contract between
individual small producers and huge supermarket chains?
(Mr Griffiths) I believe it is possible. If we have
a quality Welsh product to sell and the supermarkets are confident
they can sell that product, then a large number of small producers
getting together to make a deal with a supermarket chain does
help them in their bargaining power. I would not want to say that
necessarily these two are equal partners but, on the other hand,
if we can establish the high quality of Welsh meat and get that
across, then different supermarket chains will be anxious to be
able to sell that quality product, and I think that then could
help the small producers in their negotiations. What I think is
essential is that, however difficult the negotiations may be between
the supermarkets and Welsh farmers, it is going to be far easier
for Welsh farmers acting co-operatively than trying to have single
deals. In fact, I go so far as to say that that would be a disaster
for them and it is going to be essential. Unless a particular
farmer has some special niche market which he or she has been
able to develop, then the future for small farmers in Wales is
to co-operate, set up organisations where they can sell their
product as this quality Welsh product to the supermarkets.
153. Basically, producer co-operatives are probably an answer
to the power of the supermarkets?
(Mr Griffiths) I think so, yes.
Mr Livsey
154. I would like to urge the Welsh Office, as I am sure
they have already done, to examine what has happened in certain
countries and parts of certain countries, like Brittany, and also
in Ireland, where they appear to have accessed a lot of EU funds
in order to establish co-operative initiatives, particularly to
have a more powerful access in the marketplace. Have you any plans
or any proposals to push that sort of initiative forward?
(Mr Griffiths) Certainly we are encouraging Welsh
farmers to act co-operatively and it is true that there are European
Union funds available to help in this process and I am certain
we would want to access that money.
Mr Caton
155. Following on from the direction of your evidence, Minister,
how much scope do you think there is within the short to medium
term for upgrading Welsh-based food processing and retailing and
developing new quality markets for Welsh products? Also, do you
think there is any scope at all to diversify Welsh farm production?
(Mr Griffiths) Obviously I believe, first of all,
there is definitely scope to continue to promote Welsh beef and
lamb and things like the farm assurance scheme and the new regulations
about labelling are all going to help in that process and we would
encourage farmers in Wales to come together co-operatively to
negotiate in groups with supermarket chains or whatever. Looking
to diversification, I presume you are implying out of the traditional
product areas of beef and lamb?
156. Yes, but remaining within agriculture rather than moving
to tourism?
(Mr Griffiths) I do not think there are any easy options
there. You may create certain niche markets. I do not know if
it has had a particular impact in Wales but certainly there have
been some farmers who have lost out in the rush perhaps to try
alternatives, such as ostrich farming, where people have, unfortunately,
lost money because it has all been a bit of a rush and they suddenly
found there is not a market. The market has not developed as quickly
as they have been able to bring the ostriches into the market.
So I would say that in terms of diversification into other products,
we would need to be very careful about what we were doing there
and I think that the foundations of Welsh farming success are
going to be based upon our success along with them in developing
this food strategy on Welsh quality products.
Mr Edwards
157. Minister, there are many farmers who are thinking enough
is enough and they cannot carry on. They certainly cannot pass
on their farms to their sons or daughters. The Minister for Agriculture
announced in December a restructuring that was necessary and that
there would be support for those who wanted to take an early retirement
scheme. This is an industry which traditionally has not had redundancy
payments, early package incentives, golden goodbyes and suchlike.
Do you have any information about the retirement scheme, and what
benefits do you think that could bring to farmers, younger farmers
especially, in Wales?
(Mr Griffiths) Basically, as you rightly point out,
in the statement made before Christmas Jack Cunningham did refer
to the possibility of looking at issues around a retirement package.
There are still discussions going on behind the scenes about what
possibilities there may be for developing such a package, but
they are still at discussion stage and there is no definitive
plan to bring forward at this particular moment. I do not know
if there is anything to be said beyond that, Alison.
(Mrs Jackson) I think that the early retirement scheme
in particular is designed for the needs of farmers on the Continent,
where the inheritance laws means that the farms are split between
the children of the particular farmer, so they have a pattern
there of ever-decreasing farm sizes and the early retirement scheme
is designed to enable farms to amalgamate so that you end up with
fewer, larger farms. I am not sure whether that will be appropriate
for the Welsh position. The other thing is that I understand the
maximum payment under that scheme at the moment is in ecu equivalent
to about £25,000. So I think we need to look very carefully
at whether this scheme can be interpreted in such a way that it
would be appropriate for Welsh agriculture and the two things
I have just said do not sound terribly hopeful but we are certainly
looking at it.
158. Do you think there is a way that these deliberations
in Europe can be conducted with a sensitivity towards the situation
here in Wales?
(Mr Griffiths) Obviously we have to be sensitive to
the situation in Wales and to see whether there can be any adaptations,
but at this particular point in time I cannot say that we have
an answer. We are exploring what possibilities there are but,
as Alison has pointed out, the traditional approach with the schemes
that are available would not appear to meet the particular needs
that we have in Wales and, therefore, it is going to require some
considerable discussion before we can bring forward, even have
the chance of bringing forward, a scheme which would be relevant
to the needs of Welsh agriculture.
159. Another concern which many farmers who have come to
me have mentioned—and it was raised in the House by Members
on all sides of the House—was late payments of suckler cow
premium and other payments in recent months. How satisfied are
you with the system as it is at present?
(Mr Griffiths) I think most MPs, certainly all MPs
who have a few farmers in their constituencies, will have had
a letter from me over the last couple of months expressing regret
about the fact that there have been late payments. Part of the
problem has arisen from new audit requirements, because the Commission
is very worried about fraud across the European Union and, therefore,
our software programmes have had to be rewritten and that has
taken quite an amount of time. The Welsh Office also does not
have, in the normal course of our proceedings, a large enough
staff to be able to cope with all these problems. Our IT is also
not the most modern and we are investing quite heavily in new
information technology and I would hope that from here on in we
are going to get better at making more of our payments on time
and meeting our charter targets, but it is difficult for us to
meet all the requirements that we have and we certainly want to
get out as much as we can to Welsh farmers.
Mr Livsey
160. Mr Chairman, can the Minister reassure us that this
is not a legacy of the Hon. Member for Wokingham, who had a very
incisive knife in the Welsh Office and the net result is that
farmers are receiving late payments?
(Mr Griffiths) It is well-known that the particular
gentleman you mentioned did carry out some quite significant cuts
in the Welsh Office. I could not honestly specify myself whether
the brunt of these fell upon the three divisional offices. I have
been to two of the divisional offices and intend to go to the
one in Caernarvon in the fairly near future, but I can assure
all the Committee Members that there is a tremendous amount of
paperwork associated with these payments and because of EEC requirements
very often a single mistake can result in a claim being disallowed
because of their anxieties over fraud. So it is quite a painstaking
task to make sure that all this work is done correctly and we
are certainly aware of the need to be doing more to make sure
payments are received on time.
Mr Livsey: To my certain knowledge the position at Llandrindod
has been a considerable cutback in numbers of staff, which has
made life quite difficult for them in Llandrindod. Mr Edwards
and myself were at a meeting in Abergavenny a fortnight ago yesterday
when about 25 per cent. of the farmers present still had not had
their beef premium paid. We actually took a straw poll in the
meeting and I am happy to say that some of them had received nearly
all their ewe premium, you will be glad to hear, but there were
others who had not received certain amounts of support.
Chairman
161. Finally, I am going to ask you to get your crystal ball
out, Minister, to speculate on what is likely to happen in the
European funding area, bearing in mind there are going to be changes
within the common agricultural policy related to further additions
to the European Union and the necessary reform of the CAP in any
case. How do you see that is going to affect the ability of the
Welsh Office to encourage the developments that you mentioned
in the areas of marketing and so on?
(Mr Griffiths) I think there are two specific issues
which will have an impact on Welsh farming. One is the reform
of the CAP, given the likelihood of some further new entrants
into the European Union over the next few years, but secondly,
the other pressure that is being felt is agreements in relation
to international trade. The World Trade Organisation tried to
drive out particularly the more obvious subsidies which take place
in agriculture. On the CAP, the Commission, I think, are hoping
to have some draft proposals out by, I think, the end of March.
(Mr Brodie) 18 March.
(Mr Griffiths) As a former Member of the European
Parliament, I have to say the timetables do tend sometimes to
drag a bit and obviously the process is not going to be completed
very quickly. What we are keen to ensure is that the changes which
do come about will not be to the detriment of Welsh agriculture
and that the concerns we have in opening up markets, which is
part of this process, and the pressures on the agricultural spending
will not result in there being a targeting, if you like, of British
and Welsh agriculture in particular. As with all these things,
compromises are eventually arrived at and I would certainly want
to make sure that in the Welsh Office we are putting forward a
very strong case in relation to the needs of Wales within the
context of the United Kingdom's bargaining position, if you like,
with the rest of the European Union.
Chairman: Right. With that, Minister, I would like to thank
you once again for being before us and answering the questions,
and for allowing us to use the room in the Welsh Office. Thank
you.
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