Examination of Witnesses (Questions 460
- 479)
MONDAY 9 MARCH 1998
MR TONY
SULLIVAN AND
MR MIKE
WILDMAN
460. Mr Wildman is here. The description of
your position, Mr Wildman, in Sainsbury's is that you are the
Senior Manager, Meat Product Technology. So does your work go
into manufactured meat—to look at that and to specify it?
(Mr Wildman) I am responsible for fresh
and frozen meat, both manufactured and non-manufactured.
461. But only fresh and frozen meat in carcass
form?
(Mr Wildman) I am not responsible for
ready meals, for instance, and further processed chilled foods.
Ms Jackie Lawrence
462. On this issue of the price spread, you
have given an explanation as to the fact you are not profiting
from that increased price spread in beef and why. Can I now take
you to lamb, which has not had the problems you just outlined?
We took evidence last week from the MLC and it showed there has
been a similar price spread in lamb from 37.8 per cent to 55 per
cent. How do you explain that increase in price spread in lamb
compared to beef?
(Mr Sullivan) As I have said, we support
Welsh lamb through the counter operation and in the eight Welsh
stores. Our lamb prices have come down both from our suppliers
and into the stores for the customer by approximately 10 to 15
per cent depending on the cut you are talking about. Again, here,
what we do to support the lamb industry is ensure we are selling
British lamb in every store we have on an all year round basis,
giving the customer the choice between that and other products
we may offer at this time of year in New Zealand. They have told
us "Give us the choice and we will make it accordingly",
and it is working well for us and for our partnership schemes.
In terms of the price that is the trend that I can explain to
you. We support the retailing of lamb—especially in Wales
in recent months—by promoting lamb in Wales and in the eight
Welsh stores only, to give the support that was required and asked
for at the time, and will continue to exclusively offer Welsh
lamb in all serve-over counters throughout the UK.
463. With all due respect, we have taken on
board what you have said but you have not actually answered the
question I asked. The price spread between the farm gate and the
retail price has gone up from a margin of 37 per cent to 55 per
cent. We know that the farmers have not benefited from that: why
is that happening? Who is getting the advantage of that? The indications
appear to be that the processors and the farmers are not benefiting;
the customers are not benefiting; someone somewhere has got to
be benefiting and I just wondered if you could address that one
point.
(Mr Sullivan) I do not know really what
else I can say to that question other than that our cost prices
have fallen in the case of lamb and so have our retails in line
with that cost price reduction. There have been increased costs
borne by the suppliers and abattoirs. It is not true to say that
lamb has not been involved in the same way as beef. There are
extra regulatory costs applying to lamb as well for the removal
of SBOs, and it is necessary to ensure that all the same controls
we talked about on beef are there on lamb. So it is true that
there is an increase in operating costs for the lamb suppliers.
Mr Jones
464. You tell us in evidence that 95 per cent
of your beef is supplied from the UK. What is the figure for lamb?
(Mr Sullivan) All our lamb, with the
exception of New Zealand, is British so it does not come from
Southern Ireland or any other place like that. Between December
and April we do sell New Zealand lamb in all our stores.
465. Would you just give us the percentage figure?
(Mr Sullivan) I have figures in terms
of lambs rather than percentages but we sold last year just over
950,000 British lambs of which a third came from Wales and, by
the time the New Zealand season finishes in a couple of months'
time, we will have sold 207,000 New Zealand lambs. So, broadly,
a fifth of New Zealand lamb would come from the total sale.
466. That is helpful in putting the whole of
beef and lamb into context. Looking at your 95 per cent figure
for beef, can you tell us whether that includes both fresh and
processed meat?
(Mr Sullivan) It includes the product
areas we mentioned earlier which is fresh beef. It does not include
any processed product.
467. Where do you source that meat from?
(Mr Sullivan)I am not responsible for
that. I think the majority is sourced from the UK but if you wanted
specific detailes we would have to provide that to the Clerk.[2]
468. That would be helpful. In relation to meat
generally, are you able to tell us what proportion of meat that
you buy goes into fresh sales and how much goes into processed
food?
(Mr Sullivan) Not now, no. I can, provide
that to you. I look after the fresh product which is packed and
over the counter. Are you asking for that as a percentage against
manufactured product?
469. That would be helpful. In terms of the
95 per cent of beef, can you tell me what is the percentage that
comes from Wales?
(Mr Sullivan) We take approximately 30,000
beef cattle from Wales each year which is 20 per cent of our total
beef kill.
470. So 20 per cent of your fresh beef comes
from Wales. What was the figure for Lamb again?
(Mr Sullivan) Approximately a fifth.
It is important to say that not all our beef comes from Wales
is labelled "Welsh". As I said earlier, we in our eight
stores label it "Welsh" but we also buy quite a lot
of Welsh beef that goes into British products.
471. Can you now explain to us your sourcing
policy? Do you purchase directly from farmers or do you deal only
with abattoirs or a mixture of both?
(Mr Sullivan) As I said earlier, our
mainstay and what we find, through experience, to be most successful
way of doing business is through the partnership in livestock
scheme so we buy though our supply base which is six main beef
suppliers and five main lamb suppliers. We do not buy directly
from the farmer but we will buy through the partnership scheme
which is supplied by farmers and farmers who have signed up to
the Sainsbury's scheme. That way we find we are able to achieve
a more consistent basis the level of quality carcus we are looking
for. The farmer knows what standard is being looked for and he
knows that there is a secure market within that framework.
472. If a customer comes to your shop and buys
a piece of fresh meat from your supermarket shelves, how much
would you be able to tell that customer about where that meat
came from?
(Mr Wildman) We are able to trace that
back to the individual supplier. We are not able to trace that
back to the individual animal. However, we are able to trace back
to a group of animals that would have been killed and batched
on any particular day. If we go further down the chain, because
of the partnership in livestock scheme we operate, all of the
animals coming through the chain are identifiable by their ear
tag. They are subcoded when they arrive at the abattoir and we
can follow all those carcases through to the final boning and
packing line. So we have quite a tight control on traceability
back to the supplier and back to the farm.
473. What do you mean by "supplier"
in this context?
(Mr Wildman) The abattoir or the processor.
474. So you can trace it back to the abattoir,
but not from the abattoir to an individual farm?
(Mr Wildman) Yes, we can, but not the
individual pack. It is very difficult. Particularly when you look
at minced beef there are a number of animals associated with that
pack obviously and it is very difficult to trace the full pack
all the way back to the farm.
Mr Livsey
475. Briefly, it would seem that there is a
move to more quality and consumer led supply chains but apparently
these are not actually assisting the Welsh farm sector. How can
the Welsh livestock industry develop a better capability to match
these demands, do you think?
(Mr Sullivan) Why do you say you do not
think they are currently? Obviously we have the issues we have,
but developing quality retailing of meat for Wales and for the
UK, in our view, has got to be the way forward. It has not been
anything else for Sainsbury's, and we need to work with the Welsh
partnership scheme which is very well developed. We have 1335
farms in Wales who are members of that total 9,000 that I spoke
of earlier, and we have those meetings with Oriel Jones and our
other suppliers to communicate the demand of the end customer.
We do that through focus groups, etc, on what they are looking
for and if we can provide quality product and eating quality,
on a consistent basis, we will have increased volumes for everybody.
I do not see Wales being any different from that. Wales and Welsh
lamb has a very strong franchise which we succeed in selling and
marketing in England over our serve-over counters and will continue
to do that.
Ms Julie Morgan
476. I want to ask some questions about labelling.
You are saying you have a policy of offering locally produced
fresh meat. Is all your meat labelled by country of origin?
(Mr Sullivan) Yes. Within Wales and any
of the countries we operate within the UK they are labelled with
the country of origin.
477. And does the British meat always show what
part of Britain it comes from?
(Mr Sullivan) It will say "British"
if it is sold in England or it will say "Scottish",
"Welsh", "Northern Ireland" in those countries,
but it would not say what part of England, if that is what you
are asking me.
478. So on, say, beef that came from England,
what would it be labelled as in Wales?
(Mr Sullivan) If it was bought in England?
479. If it was bought in Wales, what would English
beef be labelled as?
(Mr Sullivan) In Wales we would only
sell Welsh lamb or beef. In England, if it was English beef, it
would be sold as British beef, and we do buy Welsh beef which
we sell in England as British.
2 Note from witness: Processed meat as defined
as fresh burgers is sourced from within the UK and represents
3 per cent of our total fresh Beef Volume. Back
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