Examination of witnesses (Questions 140
- 159)
TUESDAY 29 FEBRUARY 2000
MR BEN
GILL, MR
MARTIN HAWORTH
and DR DERRICK
WILKINSON
140. On inequity in animal welfare standards,
what should the EU do and what should the WTO do?
(Mr Gill) The British Government at the time should
not have legislated unilaterally against the British pig farmer.
At the very least it should have been done on an EU level. Until
such time as that is put right, we need a clearly identified ability
to retrieve from the market place a fair premium for our pigs,
with proper and fair labelling. That is a key issue that we have
been pushing. On the subsidiary point of BSE related charges,
it is entirely appropriate that those costs that are not in the
gift of the pig producer and that are brought about by public
restrictions for the benefit of public safety, should be borne
by the public purse.
141. Labelling was one of the recommendations
in your memo. You made three others. Do you think that you should
pursue all four of them, and which is the most important? You
said that you would seek a change to WTO rules, negotiate national
agreements on animal welfare and allow compensation as well as
labelling.
(Dr. Wilkinson) There is a range of options that have
been considered. We have identified a few here which we thought
would be possible runners at the time. As Martin said, subsequently
we have had feedback from the Commission on what their feeling
has been from the international community, and it has not been
favourable. This was written in a feeling of hope that there may
be some scope for doing it and it provided sensible ways of going
forward. It seems to me that the problem is one of trying to introduce
something that is fundamentally new to the trading system. That
is the idea of a moral issue getting some sort of legal foundation
in rules. We have talked about labelling as a way of achieving
that. There is the possibility of compensation, which is a possible
runner, if the money was ever there. Our experience with agri-money
compensation does not give us much hope and it is probably not
there in the budget anyway, but there is the annex 2 route which
is the green box, and so forth. There are a number of different
things that we can look at and push for but at the end of the
day it will be a long haul. There is not an easy solution to the
problem. As governments are taking these decisions and imposing
regulations because of public demand, I often wonder why the public
does not pay for it? Is it the case that the Government have got
it wrong and they are simply responding to a vocal minority?
(Mr Gill) Taking the four points, you need to add
one other that we have discussed in some detail. That is that
the sensible thing to do is to achieve more remuneration to offset
the differential in the cost base. As I said earlier, there are
two elements there. One is that where we have the higher welfare
standards we need to seek to achieve a premium in the market place
through, for example, the work that we are carrying out on farm
assurance schemes and the work on establishing a kite mark for
British produced food. The second element is the tariff barriers
that we talked about earlier. Where you have aspects that you
cannot address through the product price back to the consumer,
you must have the ability to use tariff barriers.
142. You say that there should be tariff barriers
within Europe?
(Mr Gill) No. I thought you were asking the question
in terms of the World Trade Organisation and in terms of the negotiations
that are about to start. Those particular points are referred
to within the WTO.
(Dr. Wilkinson) On the idea of getting some multilateral
agreement, we are awaiting a report from the Commission. They
have been doing some work in trying to see what the animal welfare
standards are around the world. The preliminary soundings are
that there is a huge range of standards and the European standards
and certainly the UK standards are at the top.
(Mr Gill) If you look specifically at the European
situation, while it is correct to say that we are the only country
with the legislation on sow stalls and tethers, it is not correct
to say that other countries do not have such sow stall-free and
tether-free systems. Some do in part. I believe that the accounting
needs further examination as we find that retailers say that they
can source X tonnes from another country to that standard, but
when you add up the total production within the Member States
and add up the total that each supermarket says that it can account
for, one exceeds the other quite considerably. So there is double
accounting going on. That comes back to farm assurance and the
veracity of the traceability systems that are put in place, together
with the checking that goes on to ensure that the product is what
it says it is.
143. Which animal products do you think would
be most affected by competition?
(Mr Gill) Those bearing the peculiar higher costs
at the moment obviously are most exposed. There are the examples
that we have talked about such as pigs and poultry. Notwithstanding
the problems that we have, there are other mainstream animal products.
Milk products at the moment are a key factor. The dairy industry
is suffering additional substantial costs from BSE and not being
able to maximise the value of their products.
144. Is the answer to have a unit at European
level policing these double standards, bearing in mind what Dr.
Wilkinson said?
(Mr Gill) Internally or externally?
145. Both.
(Mr Gill) There is a unit within the European Union
that seeks to check certain aspects of imported products. For
example, all abattoirs sending meat into the EU have to be constructed
or upgraded to European Union standards. There is a very small
inspectorate that checks on those around the world. Again, it
is for the consumer to decide. As Mr Haworth has already said,
we seem to find this problem crops up continually. When interviewing
consumers in the car park of a retailer as to whether they will
buy the welfare-friendly, environmentally-friendly product and
pay the premium, a clear majority of consumers will say yes. If
the same people are questioned when they leave the shop as to
the products that they have bought, you will find that their shopping
basket is not consistent with their avowed intention on entering
the shop.
Mr Mitchell
146. They want the cheapest.
(Mr Gill) Precisely. However, on the way in they have
said that they would pay the premium and on the way out you discover
that they have bought the cheapest.
147. People tell us that they will pay higher
taxes to get better services.
(Mr Gill) That is interesting.
Mr Paterson
148. A real horror story that is on the horizon,
the matter of egg production that you mentioned, affects both
internal and external competition. In my patch I have successful
egg producers who arbitrarily will have to reduce their flocks
by 20 per cent. They will have the same overheads and the same
costs and they will be 20 per cent less competitive if the egg
directive is imposed as currently planned. They have to compete
with vast American farms where they have 6 millions hens in one
plant operated by 12 people, I am told. With a large amount of
egg production going into liquid eggs or pre-packaged foods and
so on, the consumer has no concept of the element of the egg and
the welfare of production of the egg when buying a quiche or a
pizza. What is the solution there? Unless something is done the
hen industry will go exactly the same way as the pig industry
in this country. We have established superb welfare conditions,
way ahead of any European country, or countries outside Europe,
but they will not be competitive. Therefore, egg products will
be imported from plants with lower standards and the result will
be a net reduction in hen welfare worldwide.
(Mr Gill) I am well aware of some of your constituents
and I think that you probably have the UK's best egg producer
as an individual. The losses he has been sustaining in the last
year or so have been, to me, unsustainable in anything other than
the short-term. To illustrate the point more graphically, perhaps,
when I visited a big trade fair about 18 months ago and went and
talked to the cage manufacturers, I said to them, "You must
be worried about the future, with the impending agreement on the
laying directive", which was still to come. "No",
they said. "The bulk of our trade goes to the Far East and
North America, where they are still buying cage systems as if
there is no tomorrow." They also, interestingly, showed me
one of the advanced cage systems that they had been researching
to try and meet the new enhanced welfare standards of the European
Union. "This is marvellous", they said. "This gives
a perch, this gives the decrease stocking density. There is only
one down side, the hens break their legs now." It is because
of this sort of trade, and this hell bent desire for anthropomorphism
that goes on without actually having any real understanding of
what we are about, that the whole business of animal welfare is
compromised all of the time. My concerns in North America, if
anything, are more acute than yours. They are more acute than
we are facing the very real point you made of the catering sector
buying up dried eggs or egg powder and putting it into whatever.
Unless we put in place a basis, therefore, for degrees on where
we are going—and from a more broader pattern, we will do
that—it does argue very clearly that unless the European
Union can negotiate a welfare standard in the WTO, we cannot go
on on that basis, otherwise we need to introduce a clear protective
barrier which will run against a very seductive trend in the WTO.
I do not believe that the British consumer or the European consumer
should be forced into the position of having to accept cheaper
imported eggs to ever reduce standards.
Mr Hurst
149. Before I ask you about labelling, on the
question of animal welfare and the famous level playing field,
you and, indeed, both of your colleagues have mentioned that we
have higher standards here, which we have imposed unilaterally
over the last decade. Do you believe there is a case, beyond the
commercial premium, that the public ought to pay part of this
and the Government itself should pay a premium in respect of pigs?
(Mr Gill) I think what will be very helpful is if
we could have a very good example set by the Government or in
spite of the regulations, find ways of ensuring that all government
establishments have not purchased products produced to the extremes
that have been delineated by the Government, which does regrettably
still occur around the country. There is one constituency within
the City of London that will not buy pork, and that, to me, is
rather depressing. The premium that we need to achieve can come
from two parts. It can either come from the price the consumer
pays, or if that fails, the extra cost can come from the taxpayer,
following the argument that it is the taxpayer, by virtue of Parliament,
that has decreed that higher standard.
150. It is not realistic to assume that we are
going to go back on welfare standards. We are hardly going to
say that we are not going to have the standards any more until
any other people do, so we do need to give consideration to who
is going to pay the costs of the standards that we have embraced.
(Mr Gill) That is why I made the point a few minutes
ago in answer to Mr Paterson's questions. The answer is a combination
of two elements, seeking to derive it through the ability of proper
labelling and through farm assurance standards that we have been
building up. Parliament must gear itself to give that assurance
to the consumer. Premium prices for UK produced products is an
element of it. I do not believe that will cover it either in the
short, or medium or long term. There is the end opinion element
of costs that will need to be borne by some element of intervention,
either by tariff, buyers or, in certain respects, direct compensation
from the Government. Where, particularly, safety issues are involved,
I think that is appropriate.
151. Could it be done by concessions on regulatory
charges?
(Mr Gill) That is one option that is there. It is
a matter of not imposing costs or covering consequential costs.
Mr Jack
152. Before we leave that, could I ask a question?
In the retail sector at the moment there is tremendous pressure
on the retail margins who are having, by their own admission,
a rough time of it. They might well argue that what they have
to do is to serve two markets, one of which requires the vision
of high welfare friendly products, and the other is products which
are cheap because of the nature of their customer base. Is it
compatible to follow the line of argument that you put forward,
in other words, that there should be compensatory mechanisms for
high welfare, against the background that in these talks retailers,
wholesalers of other consumer products may be pushing to say,
"We want an excess, or even a greater excess, of the cheaper
supplies of raw materials, because that fulfils our commercial
objective of improving our margins and at the same time satisfies
what is still a very large proportion of the consumer base which
shops wholly and solely on price"?
(Mr Gill) I do have a major problem with the pressures
that currently exist in the retail food trade, from the farm gate
through to the retail point of sale. I have on many occasions
pointed out that if you look at the statistical indices such as
the retail price index, the index price on the food outlet point
of sale and the index of farm gate prices there is an enormous,
and most recently, alarming divergence between those indices,
with the farm gate price falling. That pressure has been extenuated
by recent corroboration within the supermarket industry, with
pressures coming on to cut costs. It has been compounded by the
Competition Commission's investigation, which has investigated
the suggestion that markets have been profiteering. They have
sought, as a result of the investigation, to pare costs even further
and that paring of costs has put enormous pressure on my members.
It is of enormous concern to me, because in recent weeks and months
that pressure has increased even further, beyond what it was,
to the point that in many cases there is a regular, below the
cost of production, supply to the retail point of sale, and that
clearly is not sustainable in anything other than the short-term.
That is why I believe the very positive suggestion that has come
out of the letter of remedy that the Competition Commission has
served—not only on the five principal retail companies,
but also the whole industry—that there should be a clearly
defined code of practice, in which they listed 14 points, is a
sensible and positive way ahead, so we can achieve a much more
grown up approach to the way we interface and allow us to have
a professional partnership that can deliver better value to the
market place, rather than just short-term, which seems predominate
in these settings.
153. Do you think that would give a proper context
for the consideration of the commercial aspects of the animal
welfare issue? I just get the flavour that in a way a lot of people
may pay lip service to animal welfare issues, but they may be
driven by other overriding commercial factors. Obviously, there
are a lot of people who are putting pressure on the WTO as a body
in the context that as users of food and raw materials such as
retailers and others, they may be more pressured towards the costs
element than the animal welfare element?
(Mr Gill) I understand the point very clearly. I think
there has been quite a marked change, although it has not manifested
itself at the retail point of the buying of it. A survey we carried
out in the middle of last year showed that a decade ago there
was a general feeling of, "Don't buy British, because it
is of poor quality." This was not just food, it was everything.
It was a time when people said "Buy Japanese cars because
they are better. They won't rust." The survey that we did
last year showed that about three-quarters of consumers wanted
to buy British by choice because they perceived it was safer and
of better quality. That was a remarkable sea-change in thinking,
but they were thwarted because they could not readily identify
British. We are well aware that the consumer, when he or she is
visiting a retail point of sale, has less and less time to check
all the labels. We did ask consumers to go into shops and try
and source British. There was one occasion when one of the people
concerned came out and said, "Yes, I have bought British
here. Here is a Cheddar cheese", only to find that upon examination
it was imported Cheddar cheese. Other examples were of pies or
various items, all labelled with geographical designation areas
within the United Kingdom, and possibly the factory where it was
manufactured, only to find that it was all imported produce. This
underlined to us, very clearly, the urgent need to remove the
confusion that occurs in labelling. For example, we talked to
one retailer who showed us that they had 40 different designation
marks to show British. We need to create one mark that could give
the assurance and give the buyer a simple, readily identifiable
mark to give that answer to the consumer so that they can buy
with confidence and hopefully, therefore, achieve more easily
a mark that would benefit the producer with improved profits.
Mr Hurst
154. This morning I had sausages and eggs for
breakfast. I had a reasonable amount of butter on my toast. The
only thing I was relatively certain of was that the HP sauce came
from this country. They have taken the French off the label now.
I am unaware of the origin of the other products that I ate. Whilst
I can understand that it is possible, with improved labelling,
to make a clearer choice when one buys in a shop or supermarket,
in a restaurant or any catering establishment the consumer operates
blind. Labelling is seen very much as the panacea. How would you
seek to overcome that problem and what other problems do you see
of enforcing clearer labelling?
(Mr Gill) I am not aware of whether you (a) bought
the food yourself or, (b) whether you consumed it in the restaurant?
155. The latter.
(Mr Gill) Much to my wife's irritation, I am the sort
of person who always asks, "Where is the food from?"
The general response I find, most regrettably, is that the head
waiter or waitress looks at me and thinks, "What does this
awkward customer want as an answer? Does he want British or imported?"
When he has made up his mind he then tells you what he thinks
you want to know, without any verification. I have been known
to resort to ask for the raw product to be brought out into the
restaurant so that I can verify the situation. I am equally aware,
for example, that during the period of the summer of 1996 if you
went round restaurants in the centre of London, they nearly all
had stickers up saying, "We don't sell British beef. It is
Argentinian or Australian." When talking to a major catering
butcher he assured me that he was supplying 80 per cent of those
restaurants and that he was not selling one bit of imported beef,
simply because British beef was far cheaper. So that says a lot
for the verification in restaurants and highlights the point that
you make, and we ignore that at our peril because it is an increasing
part of our market and it is a major challenge that we need to
take on. We have started with the easy bits. I find that is always
the best way. From the lightly processed products at the retail
point of sale, we need to progress into the other sectors. There
are discussions going on with major chains of catering outlets
to see what we can do. We have already done a lot, for example,
with the major burger manufacturer and vendor in the country.
156. Your sister organisation, the CLA, has
called for flexibility on the part of WTO to take account of the
right of consumers and countries to discriminate on the basis
of production processes. Is labelling the only mechanism that
you feel they might accept at the WTO?
(Mr Gill) As I have said on a number of occasions—I
think we have gone through the issues and the responses which
you made on 1st November—there were four points that Mr
Paterson referred to. The other aspect that I raised was the balance
between tariff barriers and farm assurance. They, in some way,
are formed to create the extra income without which we will see
a substantial reduction in the UK productive base of the given
commodity that is affected.
157. In your presentation to us you refer to
the hormones in beef dispute, and you suggest an "appropriate
labelling regime". Could I ask the definition of the word
"appropriate" in that case?
(Mr Gill) Here is a good example of the major conundrum
we face at the WTO. The logic is that if our consumers do not
want beef with hormones, you label it as such and then they have
a choice. That ignores one key factor. They will never have that
choice, because the amount of beef that is coming in as part of
the GATT agreement is high quality beef that goes exclusively
into high class catering establishments, at which the identity
is lost at a very early stage. Therefore, the consumer is deprived
of that choice, because we have no potential, currently, for verification
for the consumer issues.
(Dr. Wilkinson) There is the issue of what is on the
label, which has exercised people quite considerably. There is
a difference. For example, on the hormone beef, the Americans
would like us to say "USDA approved." There would be
those in Europe who might want to call it "gender bender."
What goes on the label is a big issue.
Mr Paterson
158. Surely what is on the label is vital? I
have had evidence from America that American steer beef which
has been hormone treated actually has 10 times less male hormones
in it than continental bull beef. So, what is on the label is
absolutely vital.
(Dr. Wilkinson) That is the whole point. There is
not agreement internationally as to how you set up rules that
will govern what goes on the label. There is, of course, argument
on both sides for that.
(Mr Gill) There has been a lot of confusion about
the science of the use of hormones. It is, of course, correct
to point out that the principle behind castrating a bull was to
quieten it down, and the principle behind the hormone implant
was to replace the hormone to improve the type of beef that was
produced within the animal. There are many other sources of freely
and naturally occurring hormones in our everyday diet.
Mr Mitchell
159. You say in your memorandum, "The agreement
on sanitary and phytosanitary measures has by and large functioned
well." First of all, what are "phytosanitary measures"?
(Dr. Wilkinson) "Sanitary measures", I am
sure you are aware, are animal health and sanitary hygiene. "Phytosanitary"
is exactly the same, but it is for plants.
|
