Examination of Witnesses (Questions 360
- 379)
WEDNESDAY 25 OCTOBER 2000
MR RON
GREEN, MR
GRAHAM KEATING
AND MR
KARL TUCKER
360. Right.
(Mr Green) To date, as with Graham, most of these
are frozen fruits coming from abroad because they have had so
many more years of help. They have processing plants which are
well equipped.
(Mr Keating) Just to add, all our processing is done
in the UK but for the actual growers, it is two issues I suppose,
one of which is land usage where they are doing traditional rotations
rather than ploughing the same products into the same fields and
regenerating with nitrates and so on every year, the other thing
is pest control. For example, our strawberries are all grown at
a height between 800 and 1,200 metres above sea level. That is
based on above 800 metres it is cool enough to kill the natural
bugs and insects but go above 1,200 metres and you cannot get
the strawberries to grow.
361. Not possible in this country.
(Mr Keating) That is the difficulty. Find a band between
800 and 1,200 metres in the UK which has also got the right amount
of sunshine to grow strawberries and you kind of narrow it down.
362. Does that highlight some of the dilemmas
of those who are committed supporters of the organic sector that
our climate and geography just simply does not lend itself to
providing the full range of organic produce? British strawberries
are very nice and we all eat them at certain times of the year
but they are not going to meet your standards because of the need
for additional intervention, is that right?
(Mr Keating) Yes. I think there will never be a 100
per cent UK supplier of all the things we need.
363. Most people would say strawberries are
a local crop. In that particular instance you would not be able
to satisfy your demand.
(Mr Keating) Probably not for us.
(Mr Green) We might. We are working on some dairy
farms locally. We are trying to develop some strawberry growers.
We have a chap who has come along to us with some varieties, organic
varieties, which he believes will be able to be grown in this
country. There is a lot of work being done.
364. Your relationship with the retail sector,
you are pretty much in a seller's market place, are you not?
(Mr Keating) It is not an easy seller's market. I
think everybody is looking for value for the consumer.
365. You are not in a position to dictate price
and say "If you want organic produce, this is what it sells
for"?
(Mr Green) It is dictated by the market place really.
366. I agree, since the market place has a shortage
of supply.
(Mr Green) It is not that short now.
(Mr Keating) It is also the often quoted issue about
organic food in that people would buy more if it was cheaper.
I think they would say that about anything, cars, anything. The
issue is when we developed our products we had to take the view
because we were early into the market that we had to price them
as close to conventional as we could. Our margins are relatively
small. We said that is a pump priming exercise, to get economies
of scale, to get the volume through. We have always been consumer
led. We have never said "If we are going to employ the same
costs we should be charging £1.50 for the product".
We are saying "The market is a pound so it ought to be a
£1.05".
367. So presumably, even with that, you have
always made it clear to your customers that you do have to pass
around the higher input costs where they exist to them?
(Mr Keating) Yes.
368. They must make their own judgments as to
how they pass them on to the customers, whether they do or not?
(Mr Green) Absolutely.
369. Are you finding that overseas competitors
in the organic sector can take your market as well? Is that an
option which retailers wave at you which is "Well, okay,
if you insist on a price of that kind we can get it cheaper somewhere
else"?
(Mr Green) We are working with lots of growers abroad
because of the lack of UK supplier.
370. Right.
(Mr Green) So it does not affect us. We talk directly
to the supermarkets on foreign produce.
(Mr Keating) Certainly we are seeing some ingress
from France and Denmark, particularly, of organic yoghurts.
371. On price as opposed to differentiation?
(Mr Keating) Yes, absolutely.
372. They are saying "We can do it a bit
cheaper than Yeo Valley", and Sainsbury's or whoever are
saying "That looks interesting"?
(Mr Keating) Yes; although as yet the consumer, it
appears from the figures, I am pleased to say, has not embraced
that. I think there is a degree of consumer led reassurance about
the name they know and trust so far in what is quite a new market
for them. Organic is such a baby market, growing very fast. They
have not seen the foreign imports establish themselves as yet.
373. In your company's case, you control two
thirds of the market on your own label and you do some own brand
production as well for some supermarkets so you must be a monopoly
supplier in this particular sector?
(Mr Keating) We are a majority supplier.
Mr Drew
374. I just want to take you both back but it
does link into the retailing point. I just want to approach it
very quickly from the farmer's perspective. Is one of the advantages
as far as you are concerned that it does allow farmers to diversify?
You said you believe people have to have a philosophical conversion.
As part of that philosophical conversion how important is diversifying
supplying to you or is it not important, you would rather have
specialists?
(Mr Keating) For us less so than the dairy industry.
I think we are looking for good quality dairy farmers and working
very closely with those.
375. You would rather have specialists. Mr Green?
(Mr Green) I think the same.
376. Specialism rather than diversification?
(Mr Green) It is very hard to manage the unit in two
systems and very dangerous.
Chairman
377. Can I come to regulations now. Some of
our witnesses have said that whereas they think the European Regulations
on organic food seem to deal adequately with the simple processing
they are not full enough or adequate on complex processing. For
example, on how to achieve separation in a plant which is being
used for both organic and conventional processing. Do you think
there is a problem in this regard which applies to processing?
Do you agree, again with another of our witnesses, that the Commission
and UKROFS have given an easier ride to processors than to farmers?
(Mr Keating) As a processor, because we are only organic,
I do not know what level of deal is required. We take the view
it is simpler for us and makes much more sense for us to be a
separate collection unit and offer it that way. We would feel
that the whole process needs to be water tight in terms of integrity
and control and, therefore, if there is an inference that processors
are having an easier ride then I would be concerned about that
I think. All the way through the supply chain it needs to be controlled
and clearly regulated.
378. You would want it to be fairly tightly
regulated? You would not join the clamour for deregulation?
(Mr Tucker) There are stringent rules already in terms
of where a plant is processing organic and non organic. Organic
has to be processed first thing, following a complete clean down
of the plant to avoid cross contamination. That process is in
place and is audited by the Soil Association and the other bodies
similar to the Soil Association. Those regulations are in place
at the moment.
(Mr Green) Yes. I am not sure how good they are policed.
379. Have you evidence that rules are being
broken? Are you concerned about this?
(Mr Green) Lots and lots of rumours, especially in
the last 12 months. In my paper I sent to you I included a paper
I sent to the Soil Association.
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