Supplementary memorandum submitted by
J Sainsbury plc (F69)
Our aim is to have 1,000 organic lines by the
end of this year. We serve over 10 million customers a week and
the approximate annual value of UK organic sourcing is £33
million, around 80 per cent of which is dairy sales. Last Friday,
we were voted by the readers of The Mail on Sunday's You
magazine Organic Supermarket of the Year. We also won the Dairy
category for our Organic Rich Chocolate Ice Cream and our mature
cheddar was highly commended; our organic ciabatta bread won the
Bread category in the Organic Food Awards.
During our evidence we outlined Sainsbury's
organic pricing policy. Organic foods cost more to produce and
it is Sainsbury's policy to reflect the costs incurred in the
price to the consumer. Sainsbury's stance is to be responsible
and to avoid both profiteering or artificially subsidising the
market. We believe our pricing policy is sustainable in the long
term. Sainsbury's does not take additional profit on the extra
cost of organic foods and we believe customers should be aware
of the true costs of organic foods. We believe this will prevent
any damage to this market which could create nervousness amongst
farmers, slow the UK conversion programmes and retain our high
dependency on imported products.
We do not want there to be an organic price
war as this would be bad for farmers and consumers. Bad for farmers
as they may end up cutting corners in production and bad for consumers
as quality and integrity falls. Farmers need the guarantee that
premiums will still be there after their two-year conversion process.
We believe as the UK organic market is established,
prices should stabilise as illustrated below:
Sainsbury's own label 400g Organic White Bread:
— selling price in 1996 59p;
— selling price in 2000 49p.
Sainsbury's own label 400g White Bread (conventionally
produced):
— selling price in 1996 27p;
— selling price in 2000 29p.
Instead of artificially lowering prices, which
could threaten the organic farmers' return and depress prices
for conventional products, Sainsbury's are helping farmers to
convert. As mentioned in our evidence, Sainsbury's has an unique
dairy initiative with the Organic Milk Suppliers Co-operative.
This initiative guarantees a minimum price for farmers for five
years with a target production volume of 155 million litres. The
aim is that 15 per cent of all milk at Sainsbury's will be organic
by 2004. We have recently won the Retail Industry award for Organic
Initiative of the Year for our OMSCo initiative.
In October we launched TOP (The Organic Partnership)
which is an alliance of senior Sainsbury's personnel and key organic
suppliers who together will build on the success of the Sainsbury's
SOuRCe initiative and maintain Sainsbury's position as the major
seller of organic food in the UK. The launch of TOP will build
on SOuRCe's achievements, developing a more commercial focus and
reflecting recent changes in the UK organic food market. TOP also
embraces the Sainsbury's Organic Category Management programme—the
first such scheme to be completed in the UK.
Please find below our responses to the Committee's
supplementary questions forwarded.
1. Your memorandum raised concerns about the
difference between the UK standards and the lower standards allowed
under the new European livestock regulation 1804/00 (para 4.4
to 4.6). Could you explain in more detail your concerns about
the livestock regulations? How can these concerns be addressed?
As indicated in para 4.4, the historical development
of organic standards in the UK have meant that there was a reluctance
by UK certification bodies to change their standards or accept
a watering down of them. The best way of describing our concern
is to recall the situation in Ireland.
In Ireland, the three organic certification
bodies—Demeter, IOFGA and Organic Trust—were asked
by the Irish Department of Agriculture earlier in the year to
agree one set of standards for organic livestock production. Over
a period of several months, and in discussion with other European
certification bodies such as the Soil Association, the three approved
Irish organic bodies agreed one uniform standard for organic livestock
production in Ireland. This is considerably higher than the EU
standard as it sought to protect the integrity of the Irish organic
sector.
These uniform Irish organic livestock standards
were forwarded to the Irish Department of Agriculture in July
2000. Without any discussion or consultation with the certification
bodies who represent the vast majority of organic producers in
Ireland, the Department of Agriculture informed them that the
EU minimum standard will be adopted as the Irish organic standard
from 24 August 2000.
Examples of this include:
— poultry production—EU Organic
Standards:
Max number per poultry house 4,800 broilers 3,000
laying hens;
— Irish Organic Standards:
Max number per poultry house 2,000 broilers 1,000
laying hens;
— EU standards allow lambs to be sold
as organic after only two months' organic management. Irish standards
require organic lambs to be conceived and born on an organic farm
which has undergone a two-year registered conversion period;
— EU standards allow the continued
use of animal mutilations and confinements which are not permitted
in the UK by either organic standards or within the various welfare
schemes which we endorse.
In the UK, UKROFS has approved a livestock standard
based upon a document developed over many years. In the light
of 1804/99, this was reviewed and agreed by the organic certification
bodies who, earlier this year worked closely together under the
Organic Livestock Standards Liaison Committee to produce a harmonised
standard. Sainsbury's supported this initiative and would not
wish that work to be undermined. The UKROFS Board has agreed to
an annual review of this position and we hope that the agreed
position will be allowed to continue and not be watered down.
Sainsbury's is a strong supporter of IFOAM (International
Federation of Organic and Agricultural Movements) and believe
that this approach to setting international standards will resolve
the issue of conflicting definitions.
2. You also have concerns regarding the time-scales
for compliance with requirements of the organic seed regulation
(paras 4.9 to 4.13). The time-scale for the requirement that all
seeds for organic crops are grown within an organic system by
the end of 2003 is already a compromise on the original deadline
set out in Regulation 2092/91. What deadline would you see as
reasonable for the UK industry to be able to meet the requirements
for the organic seed regulation? How are you working with farmers
and growers to address this issue?
As stated in para 4.12 we believe that derogated
periods must be strictly maintained and closely monitored. However,
the original time scales set were impractical. The current deadline
of 2003 is reasonable for a proportion of the range of species
and cultivars but still present difficulties to specific crops.
A reasonable deadline would be to extend the derogation for certain
crops and the Soil Association is working closely with the seed
industry to identify the difficult species.
In addition, Sainsbury's has written to all
of its organic vegetable suppliers to ascertain the current position
and forecast projection. We are represented on both the Soil Association
and the Elm Farm Research Centre's organic seed steering groups.
In addition we are in consultation with the seed producing and
seed breeding industry in order to overcome these issues.
3. What lessons do you draw from the difficulties
over organic mushroom production (para 4.9 to 4.11)? Are such
high levels of purity essential to either the reality or image
of organic foods?
All of our mushrooms are UK sourced. We recognise
the specific differences in mushroom production when compared
with other forms of agriculture or horticulture. Those differences
are highlighted by the fact that mushroom growing is an intensive
system wholly reliant on external inputs which organic standards
seek to limit. The fact that mushroom compost undergoes a pasteurisation
process is also a factor. One could question whether such a system
should have been accepted within organic standards in the first
place. But that conjecture must be balanced by the fact that there
are organic mushroom producers who have developed within the requirements
for organic standards over the last 20 years. Notwithstanding
this, our organic mushroom producer accepts the requirement to
use organic straw. The issue of purity is something that our customers
refer to frequently and the prohibition of GMOs in organic farming
is a good example. We would simply propose that the time taken
to achieve that goal of organically grown straw needs to be put
into practical context. Sainsbury's fully supports the proposal
for a staged percentage increase through to 2006.
6 November 2000
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