Examination of witnesses (Questions 137
- 159)
TUESDAY 30 NOVEMBER 1999
MR GRAHAM
SECKER, MS
ANNE GUTTRIDGE
and MS RUTH
RAWLING
Chairman
137. Mr Secker, I am sorry that we have kept
you waiting. My Committee, as always, has been asking too many
questions, it is a very interesting subject; and I apologise for
the delay. We will have to go up to one o'clock, I fear, now.
Can I begin by asking you to introduce yourself and your colleagues
and, very briefly, just to explain the scale of Cargill's operation
and what it actually is, as a company?
(Mr Secker) Yes, indeed; thank you, Mr Chairman. I
am Graham Secker, I am the Managing Director of Cargill plc, which
is Cargill's operating company in the UK. On my left is Ruth Rawling,
who is Vice-President of Public Affairs for Cargill in Europe;
and, on my right, Anne Guttridge, who is the Commercial Director
for our Grain, Oilseeds and Feed operations in this country. Cargill
is a US privately-owned corporation, headquartered in Minnesota,
with about 80,000 employees around the world, in 65, or so, countries,
principally engaged in agricultural commodity trading, shipping
and distribution, in food ingredient manufacturing, we are in
industrial products, in steel and fertiliser, we trade financial
products, and financial brokerage, and we are in the meat and
animal nutrition business.
138. Thank you; that is helpful. I am grateful
for that. Can you just explain how you handle GM and non-GM products
within your company; do you have different systems?
(Ms Guttridge) This is an evolving arena, as you can
imagine. Maybe I should first explain which crops we are involved
in, in the UK, that are relevant to this debate. Clearly, it is
soybean; that is a product that has a seasonal impact, so, traditionally,
before the GM debate would start, we would bring in United States
soybeans in our winter, in the north hemisphere winter, which
would be typically October/November through to January/February,
and then we would typically move on to the South American product,
this was before the GM debate started. And that is still the case,
although increasingly we are being asked to get involved in identity-preserve
programmes, which involve some segregation. But that is where
we are at, we are at a crossroads, I would say. To also talk about
corn: for technical reasons, we have two uses of corn in our process
in the UK, one is in our wet corn milling process, which is based
in Tilbury, and for technical reasons that has been using French
maize and continues to do so, and our dry corn milling operation,
which is in Seaforth, again, is using a non-GM source of corn,
which is currently from Argentina. And that has been quite an
interesting process for us, because it is the first identity-preserved
programme that we have had in the United Kingdom, but it was based
on a non-GM issue, it was based on the technical qualities of
the corn in Argentina. So that is where we are today.
139. One food processor, Northern Foods, whom
I expect are customers of yours, I expect them to be, certainly,
they say in their evidence to us that they never specify the use
of GM ingredients in foods, they never specify the use of GM ingredients.
The quote says: "Like most UK food companies, Northern Foods
has never specified the use of GM ingredients in its foods,"
in other words, it happened by accident. What are your customers
saying now to you about the specification of GM and non-GM products?
(Mr Secker) I think, increasingly, the food manufacturing
industry have specified that they will no longer take GM ingredients
into their products, and I think the area where we have been involved
more than any is in vegetable oil, where that move has been relatively
easy to accomplish, in that there was a readily available alternative
product for them which is a non-GM product and grown in the UK,
which has been rapeseed oil; so a relatively easy move to accomplish.
But that is really where the food manufacturing industry is today.
140. And, interpreting that attitude on the
part of your customers, my reading is that they are actually doing
this as a temporary operation, to try to ensure that the option
of going back to GM sources is there in the future when consumer
confidence has been rebuilt. Is that your reading of the situation?
(Mr Secker) We recently surveyed a group of 30 or
40 customers on that basis, and that is our reading. I think there
is a debate on timescale; most companies are suggesting that it
would be in the four- to seven-year period, rather than anything
earlier than that.
141. Do you find the difference between your
human customers, those that are produced for human consumption,
if you know what I mean, and your animal customers, those that
are produced for animal feed purposes, is there a distinction
in sensitivity?
(Mr Secker) I think the two industries are at different
points in an evolution. As I said, the food industry have largely
replaced GM ingredients with non-GM ingredients, subject to the
definitions that each customer has put on those products. The
animal feed industry is not at such an advanced stage in wrestling
with this issue and finding a solution, in that some of the ingredients
in animal feed are not as easily replaced. It is for sure that
we had chickens before we had soybean meal, but the production
efficiency for those chickens before we had soybean meal, with
its very high protein content, was way less efficient. So it is
a much more difficult issue for them to resolve.
142. So the implication of your comment there
is that you expect the animal feed industry to want to specify
more and more non-GM sources but it is going to find it very difficult
to do, in practice?
(Mr Secker) We are having increasing conversations
with the animal feed industry along those lines. We expect that
they will probably be talking in some great detail with the retailers,
who seem to be driving this initiative, and the signals that we
are getting are that they will seek to go to a non-GM basis at
some point in time.
143. And what about on the other side of the
pond, you have a lot of experience in America, obviously, being
an American company, what are the sensitivities there of the customers
of Cargill?
(Mr Secker) I think the biggest difficulty that we
have had, from our side of the pond, as you call it, has been
to educate our colleagues in the States that there is a real consumer
issue in the UK and in Europe. Only very recently have we started
to see real consumer concerns being expressed and changes being
made by some people in the food industry there.
144. So the process is beginning in the States
now of what has unfolded so dramatically here?
(Mr Secker) Yes. I think the degree of confidence
that the US consumer has in the safety of his food is somewhat
different from the experience that we are seeing in Europe, certainly.
145. Any prophesies about the long-term trends
in the States?
(Mr Secker) I do not know; would you have a better
idea of that one?
(Ms Rawling) I think that is very difficult to say,
but there is certainly a lot of debate at the farm level in the
States at the moment about what farmers should plant for next
year's harvest, planting time January/February next year. There
is a lot of anecdotal evidence which suggests that the trend of
uptake of GM crops will certainly flatten out, may even go into
reverse, but it is too early really to say what is going to happen;
and I think until we get to about February that will be very difficult
to see.
Mr Marsden
146. You said in your evidence that segregation
is often ill-defined and might imply two supply chains. Maize
and soybeans obviously are not mixed because there are two separate
markets. By analogy then there are two separate markets existing
for GM and non-GM. So why do you think, and I quote, "segregation
is a misleading focus for debate"?
(Ms Rawling) We heard you ask this question earlier,
too, the difference between segregation and identity preservation.
I think people can get too hung up on words, but identity preservation
does imply traceability, which segregation does not. Also, I think,
segregation, wheat is kept separate from barley, or maize from
soybeans, as you say, because they have a different functional
use, whereas, for the soybean market, whether genetically modified
or not, the functional use is the same, and a large number of
customers of those soybeans will accept both because they have
equivalent function, whereas some people are concerned, that they
do not want genetically modified soybeans, but it is only a part
of the market. Also, I think, there is the issue of thresholds
and tolerances here. Because in Europe we are talking about a
tolerance of 1 per cent or less, the only way you can really achieve
that is through identity preservation, starting at the beginning
and really keeping control of it, because you would not be able
to achieve that degree of purity by a simple segregation system.
147. On language, the analogy I would draw is
with you may call it the community charge and I call it the poll
tax, but, nevertheless, I take your point. In terms then of what
you were saying though, there is a distinct market for non-GM
food, so I disagree with you. You are saying it is part of an
existing market, I would say, no, it is completely separate, there
are people out there who do not want to buy GM food. What do you
have to say?
(Ms Rawling) As Mr Secker was describing, the food
market, yes, and we have seen our customers reformulating to take
GM ingredients out.
148. So there are two separate markets; that
is my point?
(Ms Rawling) But they have gone to alternative sources,
like rapeseed oil instead of soya oil.
149. You say, in paragraph 2 of your submission:
"No separation requirement exists for conventional crops,
even when they are known to be toxic to humans," and you
give an example of, and forgive the pronunciation, high erucic
acid oilseed rape; but then you go on, in paragraph 4, to say
that this particular crop "is identity-preserved because
its technical customers need assurances of the acidity."
So the question then is, does this mean that technical customers
require it to be kept separate, or segregated, at least, from
other forms of oilseed rape?
(Ms Rawling) Perhaps that was not worded very clearly.
There is no regulatory requirement for separation but there is
a market requirement to keep it separate.
150. I would have thought there was a market
requirement to separate out GM and non-GM. Can I ask then about
transportation. What particular problems would segregation of
the GM and non-GM crops cause in the context of transportation?
(Mr Secker) We have identified, in the case of the
major commodity crops produced in countries such as the United
States, that there are something like eight stages in the supply
chain where the product goes through a period where it could be
co-mingled accidentally with another commodity. And those stages
are from the US farm to the local storage silo, from then on in
a train, in all probability to a river silo, probably on the Mississippi,
where, again, they are unloaded, stored for a period of time,
reloaded into barges and shipped down the Mississippi to the Gulf,
where they are transhipped from the barge into the ocean-going
vessel. All of those points in time, where you are handling through
a conveyor and elevator system, could lead to a risk of co-mingling.
From then on, they are shipped to destinations across the world,
where, again, during the discharge they are handled through grain
terminals that also handle other products. So at each stage in
the process there is a requirement to separate, to use machinery
that could ensure the product integrity.
151. So you would say it was extremely difficult,
if not impossible, to separate?
(Mr Secker) The difficulty we see is that the market
is in a period of transition from not understanding whether it
has a requirement to segregate, to identity-preserve, to have
non-GM supplies, and fully going to the position of having a non-GM
system. So we have got a number of different customer requirements,
different situations, and that is causing a complication that
is leading to difficulty. I think our view is that if we were
to achieve one position or other, GM or non-GM, then life is considerably
less complex and we could achieve the degree of segregation, identity
preservation, that would be necessary. Could I just give you an
example. I have attempted to be very helpful, and I am not sure
if it will be helpful.
Chairman
152. It is difficult to read into the record,
that is the trouble with visual images.
(Mr Secker) I will pass it around; but if I could
just attempt to illustrate the scale of the problem that we are
dealing with. This is a picture of our own installation in Liverpool,
which is a soybean processing plant, and this part of it here
is a grain terminal which stores about 140,000 tonnes of commodity
crops in a series of bins that are linked by common conveyors
and elevators, and our raw materials arrive in 60,000-tonne shipments
that are stored in the grain terminal, and hence processed in
the processing plant. So, in the journey from the hold of the
vessel through to the customer's vehicle, the product is probably
travelling through 500 or 600 metres of conveyors and elevators.
So if there is one product in there the issue of co-mingling does
not exist; if, in a situation where this is the scale that we
are dealing with, we attempt to put multiple products through
then co-mingling is a real problem.
Mr Marsden
153. I appreciate the technical difficulties
with your existing plant and machinery, but are you for or against
the segregation of GM and non-GM for customers? It is a simple
question; are you for or against the segregation?
(Mr Secker) We are for providing customer choice,
for providing the solutions that our customers want, and if they
tell us that they would want a non-GM food ingredient then that
is exactly what we will attempt to provide.
Chairman
154. Can I exercise the Chairman's prerogative
and just quote some of your evidence, because you seem to be saying,
in paragraph 27, that actually it is not possible for commodity
crops, that is the implication, and you say: "Even if the
entire UK market for soya wanted to go to a non-GM supply it would
be a speciality customer in the eyes of the Brazilian..."
and the economies of scale, you say, do not exist; you seem to
be saying it cannot be done for commodities?
(Ms Guttridge) Can I pick up on a point there. Graham
mentioned the problem of timing, and we could move back to this
high erucic question, the high erucic market was well defined
and separate, it did not just appear on a news bulletin that suddenly
we needed a different rapeseed, it was designed technically for
a different usage, actually for the plastic industry. So the industry
had to get itself organised and to organise the chain into separate
crushing, and so on. The problem with the GM debate is that it
has kind of happened in a very subjective, knee-jerk way, which
has not allowed the industry the proper time. I will give you
another example. When the GM technology arrived, we, as a company,
expected that within five or seven years we would have the opportunity
to segregate special traits, which would bring a consumer benefit,
and we would have time to plan that through our elevator systems,
these eight chains that Graham mentioned through the line. The
problem is the timing. I hope that clarifies that for you.
Mr Marsden
155. Can I put something to you and see if you
agree with this, or disagree. This is a quote from one of the
UK's largest poultry producer/suppliers: "I know that we
were strongly considering a total switch a few weeks ago but we
were unable to secure non-GM supply for forward cover already
on the buying book. The intermediaries," which I assume are
yourselves, "who market the soya are unwilling to make the
change to wholly non-GM in their crushing plant..." So is
that correct?
(Mr Secker) I am bursting to answer that. I suspect
that they were not talking to us; had they talked to us and expressed
a desire to have a non-GM protein meal then that is exactly what
would have been provided, and we would not want to conduct this
debate on the basis that we, as an organisation, are unwilling
to provide what our customers want.
156. So if that were true you would investigate
it thoroughly?
(Mr Secker) Certainly.
(Ms Guttridge) Again, it is the timing issue, if I
may say. If they said, "Can you start on Monday morning?",
clearly, there is a clean-down process, there is a pipeline; so
I think the timing is an issue as well.
157. I will supply more details at a later date,
according to the source, but I would like to ask this. The world's
second largest grain-carrying processor, Archer Daniel Midland,
recently made a public statement to encourage their suppliers
to segregate non-GM crops to preserve their identity. Would Cargill
do the same?
(Mr Secker) I think the statement that was made has
been often quoted and I would not be able to provide any feedback
on the success that they have had in achieving their objectives
there. I think it is worth repeating the point, if our customers
desire us to segregate, to preserve identity and to provide non-GM
ingredients, we will do that.
158. The EU has proposed a standard for the
definition of GM and non-GM labels. Do you think the standards
proposed are practical?
(Ms Rawling) You are talking about the 1 per cent
threshold.
159. Yes.
(Ms Rawling) I think 1 per cent is difficult but not
impossible. I think you also have to look at it in terms of what
it implies. I said earlier that in order to achieve that level
of purity, if you like, you need to be able to control the chain
right from the beginning, identity preservation. Identity preservation
brings with it a cost, because you are asking the farmer to do
special things, you are having to organise special storage, special
transport. Even if you manage to get large volumes, which means
that by the time you get it to the UK you do not any longer have
to keep it separate because you are not bringing anything else
in, for example, nevertheless, there is a cost there implied in
the chain; and I think that whatever tolerance is adopted it has
to be seen in the context of what cost it brings with it. One
per cent, I think, is quite difficult, because, starting with
the seeds not being 100 per cent pure, to start with, and then
the prospect of co-mingling through the chain, it is not easy
to do.
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