Examination of witnesses (Questions 160
- 179)
TUESDAY 30 NOVEMBER 1999
MR GRAHAM
SECKER, MS
ANNE GUTTRIDGE
and MS RUTH
RAWLING
160. Not easy to do; so are you going to do
it?
(Ms Rawling) I suppose the answer to this question
is, are our customers willing to pay for what we think at the
moment it would cost us to do it; because there is a cost in identity
preservation, we cannot do it for nothing, given the state of
the US market, that is the issue.
161. Are we going to be faced with the situation
where non-GM food is going to be more expensive than GM food,
because of what you are saying, since you cannot change over,
is it too hard?
(Ms Rawling) I think that is a question of which way
the market goes. It is an issue which the market is currently
exploring, it is not determined one way or the other.
162. If consumers then require 100 per cent
GM-free, whereby we accept 100 per cent may not be exactly 100
per cent, can either IP or segregation deliver it, are you confident
it can deliver it?
(Ms Rawling) Yes, I think we are confident that we
can deliver, for example, to the threshold standard; 100 per cent
is not achievable, no, that is too much.
Mr Marsden: What are the true costs then of
segregation, because I think in your evidence you imply they will
be considerable, but other evidence to us has argued that premiums
can be as low as 10 to 15 per cent, which could mean less than,
say, two pence on the price of a chicken, for instance; so what
is your view?
Chairman
163. We have had quite a wide variety of evidence
on this issue, very different views have been taken on this, so
we would be interested to know what your view really is?
(Mr Secker) I am sure you have. I think that the price
depends on the degree of rigour in the system and the thresholds
that are required by the system. The work that we have done, in
terms of providing non-GM soybean meal for the animal feed industry,
suggests that the premium would equate to something of the order
of $25 to $30 on a product whose value is $200.
Mr Marsden
164. So 15 per cent, upper end of that range.
(Mr Secker) Yes.
(Ms Guttridge) But it does depend on scale; for example,
if three-quarters of our customer base asked us to change it would
be a different answer to your question than if 10 per cent asked,
because of the clean-down. If you think of the eight stages before
the ship, then there is the ship which you clean, I think, there
are typically seven holds in a Panamax 60,000-tonne, and it arrives
in the processing point and there is the clean-down time during
the process that can add substantially to the cost.
165. Because that is the point really. If a
vast majority of customers said "Switch over now, as quickly
as you possibly can," then there is no reason why non-GM
food would be more costly, it would actually become less costly
because it is in the majority?
(Mr Secker) Then I think the issue of a premium is
irrelevant. If we have a common definition of what is required
by the UK industry then we no longer need to talk of premiums
and discounts.
166. Another witness suggested that there should
be an EU certifying body, organisation, for GM status, and I just
wondered what your views are on that?
(Ms Rawling) I think what we are lacking, to some
extent, at the moment, is an agreed testing methodology and an
agreed sampling standard, which would mean that whatever test
people used they were complying with a standard; because it is
very clear that different tests produce different results. I think,
once the testing methodology and sampling is laid down, it can
equally be private companies who check that a cargo is meeting
the standard, because in our normal business we employ private
companies around the world every day to check that a boat-load
of soybeans coming from Brazil is actually a boat-load of soybeans.
That testing goes on all the time.
Mr Jack
167. In paragraph 12 of your evidence, you say,
under Traceability: "It is obviously easier to ensure traceability
back to a farm if the farm is local to the processor or customer,
although even then, since many food processing systems run continuous
processes, the identity of the product gets lost at the processing
stage." That almost says that even if the customer wanted
to be assured that there was full traceability of a GM product
right back to source, somehow, in the real world, it is not going
to happen. Is that right?
(Mr Secker) I think there is a misunderstanding as
to how large food manufacturing factories work; most of them do
operate on a continuous basis, so it is very important that the
raw material that is coming in the front end of the factory is
to an agreed specification, that is checked, is adhered to, such
that when those raw materials enter into the continuous process
you can be assured of the quality that is going to be produced
and the safety of the end product. But in terms of identifying
a packet of crisps to a field that the potatoes came from then
I think we would say that is not possible.
168. But in terms that if somebody was advertising,
say, potato crisps made from potatoes that were GM-free, and bearing
in mind there would be a multiplicity of sourcings of potatoes,
is it possible, under those terms, to have for a given batch,
because a crisp processor, when he tips the potatoes through his
hoppers, and everything else, will know where they came from,
I assume so, is it possible, under those circumstances, with a
multiplicity of sources, to have full traceability?
(Mr Secker) I think you have got to have then a situation
where that processor buys all of his potatoes, his raw materials,
on the basis that they are non-GM, that those farms have grown
non-GM potatoes, and when the raw material enters the process
there is not an issue of traceability any more because you have
got an agreed standard.
169. So it comes back, effectively, to an organisation
like yours marshalling together sufficient sources of raw material
to provide the processor with what they want, and under those
terms traceability is quite feasible should consumers want it?
(Mr Secker) I think, if you take the case of the animal
feed industry in the UK requiring about two million tonnes of
soybean meal a year then, out of a US crop of 70 million tonnes,
we are talking of identifying a niche requirement for a niche
market, and that is possible. The system that you would need to
put in place to ensure full traceability to a US farm would be
extremely complicated.
170. It would. In terms of the processors of
major arable commodities that you are presently serving, certainly
as far as the UK is concerned, are they actually asking for some
form of complete traceability already, in terms of GM-free raw
materials?
(Ms Guttridge) You are talking in general on commodities?
171. Any that you are dealing with. I am just
looking for examples of some other—
(Ms Guttridge) Yes; one example is the one I started
with, which is the dry milling process for the manufacture of
corn flakes, that is a full traceability system that has been
built over a number of years, backed by full traceability of the
audit, right back to the individual farm in certain states in
Argentina. So, yes, it does exist. And it comes back to this issue
of timing. For example, we may have had lots of letters like the
one you mentioned over there from people saying, "Can you
start on February 1st? We would like to consider, with our customers,
the switching to poultry fed on non-GM from February 1st,"
it is a commonly quoted number. It is the timing issue. The farmers
plant the US beans in about February, so for them to get something
in place it is almost too late for February. It is the seasonality
of agriculture that provides us with the problem, and the retailer
the problem, because he is asked by people to come up with a solution
too quickly.
Mr Mitchell
172. Just to come back to the comedy star, just
a question which is a bit offline, but you emphasise the difficulties
in commodity markets of segregation and different distribution
systems, but do you see a fear, or do you feel a fear, that all
this agitation about segregating GM crops and non-GM crops, given
the fact that the regime in the United States is much more liberal,
if it is authorised for use the farmers can use it and you do
not have to have traceability or declarability, or anything like
that, do you see a fear that this will be used as a non-tariff
barrier to trade, particularly with US commodities?
(Mr Secker) You are in the best position to answer
that.
Chairman: Mr Mitchell is anticipating our WTO
investigation here, but never mind.
Mr Mitchell
173. It is an important point, and all this
argument.
(Mr Secker) Yes, it is.
(Ms Rawling) It is true, if you look, for example,
the US maize trade into Spain has stopped because of the GM issue.
That used to be perhaps a million and a half tonnes, something
like that, a year, and that has stopped because there are 11 varieties
of GM maize approved in the US and only four here, and it was
just proving too difficult to be absolutely sure, to keep the
unapproved varieties out of that export stream, and the trade
has more or less stopped. On the other hand, it has been partially
filled by corn from Argentina, and also the Spanish also have
things like barley for their feed market, so the demand on the
Spanish side for this US maize was perhaps not so great to force
the system to try to find a solution to the problem. But I think
you could say that was some kind of a non-tariff barrier. I think
identity preservation may be a way through, if the approval systems
remain sort of out of synchronisation with each other for a long
period of time.
174. There have been some reports of US farmers
contemplating returning to conventional crops because of the problems
of marketing GM crops. Do you know whether this is happening on
any significant scale, or is it just rumour?
(Mr Secker) There is a certain amount of anecdotal
evidence that chief operating officers from seed companies are
touring the mid west and holding town hall meetings to encourage
the farmers to continue with the planting of GM crops, evidencing
an amount of concern that that is going to happen. I think our
view is that it is too soon, we will have a better view in February,
at the planting time. There seems to be some system in the US
where even if farmers place provisional orders for seed for planting
then they are able to return those seeds to the vendor if they
choose not to go ahead with the planting. We are not too keen
on replicating that system anywhere else in the world, but we
understand it does exist.
175. What would be the consequences for segregation
and identity preservation if farmers did switch around between
GM and non-GM crops; is it going to throw the whole system into
confusion?
(Mr Secker) I do not think that is possible, frankly.
I think we are in sufficient confusion as it is.
Mrs Organ
176. You mean, we are already there?
(Mr Secker) To a degree, we have got the worst of
all worlds, in that 50 per cent of the US soybean crop is planted
with genetically modified varieties today, and that gives the
most challenge for a segregation system. I think 90 per cent of
one thing and 10 of another is much more manageable, but we seem
to have got to a point now where we either need to go one way
or the other.
Mr Mitchell
177. You have been reported as offering premiums
to farmers who supply non-GM crops. Is that the case?
(Mr Secker) There has been differentiated price put
into the US market during the harvest season that we have just
seen, and the degree to which that has been successful I do not
have any feedback. It is something that we would be quite willing,
I think, to do some further work on and provide you with some
more information, should you be interested in it.
Chairman: I think we will use that as an excuse
to terminate Mr Mitchell. Thank you very much, we accept that
offer.
Mr Todd
178. Very briefly, which markets that you have
experience of are rejecting GM product, in the same way as is
happening here? We know enough about this country, but you trade
internationally; what other trends can you identify?
(Ms Rawling) What we are seeing in the European market
is that there is a similar situation in some other countries.
179. Which ones?
(Ms Rawling) For example, in France, some of the retailers
are adopting very similar positions to the UK retailers; similarly
in Germany as well. We also have a situation where many of the
major food manufacturers make a product in one country and sell
it throughout Europe; so if they are deciding to go non-GM on
their food ingredients that is actually covering the European
market as a whole. The Japanese market has decided to label GM
and non-GM food ingredients through some legislation which is
coming in, I think, in 2001, but that is already having an impact
on the market, in terms of supply; however, they have adopted
a 5 per cent tolerance, which means that meeting the standard
is actually much easier than meeting the European standard.
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