APPENDIX 32
Memorandum submitted by the Meat &
Livestock Commission (F41)
INTRODUCTION
1. The Meat & Livestock Commission's
major responsibility is to improve the efficiency of the production
and marketing of beef, sheepmeat and pigmeat in Great Britain—in
the interests of consumers.
2, MLC's comments are confined to the organic
livestock sector; particularly supply, demand and structural issues.
We are committed to helping the British industry meet the challenge
of increasing production of organic meat to satisfy the growing
demand in the UK.
3. The current situation is characterised
by increasing interest being shown by producers in organic livestock
production as they seek to diversify, reduce input costs and take
advantage of higher prices for organic meat offered by abattoir
operators and retailers. Major retailers are also looking to source
organic meat but become frustrated when they cannot immediately
access all their requirements from British producers. This has
led to an unseemly scramble for available supplies with various
inducements being offered to producers. A critical issue is how
quickly British production can gear itself up to satisfying the
shortfall in demand.
GROWTH IN
ORGANIC LIVESTOCK
PRODUCTION
4. By April 1999 more than 240,000 hectares
of land was registered and managed organically in the UK.
5. Data from the Soil Association indicates
that there were 4,000 organic cattle, 26,000 sheep and 12,000
pigs marketed in Great Britain in 1998-9. It is likely that these
numbers will increase by 300 per cent for cattle and fivefold
for sheep and pigs by 2001. However, even then they will account
for less than one per cent of total GB production.
6. Substantial further growth in production
is forecast over the next 10 years but it seems unlikely that
by 2010 production will be in excess of five per cent of total
production unless there is a major reduction in cost differentials
between organic and conventional livestock. At present these are
estimated to be +30 per cent for beef, +25 per cent for sheepmeat
and +110 per cent for pigmeat.
7. There are still a substantial number
of potential constraints to increased production, excluding issues
of financial support. The conversion time for organic beef production
is a minimum of four years and the cost of rearing organic dairy
bred calves on organic whole milk give rise to expensive reared
calves.
8. For pigs, the cost of conversion and
the ongoing costs of organic pig production are substantial with
producers needing in excess of 200 pence per kilo for finished
pigs to break even.
CONSUMPTION OF
ORGANIC MEAT
9. Estimates of organic meat consumption
indicate substantial growth over the past three years but the
total market is still less than two per cent of total meat consumption.
This is significantly less than in some EU countries although
the definition in some countries may be less strict than in the
UK.
10. According to a recent survey of multiple
retailers there is an expectation that consumption could grow
over the next five years—however, opinions range from an
increase to three per cent of total meat consumption to 10 per
cent. Major concerns from retailers are availability of beef and
lamb supplies and the price differential, especially for pigmeat.
In view of the shortage of domestic supply, there has already
been a dramatic growth in sourcing from outside the UK.
11. A survey of independent retailers also
indicated that major growth in demand is expected. Concerns were
also expressed about availability and price. However, it was interesting
to note that of the 55 independent retailers surveyed, 80 per
cent did not stock organic meat and showed little interest in
doing so over the next few years.
CONSUMER ATTITUDES
TO ORGANIC
MEAT
12. A consumer survey commissioned from
Taylor Nelson Sofres over the weekend 2-4 June this year provided
interesting data on how the market has developed. Of 1,000 respondents
65 per cent did not purchase any organic food and nine per cent
purchased beef, lamb or pork.
13. The survey indicates that between 40
and 50 per cent of current purchasers of organic food have begun
to buy during the last six months. Three quarters of purchasers
of fresh fruit and vegetables buy once a week or more, whereas
less than half of total purchasers of meat buy beef, lamb, pork
or bacon once a week or more. The percentage of "organic
consumers" who buy 100 per cent organic varies from nine
per cent for fruit to 24 per cent for bacon.
14. When asked why they buy organic food
41 per cent gave the answer "healthier, 34 per cent "tastes
better" and 22 per cent "absence of chemicals and additives".
THE ROLE
OF ORGANIC
CERTIFICATION ORGANISATIONS
15. Certifying bodies are not allowed to
give technical help to those involved in organic production, marketing
and processing but inspect farms, abattoirs and processing facilities.
They are approved as certifiers by United Kingdom Register of
Organic Food Standards (UKROFS).
16. The substantial growth in applications
for approval from farmers, abattoir operators and processors has
stretched the resources of the certifying bodies and MLC has concern
that the training procedures for those assessing abattoirs and
meat processing plants is inadequate and should be put on a more
formalised basis.
17. Confusion in the market place is exacerbated
by different certifying organisations inspecting to differing
standards.
OUTLETS/DISTRIBUTION
SYSTEMS FOR
ORGANIC PRODUCE
AND PRICING
POLICIES
18. In 1995 as the market for organic meat
was beginning to develop, the Soil Association and Organic Farmers
and Growers, in conjunction with Eastbrook Farm Organic Meats,
sponsored a feasibility study which led to the setting up of the
Organic Livestock Marketing Co-operative (OLMC).
19. The main objective of OLMC is to create
an orderly marketing environment for primary producers, with ex-farm
prices fixed for long periods. Cattle and sheep prices currently
agreed for 12 months are based on the principle of "production
cost plus".
20. The co-operative is endeavouring to
secure long-term commitment, including finance, from four of its
major abattoir partners who, in turn, are linked to specific major
retailers.
21. However, organic production is still
very fragmented with small consignments of rearing and finished
stock scattered all over the country. The philosophy of organic
production is that animals should travel the shortest possible
distance to further feeding farms or abattoirs. To achieve this
objective is difficult, especially for slaughter stock, as major
retailers normally require animals to be slaughtered in nominated
facilities. Equally, in rural areas, as small abattoirs close,
even if the resulting meat is to be sold close to the point of
production, the animals may have to travel substantial distances
to slaughter.
22. The serious under-supply of all organic
livestock, but particularly cattle, has resulted in attempts by
major retailers to secure required supplies by offering substantially
higher prices to farmers than those agreed as fair and reasonable
by OLMC with its customers.
23. This short term opportunism must be
considered counter-productive to the long term health and development
of the organic market. Excessively high prices cannot be sustained
at retail or by abattoir processors.
24. Organic production, particularly for
ruminants, is currently resulting in wide variation in carcass
weight and classification. Most major retailers work to tight
specifications and on unacceptably high proportion of stock fail
to meet these. Markets for non-specification product at premium
prices are difficult to achieve, as are outlets for parts of a
carcase which are not required by a primary customer.
25. Organic production tends to accentuate
seasonality problems, particularly where grazing animals are involved.
THE ROLE
OF ASSURANCE
SCHEMES
26. Farm Assurance Schemes eg ABM/FABBL.
FAWL and SQBLA are designed primarily to provide consumers with
reassurance on food safety issues as they affect food production.
Each scheme has standards and protocols, against which producers
and their holdings are independently inspected on a 12 or 18 month
cycle.
27. The concept is being extended in England
and Wales by FABBL and in Scotland by SFQC to include all stages
from feed supply through transport, auction markets, abattoir
and processing to retailing.
28. Currently, none of the assurance schemes
inspectors are able to inspect to UKROFS or Soil Association standards
and organic inspectors do not inspect for assurance schemes but
discussions are progressing on adding bolt-on modules to existing
implementation protocols to resolve this difficulty.
29. It would be unusual for a customer to
require a farm, in particular, to be approved as both farm assured
and organic. The real difficulties arise during the in-conversion
process, when both organic certification and farm assurances status
may be required.
30. It is becoming increasingly common for
transporters, abattoir processors to be required to be approved
for food safety assurance, organic and possibly Freedom Foods
as well. Each inspection carries a cost. Consideration is being
given by the various parties to rationalising inspections beyond
the farm gate so that one covers all schemes.
IMPORTS AND
EXPORTS
31. Virtually no organic meat or meat products
are exported, but as a retailer demand increases, imports are
increasing. Beef to serve one major retailer's requirement is
coming from South America while beef and pigmeat from Scandinavia
and Northern Europe is also being imported. All such products
are very price competitive, particularly at present with sterling
at a high level.
It is of concern that uniform standards for
organic production do not apply throughout the world or in some
cases are adequately audited. There is a need to resolve these
issues so that organic production does not become discredited
by consumers.
CONCLUSION
32. There is much potential for UK organic
meat production to expand to match the considerable increase in
demand. However, organic meat will remain essentially a growing
"niche" market for UK producers. MLC will play its part
in:-
(a) facilitating contacts between retailers
and potential suppliers
(b) promoting harmonisation of assurance
schemes
(c) production and marketing advice to producers
(d) developing training procedures for assessment
of slaughtering and processing facilities
16 June 2000
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