Select Committee on Trade and Industry Minutes of Evidence

Examination of witnesses (Questions 286 - 299)




  286. Good morning gentlemen. I am sorry you have had a bit of a wait. On occasions like this we sometimes run over a bit. I realise that you are from two different organisations this morning: Farmers for Action and the People's Fuel Lobby. Perhaps you could identify yourselves, giving the organisation from which you have come.
  (Mr Hanley) My name is David Hanley, I am a dairy farmer. I am Chairman, for some unknown reason, of both Farmers for Action and the People's Fuel Lobby. To my left is John Pratt who is a member and committee member of Farmers for Action and a beef and sheep farmer from Brecon. On my right is Paul Ashley, who is also a member of Farmers for Action and the People's Fuel Lobby and is a farmer and forestry products operator in Cheshire.

  287. Can you just give us an idea of the size of your organisation? I realise there has been a mushroom growth and there may well not be a secretarial backing but roughly how many people would you say subscribe?
  (Mr Hanley) Certainly from the Farmers for Action point of view we are running from right up in Orkney where we have a member, right down to South Cornwall, across to West Wales and into Kent. It would be running into several thousand at this precise moment. I do not have actual figures.

  288. Would these be people who would otherwise be in NFU or NFU Scotland?
  (Mr Hanley) A lot of the members of Farmers for Action are actually NFU and FFA members but a lot of NFU members are tending to leave the NFU now and join Farmers for Action. The People's Fuel Lobby has been quite short-lived and it is not on a membership basis, it is just based on the fact that there is a very large number of frustrated people throughout the whole of the United Kingdom.

Mr Chope

  289. Can I ask you to give us some specific examples of how fuel taxes have been hitting farmers?

  (Mr Hanley) Yes. Certainly from my own point of view, I did submit some figures to you. As you will appreciate, on the red diesel issue we know that the fuel taxation is low but it needs to be made perfectly clear that the cost of that fuel has doubled in the last 11 months. We can only use those vehicles for actual agricultural work. The main problem we have with either white diesel or petrol is running around with vehicles moving our stock or our products around though most farms in the UK rely on the haulage industry to deliver and take away products from those units.

  290. The haulage industry does not benefit from red diesel.
  (Mr Hanley) No, not at all.

  291. They are passing on those extra fuel costs.
  (Mr Hanley) Yes. We are in a situation now where in my own business through the activities of Farmers for Action we have just received a substantial increase in the price of our raw material, milk. I have had a phone call this morning from my farm that the transport cost of moving the milk from my farm to the milk processors is now going to have to increase; they can no longer sustain the prices they are having to pay and it is having to be passed back to me. The words used were "A substantial amount of what you have just received is now about to be given away".

  292. This has of course happened at a time when your income from what you produce has been falling dramatically.
  (Mr Hanley) My own personal income has dropped probably 50 per cent in the last three years. I have gone from a situation of employing two people, one full, one part, and am now down to running a business with just myself and my wife. In all probability by the end of this year that business will cease.

  293. How much of this is down to the fuel?
  (Mr Hanley) Living in a rural area we certainly rely on fuel for every movement we make, every product which comes onto my farm and goes off is moved by the haulage industry. All the increased bills which come with that are more pressure on my business.

  294. May I ask Mr Ashley specifically about the impact on the timber business of fuel costs?
  (Mr Ashley) I notice in our business now that there is product coming in from Eastern Europe because it can be brought in cheaper than it can be brought down from Scotland.

  295. How is that?
  (Mr Ashley) It just seems to be that the haulage rates they get mean that the hauliers want to get into the UK. We have had a situation that when we have done our process we employ hauliers to take product to our customers. We work on a theory of about £1.20 a loaded mile. We have just had one of our contracts taken off us where the customer is still going to have us to do the work but he is going to use a foreign haulier and I believe he is running at about 60 pence per loaded mile. We have a small haulage fleet of our own which is supplemented by haulage contractors and in effect that means we shall probably dispose of our haulage fleet.

Mr Morgan

  296. Are you saying that the product is coming from a different place or just the contractor?
  (Mr Ashley) No, we are noticing now less and less product coming from the forests of Scotland and more and more product is coming from Eastern Europe.

  297. A considerable amount of that must surely be down to the basic price of the product, which is coming out, say, of the Baltic States, exacerbated by the high rate of the pound.
  (Mr Ashley) I accept that but also when you look at the haulage costs they seem to express that they can deliver product from the Baltic States as cheaply as they can deliver from the North of Scotland.
  (Mr Hanley) One of the members of the People's Fuel Lobby is a substantial haulier from northern Scotland. I met with him about a week ago and he is actually moving forest products out of Scotland to Manchester. He is very competitive with his rates but he has just been told by the firm in Manchester that the rates he is having to charge mean they are going to cease using his business and they are actually going to pull from Scandinavia into Manchester because the rates are cheaper. That is actual comment from a haulier who is doing substantial business in northern Scotland.


  298. Let us get this clear. When we are talking about timber being transported, there is the fact that there are now sources of timber which never existed before. Some of us were in the Baltic States not long ago and certainly from the former Soviet Union and areas like that on the Baltic vast amounts of timber are coming in at dramatically lower prices. Then there is also the question of the haulage industry. In my constituency I have a major timber processor, CSE Timber Products. Some years ago they ended their own fleet and made an arrangement with a private haulier; they outsourced the transportation because they said they were timber processors, not hauliers and these people do it far more efficiently and more cheaply than we can do it. Is this outsourcing not a trend? I realise that for someone like yourself, who has had a vertically integrated business, maybe you have been holding up against the flow of the tide as it were.
  (Mr Ashley) I accept that. What I am saying is that the trend is that the British hauliers we were using have been replaced by foreign hauliers. The local British hauliers whom we were outsourcing have been replaced by hauliers coming in from Europe, bringing in a load and then working within the UK to move the product out.

Mr Morgan

  299. Are you saying the timber is being brought in by road?
  (Mr Ashley) Yes.

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