Examination of Witness (Questions 177
WEDNESDAY 6 FEBRUARY 2002
177. We are having an inquiry basically into
what agriculture would be like, as it were, in a world with either
different subsidies or no subsidies. We are anxious to sketch
the architecture of the world in which agriculture would have
to live and thrive. One of the important things is what is happening
out there in terms of consumers, what the trends are, what consumers
want. We thought you were quite a good chap to tell us about that.
I wondered if you would give us an initial, one-minute burst on
what you think of it. If we got nothing else from this, if there
is one essential factor we have to remember about what is happening
in the marketplace, remembering all that Curry said about disconnection
of funds, what would be that one thing we must not let go of?
(Professor Hughes) This is the easy step
first. What would I say? I guess that, if we achieve sustained
income growth, the relative importance of price in food as an
attribute declines, notwithstanding that, if you listen to the
marketplace, it seems to be all about price. Clearly, in developed
countries where for many households the expenditure on food is
not the biggest constraint, then we are looking for a lot more
out of our food than low prices. The sort of attributes would
include esoteric quality ones, which could be better taste, provenance
and you could perhaps bolt on some environmental or animal welfare
type aspects. Price is important but there are many other things
associated with food products that are as increasingly important.
178. Is that true of all classes and groups?
(Professor Hughes) Clearly not. What would we get?
There are 60 million of us and about 23 million households. Probably
70 per cent of households are not income-constrained when it comes
to their food budget and they can make choices; 30 per cent are
clearly constrained. That is reflected in the sort of products
you see in the store. If you look around the supermarket, there
are products for the haves and there are products for the have
179. Is the market becoming more or less differentiated?
(Professor Hughes) It is becoming more differentiated.