Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witness (Questions 360-379)



  360. I know you are aware of the Co-operative Group and I know they talk to you directly in terms of what they are trying to do in the North West. Would you go as far as to make recommendations, which you did in the Report, if there are structural imbalances which prevent co-operatives or collaboratives, if you want to call them that, from operating that you would urge that those barriers in terms of tax regimes and grant inadequacies are moved out of the way and we find a much more encouraging environment?
  (Sir Donald Curry) As you know, I have been talking to the Co-operative Group and they are very keen indeed to participate in this collaborative board so that they and others can bring together whatever funds, support and resources there are available to make this happen. Yes, indeed, we do need to see this happen. Let me stress this is not an optional extra now, this is a fundamentally important recommendation. We have to see co-operation/collaboration taking place widespread across our industry today.

Mr Todd

  361. But very firmly within an enterprise culture?
  (Sir Donald Curry) Focused on the market.

  362. And where I found the Report too comforting and comfortable was in how to change that culture of an acceptance of lowest common denominator rewards and performance to one which focused on winners and enterprise as you would normally expect in a market framework. One of the examples of that, curiously enough, is the approach to the various social and environmental products that we discussed a little earlier where, certainly in my submission to the Commission —
  (Sir Donald Curry)—Hopefully you identified it within the Report.

  363.—I urged that any funding for schemes of this kind should be based on as close to a market-based and competitive model of award as we could get so that there is a consistent message throughout to the farming sector that we reward innovation, bright ideas, whether they are delivering a social or environmental goal or devoting themselves to introducing a new product to the market-place. We have to be consistent right across the board in the messages we give. Would you agree with that?
  (Sir Donald Curry) Yes, absolutely.

  364. Because the process that you hint at is a development of the current schemes which, to be honest, are not particularly based on competitiveness and innovation but based instead on rather more prosaic models of bureaucracy that we are familiar with in this sector.
  (Sir Donald Curry) I am surprised that you have taken that message out of the Report. We make it very clear that government grants to encourage co-operation or collaboration or market development, whilst they have been helpful in stimulating activity in the past, have not been particularly well-focused and we believe—

  365. And often awarded to, if you like, "losers" rather than winners.
  (Sir Donald Curry) I think there has been the temptation to pepper corn the funds available to relatively small initiatives without achieving significant structural change.

  366. That is right.
  (Sir Donald Curry) So we recommend that government funds available should be subject to advice from this collaborative board based on whatever given priorities they establish and that board should consist of people who are well-qualified, both financially and with industry knowledge, to assess the viability of projects that are presented to it for grant funding and, if necessary, venture capital.

  367. I deliberately drew out the fact that for environmental and social goods I would expect a similar approach of competition and enterprise and innovation being recognised rather than simply box-ticking and compliance with bureaucratic expectations.
  (Sir Donald Curry) We have that currently within the environmental schemes. I would suggest that there should be a separate approach in principle to this. The market delivery mechanisms have to be commercially sustainable in the market place but they will not succeed and the disciplines required to produce food efficiently and process it efficiently and deliver it in a product form which satisfies the market that it is competitive is crucial, but in the environmental area we have at the moment schemes that are based on tendering and are supported through the tendering process. It is hugely bureaucratic, it is selective, and it is not sufficiently widespread to achieve the environmental outcome that we believe could be achieved through a different approach with the broad and shallow scheme.

  368. I think we are drawing out that there needs to be a complete change of culture within the Ministry that administers these schemes.
  (Sir Donald Curry) We recommend that.

  369. So consistency is the message in any scheme administered as to the ethos that we are expecting from the agricultural sector if they seek recognition and reward and support. Consistent with that, one of the other steps that you dwell on but reject is the concept of an early retirement scheme which you recognise as being expensive and maybe ineffective in delivering the goal. To be brutal about this, those who are most determined to stay in farming are very often those who are least adaptable and least able to take advantage of new opportunities because they are the most durable people who are prepared to live in conditions which very few other people are prepared to put up with and yet, to be harsh about this, those will be the anchor chain which will slow change in this sector. So how do we achieve that change in personnel and skills within this sector and, I have to be honest, assist some people to leave who would wish to do so but will hang on to the bitter end if not given some support and recognition to go?
  (Sir Donald Curry) We certainly recognise that as a serious challenge, which is why we gave the early retirement scheme very serious consideration and rejected it for the reasons I have said. We make a number of recommendations in the Report on how we might encourage young people to come in. It is difficult within the picture that you paint to put an age on that person, but we are looking at an ageing population in the farming industry currently and we need to encourage farmers to retire for sure or stand back from the day-to-day management of their farms, which is why we looked again at finding ways of share farming and the like to bring young people in to take over the day-to-day workload and ultimately the running of the farm. We need to find innovative ways of doing that to create opportunities for young people and, either through training or through market pull, to encourage existing farmers to recognise that life is changing and they themselves need to be equipped to face the challenges that lie out there in the market-place.

  370. But we need a step change in performance. I think that is accepted in this Report but you are not identifying the tools that are going to bring it about. You are identifying very gradualist methods which may achieve change over 20 years but, to be honest, and I have to say I am very unwilling because I can see the difficulty of some cost in this, we must accept that we need a short-term early retirement scheme to simply remove a proportion of people from the market-place who are literally trapped and unable to leave currently. I would certainly not want to see an early retirement scheme in the long term but a short-term, targeted hit which gave people a brief opportunity to go would be, I think, money well spent in achieving the step change in our sector.
  (Sir Donald Curry) It would be difficult, but not impossible, to construct a scheme to ensure that you achieved the change that was necessary and those who benefited from such a scheme were clearly identified. We did have proposals put to us by the Tenant Farmers' Association that we should look at some sort of means testing as a way of ensuring that appropriate people were targeted which one had to conclude would be largely the tenanted farming sector and would probably leave the owner occupier untouched by such a route, so it became very divisive and difficult to target. I recognise the challenge. It is not an easy one to solve by waving a magic wand. We have recommendations which if collectively put together, provided they are adopted, should achieve that end but it will not be overnight for sure.

Mr Drew

  371. Can I look at the issue of how you bring younger people in. I was a bit surprised that although you mentioned tenant farmers you do not look at the role of the county council smallholding scheme, which traditionally has been one of the ways of people coming into the industry. They are also increasingly looking at community land ownership as a way by which we can take out the biggest problem which any new entrant into farming faces, which is unless they have got access to capital, no matter how good a farmer they are, they start at a really difficult comparative disadvantage. I wonder what your comments are on that?
  (Sir Donald Curry) I think, David, it is difficult today to see how a new entrant into the farming industry can come in without some capital. We are suggesting that through the share farming route, which has been successful in other countries and which has been less successful here, where there may be an opportunity for young people to come in and gradually take over the working capital of the farm over a period of years. We did not specifically address the county council smallholding issue because we talked in general terms about the industry rather than about a specific segment. The county council smallholding route has been, for many farmers over the years, an important first step on the ladder of getting into the industry. It has become increasingly difficult to move from that step. That is a structural weakness we have. To move from a relatively small farm to the next step up has proved to be difficult, not impossible but difficult. It is important we have those starter holdings available to the industry where farmers can use alternative sources of income to support the business until they can generate sufficient capital hopefully to move to the next stage. It is not easy today because of the capital requirement, to finance a viable farming business.

  372. What about community land ownership where you can develop a trust to buy the land and allow the farmers to run the land for a period of time until they have the capital?
  (Sir Donald Curry) The principle of that is very good but all of this assumes that farmers will gradually generate capital out of profits, and the last five years have certainly not supported that potential, which is why fundamentally we need to have a profitable farming industry through which all of these initiatives can be seen as encouraging new people into our industry.

Mr Jack

  373. Page 43 represents the Captain Kirk approach to novel ideas—you have "boldly gone where no man has gone before". In the section on local and regional food you imply that you can in some way roll back the stranglehold by supermarkets and major catering outlets on producers by going local, which is very interesting given that Sir Peter Davis was one of your Commissioners. Can you, first of all, give the Committee some indication of the potential for this development. 70 per cent plus of food in the UK is sold in the supermarkets. How much of UK's farming output could go local? What sectors would be the ones that you think could take full advantage of that quickly?
  (Sir Donald Curry) We deliberately have not put a figure on this. It is like asking how many farmers are there going to be in ten years' time? You are a hostage to fortune and it is inappropriate to put a precise figure on it. What we see is a growing interest in local food, in locality food and in regional food. There is from all the consumer research available an attachment and an affinity with food produced in one's own locality. The growth of the farmers' markets has demonstrated that people are interested in procuring local food if they can. We believe that should be encouraged. We then looked at what, as I said earlier, were the barriers to progress, and I have spoken about those earlier, but we do believe that particularly for farmers on relatively small to medium sized farms who are prepared to, either themselves or with their family, take this on to the next stage of processing or retailing, they can add significant value to the products leaving their farm. We have significant evidence of that. We visited a farm shop in Cumbria and there were 40 other businesses that were producing food products being sold through that farm shop. So it is not the only single point of contact with the customer, it is all of those businesses that are actually inter-dependent through that retail outlet and providing employment and added income opportunities for those farmers that is important. With a mobile population, it is people touring around the countryside, stopping off and wanting to enjoy whether they are staying overnight or whether they are there for the day, local food.

  374. You use language like "we believe that one of the greatest opportunities" and yet in your reply you have just said it is medium-sized and small farmers in as yet unspecified sectors who may be the ones to benefit. I strongly support the local movement, I am the President of Keep the Fylde Farming, and I am anxious to see our small and medium-sized farmers survive but they have co-operated in the dairy sector, they supply a major dairy producer, but their product is anonymous, and it is very difficult for them to communicate back to the consumer locally where the product can be bought. Can I focus on this business of "local", "locality" and "regional". Give us some definitional feel as to what is local, what is locality, what is regional and would it be easy for consumers to understand these delicate differences between these three terms?
  (Sir Donald Curry) If I can start with the regional first. We strongly believe that the regional development agencies should take a much keener interest in food production than many of them are doing currently. Perhaps, quite rightly, they have focused on urban regeneration, yet rural regeneration is important and the part that regional food production can play in that. Regional food strategy for them is an important recommendation in this Report. In terms of regional products they have a responsibility and there may be within the region a regional identity which they could explore and encourage in identifying food from a particular region, a branding exercise maybe. As far as locality goes, when you move to marketing food produced from a particular locality into some of the major retail outlets, it is necessary to identify the source of that product. And so we see locality as moving product away from its immediate locality but within sufficient geographic distance for consumers to be able to identify it and identify where it comes from.

  375. Give us an example of the name of a locality so I can focus geographically on what you are getting at.
  (Sir Donald Curry) If we were talking about a particular brand of cheese, for example, which is produced from a particular locality, there is no reason why that product could not find a market beyond its immediate locality on the shelf of a major retailer, provided it retains that identity. We encourage the registration of these various foods under the European schemes.

  376. Which sectors are going to be the ones which you think have the greatest potential to exploit this? For example, in dairy there is hardly a supermarket shelf now that does not include regional cheeses. What other sectors could benefit from this approach?
  (Sir Donald Curry) Cheese is a good example. There may be opportunities in the meat sector, processed products sector, there may be opportunities in other dairy products, whether it is ice-cream or whatever. It is more difficult to envisage it on the field vegetable front but in the further processing of meat and dairy products —

  377. What you describe all sounds terribly bitty and difficult.
  (Sir Donald Curry) The reality is that the market is segmenting and there are opportunities within a segmented market.

  378. This is supposed to be "the greatest opportunity" for farmers to add value it says here. It all sounds very difficult to me.
  (Sir Donald Curry) If you look at where there are growth opportunities at the moment within the British farming and food industry, there are growth opportunities in organic, and we may want to explore that. There are growth opportunities in the production of local food and locality food. We have simply identified a growth opportunity. It is there, it is fact, it is reality, and we believe that should be encouraged.

  379. Tesco's in their evidence to the Committee said, and this was after extensive consumer research, that "actual buying habits show that whilst British food is requested, the majority of consumers will not pay a premium for British food products." That is really damning evidence from Tesco's about that locality point. It does not exactly show a huge enthusiasm for this.
  (Sir Donald Curry) I think it is a little mischievous to suggest that that applies to local and locality food. That is a general statement; and that is their view. If you are looking at the marketing of local foods through local outlets I suspect you might have a rather different picture. We encountered within the tourist industry, for example, a serious opportunity for them to source local produce to feed to people who are staying in local establishments. What they found difficulty with is sourcing the product through an adequate distribution system. What they have not got time to do is tour around the countryside and stop off at six or seven different places in order to fulfil their requirements. That should be addressed. There are opportunities there for local people to get value from supplying local food to local outlets, whether it is retail or food service or catering and hospitality areas.

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