Examination of Witnesses (Questions 160-172)
MR ANDREW
JORET AND
MR MARK
WILLIAMS
17 JUNE 2003
Q160 Chairman: Will those feed costs
not reduce under liberalisation?
Mr Joret: Yes, they will and in
fact the paper that Mark referred to which was done by the Dutch
Economic Institute actually assumed a 5% cut in EU feed costs
as a result of the mid-term review, so that actually was built
in.
Chairman: Can we move onto an area which
we have not really touched on in any detail and that is the environment.
Q161 Diana Organ: You say that you
support measures to protect the environment and I wonder if you
could just give me a little guidance about the fact that the Integrated
Pollution Prevention and Control rules state that all intensive
livestock producers must apply for a licence, as you know, by
31 January 2007 and that all new installations already require
a permit before they can carry out activities. I wonder if you
could tell me if you are aware of any application for IPPC permits
from the egg sector and have you had any response from people
in the egg sector regarding whether it is straightforward, difficult
or whether they are having problems with it and also whether there
has been a benefit for the company going through this process
or whether it is all bad news on all fronts.
Mr Williams: I think that we have
some real concerns about the IPPC directive. Many of the concerns
are the fact that it comes into conflict with other legislation,
which perhaps we could come back to in a minute. Certainly, I
am aware of one company that has made an application for a new
unit, so obviously comes within the process now. They found it
very tortuous; there was a huge amount of bureaucracy and a lot
of staff time was spent on discussions with, and it was not the
Environment Agency, as it happens, it was SEPA up in Scotland,
so it was one step removed, if you like. They have been on a learning
curve and I think that SEPA has as well. I know that concerns
are of course that the full-cost recovery basis which is in place
is going to be a huge financial burden and I believe that we have
provided the Committee with some figures as to what it would mean
on a per annum basis to a medium size and a large farm and I think
it was £3,500 per annum.
Q162 Diana Organ: So you are not
really satisfied with the standard rules for IPPC, are you, that
it will minimise costs and regulatory burdens?
Mr Williams: If I were to say
that it is better than what the alternative was, I think that
would be fair enough. We have spent an awful lot of time as an
industry—both sides of the industry, meat and eggs here—discussing
with the Environment Agency to get things right because we are
structurally different. If we look at this politically, we were
"picked on", shall we say, in terms of the emissions
coming out of egg production and broiler units which are much,
much lower than, for example, dairy cattle are emitting, but of
course we were clobbered with the directive back in 1996. Chairman,
would it be opportune if I were to mention our concerns about
conflict between various pieces of legislation, very briefly?
Q163 Chairman: Yes.
Mr Williams: We have animal welfare
legislation which is moving industry away from cages, shall we
say, but we know and science has shown very clearly that, if you
want to reduce the levels of ammonia, then you dry the manure
very quickly and the caged unit is best for doing that. We also
have conflict within environmental legislation under the Integrated
Pollution Prevention and Control regs as well as this climate
change levy and again, to reduce the volume and obviously the
emissions of ammonia, you dry manure and, if you are drying manure,
you are using electricity to drive the fans and then you are getting
penalised by the climate change levy for taking a responsible
environmental action. It is totally ludicrous.
Chairman: I am going to pass you over
to our marketing expert on the Committee now because you were
saying particularly at paragraph 87 that a good number of the
problems facing agriculture and, by implication, affecting your
industry relate to the consumers' demand for cheap food and marketing
policies of the major retailers.
Q164 Mr Wiggin: In your submission,
you say that the industry has invested heavily in communicating
the benefits of the Lion Quality Standards to consumers. How do
you communicate it to consumers and to what extent have you tested
whether the consumer has understood the message?
Mr Parker: If I may come in here.
There are two ways. The cost of the communication has been £16
million, which is really straightforward advertising telling the
consumers. The other way in which we have communicated or communicated
back from the consumer if you like is by carrying out research
with consumer groups.
Q165 Mr Wiggin: What responsibility
do the egg industry customers have in maintaining high levels
of animal welfare and health and how should they put this responsibility
into practice?
Mr Parker: When you say "the
customers", do you mean the retail customers?
Q166 Mr Wiggin: In your submission,
you have put that ". . . the marketplace has an important
role to play in maintaining high levels of animal health and welfare.
The egg industry's customers must therefore recognise their responsibility
in this area."
Mr Parker: We have invested, as
I say, £16 million in the Lion Code of Practice and it is
obviously the first—
Q167 Mr Wiggin: So, you have done
your bit.
Mr Parker: We have, indeed, and
we have spent a lot of money doing it. From a retail sale which
was falling at 8% per annum, we have now levelled off and in fact
Lion eggs are increasing whilst non-Lion eggs continue to decrease.
So, there has been a huge benefit to the retailer and there has
been a huge benefit to the ultimate consumer in that they now
have confidence that they are no longer going to have salmonella
enteritis in their eggs.
Q168 Mr Wiggin: What would you say
was the problem with supermarket buying polices or are you happy
with that as well?
Mr Parker: No, we are not. We
are actually working with the NFU. We want to introduce a new
code of practice for retailers and the main features of that will
be payment terms, proper contracts, notice periods and a proper
setting up of promotion, so that if there is packaging left at
the end of a promotion for instance, that is actually taken care
of, and also making sure that we produce and promote according
to the production.
Q169 Chairman: One final question
from me. At the pantomime which was the agricultural summit in
March 2000, the Prime Minister gave an assurance, which you welcomed,
that although the goose may lay golden eggs, we would not, as
a government, gold-plate EU regulations. Do you believe that the
Government have lived up to that in the three-and-a-bit years
since then?
Mr Williams: I think we had a
great scare recently and were very disappointed that Mr Morley
should go out and consult so early on a ban on enriched cages
just after the legislation was implemented. We also have beak
trimming, which Mrs Organ mentioned earlier. That was out-and-out
gold-plating because the directive authorises it. Then of course
on the organic standards—about 2% of the UK egg production
is to organic standards—the European regulation was gold-plated
by the then UKROFS[1].
So, while that commitment was made, we have not seen it in practice
and certainly, as we look to the future, our industry just cannot
afford to have gold-plating. It is in an increasingly competitive
marketplace and it would be the death knell of our industry and
I should say a successful industry. We have done everything right
and everything that has been asked of us and it is just that at
the moment as we look to the future, we have this, as I call it,
the so-called `clean hands, dirty mouth' scenario. We export our
welfare concerns and we allow eggs and egg products to come back
in from systems which are banned from use here in the European
Union and it is wrong.
Q170 Mr Wiggin: I have just heard
that chicken farmers are being asked to insure against environmental
damage now; have you heard anything about this? It may not be
specifically to egg producers but it is to poultry farmers. If
you could imagine that you are farming within a shed or a chicken
house, do you not think that this is extra gold-plating that apparently
is just going through at the moment?
Mr Williams: I am not aware specifically
of what you are saying.
Mr Joret: Yes, it would be.
Q171 Diana Organ: You have put a
catalogue in front of us of the welfare directives, the environmental
regulation and the cost to the industry, but the one way out of
it is to ask, how much will the consumer bear for egg prices to
rise? It seems to me—and maybe I am being very simple about
this—that one of the cheapest meals you can have is poached
eggs on toast or scrambled eggs or an omelette and I do not understand
why every student in Britain does not live off them though they
would probably go around clucking! I am not going to promote the
business for you, but it is a fairly wholesome, protein rich,
simple food that Delia Smith taught the nation how to cook. Why
can we not push the point that the consumer does not get eggs
on the cheap but actually pays a price that would sustain the
British industry, or is it that the consumer just wants to buy
eggs so cheaply that they do not care that they come over from
Thailand with all the crap in them?
Mr Williams: In answer to the
first part of our question, one of our strap lines, was "fast
food and good for you", so it is absolutely right. I can
only quote from retail sales figures which show that over 40%
of the major supermarkets' sales are of so-called value or economy
eggs which are caged-produced eggs and that varies of course from
somewhere like, dare I say it, Hartlepool right down to somewhere
where it is more affluent, shall we say, and obviously a lot more
free-range eggs are sold in the more affluent places. At the end
of the day, the consumers will decide. In front of them on the
shelves, they will have all sorts of eggs produced in different
systems and with different types of packaging and they make that
choice and it is left to them to make that choice and we will
respond and our members will respond accordingly.
Q172 Mr Mitchell: You should get
Mrs Currie to front an advertising campaign, "Live on student
loans on an egg"!
Mr Parker: With respect, I did
ask her to! Coming back to the point about the consumers, I did
refer to the research that we do with consumers and there is no
question that what they want is a safe egg. They recognise the
nutritional value of them and I am sure that they would pay more.
Our research certainly says that is so. I think it inhibits what
we have done if a food product is undervalued. I do not think
it has been respected and I think it is one of the things that
we are suffering from.
Chairman: Your probably need a latter
day Saatchi who made a fortune on "Go to work on an egg"
which was fairly accurate and then went on to talk about Labour
not working which was—
Mr Wiggin:. . . absolutely true!
Chairman: Thank you very much for coming
along this afternoon. If you feel there are points which, on reflection,
you would have wanted to have made, please write to us and they
will be in the public domain as well. We are grateful for your
time and interest and, if you wish to stay for the final session
with your colleagues in the British Poultry Council, you are most
welcome to do so, but thank you for now.
1 UKROFS= United Kingdom Register of Organic Food Standards. Back
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