Memorandum submitted by the British Pig
Executive (BPEX) and the English Beef and Lamb Executive (EBLEX)
(SFS 26)
HOUSE OF COMMONS ENVIRONMENT, FOOD AND RURAL
AFFAIRS COMMITTEE INQUIRY, "SECURING FOOD SUPPLIES UP TO
2050: THE CHALLENGES FOR THE UK"
BPEX and EBLEX are the English pig sector and
cattle and sheep sector subsidiaries, respectively, of the Agriculture
and Horticulture Development Board. BPEX and EBLEX focus on increasing
the competitiveness and efficiency of English pig, cattle and
sheep levy payers through applied research, knowledge transfer
activity, market intelligence, and domestic and export market
promotion.
EXECUTIVE SUMMARY
1. The Government argues that self-sufficiency
is not a complete measure of food security. Nevertheless, the
reasons behind falling self-sufficiency in some sectors, including
the cattle, sheep and pig sectors, are worthy of reflection. Defra's
food security discussion document fails to recognise the weak
economic state of the UK livestock industry and the threats to
its long-term competitiveness and sustainability and, consequently,
to its long-term ability to meet domestic food needs.
2. The cattle and pig breeding herds, and
the sheep breeding flock are all falling as a result of low profitability,
low producer confidence and lack of investment over many years.
A continuation of these trends will mean falling domestic production,
increased imports, and the "export" of our industry
to areas where production standards and—in the longer term—production
capability may be lower than in this country. A greater reliance
on imports is neither conducive to food security nor to consumer
choice.
3. Within the red meat industry, there is
already in place a substantial foundation of scientific and technical
knowledge on which significant improvements in productivity and
production can, in principle, be made over the next two decades
or so. The realisation of much of the country's production potential
largely lies in the hands of the industry itself, but a necessary
condition for this realisation is effective knowledge transfer
activity. This is a substantial challenge.
4. Other challenges in the livestock sector
include: exotic and endemic animal disease, convoluted and inefficient
supply chains, the large retailers' domination of the food supply
chain, the administrative and cost burdens of aspects of legislation
and regulation, and, the impact of policy changes. Overcoming
some of these challenges lies beyond the capabilities of the meat
and livestock industry alone, and highlights the continuing need
for greater dialogue and cooperation along the supply chain within
the food industry as a whole, as well as for engagement by government.
5. Technical improvements have direct production,
competitiveness and environmental benefits.
6. It is vital that the Government maintains
and enhances its commitment to research and development. For both
government and industry, training is also a critical success factor.
7. The long-term strategic domestic and
global food challenges require a focus on "modern" agriculture
and the evidence-based appliance of science.
8. Demand for red meat is robust and will
continue to grow with population and economic growth.
9. Government has a critical role, not only
in ensuring a suitable legal, economic, policy and regulatory
framework, but also in helping competitiveness through the rural
development programmes, R&D, animal health policy, skills
and training, and public procurement.
10. Defra's proposed indicators of food
security should include a meaningful measure of the economic condition
and sustainability and production capability of the UK's food
and farming industry, which are important factors in determining
the UK's long-term food security.
INTRODUCTION
11. BPEX and EBLEX welcome the EFRA Committee's
important and timely inquiry into the UK's readiness to meet the
challenges of increasing pressures on global food supplies. Our
comments focus mainly on the issues in relation to the red meat
industry (cattle, sheep and pigs).
How robust is the current UK food system? How
well placed is the UK to respond to the challenge of increasing
food production?
12. The main thrust of Defra's discussion
document, "Ensuring the UK's Food Security in a Changing
World" (July 2008), is that the UK has always been a net
importer of food, self-sufficiency is currently relatively high
in historic terms, and that food security is largely ensured through
open international markets, good links with a diverse range of
stable trading partners, a strong domestic economy, and resilient
infrastructure and domestic supply chains. We would agree with
much of this general analysis. We would also accept that food
self-sufficiency is not a complete measure of food security. But
Defra's discussion document fails to recognise the weak economic
state of the UK livestock industry and the threats to its long-term
competitiveness and sustainability and, consequently, to its long-term
ability to meet domestic food needs.
13. EBLEX's latest annual survey of production
costs across a range of cattle and sheep production systems in
England shows that, in the 2007-08 financial year, average-performing
producers (with the exception of store lamb finishers) failed
to secure a positive net margin (though the top third performing
producers in some production systems did so). In the pig sector,
with feed representing a substantial proportion of the total cost
of producing a finished pig—reaching 60% during 2008—producers
have been particularly exposed to the dramatic increases in the
level and volatility of global cereals and soya prices during
2007 and 2008.[78]
While UK pig meat production has been falling since 1998, production
across the EU has increased.
14. As a result of a chronic condition of
low profitability, low producer confidence and lack of investment,
the dairy and suckler beef herds, the sheep breeding flock and
the pig breeding herd are all falling. Despite encouraging signs
of an increase in productivity in the pig sector, the logical
consequence of a continuation of these trends is falling domestic
production, increased imports, and the "export" of our
industry to areas where production standards and—in the
longer term—production capability may be lower than those
in this country. A greater reliance on imports is neither conducive
to food security nor to consumer choice.
15. The graphs below show the overall market
balances for pig meat, beef, and sheep meat since 1995 (with
BPEX and EBLEX forecasts for 2008 and 2009).
UK Pig Meat Market Balance, 1995-2009
UK Beef Market Balance, 1995-2009
UK Sheep Meat Market Balance, 1995-2009
16. The UK's self-sufficiency in pig meat
fell from 73% in 1995 to 47% in 2007, in beef it fell from
109% in 1995 to 79% in 2007, and in sheep meat it fell from
103% in 1995 to 85% in 2007.
17. Looking ahead, the graphs below indicate
the outlook for consumption and domestic production of pig meat,
beef and sheep meat to 2030 based on current trends.[79]
Current and projected demand for red meat is robust (though the
current economic downturn is impacting on the types of cuts being
purchased at retail level as some consumers switch to cheaper
cuts).
Pig Meat: Projected Consumption and Production
to 2030
Source: BPEX/EBLEX.
Beef: Projected Consumption and Production
to 2030
Source: BPEX/EBLEX.
Sheep Meat: Projected Consumption and
Production to 2030
Source: BPEX/EBLEX.
18. All three graphs indicate that, on current
trends, the UK's ability to meet projected red meat consumption
in 2030 from domestic production will continue to decline.
What are the challenges on the supply side?
19. Within the red meat industry, in our
view there is already in place a substantial foundation of scientific
and technical knowledge on which significant improvements in meat
and livestock productivity and production can, in principle, be
made over the next two decades or so. This knowledge base includes:
— Improved nutrient management (consistent
with matching genetic potential)
— Higher productivity (pig/calf/lamb
per sow/cow/ewe)
— Higher animal health (including through
more effective and collaborative animal disease control)
20. The benefits of achieving these technical
improvements include a higher supply of animals for slaughter,
better use of abattoir capacity, as well as improved carcase and
meat quality. In turn, these improvements should, in principle,
also lead to higher returns from the marketplace, greater business
confidence and higher investment leading to a more sustainable
industry. Improvements in technical performance also carry environmental
benefits, including more effective adaptation by the livestock
sector to climate change and mitigation of its greenhouse gas
emissions.
21. If the realisation of much of the country's
production potential largely lies in the hands of the industry
itself, crucially, a necessary condition for this realisation
is effective knowledge transfer activity that succeeds in achieving
the wider uptake and application of that knowledge. Given that
the livestock industry—notably in the case of the cattle
and sheep sectors—comprises several tens of thousands of
small businesses, this is a very real challenge requiring considerable
resources.
22. For the pig sector, a key aim is to
ensure access to GM animal feed ingredients. In an increasingly
GM world, the EU's policy of zero-tolerance towards GM feed imports
places it in a position of growing isolation, to the disadvantage
of those sectors that are heavily dependent on imported animal
feed and feed ingredients. Here, the need is to encourage the
EU authorities to improve the regulatory regime for such ingredients.
Another major challenge is the continuing effort to improve pig
health and welfare.
23. A number of systemic factors combine
to challenge the competitiveness and long-term sustainability
of the UK meat and livestock industry. These include: exotic and
endemic animal disease; convoluted and inefficient supply chains;
the large retailers' domination of the food supply chain; the
administrative and cost burdens of some aspects of legislation
and regulation; and, the impact of policy changes. Overcoming
some of these challenges lies beyond the capabilities of the meat
and livestock industry alone, and highlights the continuing need
for greater dialogue and cooperation along the supply chain within
the food industry as a whole, as well as the need for engagement
by government. In some areas (e.g. animal disease control, trade
policy, tackling climate change), cooperation with other foreign
governments and through international institutions is necessary.
24. Looking further ahead to 2050, against
a background of a slow-down in the overall rate of agricultural
productivity growth, it is vital that the Government maintains
and enhances its commitment to research and development. Looking
forward to a world that seems certain to be severely challenged
by population growth, climate change and accompanying pressures
on soils, water and air, it is vital that the seeds of future
food production capability are sown now in order to apply and
harvest the fruits of that knowledge many years into the future.
This research effort should include all aspects of biotechnology,
including GM technology, and its safe application in this country
as well as in those parts of the world which, on current trends,
face the most severe threats to natural resources and agricultural
production, largely as a result of climate change.
25. In our view, the strategic domestic
and global food challenges require a focus on "modern"
agriculture and the evidence-based appliance of science. Such
a focus is consistent with ensuring sustainable and competitive
food production, food safety, high animal welfare and environmental
standards, adaptation and mitigation strategies in relation to
climate change, the achievement of healthy and balanced human
diets, and consumer choice.
26. In the debate about the future of food
production in this country, it is important that otherwise legitimate
concerns about diet and nutrition or about climate change in some
parts of the world do not lead to assumptions about similar conditions
and issues in the UK context, or to simplistic conclusions about
meat eating and the necessary size of the meat and livestock production
in this country.
27. In relation to the particular aspects
on the supply side that the Committee raises, we make the following
comments below.
28. Soil quality. Soil and water
are inextricably linked and should be considered together. Soils
are generally well-managed in this country, though there are aspects
of managing organic matter that could be improved. The challenges
will be to maintain levels of fertility and soil structure. As
the costs of essential plant nutrients, normally supplied as fertiliser,
rise, this should lead to their more efficient use. A concern
is that such nutrients become uneconomic or unaffordable. Falling
livestock numbers, together with improved performance and feed
utilisation, mean that there is reduced availability of plant
nutrients in the form of manures, and correspondingly greater
need for manufactured and mineral fertilisers.
29. Water availability. There are
some concerns about the availability of water in the south east
of England. This could be addressed, at least partly, through
the construction of more reservoirs.
30. The science base. While industry
will fund near market research that offers commercial returns,
government must continue to fund strategic research, and there
is general concern across agriculture as a whole about government's
commitment in this area. In the area of collaborative applied
research between government and industry, the LINK programmes
have been very successful, but their future is unclear until more
is known about the planned Technology Strategy Boards. A number
of levy organisations, including BPEX, have closed their own research
facilities, as has government. In England, there is now no government
presence at institute level dealing with livestock. Universities
too have closed their agriculture departments and associated research.
Food retailers should also be encouraged to support research,
since they are the most profitable sector of the food and farming
industry.
31. Training. Any modern economic
sector must ensure the provision and take-up of formal and practical
education and training, as well continuous professional development.
Offering rewarding opportunities in a forward-looking industry
is key to attracting new talent and retaining experienced manpower.
The pig sector, in particular, has invested significantly in industry
training. However, across government, its agencies and industry,
the plethora of bodies and schemes makes for a very complex system.
Schemes and their funding need to be simplified. And very often
skills development is displaced to attend to more immediate concerns—the
"important" is displaced by the "urgent".
32. Farming and land management.
This is an area that is strongly policy-driven, notably through
the environmental regulation and through the range of agri-environment
schemes operated by Defra and the devolved administrations. The
Government chose to implement the 2003 CAP reform agreement,
including the use of voluntary modulation, in a way that strongly
emphasised the environmental dimension of farming. Concerns about
future food supplies suggest that there may be a need to alter
the balance between the environmental and food production aspects
of farming. In particular, there should be as much flexibility
as possible to exploit—but within sustainable limits—our
most productive lands in the lowlands.
DEMAND TRENDS
33. After a very strong 2007, red meat consumption
fell back to more expected levels during 2008 although the
general trend over time is still upwards. However, economic factors,
caused by the recession are expected to influence volume in 2009-10.
Whilst some of these will be positive, such as a return to home
preparation from ready meals some will be negative (e.g. an expected
decline in out-of-home eating). The economic downturn is also
likely to influence that pattern of cuts of meat consumed.
34. In the longer term little change is
expected in individual meat consumption levels, although movement
between species and cuts is likely to occur and meats used in
snacking, sandwiches, which cater for the increased need of time-poor
consumers, or lighter meals, if predictions of global warming
and longer warm dry summers are realised, are likely to be strong.
The EU forecasts the UK population to reach 71 million in
2035. As it grows towards this level total UK meat consumption
will increase. The ethnic composition of an increased population
could change the mix of meat consumed e.g. the Muslim religion
proscribes consumption of pig meat, while lamb is a traditionally
stronger element of some ethnic diets.
35. Multiple retailers will continue to
increase their share of the market although this is likely to
slow as the number of independent butcher outlets reaches a sustainable
level. It is clear within the multiple environments, that promotion
has an ever-growing influence on levels of purchase for any particular
cut. This will continue to be a strong driver as meat is regarded
as a destination purchase and a strong meat offering will increase
customer traffic.
36. Local sourcing, sustainability and animal
welfare are all becoming more influential in consumers purchasing
habits. Being able to make these claims will become more important
over time and of particular benefit to many independent butchers.
Whilst some multiple retailers already offer these benefits, it
will become increasingly relevant to them to have fully traceable
farm, supply chain, local sourcing assurance schemes in place.
Without this they risk turning away a substantial number of meat
purchasers who will then purchase meat and general shopping at
a competitive outlet.
DEFRA'S ROLE
37. The Government's key role is to provide
a legal, economic, policy and regulatory framework that promotes
the effective workings of the market, fosters fair competition
and ensures strong infrastructure. As we highlighted in our response
to the Defra food security discussion paper, the key role for
Defra (and other relevant agencies) is in the following areas:
— Regulation—regulatory regimes
(e.g. environment, food safety, animal health and welfare, planning
etc) that are risk-based, proportionate and cost-effective.
— Rural development—to promote
agricultural competitiveness and modernisation (including support
for knowledge transfer and training activity) through the RDAs
in England and the devolved administrations in the other parts
of the UK. However, each RDA has different priorities, and with
differing application procedures, accessing funds can be difficult.
— R&D—maintain or increase
funding of long term strategic R&D, including new biotechnologies,
and support of collaborative research with industry.
— Animal health—protecting the
nation's animal health status, and improving control of endemic
disease through cooperation with industry.
— Skills—supporting the development
of an appropriately skilled workforce.
— Public food procurement—through
a regime that includes quality and animal welfare amongst sourcing
criteria.
MONITORING PROGRESS
38. In its food security discussion document,
Defra proposes a range of headline and supporting food security
indicators to enable it to assess and monitor the UK's food security
over time. However, as we commented in our response to the document,
the proposed indicators only go so far. In particular, they do
not include a meaningful measure of or guide to the economic condition
and sustainability or production capability of the UK's food and
farming industry, which, in our view, are important factors in
determining the UK's long term food security. In our response
to Defra, we suggested that a separate "theme" (alongside
Defra's proposals of global availability, UK trade and diversity,
food chain resilience, affordability and safety and confidence)
might be "UK farming competitiveness", which might embrace
the following indicators:
— Investment levels in farming
— Domestic agricultural R&D spending
— Farmer age profiles and new entrants
— An appropriate measure of farming
skills
Some of these measures might have to be established
on a sector-by-sector basis in order to take into the account
the varying fortunes amongst the different farming sectors over
time.
January 2009
78 The cost of producing a kilo of pig meat peaked
at just under 150p in April/May 2008, while the average loss per
pig produced was at its greatest, at between £20-25 per
pig, in the period January to May 2008. Since then, declining
costs and higher producer prices meant that the industry moved
back into profit in October. By November 2008 average production
costs were down to 128p per kg of pig meat, giving a net profit
of £4 per pig. Back
79
The consumption lines are based on a simple extrapolation of current
per capita consumption and projected population growth in the
UK. The "Baseline" production curves plot production
based on a projection of current trends in production performance,
as well as in the prevailing commercial and policy environment. Back
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