Examination of Witnesses (Questions 20-39)
MR STEWART
HOUSTON, MR
RICHARD LISTER,
MR JOHN
GODFREY, MR
MICK SLOYAN
AND MR
NIGEL PENLINGTON
13 OCTOBER 2008
Q20 Miss McIntosh: Was this through
Pig World Magazine?
Mr Sloyan: No, this was done through
an independent research company and I am more than happy to supply
the results. We asked consumers would they be prepared to pay
a few pence more. We did not specify and we asked them how much
more they would be prepared to pay to support British farmers,
so there is an indication out there that they are prepared to
do that. We see some research coming from people like the BRC
and various retailers that says the most important thing people
are interested in is price and that may well be true if you ask
people to rank it, various factors, but it does not mean it is
the only thing that consumers are interested in and that is the
question they are never really asked. Yes, people want keen prices
but what else do they want? I guess if you ask them as we have
done in the past, "Would you like your pork to be produced
to the same legal standards as it is in this country?" the
answer is overwhelmingly yes, because they do not appreciate that
it is not for a lot of imported product.
Q21 Miss McIntosh: Do you believe
there is a label that would be not too bewildering for the consumer
that would have the welfare standard on it?
Mr Sloyan: It is very difficult
to communicate that within a single label. We try within our own
Quality Standard Mark to do that. The red tractor logo which has
exactly the same standards as ours tries to communicate that in
the same way. The important thing is to have a clear and unambiguous
statement on behalf of retailers and food service companies, to
have somewhere on a website or in an annual report, as some of
them claim to do under the corporate, social responsibility statements,
to say, "This is the specification to which we buy",
and incidentally to watch out for what might be construed as playing
with words. Some retailers state that "everything we sell
under our label conforms to this specification". We believe
that retailers are powerful in this country even if they decide
to sell under a tertiary brand—i.e., not with their name
on. They could still insist on a specification because they are
powerful enough to enforce that.
Q22 Miss McIntosh: Considering that
the welfare rules were driven by the consumer, you would think
that they would want to see that reflected on the product label.
Mr Sloyan: You would think that
they would certainly want the information, absolutely.
Q23 Miss McIntosh: How best do you
think British pigmeat could be labelled to highlight the welfare
standards? Are consumers for example likely to understand the
difference between free range, outdoor and indoor?
Mr Sloyan: When you get to nuances
of how animals have been produced, you have to accept that at
the moment we can only measure inputs so we equate high welfare
with systems of production. We do not know what the outcome is
on the animal. We have a research programme ongoing at the moment
with Bristol University to try and plug that particular gap. In
terms of specifics in relation to free range, outdoor bred or
outdoor reared, statements that are used at the moment, we are
working with the RSPCA to have in the first instance a voluntary
code that specifies what we mean by that. Hopefully by the end
of the year we will have something in place.
Q24 Miss McIntosh: As regards castration
and everything else you have said, you are saying that we have
the highest welfare standards and we are probably scoring a bit
of an own goal by not reflecting that in consumer information?
Mr Sloyan: We have extremely high
welfare standards. It would be wrong of me to say that they are
the very highest in the whole of Europe. Sweden has quite stringent
laws and there are one or two other countries as well, so it is
fair to recognise that. If you take Denmark, we referred in our
evidence[15]
to the UK contract which is pretty much UK standards with the
exception of castration, so they can produce those pigs if the
market incentive is there. This is not about those supplying countries.
This is all about retailers, food service companies and the demands
they make on those importing suppliers.
Q25 David Taylor: We are dealing with
the willingness of the consumer to pay an extra premium for the
welfare of product. My own direct contact and experience with
this mainly relates to the area of poultry but I am sure there
is a carry over to pigmeat as well. If you stand with a clipboard
outside any Tesco, Asda or something and ask people to endorse
the sentiment about higher welfare standards for poultry or pigmeat,
people are pushing you out of the way to get to the clipboard
and sign. The same people moments later will be dipping into the
chiller cabinet and picking the cheapest cut. I know that the
BRC are saying that that is a key factor. My view would be that
maybe either QSM or other standards are just not promoted as vigorously
and as extensively as they could be so that they percolate into
consumers' pattern of purchase. I do not think that enough is
done to let people know what the implications are of buying the
cheapest as opposed to buying a QSM or other standard product.
What would you like to see either the government or producers
do?
Mr Sloyan: I agree with you that
what consumers say and what consumers subsequently do does not
always match up. That is undoubtedly true. I agree with you that
in terms of the money we have available, trying to communicate
with our consumers—which is not the full 60 million in the
country but it is a big proportion of them—is something
that we have not succeeded in fully in terms of making sure that
all of our consumers fully understand the issue. That comes down
to the amount of money we have to spend in communicating that.
What we rely on is working with retailers and food service companies
to make sure that they are helping to make those communications
for us. I do really think that retailers cannot abdicate the responsibility
in terms of the specifications that they have; nor food service
companies; nor, dare I say it, government in terms of the specifications
it uses to buy the products we have which we know are not universally
specifying at least a legal minimum standard for UK product. There
are a lot of people in the chain who all have a responsibility
to communicate this. One thing I am very sure of though is that
if consumers were fully aware that when they pick up a very cheap
packet of bacon, for example, that standards of welfare were not
just not the highest but would be illegal in this country, it
would change consumption patterns, not for everybody—I fully
accept that—but certainly for a significant proportion of
the population.
Q26 David Taylor: Consumers probably
conveniently close their minds to the implications of what they
are buying at times.
Mr Sloyan: Some of it, but I think
it would be too cynical to say—
Q27 David Taylor: I am not saying
that is always the case.
Mr Sloyan: If you look at where
an idea takes hold, for example, fair trade is a very good example
of that. Once it became established within consumers' minds, it
really started to be a demand that had to be met. It is not my
particular area but I remember people saying, for example, they
could not sell bananas. They could not possibly have them priced
at two particular levels, until a retailer said, "We will
only stock free trade bananas", so that was the push that
was required. I think it was the retailers and the food service
companies responding.
David Taylor: There is a cognitive dissonance
almost, people holding in their head contradictory positions of
being able to buy cheap meat and having higher welfare.
Q28 Mr Gray: What David describes
is going to get worse, not better, with the recession and people
are going to be more and more concerned about price. Mr Sloyan
said just now that there is a whole variety of people responsible
and retailers themselves are responsible. Retailers are not responsible.
The retailers' job is to maximise the return for their shareholders
by selling food. I think you are wrong there. I think the fair
trade thing was done by producers producing a wonderful, catchy
expression, by advertising and by pressing the point. It is your
job surely, is it not, to say, "Half the stuff you are buying
is produced illegally. It is disgraceful and if you care about
pigs buy our stuff"? It is your job and not the supermarkets'.
Mr Sloyan: That is something we
have been trying to do for a number of years within the resources
that we have but it is very difficult unless we can get support.
For the complete avoidance of doubt, what we are saying here is
not that we want to stop imports and that people should only buy
a British product. Quite the opposite. What we would like to see
is that all the product that we currently import is produced to
the same standard. That is about demand in the market place and
I am afraid the retailers are the gatekeepers of that. If they
change their minds tomorrow, I believe—
Q29 Mr Gray: The notion that Lidl
might turn round tomorrow and say, "In the interests of pig
welfare we are going to stop buying from X, Y and Z countries
and we are going to put our prices up tomorrow because we really
care about pigs" is away with the fairies. There is not a
chance they are going to do that.
Mr Houston: Lidl is a good example
because they have moved from virtually no sourcing of British
pigmeat to something like, from memory, 65% British pork. This
is not all doom and gloom.
Q30 Mr Gray: That is great, but it
is supply and demand from consumers. I am concerned from the tone
of your answer that it is everybody else's fault and they must
all do something about it. I do not think that supermarkets are
going to change their buying habits unless people coming into
the supermarkets say, "I do not want that stuff". If
there is lots of the bad stuff, as it were, left in the freezer
compartment at the end of the day, the supermarket will stop buying
it, but that is your job, not theirs.
Mr Houston: A number of supermarkets
are in our 100% British club. I am thinking of Waitrose, Marks
and Spencer fresh pork, Budgens, the Co-op. I am sure I have missed
people out.
Q31 Chairman: Tesco perhaps?
Mr Houston: Tesco have a corporate
statement that they will only buy to British standards. Part of
Mick's presentation is that we do not have an argument if the
standard of the pigmeat coming in is equal to the UK standard.
Tesco do follow up on that by auditing their imported supply chain.
Q32 Chairman: The message is very
clear from the producer side of the evidence that we have had,
that there is a cost to produce to the UK's welfare standards.
You are then saying that there are continental producers with
a similar, in the case of Sweden, or a more exacting regime than
we have and that there is a third category which are those continental
producers who are getting somewhere near the UK standard and therefore
are able to supply discerning customers like Tesco. They are able
to do that competitively to the exclusion, effectively, of pushing
out our own production. What that says to me is it is the other
factors in the cost function of producing a pig which weigh more
heavily in the competitive difference between the industry that
you represent and other people's products on the shelf. Is that
a fair assessment?
Mr Houston: We are a lot closer
to the similar cost of production—
Q33 Chairman: Is it yes or no?
Mr Houston: It is not a yes or
no answer. We are a lot closer to the cost of production of producers
in EU countries who are producing to the same standard.
Q34 Chairman: But sufficiently different
to give a competitive price advantage to those other producers.
When you read this evidence, it is very long on what I call playing
the welfare card. The changes in the sow stall and tether system
have been around for a long time and the "good producers",
the ones with sufficient finance, I guess I am right in saying,
will have made their changes in investing in different production
systems quite some time ago. Would that be correct?
Mr Houston: That is right.
Q35 Chairman: In terms of there being
a new cost, that could not be the case. It may represent an additional
cost to production because of lower density, more space being
required et cetera, but this is not a novel feature in pig production
in the UK amongst our bigger producers; it is the reality, is
it not?
Mr Houston: There is an ongoing
cost of maintaining that difference in welfare standards.
Mr Lister: Welfare is not the
only cost. There are various other costs. There is a catalogue
of events. You said that when you read the report it was a story
of one bad occurrence after another. We had the 2001 F&M outbreak.
That had a huge carry over on our own herds. It took us four years
to recover from that because of the consequences of not selling
old sows, movement restrictions and disease problems. Again, that
was a catch 22 so we did not invest and it became more inefficient.
Welfare is not the only reason. There are a number of other reasons
which are all part of a catalogue of events.
Q36 Chairman: Welfare would be a
positive if you were attracting a premium. Let me focus my line
of enquiry. You enunciated a number of supermarkets who had gone
100%. I must admit I enjoyed my bacon sandwich on Sunday morning
after my bicycle ride. It came from Marks and Spencer so I know
it must be part of your club. It was very good bacon indeed but
do those producers who go for the 100%, or are part of the 100%
club if we can put it that way, receive an obvious premium over
the suppliers which go to other supermarkets which are not quite
so discerning?
Mr Houston: No, the market does
not work like that. It works more on averages because pigs are
split up in the abattoir and do not all go to one outlet.
Q37 Chairman: Let me turn it round
the other way. If we are looking at welfare and we are saying
this is a particular attribute of our production, should there
be a premium paid for welfare over and above whatever benchmark
you care to define as the market price for pig meat?
Mr Houston: If you look at our
average weekly cost and compare it with the continental weekly
cost, you will find that although there is a fluctuation we are
consistently above the European average return. That is how the
premium is reflected in the British pig industry.
Q38 Chairman: You are actually getting
more than the continental counterpart?
Mr Houston: Yes.
Q39 Chairman: If my colleagues and
I wrote a report which came to the conclusion that our supermarkets
were wholly unmindful of the whole question of the cost, Mr Godfrey—
Mr Godfrey: I am agreeing with
you. The supermarkets are not wholly ignoring what is happening
and in fact there are some premiums for additional welfare standards.
Some outdoor production does get a premium. The question is why
are our costs so much higher than our continental brethren.
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