Examination of Witnesses (Questions 180-199)
MR ANDREW
OPIE AND
MR DUNCAN
SINCLAIR
27 OCTOBER 2008
Q180 David Taylor: Waitrose is very
much the flagship for the quality end of retailing. Mr Sinclair,
do you for instance operate your own abattoirs and processing
plants or do you buy from generic processors?
Mr Sinclair: We source our product
from a processor who processes all our pig meat and the retail
carton packaging plant. We have developed a relationship there.
The model we have developed is possibly more integrated than some
in terms of the people who look after the farming end, who are
involved in the purchase of the feed and sourcing the feed on
behalf of the collective group of farmers. Also, we have a research
facility looking at driving best practice, and we are trying that
out at the research facility before asking or encouraging other
members of the groups to pick that up and introduce that. The
third element is that high on the agenda right across the various
livestock schemes is emphasis on working with breeds to improve
the taste of the product with significant emphasis on the pig
meat side. That has led to the development of a specific Waitrose
board line that is used throughout our standard pig meat products.
There are elements where, because of our size, it has allowed
us to do things slightly differently to some others.
Q181 David Taylor: You are not one
of the big four at the moment. Do you have any sympathy at all
with the point that I am trying to make which is that, in a very
highly concentrated retail market in the UK, bigger than any other
western European country, there can be a tendency for overweening
power of the group of four main retailers to act and operate in
a way which is inimical to the interests of in this case the British
pig meat industry. Do you see any signs of that at all?
Mr Sinclair: It is difficult for
me to comment on that. I have not previously been in the industry
and I came specifically to Waitrose two years ago. I do not have
the background.
Q182 David Taylor: You must talk
about these things.
Mr Sinclair: It is something that
you are aware of. It is a consideration but we have decided to
develop a model that works for us. We very much focus on developing
that for the benefit of Waitrose and the partners in that supply
chain.
Q183 Chairman: Listening to our previous
witness, there was a very strong emphasis that price was the dominant
feature. That was a very key element in the hospitality industry.
We have been talking about supplying major supermarkets so far
in the inquiry. Waitrose, I note from a recent edition of Farmers'
Weekly, are supporting the award for the pig farmer of the
year to be presented this evening in the Great Room of the Grosvenor
Hotel, a sumptuous event. I notice happy, smiling pig farmers
beaming from the pages which is an unusual sight for us to see,
but two people appear to have been fingered as persons of excellence,
Mark and Paul Hayward. In their operation they have the Dingley
Dell brand of pork products. One of the points that the judges
liked in coming to the conclusion that they were winners was branded
point of sale information, drive to get 100% of branded meat,
and very much that they had gone their own way. They had circumnavigated
having to do business with big retailers and they decided that
they were going to do their own thing. That suggests to me that
they are saying niche is the way to be profitable with pigs. Is
that a fair comment?
Mr Sinclair: I accompanied the
judges going round to the finalists for the Farmers' Weekly
award. On the two farms I visited there was innovation and a drive
to stand aside from the mainstream market and take control of
their own destiny. They were two of the major factors that these
finalists had embarked on pretty successfully. Different people
have different attitudes to how they can develop their business
and opportunities. Two of the finalists had decided, "Right.
Let us see if we can diversify our outlets and not rely on just
one major outlet." They are spreading the risk in terms of
the different markets.
Q184 Chairman: The reason I am asking
these questions is that it is quite difficult to get your head
round whether the UK is encompassed with the phrase "Physician,
heal thyself", which is what people like these potential
winners have done—they have said, "Okay, we are going
to set out our own stall"—whereas others clearly are
co-located as in your supply chain and those other supermarkets
that Mr Opie speaks on behalf of, because that is what they have
decided to do. The general message from the industry is one that
the industry is truly struggling. You come to the question: if
some can make it a profitable, worthwhile and positive enterprise,
what are the rest doing wrong?
Mr Opie: The niche player is an
important issue but it is only one very small part of the pork
market. In terms of the interest in local produced food, for example,
pork has been one of those where they produce sausages. There
is good consumer interest in those smaller niche products. For
the farming community as well, there is always going to be a variety
of efficiencies on those farms in terms of the way that they are
managed and run. We tend to think of farmers and farming groups
as all the same, as if they are almost like a factory unit that
is producing a product at a certain price. That is not true. What
is interesting is trying to address some of those efficiency issues
directly with those who are in the mainstream supply, looking
at things like efficiency and breeding, to help them also make
money. There is money to be made in the mainstream of supply to
main supermarkets. I do not think we should see the niche player
as the panacea for the industry, for example.
Q185 Dan Rogerson: It is quite often
farmers who own the processing but not British farmers. There
is a question about the issue of pressure to change the way pig
farming is carried out in this country which came through retailers
and through government. Now that that change has happened, it
is get on with it yourself, farmers. That is the situation you
have to work in. Do you think that is a fair summary of what has
happened?
Mr Opie: In terms of the government
or in terms of the market?
Q186 Dan Rogerson: In terms of the
retailers involved in what the government decided to do, in terms
of tightening up and changing things.
Mr Opie: Certainly in terms of
the animal welfare standards, retailers have been up front about
that. If you look at all the statements of the major retailers,
they make it clear that where they source outside the UK they
look for comparable animal welfare standards to those in the UK,
stalls and tethers being the clearest example. Retailers have
stepped up to the mark here and said, "We recognise the government
has a concern on animal welfare but we do not want to penalise
our own home industry because that is absolutely at the core of
everything we do in terms of British retail." Therefore,
we need to make sure that when we are buying a product we can
assure ourselves that it is of an equivalent standard.
Mr Gray: What you are saying is entirely
different to what BPEX are saying.
Q187 Dan Rogerson: That is what I
was going onto. BPEX are saying that up to 70% of what is sold
does not meet those standards.
Mr Opie: I think there is a difference
between what might meet the BPEX quality standard and what would
be legal in this country, talking about stalls and tethers. The
one issue which often comes up is castration for example which
is allowed in other countries and is perfectly legal. In fact,
it is required in some countries, but it is not part of the BPEX
scheme here and therefore would not qualify. That aside, the main
issues which we are concerned about here—stalls and tethers,
those sorts of issues—are covered in comparable standards
and are also audited across Europe.
Q188 Dan Rogerson: That is a 70%
figure on the strictest interpretation of things. You mentioned
stalls and tethers in particular and the ability to move round
as crucial. Could you give us a percentage figure for what you
think meets those slightly more limited standards?
Mr Opie: When you say "more
limited standards" are you talking about—?
Q189 Dan Rogerson: More limited than
what BPEX are telling us would be legal.
Mr Opie: They are not illegal
standards but they might not qualify for the BPEX standards. I
do not have a figure to hand on that. 80% of fresh pork sold in
UK supermarkets is British produced. Up to about 50% of bacon
and ham is also British produced. If you take out that, not all
of those pigs would necessarily have been castrated as well. You
can see the sorts of margins we are starting to get down to.
Q190 David Taylor: Would you say
that the Food Standards Agency has reasonable knowledge about
what it is that consumers are looking for in food, in particular
meat and in particular pig meat?
Mr Opie: I am not necessarily
convinced that they always know what consumers are looking for
in food. They are the authority on food labelling, so I would
accept that point. I think there is a difference between consumer
demand and what consumers are looking for when they go into a
supermarket. That is the point I am making rather than the legal
framework.
Q191 David Taylor: You acknowledge
that they have a role, knowledge and expertise in terms of labelling.
What they say comes head to head with what you say. They say that
high on the list of consumers' demands for change is better country
of origin labelling. In your submission to us at 4.5 you say:
"Country of origin, as demonstrated by research from IGD,
is not a key factor in customer choice."[5]
How can the FSA and yourselves both be right on this?
Mr Opie: We are right. We rely
on the IGD figures which are produced regularly. That figure I
quoted there came from a collaborative document that was co-sponsored
by some of the supermarkets, the NFU and some of the producer
groups as well. The particular reference there was that in the
top five buying preferences for consumers country of origin was
not one of those. That is a consistent figure. I am talking against
things like price, quality, use by date, those types of indicators
on a product compared to country of origin. It consistently scores
lower than other factors in consumer choice surveys which have
been done over a number of years by IGD.
Q192 David Taylor: It is a fairly
convenient finding for your members, is it not? You are able to
brandish the labelling that your members put in as being of British
origin or whatever it might be, but when you are put under pressure
to say, "It ain't British by any logical measure that people
have" you say it does not really matter to the consumer anyway.
Mr Opie: No. What I am saying
is it does not matter to all consumers. What we do—what
all good supermarkets do—is help consumers to make a choice.
If you go into any major UK supermarket now, which we all do,
you will see lots of products: bacon, ham, pork products, very
clearly labelled as British with "British", with the
Union Jack, with the BPEX quality mark on fresh pork joints, country
of origin, all of these things which go well above the legal requirements
but are there to help consumers make the choice.
Q193 David Taylor: Not to mislead?
Mr Opie: Absolutely not to mislead.
Q194 David Taylor: Not with a veneer
of national loyalty from national retailers which is not borne
out by the evidence?
Mr Opie: Absolutely not. UK supermarkets
are incredibly proud of the British pork they sell. They want
people to be able to come and see it and choose it easily. That
is why they support things like assured food standards.
Q195 David Taylor: Why do you not
pay British producers more premium for the higher standards which
they are able to deliver, welfare standards in particular?
Mr Opie: They do pay a good price
for the pork. We have already been discussing the rise in the
DAP price that we have seen over the last year for example.
Q196 Chairman: You have now been
presented with a piece of evidence which the Committee has.[6]
It is but one example, the one I used earlier in my questioning
of Mr Dyson, but it does seem to be somewhat at odds with what
you are saying. Do you want to pass an observation?
Mr Opie: When was this photocopy
taken?
Chairman: It was sent to us by one of
our witnesses.
Q197 Mr Gray: It says on it 17 August.
Mr Opie: Which year?
Q198 Mr Gray: 2008?
Mr Opie: That product is not illegally
labelled as it stands.
Chairman: I do not think it is the legality
that we are questioning. It is the fact that the word "Britain"
is printed there. For the person who shops by eye and may not
get down to the bottom bit, when they see the collection of meats
that have gone into that, they might be surprised to learn that
a pack of bacon contained meat from so many countries of origin.
I know it says "Britain" and not "British".
Q199 David Taylor: The four key qualities
of advertising includes truth and honesty. It may well be that
technically what is on that label is truthful but it is not honest,
is it? It is misleading. It is trying to lead people to the checkout
believing that somehow they have supported the British industry
when all they have done is support some firm that has wrapped
it up in polythene in Kent.
Mr Opie: I do not agree with that.
If you took a photograph of the whole of that chiller cabinet
for example, you would be able to pick out lots and lots of products
which had the BPEX mark on them. They have the union jack mark
on them. They may have "Produce of Britain" on there,
but there is an absolutely easy choice for consumers to make when
they go into a supermarket.
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