Memorandum submitted by The Co-operative Group (SFS 71)

1. Introduction

1.1 The Co-operative Group is the largest consumer-owned business in the UK. It is a diverse commercial organisation, comprising of several significant businesses: food retail, farming, pharmacy, financial services, travel, funeralcare, and legal services. We have 3.2 million members and employ over 80,000 people.

1.2 For the purposes of this inquiry, we will focus on our food retail and farming businesses:

The Co-operative Food is the largest independent convenience store operator in the UK. It has over 2,200 stores and 12.4 million customers. On the 15 July 2008, The Co-operative Group announced that it had exchanged contracts for the acquisition of Somerfield. The combined food business will operate more than 3,000 grocery stores and generate net sales of 8 billion, making it the fifth largest food retailer in the UK. All Co-operative Societies operating supermarkets and convenience stores are members of the Co-operative Retail Trading Group (CRTG). Through the CRTG, the Co-operative Food sources and supplies the Co-op own-brand range, comprising of some 4,000 lines.

The Co-operative Farms is the largest commercial farmer in the UK, with over 10,000 hectares of land in ownership in England and Scotland and farming a further 20,000 hectares. We are the largest farming recipient of the Single Farm Payment in the UK. Food from our farm supplies our stores, but varies on the season and location of the farms.

1.3 We approach the inquiry from the unique position of both large food retailer and large commercial farmer and have outlined our response to the Committee's specific areas of interest.

2. Specific questions

How well-placed is the UK to make the most of its opportunities in responding to the challenge of increasing global food production by 50% by 2030 and doubling it by 2050, whilst ensuring that such production is sustainable?

2.1 DEFRA is aware of the potential problems that the UK faces from a food security, sustainability of supply perspective. It has already identified five key areas of policy development to ensure food security at both UK and wider world levels. These are: global availability, diversity of supply, food chain resilience, affordability, safety and resilience. Whilst it is right to identify these workstreams, there are an additional number of issues that must be considered to assess how well-placed the UK is to make the most of its opportunities in greater detail.

 

2.2 Genetically Modified Organisms (GMOs): The ongoing food security debate cannot be assessed without some reference to GMOs. Genetic modification is an area where we have employed the precautionary principle. Within The Co-operative Food, our aim is to eliminate any ingredients and additives that come from genetically modified crops in our products. Our policy, achieved in 1999, recognises consumer and member concern in this matter. Our own-brand range of food products does not contain any ingredients or additives derived from GMOs.

 

2.3 We remain reliant on the availability of segregated sources of soya, maize and indeed any other genetically modified crops that may come onto the market. But this approach and consumer choice will be compromised if genetically modified and non-genetically modified food sources are mixed.

 

2.4 The dynamics of the political landscape - regulation: Both our food retail and farming businesses are affected by an increasingly complex legislative landscape. About 90% of the regulation that these businesses are subject to is EU level regulation. Recent months have brought changes to the Common Agricultural Policy through its Health Check - which has meant a revision of the farming business model to accommodate changes, the newly-agreed Pesticides Directive, where it is still unclear as to the effect on the level of agricultural production in the UK, and changes to the Marketing Standards - a very positive development allowing the sale of Class II produce in-store. However, greater coherence in regulatory development would be welcome.

 

2.5. The dynamics of the political landscape - devolution: As a UK-wide business, we operate across four different legislative regimes. Although DEFRA is a UK Government department with the remit of uniting food policy across the UK, both Scotland and Wales are working to develop their own national food policies as of 2008. It will be important to achieve some kind of parity in national food policies across the United Kingdom in order to maintain a stable level of production. One of the reasons for this is because of the different regional climates in the UK. Different regional climates mean that certain areas have specialisms, eg: most seed potatoes are grown in Scotland, because its climate is ideal as a low virus area. The seed potatoes are then planted in fields all over the UK, but potato production in other countries of the UK could be at risk if there is not suitable co-operation across borders and too much control of potato production.

 

2.6 Intensive agriculture: As an impact of climate change, we must be prepared for the risk of more extreme weather. This will have an effect on food production. With correct environmental balance, a focus on more intensive agriculture, and growing crops where they will be protected from the elements of the weather, including in polytunnels or greenhouses (cf: Thanet Earth), should be considered. Intensive agriculture does not have to equal energy-intensive agriculture, particularly if offset by wildlife friendly areas.

In particular, what are the challenges the UK faces in relation to the following aspects of the supply-side of the food system:

2.7 Science base: The Director of the Australian Commonwealth Scientific Industrial Research Organisation (Flagship research)[1] spoke at this year's Oxford Farming Conference. The research concentrates on addressing four major challenges in the agrifood sector: future grains, designed food and biomaterials, breed engineering and quality biosensors. The research is highly sophisticated, but we fear that there is no equivalent in the UK. The lack of significant levels of appropriate scientific research represents a challenge in terms of developing knowledge sharing and transfer amongst countries, and the farming community. The situation in the UK has already been the subject of significant debate, including most recently in the House of Lords[2].

2.8 As example of this, the quality of soil in the UK has decreased as a result of livestock moving from the east to the west of the UK, and the increased use of artificial fertilizers. The farming community lacks the knowledge required to improve soil quality. This is caused by lack of relevant independent research, and knowledge transfer within the farming community. We would encourage DEFRA as the lead government department in this area, perhaps through the EU, to invest more in independent agricultural research.

 

2.9 The provision of training: The Co-operative Farms offers a sophisticated level of training to its employees. We are part of a DEFRA-funded consortium that advises farmers on the requirements of cross-compliance and on catchment-sensitive farming. All our owned-farms are in government supported environmental schemes (Entry Level Stewardship, some are in Countryside Stewardship Schemes and Land Management Contracts in Scotland). We co-operate with other farmers in grower groups and buying groups. Training is widely offered to the farming community and is not high cost, however it is not mandatory. Organisations may have a role to encourage farmers to take up such training.

2.10 The way land is farmed and managed: Replicating the co-operative model of sharing equipment and land management training would work well across the wider farming community. Part of the difficulty is the large number of farmers in the UK, who do not share knowledge and equipment. By sharing equipment, we have restructured our farming business and brought it back into profit.

 

2.11 The marine environment: The marine environment may be overlooked on occasion, in comparison to the territorial environment. We are likely to see rising demand for fish products over coming years. At the same time, fish stocks are under severe pressure. The 'industrialisation' of fishing has seen global catches at sea increase fourfold over the last 50 years.[3]

2.12 In addition to over-fishing, by-catch and discards also pose a serious threat to the conservation of fish. If the current marine management system remains as it is, we expect catches to continue to decline on the present trajectory as a function of falling fish populations. We welcome the publication of the Marine and Coastal Access Bill, but support the Royal Commission on Environmental Protection's recommendation[4] for the Government to establish an ecologically coherent network of marine protected areas with 30% of UK waters designated as no-take reserves. Such measures increase fish populations outside their boundaries as numbers of fish build up within reserves, they can migrate to fished areas outside the reserve. Reserves can be important for protecting spawning and nursery sites and an essential element of sustainable fisheries[5]. But we also recognise that there would need to be significant support for fishing communities affected by marine protected areas in the short-term.

2.13 The Co-operative takes fish sustainability seriously and is a member and key supporter of the Marine Stewardship Council (MSC). We operate a strict responsible fish sourcing policy to monitor and control supplies. We do not source fish where the origin or method of catch is unknown, we will never knowingly purchase Illegal, Unregulated and Unreported (IUU) fish nor deal with suppliers implicated in the practices of exceeding quota limits, fishing outside prescribed areas, using banned fishing methods or the capturing and selling of endangered species. All our suppliers are subject to audit and inspection on a regular basis to ensure that the required standards are being met, and we regularly review our fish sourcing policy in view of the latest scientific advice.[6] We have also provided 200,000 of funding to take four UK fisheries through MSC certification in 2009/10.

2.14 It is also worth noting that one of the topics of the Australian Flagship research mentioned above was the modification of grain to produce Omega 3. This has reduced the pressure on fish stocks, which had arisen because farmed fish produces less Omega 3 as it is fed grain rather than fish waste, which is in shorter supply[7].

What trends are likely to emerge on the demand-side of the food system in the UK, in terms of consumer tastes and habits, and what will be their main effect? What use could be made of local food networks?

 

2.15 Good with Food is the theme of The Co-operative's food retail business. It is a business philosophy that defines the way the business and its people operate. It has generated a passion for the products and also for the business - for product development, for the social goals of the business and for excellent store performance. Through "Good with Food" we have focused on:

 

Key category drivers - produce, protein and bakery. Excellence in these categories demonstrates a passion for food, demonstrating we are "Good with Food" with leading edge displays that inspire and excite.

Ranges that reflect current shopping trends allowing consumers to make healthy choices.

Regional ranges that reinforce our position as a community retailer.

A service culture that prioritises the customer.

In-store communications reinforcing responsible retailing.

A layout that is clean, bright and uncluttered with space given back to customers and the creation of different zones to enable easier navigation and encourage customers to explore the new ranges.

 

2.16 This encourages consumers towards a healthy diet allowing and enabling them to become Good with Food. Another exciting aspect of the Good with Food programme has involved developing a close relationship with the farming business to supply products exclusively for our shops. This has provided us with a unique opportunity to present healthy options that also meet customer preferences for locally grown produce with sound provenance.

2.17 We also recognise that as a significant food retailer, we have a responsibility for encouraging and developing certain positive demand-side trends. Analysis of sales data enables us to predict the following demand-side trends for 2009:

From-scratch cooking and home baking: We offer recipe advice in-store and also through mass mail-outs to our members with healthy-eating and cooking ideas to encourage this trend. There is also a demand for better education in food - how to cook, how to cook with leftovers, how to eat more healthily, how to not waste food. We promote better food education both in-store and on the farm. We have an education project where over 10,000 children have spent structured days on an arable farm seeing how cereals are grown, what we do for the environment and then cook to understand the link to their food. We now have 7 sites set up to offer this on our own and third party farms. Please see www.co-operativemembership.coop/en/fromfarmtofork/home/.

Trading down from eating out: it is important to offer a range of premium products to encourage and enable customers to do this.

Less protein: There is a trend towards cheaper cuts of meat, mince and also, more vegetables. In January customers choosing healthier products received double points on all purchases of green dot products. We plan to repeat this three times in 2009. In addition, we are planning to run strong value deals on green dot products all year. Green dot messages are based in approved nutrition claims under the Nutrition and Health Claims Regulation (EC) 1924/2006 plus Omega 3, Wholegrain and 5-A-Day claims and will be applied to any products that meets the strict nutritional criteria and has only green or amber traffic lights.

British food: Provenance of food is important. We have recently converted all own-brand bacon to British only. Our entire range of own-brand bacon, gammon and fresh pork is now British in an initiative to support UK farmers and to raise animal welfare standards. We have worked with over 300 British farmers to achieve this change.

2.18 In addition to demand-side measures, our ongoing engagement with our member customers means that we have developed an Ethical Food Policy based on the responses of over 100,000 member customers to a survey. Our customers told us what they want, and therefore we will continue to develop initiatives in the following areas: Food Quality, Diet and Health, Ethical Trading, Animal Welfare, Environmental Impact and Community.

2.19 Demand-side trends can also be linked to economic downturn. We are aware that the demand for organic food has reduced in the past few months[8], affecting some of our competitors. However, demand for products from our Fairtrade range, which is the largest of any UK supermarket, have increased over the past year in spite of the economic downturn.

What role should DEFRA play both in ensuring that the strengths and weaknesses that have been identified? What leadership and assistance should DEFRA provide to the food industry?

2.20 We believe that it is essential for the interests of both consumers and producers of food to be the responsibility of the same government department. At the moment, DEFRA has an opportunity to promote better joined up working amongst the vast number of stakeholders with an interest in food and the security of its supply. It is also an opportunity for the department to be at the forefront of encouraging, and funding research into the future of food and its security and agricultural needs in the UK.

 

2.21 We very much welcome the publication of the Food Matters report. This contained a number of valuable and positive recommendations and objectives. However, to date, progressing the recommendations appears to be slow. We are particularly interested in the role of the Council of Food Policy Advisors and await further information on their activities.

 

2.22 DEFRA must also adopt a leadership role in closer working with both the Food Standards Agency, the Department for Energy and Climate Change and external organisations such as trade bodies, consumer organisation and NGOs.

How well does DEFRA engage with other relevant departments across Government, with European and international bodies, on food policy and the regulatory framework fro the food supply chain? Is there a coherent cross-Government food strategy?

 

2.23 We would expect to see an improved relationship across government departments following the publication of the Food Matters report. The report aims to create a coherent cross-government food strategy for the first time since the Second World War, indicating the importance and need for continued and increased food production across the United Kingdom. However, we consider that there is still some way to go for a coherent, joined-up relationship between DEFRA, the Food Standards Agency and Department of Health, as promised by the Food Matters report.

 

The Co-operative Group

February 2009



[1] Dr Bruce Lee, Director, CSIRO Food Futures National Research Flagship; "Impact from Australia's CSIRO Flagship Research Program", Oxford Farming Conference 2009.

[2] http://www.publications.parliament.uk/pa/ld200809/ldhansrd/text/90120-0011.htm#09012050000233

[3] "Silent seas" October 2008, Marine Conservation Society

[4] The Royal Commission on Environmental Pollution's twenty-fifth report "Turning the Tide: addressing the impact of fisheries on the marine environment", 2004.

[5] "Net benefits: a sustainable and profitable future for UK fishing", March 2004, UK Strategy Unit

[6] Ibid.

[7] Dr Bruce Lee, Oxford Farming Conference 2009.

[8] Jay Rayner; "Top stores call them "budget food lines", I say they are a disgrace", The Observer, 18 January 2009.