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 20081. 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 trends2. 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:

 

Genetic improvement

Improved nutrient management (consistent with matching genetic potential)

Higher productivity (pig/calf/lamb per sow/cow/ewe)

Higher carcase weights

Lower mortality

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:

 

Profitability

Investment levels in farming

Retail price spreads

Business confidence

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



1 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.

 

2 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.