UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 879-vii

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

Environmental Audit Committee

Sustainable Food

Wednesday 7 December 2011

Dr Jennie Macdiarmid, Sue Dibb and Professor Elizabeth Dowler

RT HON James Paice MP and Sarah Church

Evidence heard in Public Questions 311 - 378

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Oral Evidence

Taken before the Environmental Audit Committee

on Wednesday 7 December 2011

Members present:

Martin Caton (Chair)

Peter Aldous

Neil Carmichael

Katy Clark

Zac Goldsmith

Mark Lazarowicz

Mr Mark Spencer

Paul Uppal

Simon Wright

________________

Examination of Witnesses

Witnesses: Dr Jennie Macdiarmid, Senior Research Fellow, Public Health Nutrition Research Group, University of Aberdeen, Sue Dibb, Executive Director, Food Ethics Council, and Professor Elizabeth Dowler, Trustee, Food Ethics Council, gave evidence.

Q311 Chair: Can I welcome you to this afternoon’s session of the Environmental Audit Committee? Dr Macdiarmid, we understand that Professor McNeill has had a motor accident. We hope she is all right.

Dr Macdiarmid: She is fine.

Chair: It is good to hear that she is all right. Dr Macdiarmid, if we could start by you introducing yourself and the work that you are involved in, and after that, Ms Dibb, if you could introduce yourself and your colleague and the work you are involved in, very briefly if possible. Dr Macdiarmid.

Dr Macdiarmid: I am a senior research fellow at the Rowett Research Institute of Nutrition and Health at Aberdeen University, and part of our research is focusing on looking at healthy, sustainable diets, so trying to bring together the nutritional requirements for a healthy diet, but also taking into account the impact this is having on the environment. We have done a piece of work last year, funded by the World Wildlife Fund, which is called Live Well, and what we did with that was to look to see if it is possible to create a diet that would be compatible with health issues and be compatible with environmental issues. Basically, what we showed was it can be compatible, but you have to look at these things together because it could also be that you could have an unhealthy, sustainable diet. We are very keen that we make sure that when we are looking at what we need for a healthy, sustainable diet we keep on the agenda of both health and the environment, because obviously obesity is a huge issue and we need to be addressing these two issues together. So, in the Public Health Nutrition Group that I work in we are looking at issues of obesity but also the environmental impact of the diet in the UK.

Chair: Thank you very much. Ms Dibb.

Ms Dibb: Thank you. I am Sue Dibb. I am the newly appointed Executive Director of the Food Ethics Council. I have a background in sustainable development with the Sustainable Development Commission and on consumer issues with the National Consumer Council. The Food Ethics Council is a charity that provides independent advice on the ethics of food and farming, and our aim is to create a food system that is fair and healthy for people and for the environment. In pursuit of this aim, we research and analyse ethical food issues, for example, our Food and Fairness inquiry brought together civil society, business leaders, academics, policymakers to show how a fairer food system is a prerequisite for meeting wider sustainability and health goals. We mediate between stakeholders, we develop tools for ethical decision-making and we act as honest brokers in public and policy debates. For example, with our work on sustainable livestock with the WWF we have engaged with the farming and food sector to show it is possible to have dialogue and productive discussion around sensitive ethical and sustainability issues.

Our 14 members of the Food Ethics Council are all leaders in their relevant fields-Liz is one of those and I will let her introduce herself in a moment-and are appointed as individuals, and they bring a broad range of expertise to our work, from academic research through to practical knowledge of farming, business and policy. I would like to thank you for inviting us here today.

Chair: Thank you. Professor Dowler.

Ms Dibb: Liz, would you like to introduce yourself?

Professor Dowler: Yes. My name is Elizabeth Dowler, usually known as Liz, and I am a professor of food and social policy at the University of Warwick. For many years, I worked in the global south on food and inequality and nutrition. I am a public health nutritionist, registered, but I am now in a sociology department, working much more on the social and policy aspects of the food system. I have always worked on inequalities and I suppose issues to do with justice, though I must confess in nutrition departments I don’t usually use that language very much. I have been a member of the Food Ethics Council for about seven years, and I am one of the trustees. Lately, I have returned to working on food security, both in the UK and with colleagues across the Atlantic, as well as looking at international issues.

Chair: Thank you very much indeed.

Q312 Mr Spencer: I just wondered to what extent you think it is possible to communicate to consumers what they should be eating and how they should be consuming. I am conscious that at the moment on a label we are trying to get fat levels, salt levels, the social impact of where food is coming from through fair trade, welfare of farm animals, sustainability, whether it is local. There comes a point where you need a sheet of A4 with every piece of food to explain all the information that we are trying to get across.

Ms Dibb: It is a very good question. I think it depends where you want to put the onus on where the decisions are made, how much onus you put on the consumer and what onus you put elsewhere in the food chain to help make those choices for consumers much easier choices. Of course, food labelling is part of that picture but we certainly would argue that it is important that all players in the chain look at what they can do to help make it easier for consumers, because I think if you are going to put all the emphasis on consumers trying to make individual decisions based on labelling that is going to be very difficult. You are not going to get that kind of transformation towards healthy, sustainable diets solely through labelling.

Of course, there are other sources of information. I was looking on Government websites just yesterday to see the latest information that Government is providing to the public, and we don’t have a clear source of authoritative, accessible, usable information to the public, in my point of view, and not just to the public; what are the messages that we are giving to business as well? While there has been a huge increase in awareness and interest in the issues of sustainability, including healthy diets, we are far from being able to communicate that, and I think we have taken a step backwards. One of the projects that was coming out of Food 2030-which in our view was a really important milestone that we got to that unfortunately the coalition Government doesn’t seem to be taking forward in the same way-was called the Integrated Advice to Consumers. It is how can we join up this advice, how can we ensure that the information on healthy eating is also dovetailing with information around environmental or other forms of ethical sustainability? We have gone backwards on that; that just isn’t happening. I was looking to try and find that information.

We no longer have the Food Standards Agency giving information on nutrition, which was very consumer-friendly. That role has been taken away from the FSA. We would argue that that is an area where we certainly need more integrated, joined-up advice from Government to help consumers and to give clear messages to business as well, because we know that businesses want to play their part. There is a lot of interest and we have seen progress, but business is also saying that the Government’s strategy and progress towards sustainable, healthy diet seems to have stalled, and our work with businesses say that they would welcome that too.

Do you have anything you want to add?

Dr Macdiarmid: I think just supporting what you are saying is that they have had quite clear health-nutrition advice, but the danger is if the advice is coming from two different sectors there could be certain parts of information that is conflicting. This will add even more to consumers’ confusion, and possibly switching off. So I think it is absolutely critical, whether it is labelling on packaging or whether it is Government advice, that the environmental sustainability, the ethical issues and the nutrition issues for health are brought together. There is a danger of all sorts of unintended consequences if nutrition departments are talking for health; environmental departments are talking, say, for climate change as one example; and there are obviously issues around ethics that could bring up other things. If you put some of them together, there are some potential win-wins, as people describe them, but also there are definitely some unintended consequences that could happen.

Q313 Mr Spencer: Linking on to the back of that then, how do you see those different Government Departments communicating with each other? Do you feel that there is adequate communication between those separate Government Departments to try and solve this issue?

Dr Macdiarmid: At the moment, no.

Professor Dowler: No, not at the moment. That is not the sense that I have. A few months ago I was a member of the Council of Food Policy Advisors for DEFRA, and one of the rather remarkable things about that grouping-which had cross-sectional representation on it, clearly non-industry, of course, as well as consumer groups-was that we took evidence and related to and worked with a whole range of different sectors. Although we were located in DEFRA, our remit was to work with DEFRA, we talked to other people as well, let’s put it like that. Out of that work, one of the things that we recommended was a mechanism for enabling exactly this kind of collaboration and understanding to take place, and there were some early moves in that direction. But again, I have to admit I have very little sense of what has been happening in the last 18 months.

Ms Dibb: In fact, the high-level Cabinet Committee-sorry.

Q314 Chair : Sorry, before we move on, Dr Macdiarmid, you mentioned win wins. Do you have examples of that that you can provide to the Committee? It doesn’t have to be now, but in writing.

Dr Macdiarmid: We can provide some in writing. One might be reducing possibly meat but it depends what sort of meat you are talking about reducing. There is evidence that for health it may be beneficial, because it contributes a lot of saturated fat to the diet, but again it depends on the quality of meat. This is where you may be asking for the same thing, but if you are not speaking to each other, a reduction in meat could be healthy and beneficial for the environment but also if the wrong meats are then put into the diet you end up with an unhealthy, sustainable diet. So you need the expertise from the nutrition side and the expertise from the climate side to come together. I am a nutritionist, I have expertise there, but I need to work, when I am doing my research, with colleagues who work in climate change and environment, because that is not my background. That is where we are taking our research now, seeing we have to make this multi-disciplinary.

Chair: Thank you very much.

Q315 Mr Spencer: I would like to move that on to say that kite marks are a very easy way of communicating with consumers, and obviously Freedom Food would suggest that it is the use of the little red tractor, or there has been a lot of debate over pie-charts or traffic lights for nutrition. Nobody currently does a sustainability kite mark. Would that be a good idea, and whose job would it be to implement that and to police it?

Ms Dibb: There has been some work to try and explore whether you could bring all these separate issues together into one kind of mega-label, sometimes known as an omni-standard. Quite clearly, there are challenges in doing that. I think we need to continue to try and understand the main drivers to helping people have healthy, sustainable diets. At the moment, I think the jury is out on whether it is practical to do it and something that would be welcomed by consumers. So I don’t think anybody is ready to roll one out, put it that way. But the conversation about how best to engage on a diversity of issues and to help people understand perhaps what are the priority issues, you know, give some support to consumers faced with fair trade or organic or animal welfare friendly, for example, or climate friendly, and we don’t believe we have a label for climate friendly. Carbon labelling is something that I think many people recognise sounds like a good idea, but is that on products when we are talking about whole diets here?

It is not easy for consumers, and therefore much of the research and evidence shows that some of the biggest differences can be made by retailers, for example by choice editing, by taking the least sustainable products off the shelves. We have seen that in regards to sustainable fish, a really tricky issue for consumers or any of us to get our heads around about what is sustainable, what isn’t, even at what time of the year. It is complicated, and there has been a lot of publicity around sustainable fish, and it has largely come from media interest. Hugh Fearnley-Whittingstall, for example, and a lot of the other campaign groups have shown just how retailers and other food suppliers can make those choices for us. So when any of us go into a supermarket, at the fish counter we have more chance now than we previously had of being reassured that what we are buying is sustainable and I think we have to think about whether that is perhaps going to be a more effective way to help consumers than struggling too much with the perfect label.

Q316 Simon Wright: We have had evidence from a number of producers that in some parts of the food supply chain the financial returns are not being passed down fairly onto primary producers. I wonder if you could comment to what extent are we paying a fair price as consumers for the food we eat, and along the supply chain are the financial returns going where they should be going?

Ms Dibb: This is something the Food Ethics Council looked into with our Food and Fairness inquiry, and we very much received the same message as obviously you have heard. We are pleased to see that the policy response has been to set up a UK Groceries Code Adjudicator. We feel that that is going to be an important step forward, but of course we don’t yet have that and so it is important that that is moved forward, the legislation is moved forward and that is introduced as soon as possible. We do have some concerns about whether it is going to be as effective as many of those in the supply chain would like it to be. We do need to ensure that they can conduct effective inquiries themselves and that they do have some sanctions that if the codes are not being kept to that they can levy fines, for example. We don’t want it to be a toothless watchdog. It has to be able to work, because this is an issue that has gone on for such a long time now. We know that farmers and other small producers are not the most powerful players in this market, and this could go some way to addressing that.

In terms of broader sustainability issues, if those producers knew that they were going to get a fairer return then they are likely to be able to invest and innovate in sustainability themselves. One of the real barriers at the moment is that where the difference can be made at the production level, that if those producers are really being squeezed, they just don’t have the capability to do that. So, very much agree with the point that you have made that we still have a long way to go on that and obviously all eyes are going to be on the Groceries Code Adjudicator.

Professor Dowler: I don’t have very much to add to that, I’m afraid.

Q317 Simon Wright: In resolving those issues along the supply chain, is it an inevitable consequence then that the consumers are just going to have to pay more?

Ms Dibb: Do you want to answer that?

Professor Dowler: I would have said not necessarily the case at all. There is quite a bit of work being done trying to estimate this, and obviously it is a complex issue. Understanding what the factors are that set prices at the moment is not that straightforward, for instance not only drawing on FEC work but also talking to others who have tried to get a handle on if people were to eat food that was more in season, would it be cheaper in season and more expensive out of season, because that is one of the things that sometimes we have heard from Government and others, or if people ate food that had been produced in certain ways and so on. When you try to look at how prices do vary by season already and where that money goes, it is very opaque. It is quite difficult to get a sense of where money is going to, except it doesn’t seem to be going to the producers.

It is not at all clear that if food was produced by means that were more environmentally sustainable that they would necessarily add more costs as far as the consumer is concerned. It is an assumption that is very often made. I think the jury is still out on that. I also think it would vary a lot from commodity to commodity or food to food. It is very difficult to generalise on that. You probably expect me to say that as an academic, but in fact food is complicated, as you will know only too well. Some complex supply chains, the ways in which value-added and prices are set, shall we say, by the major supermarkets-who after all retail 80% of the food at least in the UK-don’t necessarily reflect the full costs of production, including whether or not there are environmental factors within that. I think that is particularly true for processed foods, which again is a huge part of the diet. It is difficult enough to trace it through for fresh produce like meat or vegetables or fish or something like that. It is extremely difficult to do it for ready-meals and biscuits, cakes and so on, the foods that form the major part of most people’s shopping baskets. My real sense of this is we don’t know whether increasing-a lot of people say it will, but I don’t feel we know.

Q318 Simon Wright: What about the National Ecosystem Assessments and the measures in the Natural Environment White Paper? Will those lead to changes in prices?

Ms Dibb: I think the idea that we need to more effectively value our ecosystem services is an important one and it is good to see that acknowledged, and the White Paper clearly does that. I think the Food Ethics Council has a question as to whether that can be done always through financial market mechanisms, and the ethical issues about whether you can always put a price and whether you always should put a price on the natural environment. Should we only see the natural environment as something that has an economic value? As the Food Ethics Council, we are obviously considering broader issues than that so we do have a question about whether a purely market-based approach to valuing into the system would work. Clearly, we are a long way from that. It is important, and DEFRA has done a good job in starting that conversation and wanting to take it to broader considerations of what a sustainable economy could look like. We have an opportunity now to redefine, potentially, the kind of economy that we want to have, given that our current one doesn’t seem to be working that well. So I think there is an important opportunity and it is an important conversation and, yes, we do need to think how that might apply to food. We are a long way from knowing what that might mean, but it is an important conversation to have.

Q319 Zac Goldsmith: I want to jump in very quickly on this. Besides the Groceries Code Adjudicator, or whatever it eventually is, and beyond the comments you have already made, what specifically can the Government do? What levers does the Government have access to to boost the income of sustainable farmers in this country, because they are facing a pretty rocky time? So, beyond ensuring a fairer price in supermarkets, what specifically can they do? The reason I ask is that in 20 minutes or so we have the Food Minister, Jim Paice, and we would like to put some of your suggestions to him.

Ms Dibb: I think what we need from this Government is some clear signals about its intentions in relation to UK farming and particularly into sustainable farming in the UK, and supporting and boosting production of sustainable food in the UK. We have heard some talk around this but my understanding, from talking with others, is it isn’t entirely clear what that means. We don’t have any kind of action or delivery plan, as far as I see, at this point of view. I come back to the point I made earlier about Food 2030 being a vision for sustainable food production in the UK and sustainable food consumption. In order to develop a roadmap for what that would mean in practice, and a delivery plan, I think the first thing that this Government needs to do is to either own Food 2030 and develop its delivery plan, including the production side and how it is going to work with the UK farming industry on that and support farming industry on that, or develop its own, but at the moment it is not doing either.

There are some very practical things-for example, extension services. Farmers previously, after the Second World War, had a lot of advice and support on increasing intensification. That is not where we are these days, but they don’t have advice and support on moving towards more sustainable production systems, and that is one area. I think we need more research to understand what we mean by sustainable production. The Foresight Report talked about sustainable intensification. I don’t know what that means to most of you, but I am rather confused as to what it means, and in terms of being explicit about what that means and understanding what we mean by that-

Q320 Zac Goldsmith: I take your point completely but in terms of the tools for achieving-just accept for a moment that there is a vision and assume there is a consensus on what sustainability means and what kind of future-where is the most obvious toolkit? Is it CAP reform? Is it public food procurement? What are the areas where the Government can have the most immediate impact, in your view?

Ms Dibb: I think they are both important.

Professor Dowler: Both of those, but I was going to say something about public procurement, which I was thinking about as you were speaking. There are examples in other countries of government commitment to sourcing from local communities and enabling some of the regulatory structures that are inhibiting, for example, small producers to collaborate and co-operate, because they don’t have sufficient economies of scale to be able to meet-I hesitate to go into this since it is not my expertise-for example, abattoir standards. I know there were good reasons why abattoir standards were raised and why it became a very heavily policed system, but one of the downsides of that was that a lot of small meat production suffered quite a bit and a lot of small livestock sectors were hit by that, simply because they could no longer reach or sustain local abattoir systems. So that would be just one very small example of something that enabled much more local food networks and linkages to build up. I know already there are things like that going on under things like Making Local Food Work and the community food links that I just mentioned.

There has been quite a lot of interesting work done, particularly in the West Country, on enabling, for example, schools to procure together, hospitals, care homes to be able to organise local procurement, which also reduces heavy goods transport and builds up resilience of local economies, but there is no structure to enable that to continue. It is all being done on big lottery money and on very temporary, hand-to-mouth, small, piecemeal opportunities, and I think there is a big opportunity there to do something much more imaginative and on a much grander scale through the public procurement system.

Q321 Zac Goldsmith: Just one point, I don’t want to take up too much time, but I 100% agree with you, and it is a mystery to me still why it is so piecemeal. We did an experiment in my constituency in Richmond, one part of it, Richmond Borough, where they have saved since last year a considerable amount of money, and they have done that by raising the standards. We did it deliberately to show that it is possible, not only within budget but even with less money, to provide children at schools with better quality food. We were awarded a silver standard by the Soil Association and per capita expenditure has gone down. So everyone wins; there is no downside. What puzzles me is this Government and the previous Government’s resistance to generalising that, to ensuring that what is the exception could become the norm. I am interested to know why you think that is.

Dr Macdiarmid: Can I just add one thing? We are talking about producing food, agriculture and so on. I think we need to think of this all the way through to what the diet looks like as well and what does it mean in terms of health, because what we do with the food, perhaps what part of the animal we eat and how it is raised may vary how much fat is in it. So I think we need to not just think about sustainability in terms of food production but look at what effect that will have on the health of the nation. We have an enormous problem with obesity in this country and various other health issues. I would urge this joining up to make sure what is being done in maybe the primary production stages is then following through to make sure that it is not having unintended consequences on health.

Q322 Chair: Dr Macdiarmid, I think there was consensus that a sustainable diet does not need to be more expensive. Does a healthy diet need to be more expensive?

Dr Macdiarmid: Not necessarily, no. Again, there is no one healthy or sustainable diet. It depends how you put it together and we have done some work where we have looked at creating diets and using them in studies and, no, they don’t need to be more expensive. It is maybe the one area where there could be more advice given on how to make up diets that would be healthy and be sustainable. So, it does vary.

Q323 Mr Spencer: I wanted to draw your attention to some of the contradictions. You talked about encouraging producers to move to a more extensive, less intensive system, and that will clearly be a benefit. You then talked about, I suppose, an example of sustainable beef production would be moving to an extensive system with more traditional breeds, which actually have more marbling in that beef, which is a contradiction. But I think the real challenge is that if we encourage British farmers to do that, which inevitably they would do, then with examples like the regulations over pig production and stalls and tethers we then allow imports to come in and compete, which aren’t on the same level and it undermines the sustainability of the whole UK production.

Professor Dowler: Can I comment on the fat story? I think you are right that it looks like a contradiction, but I see absolutely no reason why it needs to be. There is, as I am sure you are aware, evidence that in more extensive ranged beef, and particularly traditional breeds, the quality of the fat that is in there is not as damaging for health as it is in the more intensive production systems. I think there is growing evidence on that, although as an academic of course I would argue, adding to the previous comments, that we don’t have enough evidence about those things. I am not saying you have an idea and go and look for it, but what I am saying is there hasn’t been a huge amount of research done on it but what there has shows quite promising things.

The second point, that Dr Macdiarmid has already made, is that both general health advice and "environmental sustainability" diet advice is to eat less meat than we on average currently do and to have beef much less often but from a more traditionally extensive sourcing would not be detrimental either to the environment or to human health. It is the regular consumption of beef that involves cereal rearing, intensive rearing and particular sorts of breeds which probably contributes to high saturated fat diets.

Q324 Mark Lazarowicz: Although I fully accept that a sustainable and healthy diet does not need to be more expensive, in fact some of the measures that have been suggested to encourage healthy diet would have consequences. There have been suggestions, for example, of fiscal measures, so-called fat taxes and all those other kind of measures as well. It is very hard to escape the conclusion that certainly in the short term at the least the consequences on those on the lowest incomes will be most severe. That is partly because of cultural and other issues, but simply because the poorer you are the more of your income goes on food and therefore, if you increase the sum people pay, people are going to be affected by it. Do you think that kind of fiscal measure, for example, is justifiable?

Ms Dibb: I think we are already seeing food price rises anyway, and one of the messages from our work is that the policy of cheap food is at an end. It is no longer a legitimate policy objective. It has been the way in which policy has driven the competition and the retailers-

Q325 Mark Lazarowicz: Absolutely, I accept that, but the point is some of the measures lead to even higher increases than some people can pay. That is one of the criticisms made of that kind of approach, if that is something you support. Maybe you don’t support the idea of fiscal measures to encourage a healthy or more sustainable diet. I am just wondering what your view is on that issue.

Ms Dibb: If the intention is that those fiscal measures encourage behaviour change then presumably you are not being hit by those taxes if you are choosing something that is healthier and more affordable. That is the intention of taxes in that sense, to create behaviour change, to shift behaviour change.

Professor Dowler: If I could comment further-

Q326 Mark Lazarowicz: I do agree. I think the practical consequence is over a period of time; it would not be that people suddenly change their diet. That is the problem, isn’t it?

Professor Dowler: But it is because we are approaching it, if I may say so, from the wrong direction. The assumption has been, the assumption that is built in, is that people on the lowest incomes, and on relatively low incomes too in various sections, can get by on food that is very cheap. Food that is very cheap by and large is high in the wrong kind of fats and sugar and often salt as well, but it is also often the only food that is available in places where poorer people live. It is perfectly true that a healthy, sustainable diet need not cost more, but that depends where you live and it depends on what kinds of shops you can get to, how much time you have to cook if you are holding down two jobs. You can’t juggle these things. So I think we need to have a much clearer, more nuanced and a much sharper response to low income and poverty and whether or not people can afford to eat decently, rather than saying, "Oh, we can’t do these things" or, "We can’t have a fat tax" or, "We can’t do this, that and the other because poor people will be hit". Poor people are being hit already pretty severely and we constantly try to address it by making food cheaper instead of addressing the fundamental issue of multiple areas of deprivation and low incomes.

Q327 Mark Lazarowicz: Yes, that was the point of my question. Perhaps you would be better off addressing the other issues as the priority rather than just putting in a blunt measure. [Interruption.] That is fine, I will not pursue it.

But in that case, if I can go back to an earlier point about the role of food suppliers and food retailers and so on, how far should they be either encouraged or just made to, by regulation, restrict the-choice is the wrong word because it is not a question of choice, it is a question of what things they choose to sell. But should they be encouraged or made not to sell unhealthy food in some way, either by regulation, direction or by some encouragement and, if so, what would that kind of measure look like in practice?

Ms Dibb: We have some good examples of how that has already started to happen.

Q328 Mark Lazarowicz: Can you give us some examples?

Ms Dibb: Yes. So, for example, if we think about the work that the Food Standards Agency initiated over reducing salt in products-that was retailers as well as food manufacturers-by setting targets, by being open and transparent about the progress that companies were making, I think that was very successful. I am not quite sure where it has got to, because I think it has now moved to the Department of Health and I think perhaps there is not so much transparency on how that is being taken forward. It is a really important piece of work that has reduced the health impacts to UK consumers from high levels of salt in their diet, and more work to be done obviously. That is one example.

If we think about the Courtauld Commitment, for example, around packaging and waste, which Wrap lead on, a very important way in which companies, including retailers, sign up to reduction targets and get support and are making a real difference. You could call that a kind of responsibility deal. In my view, it is perhaps at the better end of practice around responsibility deals. It is a voluntary agreement, but there is a huge incentive for companies to be involved in that, because it is open and transparent and they are competing on meeting targets in that area.

Chair: Thank you. A very brief last question from Paul Uppal, which I am afraid I will have to ask for very brief responses to as well.

Q329 Paul Uppal: I think it will be very brief. I represent an urban constituency, and something I only very recently became aware of-and I wanted to ask all three of you whether you are aware of this-is an initiative called Food Dudes. For the sake of time I will let you expand upon that, because time is very pressing, just your thoughts on ways we could perhaps take this one. We have some markedly successful results in Wolverhampton in terms of academic results.

Professor Dowler: In the interest of brevity, it is one of a number of health promotion activities or health education activities that have addressed young people’s responses to marketing of essentially unhealthy foods by using similar sorts of techniques to market healthy foods, and to engage with children and young people in changing the way they think and feel about food. My sense of it is that it is quite an expensive intervention in terms of its requirements of input, but it is not something with which I have had direct experience. I have only read evaluations of it and seen it being attempted and rolled out elsewhere. My general feeling is that anything that enables children and young people to feel better about food and to think that vegetables are a good idea has to be a good thing. I hope that is a helpful response for you.

Dr Macdiarmid: But I think we need to do more than just these initiatives, because there is no one solution, so we do need to have a number of different things. There is lots of small, good initiatives that are working in some places that are not probably being evaluated as much as they could be to see if it is having an effect on diet and various other things and health, but I think we need to look at a whole raft of things across Government to really make a big difference.

Chair: Thank you very much indeed. I am afraid we have to conclude now, the Minister is waiting outside. Thank you for your evidence. I am sure it will help inform the report that we eventually produce.

Examination of Witnesses

Witnesses: Rt Hon James Paice, MP, Minister of State for Agriculture and Food, and Sarah Church, Head of Food Policy, Food Security and Food Sustainability, DEFRA, gave evidence.

Q330 Chair: I welcome you, Minister, and Ms Church, to this meeting of the Environmental Audit Committee. We have limited time so I am going to get straight on with the questions, if that is agreeable.

Mr Paice: That is fine with us.

Chair: Okay. The Foresight Report suggests that sustainable intensification of production is the solution to the impending food crisis. How does the Government define sustainable intensification?

Mr Paice: In a nutshell, Mr Caton, it is producing more and impacting less. That is the slightly glib but simple, straightforward answer. It means that we have to produce more food, which is the key message out of the Foresight Report, and it means more per hectare or per unit of productivity, but we have to do so in a way that minimises our impact on our natural resources, whether they be physical resources like fossil fuels or certain mineral fertilisers or impact on biodiversity or climate or anything else. That is the great challenge that we have to pull together.

Q331 Paul Uppal: I would like to elaborate on the research side of things about deficiencies or gaps you think we can highlight and pick up on. I am very interested in specifically how you think the Government can identify these gaps or deficiencies.

Mr Paice: I am going to probably surprise you to start with by saying that I don’t believe Government has all the answers, but I am sure that if Government took upon itself the responsibility of deciding where all the research should be spent, we would get it wrong. I think it is very important that Government works closely with the industry, with the ancillary sectors and the research institutes to identify what we need to do. I think the Technology Strategy Board brought in by the previous Government is proving to be very successful. I think it was a significant step forward, and the sustainable agriculture platform that we sponsor within that we have opened up for project bids and we are now on the second tranche of bids to be considered. That board then considers and brings together all the knowledge and the expertise, way beyond what Government on its own can have, in order to assess those projects. I think that is the best way to do it, by working in partnership with the industry, with the Agricultural and Horticultural Development Board, with whom I see an increasing role in particularly the applied end of research and in knowledge transfer, but also with the research institutes and others in deciding where to go. Have I missed anything with yours?

Ms Church: No, I think that is absolutely right. The only thing to add, of course, is that we operate in a global food system and we are very interested in forming research partnerships with EU and international partners as well to try and lever in as much kind of joint funding as possible to tackle the issues.

Mr Paice: We are involved in a number of global alliances and so on.

Q332 Zac Goldsmith: Can I jump in there? How confident are you that when you go to the industry, when you go to the sector and you build up the sounding boards that you have just described, that you are really taking the pulse of the industry as a whole and not just the big and more intensive end of it? How conscious are you of the need to consult smaller operators as well, some of the smaller organisations that have less of a platform but should have just as much of a voice?

Mr Paice: I am pretty confident that we do, because when we take the voice of industry it is taking the voice of industry representative bodies and they certainly do not represent one end of the spectrum, any end of the spectrum. Whether it is the National Farmers Union or whether it is the Tenant Farmers Association or whatever, they represent farmers across the spectrum. Also there are individuals involved in these discussions and in deciding which projects to fund and they will be there with their own knowledge and expertise, not representing anybody, but they are certainly not there as representatives of perhaps industrial agriculture or anything like that.

Q333 Mr Spencer: I wondered to what extent you see genetic modification playing a role in delivering more sustainable food.

Mr Paice: We believe that genetic modification certainly does have a role to play. We do not believe it is the answer to everybody’s challenges and it is the sole way of resolving the sustainability problem, but we equally don’t believe you should reject the technology out of hand. Clearly we need to make sure that any individual advance of technology is properly tested for human food safety and environmental impact, but if a particular development passes those then it becomes much more an issue for the marketplace and for consumer choice, and quite clearly we have been through a long period when consumers don’t want to know. Some people are suggesting that is beginning to change, but we deem it a matter for consumer choice once Government has properly fulfilled its regulatory role to ensure that whatever is released for commercial use has passed the necessary stringent tests.

Q334 Mr Spencer: I wonder if you would recognise that it therefore needs more public debate and more open discussion, and how Government could facilitate that discussion.

Mr Paice: I certainly think it needs a much more open debate. Like a lot of things, the debates tend to get focused on sometimes some fairly extreme views and you lose the sort of centre ground of a debate, which is where it ought to be held. If behind your question is that Government should be leading that debate then I am not so sure I would agree with you on that. I think it is for the industry, the farming industry, the food industry, because they are the users of this material and they will identify whether there is a real role for it, and of course the retailers. Public trust in what the supermarkets put on their shelves is immense, and all the studies show that if something is stocked on the supermarket shelf the consumer assumes it is fine.

Q335 Mr Spencer: I am sure the industry would say that it is very keen to do trials and get involved and prove that this technology has a role to play, whether that is a large or a small role, but of course they would say that it is very difficult to do that in the atmosphere that exists when people want to try and destroy those trials and prevent the evidence coming forward. Does Government have a role in facilitating the ability of the industry to hold those trials without interference?

Mr Paice: Yes, of course, because you are into the issues of law and order there and once Government authorises trials-and we have recently authorised one set of trials-clearly Government has a role to ensure that what is then a lawful activity can be carried out. I strongly condemn all those who wish to intervene and destroy those trials, because I always take the view that if GM is as bad as some of those people believe it to be then isn’t it better to have a trial and prove it. Are they afraid of proving it?

Q336 Peter Aldous: Minister, if I can go back to the beginning, and we talked about the goal of sustainable intensification and I think you described it as a challenge. Do you think it is an achievable challenge?

Mr Paice: It is achievable if you are trying to describe it as a specific point in time. I would argue that it is like the word "competitiveness". It is something you are always trying to be better at. You never get to that sort of point when you can say, "Hallelujah, we have reached it, we have done that, got there". I think there will always be an argument that you could be more sustainable, but certainly I do believe it is possible. We have already seen dramatic advances over the last few decades. The plant breeders will tell you that they believe the current genetic capacity of wheat, our main crop, has the potential of something like 14 tonnes a hectare, whereas to get 10 tonnes is a good yield today. It is the technology to exploit that capacity that is important.

I think the intensification but doing so in a more sustainable way. The use, for example, in that context of precision applications of fertilisers and pesticides reduces inputs, is better for the environment and may well lead to enhanced yields.

Q337 Peter Aldous: Would you agree that the rate of advance of increasing yields has slowed down in the last, say, decade or decade and a half?

Mr Paice: Yes, it has.

Peter Aldous: You referred to 10 tonnes of wheat. People were joining the 10-tonnes club 15 years ago, and they have not moved on from there. Why do you think that is?

Mr Paice: I think there is a combination of factors. To start with, the farming industry for some years has been pretty demoralised. I think that is changing. Some people argue that farming went through its recession when the rest of the country was doing very nicely. I think that is a factor. The second factor is that certainly there were very much lower prices of grain and the farmers did not see the benefits of investment in new technology or the benefits of spending money on research or anything like that. The debate we have just had on GM was a factor, because the whole row in the late 1990s about GM spread beyond just GM to discouraging multinationals from investing in research in this country. I don’t think it is one issue. I think that there is a raft of issues that have caused it but, as I say, the belief is that the genetic capacity is there. We have to learn to exploit it.

Q338 Peter Aldous: One last point, would you agree that what some people might describe as the dismantling of the state support, whether it is in the form of ADAS or the MLC, did not help?

Mr Paice: The MLC is a separate issue. It was not dismantled; it was brought together within the AHDB, so I do not think that is a fair issue. I think the issue of advice and the role of ADAS is a fair one. ADAS still exists but not as part of the state arrangement and, yes, we can look back and say that that was arguably the wrong thing to do. I think what matters now though is that we ensure that farmers do have access to good advice. There are a range of sources of advice, obviously commercial companies in the pesticide chemical industry and fertiliser industry; most big land agents now have their own specialists; there are independent agronomists; you have the role of the AHDB who have a lot of advisors, particularly in the livestock sector. So there is a range of them.

We are doing some work in-house at the moment to see what we can do, not to intervene or interfere but to try to ensure that farmers know where to go for advice. It is the work my colleague Lord Taylor is working on, the concept of developing more demonstration farms on private farms so that farmers can have access. Much of the research that is being done is not readily being taken to the farm gate for the farmer to use, and that is an area we need to spend more time on.

Q339 Zac Goldsmith: On that point, you were asked why the sector was demoralised around 10 years ago, and around that time there was a moment where the number of farmers was dropping by about 10% a year, the total number of farmers we had dropping catastrophically. I wanted to clarify because I can’t believe that you believe that is as a result of the GM backlash or the anti-GM backlash in this country. Do you really think that was a significant part of the reason why so many smaller family farmers were going out of business?

Mr Paice: No, I am afraid that is not what I said either. What I said was that the GM backlash meant that a lot of big organisations who do the research in plant breeding left the country, took their research elsewhere where they felt-

Q340 Zac Goldsmith: How would that have contributed to some 10% of smaller family farmers going out of business in the West Country? I am asking you to clarify so that we don’t go away and misquote you.

Mr Paice: I did not say that that contributed to the numbers of farmers going out. The question I was asked was not about the number of people going out of farming. The question I was asked was why we have not increased our wheat yields for 15 years, and I said part of that was demoralisation, part of it was the fact that the research companies were going abroad because of the GM furore, and the other factors that I mentioned. But farmers going out of business is a separate issue, and my response to you would be that that was very much the feature of economics at the time. Wheat was down to £70 or £80 a tonne.

Q341 Zac Goldsmith: On the issue of GM, what do you believe should be the role of GM? You said it almost certainly has a role to play. What role do you think it has to play in this country?

Mr Paice: GM is such a broad term that you can’t answer your question, with respect, directly by saying it has a role to play. GM is a technique, which could be used in a whole raft of different ways in terms of increasing crops’ ability to grow with very low water inputs, which not only has a role to play in the warmer parts of the globe but potentially more in this country as we get more and more water stress. Obviously there are nutritional alterations. You have a lot of work now going on in raising, for example, Omega 3 levels in certain plants. There are issues to do with flavour, issues to do with shelf life, all of which have moved on from the early stages that were purely about a resistance to a particular herbicide glycoside, so I think there is potential for the role of it in many ways. Conventional plant breeding techniques using the latest science but without using GM can deliver some of those. It is not for me to say that this is what it has to do or this is what its role should be. I think we have to say to the industry, "Feel free to investigate how it might help. Come forward with your proposals". We, as Government, have the regulatory role to ensure that any GM development is properly tested before we allow it to be used commercially and then it is for the market to resolve.

Q342 Zac Goldsmith: On that point, on the trials that you mentioned, what are we hoping to discover from the trials that have been authorised at the moment? What are the questions that are being asked?

Mr Paice: The principal purpose of these trials is the environmental impact, what in early days was sometimes called gene escape, the potential for the GM plant to cross-pollinate with some wild species that was suitably related, impacts on biodiversity in the area. If you go back to the trials that have been completed, where we obviously know more about it, the maize trials that were done, I am guessing around 10 years ago, where if I remember rightly six different GM varieties of maize were tested in the field conditions and only one of them was approved-in fact that was then withdrawn from the market, as it happened, but it was only one-they looked at the impact on insect populations. If I remember rightly, the main reason why the others were rejected at that level was because of impact on insect populations.

Q343 Zac Goldsmith: What work has been done either directly or indirectly by Government to look at the health impacts of some of the novel crops?

Mr Paice: That is a matter for the Department of Health rather than for me. Anything that falls within the definition of novel foods has to get consent from the Food Standards Agency. The most recent issue, of course, was the row about a year ago over clones, which is slightly a separate issue. But novel food regulations are quite clear, that they need permission to go on the market, and the Food Standards Agency, which is accountable to the Department of Health, is responsible for ensuring that.

Q344 Zac Goldsmith: The work will have been done, so the trials that you are talking about now and any subsequent trials, there will be tests conducted and overseen by Government, if not paid for by Government, looking into the potential health impacts?

Mr Paice: Yes.

Zac Goldsmith: But not by DEFRA?

Mr Paice: Not by DEFRA, no, but there is no way we would allow a GM crop to be commercialised if it had not gone through those tests.

Q345 Zac Goldsmith: I am going to ask one more, if I can. I am sorry to jump in, but you prompted me by mentioning cloning. I am not going to go down that road because we have already had the dialogue about that. But the final question is is there an absolute commitment there in relation to labelling? You said this is an issue ultimately of consumer confidence. If consumers don’t want to eat the stuff then there is no market for it, it won’t be imposed upon them. Your position historically has always been pretty firm on honest and clear labelling. That is an absolute commitment from you that that will remain the case?

Mr Paice: It is the law.

Q346 Neil Carmichael: One response to the question that Peter triggered off about the plateauing of production is, of course, the influence of the MacSharry reforms and subsequent reforms in the CAP. They moved the pressure away from production quite sharply, and coincided also with John MacGregor’s observation in 1989, I think, that we had a peak of output in terms of self-sufficiency, and of course we started to drift down after that, which leads me on to my question. If we are going to be focusing towards protecting the environment and paying farmers for that through the CAP, are we not in danger of certainly having a sustainable agriculture, because that is what it would be, but in terms of output an insufficient agricultural production?

Mr Paice: It is an extremely valid question. I think you need to see it against where we started, the Foresight Report and increasing global demand. Basic economics to me tells me that if demand is rising then prices will rise accordingly and that will then draw up supply. Prices will continue to rise while there is a shortage of supply. It is against that background that we believe this new set of reforms for the CAP should be seen. Unfortunately, I don’t believe it is being properly planned. There is no mention of the Foresight work or any similar work in the Commission’s proposals. But if you accept that background, which I personally believe strongly in, then you can see the attraction for farmers whose income will be much more, as we move away from direct payments over a period of time-but I believe it is inevitable-from producing food.

Yes, public support will be there for the non-market goods, public goods. That is why I think it is the right way to go because that price stimulus, I believe, will be there. Some would argue that the trend is already beginning to establish of rising commodity prices; we have seen big spikes in food inflation, although it has levelled again at the moment. I think you would argue that that itself is demonstration that the market will respond and that farmers-not just in the UK, but across Europe and elsewhere too-will respond to that increasing demand.

Q347 Neil Carmichael: How would that include, say, upland farming, a subject that we had a fascinating discussion about last time we met as a Committee?

Mr Paice: I think we have to accept-I accept anyway-that upland farming is in a relatively unique position. It is not just about producing food, although I think it is important, not food itself, and obviously it is a very good source of breeding stock for cattle and sheep for lower down the hills, for lowland farmers. But it also has a vital role to play in our ecosystems and, as you are probably aware, we published a National Ecosystem Assessment earlier in the year, before the Environment White Paper, and I strongly believe that we will see developing over a period of time mechanisms by which you can pay upland farmers again for public goods for which there is no market, such as the water retention in the peat, massive benefit to the environment; the carbon retention in the peat; biodiversity in plant life all up there. The uplands have a huge contribution to make to our wider wellbeing. We need to build on the ecosystem assessment to find ways of valuing them and then to reflect that in how we, as we always have done and continue to do, provide extra funding for farmers in the uplands.

Q348 Neil Carmichael: There used to be an old maxim, "Profitable farmers are responsible farmers", or words to that effect. I used to be a farmer myself so I take that label kindly. What I wanted to probe was the next-ish element of this, which is obviously commodity prices, because you referred to those as the driver. They are clearly international now, that is obvious, and they have a fair degree of elasticity. I was wondering how we think British farming, if it is going to go down a sustainable route, will be able to cope with those pressures, which are brought about by change in commodity prices but certainly very high ones, but by extension clearly inputs might be high as well.

Mr Paice: Inputs indeed are going up quite considerably, but that comes back to my earlier point that if input prices are rising at least as much as output prices, then there is no incentive to produce more. The incentive to produce more is when it becomes more profitable to do so. The issue of-my mind has gone a blank, I am sorry. I do beg your pardon. Please repeat the question.

Q349 Neil Carmichael: Basically I was worrying about the effect of commodity prices on farming’s ability to respond to-

Mr Paice: They are global, as you rightly say, although there are variants, particularly in terms of the commodity. Obviously liquid milk tends to be much more domestic, because it is very expensive to move long distances. Milk powder is clearly a global commodity. On fruit and vegetables, transport is a big issue, so again it is not necessarily global. Grain, is clearly entirely global. Beef is pretty global. I think it is fair to say, and I would not want to hide the fact, that volatility is going to be an increasing feature. It always has been. Those countries in the world that have always operated close to the global market-and of course we haven’t; since the last world war we have always been under some form of a protectionist regime-have been used to very considerable swings in commodity prices.

There are two or three mechanisms that have to be available. The first one, which was discussed quite a lot at the last G20 summit, is the issue of transparency so that we know where food is in the world, what has been produced, what stocks there are, so there is disincentive for ridiculous speculation. Secondly, that you have a liberal market. The last thing you want is what happened last year, when Russia suddenly banned exports. That sort of thing destroys a fair marketplace. The third thing is market instruments, which of course are available in many commodities now on the futures market. A lot of farmers, and their co-operatives as well are increasingly using the futures market to reduce volatility.

Q350 Neil Carmichael: Certainly the market is much more sophisticated and I think that is a big step in the right direction. I certainly hope that farmers and traders are fully cognisant of those changes. But if I was a dairy farmer in my own constituency I would be wondering to myself, "They are talking about a rise in commodity prices in a sustainable agricultural world, but I can’t sell milk above peanuts". How do we manage to engineer a situation where the dairy farmer is getting a price that is reasonable and compatible with, say, Europe in that international framework?

Mr Paice: I tend to agree with you. The dairy sector in the UK tends to fly in the face of everything that not only have I said but most other people would agree as well, or indeed of normal market behaviour. In my view, it is because, firstly, 50% of the milk consumed in this country is consumed as liquid milk. That is almost unique in the world, that level of consumption. As I said earlier, we import or export very little liquid milk and most of what there is is over the Irish border because of the costs of haulage. Secondly, the other 50% of what we produce goes to processing cheese, butter, yoghurt, and so on.

I am afraid that the record of the dairy industry over the last 20-plus years, and indeed before that, has not been a particularly good one in terms of innovation, modern production systems and high investment in new plant. It is changing. There are some really good examples now. You have the Davidstow factory in Cornwall, which is state of the art. You have Müller state of the art yoghurt factory in Shropshire, and there are others. They are changing, but in the intervening period our market has been taken over by overseas products; 25% of all milk product consumed in this country is imported, which is crazy. We are the best country in Europe, outside Ireland, for producing milk off grass. We can do it. We have the natural resources. I am not just blaming the processors. I think it is a whole series of issues but that is where the fundamental problem is.

Neil Carmichael: One last question-

Chair: I am not having another last last question. We have a lot of policy areas that we need to cover and I would like to move on. Mark Spencer with one question and then we are going to go back to the CAP reform.

Q351 Mr Spencer: I wanted to revisit sustainable intensification and whether you saw that as something that operated within the UK or globally. There is an argument to say that you should not put six metre grass headlands in in the Fens or in Lincolnshire because agricultural culture in that part of the world is productive and we should squeeze as much out of that little bit of the world as we possibly could. I wonder how we are going to balance that, if you like, at the same time leave our farmers competitive globally. You can make an argument to say that we should import all of our beef from South America, where they can feed it with genetically modified maize at much lower cost and ship it round the world and feed us cheaper.

Mr Paice: My reading of the Foresight Report and the conclusion I draw from that is that no country in the world can opt out of its responsibility to try to improve increased agricultural production. The report very clearly demonstrates that there is a limited amount of extra land that can be brought into production, it illustrates the climate change impact on some of the existing world’s farmlands, which will be pretty damaging to production, and I think it therefore becomes incumbent on all of us to try to increase production. But you are right, it has to be sustainable, and there is an element of balance on your specifics, of course. You can argue that, yes, a six foot headland in Fenland is highly productive soil but equally in the Fens it is almost certainly against a water course and if, as a result of farming that six metres, you pollute the water course that is not sustainable in the long term. So you have to find the right balance, and I believe we are headed in the right direction.

Q352 Mark Lazarowicz: On this question of direction and which way we are headed, we talk a lot about sustainability, we talk about it indefinitely, but in terms of practically how we get there, how do you hope the current CAP reform negotiations will achieve that? Is sustainable intensification the talk of the table in Brussels when you go there?

Mr Paice: No, regrettably.

Q353 Mark Lazarowicz: How can it become so? What are you doing to make it happen?

Mr Paice: In direct terms, the Secretary of State and I are investing a very considerable amount of time in the negotiations in terms of building relationships with other countries which have a similar outlook. We are currently developing proposals of our own to be positive rather than simply negative, that we do not like what is being proposed. Therefore, we are trying to influence as much as we can the direction of the talks, and that includes as well, as you will appreciate, the European Parliament now who are equal players in the new arrangements.

In terms of the negotiations, I think we are doing all that we possibly can to achieve that. We have met with the Commissioner himself to discuss some of his proposals and point out why we think they are not appropriate and particular challenges they would cause in this country over, for example, stewardship arrangements. But we also believe very much that we need to refocus what the CAP reform is about. There is no doubt that part of what the Commissioner is trying to do is to make the direct payment a permanent feature of farming policy in Europe. We believe that is the wrong approach. We don’t think we can get rid of it today or tomorrow but we do think that the background-I have talked about Foresight and so on-creates an opportunity where we should be setting out upon a path towards phasing it out. That means we should be using more of the CAP’s resources to promote competition, to promote innovation, in some parts of Europe to perhaps do some farm restructuring, much as happened in old Europe back in the 1970s, all of it focused on a modern competitive agriculture for the middle of the 21st century.

I am afraid much of the current proposals are about basically stagnating the industry in its current form. I don’t believe that is right either for food production or for the farming industry. I think your first comment concerned the difference between what I expect and what I hope. I have a horrible expectation that we are not going to see a big leap forward at the end of this reform, which would have been the same as last time, which was a major reform. As Mr Carmichael has said, the MacSharry reforms before that were major reforms. At this stage I am much less optimistic about this one.

Q354 Mark Lazarowicz: I must say, I am not so sure about not even being a great leap forward. I think I can pick up hints of a great leap backwards, at least reverse it in terms of some of the direction. Is that a fair comment?

Mr Paice: I think it is perfectly fair that that is a-I do not think it will be as bad as that but, given the proposals that are on the table, it could end up like that.

Mark Lazarowicz: Perhaps if I might make an observation, Chair, to which I do not expect necessarily a response, that if there were discussions taking place with the European Union about various reforms at the European level, maybe it should be on the agenda of the UK Government as part of the package rather than perhaps others that are in the discussion. Unless you wish to respond, I will leave it at that.

Q355 Simon Wright: Does sustainably produced food have to cost more for consumers? You referred to the National Ecosystem Assessment and the Natural Environment White Paper; what impact will they have on prices?

Mr Paice: They do not need to have any impact at all directly on food prices. I think the challenge we have is how much of the cost of producing food-you could argue is how much of it is in the price itself anyway. Obviously the actual price that the consumer pays is not just involved in the raw material, what the farmer gets, but whatever processes the product goes through before it gets on the shelf and, of course, most food goes through a lot of process. So there are all sorts of other aspects about the food price-the shelf price-compared with the farm gate price of the raw ingredients.

The second point is that there are many issues. Water was an example I used earlier, where arguably that cost is not internalised yet, and we may need to. Yes, ecosystems are important but I think the advantage of the ecosystems assessment will be much more that we can more readily put a value on those things for which there is not a market. I mentioned earlier water retention, carbon retention, things like that, biodiversity. Therefore the Government of the day will be in a better position to value those in terms of how you provide other funding to the industry, or not just to farming but to others, as payment for those ecosystems, if you like. I don’t pretend to be a brilliant economist, but I am not sure there is an easy way of internalising the impact on an ecosystem into the food price. It would only really be done if it was done across the world, and that is why I think you have to look more at how you can use other mechanisms to fund the cost of the ecosystem aspect, as I say, through stewardship or whatever.

Q356 Simon Wright: We have had evidence, particularly from primary producers but others as well, that the financial returns are not fairly distributed along the length of the food supply chain. We have heard suggestions earlier today that the Groceries Code Adjudicator could have an important role to play. How soon are we going to get the adjudicator?

Mr Paice: The strict answer to your question is that you would need to ask the Department of Business because it is their legislation. However, I can assure you that DEFRA, and indeed the Department of Business, are very anxious to get that legislation through. As you know, they published the draft Bill and it has been consulted upon. As I understand it, the Departments are ready to go as soon as we can find the time in the Government timetable. I had better not say any more because I would be straying way outside my remit, but I gather the issue is more to do with the amount of work in the Upper House than it is in our House.

Simon Wright: Right, but you are actively-

Mr Paice: Very much so.

Q357 Simon Wright: Coming back to some of the issues that Neil Carmichael raised earlier, can you ensure that farmers at all levels will have access to the investment needed to shift to sustainable production where that investment is required?

Mr Paice: I don’t think I can give you guarantees. It would be a very rash thing, but that is our intention. It is another reason why-and I have not mentioned this yet-in the reform of the CAP we would like to see a bigger proportion of the CAP in what is called Pillar 2, which is where we could not only assist the environment, as we do at the moment, but we could step up our investment or support for farmers’ investment for competitiveness, innovation, energy saving, all these different technologies. We believe that is a far more effective way of helping the industry face the future than simply sending them a cheque, hopefully on 1 December, which is when most of them got it this time. Not all of our colleagues around the European Ministers’ table take that view, but we are working hard to achieve it.

Q358 Mr Spencer: Should the Grocery Ombudsman be able to take representations from trade bodies such as the Food and Drink Federation, NFU or CLA?

Mr Paice: He should be able to take representations of specific cases, yes, and that, as I understand it, you will be able to do. What I do not think the Department of Business is very keen to do is to open it up that the trade body, for example, could simply say, "We think you should look into a particular overall issue". Obviously, the other part of the adjudicator’s concern will be to make sure they are not just looking into vexatious claims but to genuine problems with the implementation of the code.

Q359 Zac Goldsmith: Can you tell us what role the Groceries Code Adjudicator will have in ensuring the producers get a fair price for their produce?

Mr Paice: The adjudicator will not-I have to be straight about this-set prices, set margins or shares of retail price or do anything like that. The job of the adjudicator as envisaged by the Competition Commission, who put forward the proposal, is to enforce the code, which is already statutory. It came in in February last year. So it is about ensuring that the terms of the contract between the retailer and the supplier are open, written and explicit. It puts very strong limitations on what are seen as unfair practices, like retrospective discounting, like charging the supplier for special offers that the retailer has decided to do. There are a number of things listed that are prevented because they are in the code. The job of the adjudicator is to enforce the code.

Q360 Zac Goldsmith: One of the examples-I forget who gave it to us-was of orders being informally placed, say, "I want to have 100,000 units of a product" and then a week before delivery the supplier is told, "Actually we only want 50,000" at which point it is far too late and the money has been wasted, the investments are made and so on, and the cost is borne by the supplier. It is not technically a breach of contract because nothing is written, but is that something the adjudicator is going to be looking out for?

Mr Paice: I don’t want to make presumptions about how the adjudicator would interpret it, but my guess would be that the demands of the code would mean that that sort of verbal contract is just as-if indeed a verbal contract would remain possible. I suspect it will need to be written anyway.

Q361 Zac Goldsmith: The difficulty is the adjudicator will presumably be responding to complaints. How can they get around the problems whereby a supplier knows that if they make a complaint about a particular supermarket they are likely to be struck off? Is there anything you can add to this to insulate them from that kind of risk?

Mr Paice: Clearly it is there and clearly it would be crazy to ignore it. The adjudicator will be able to keep the anonymity of a complainant. Whoever it is would have to be open to the adjudicator, but in pursuing the compliant the adjudicator would ensure the anonymity of the complainant. I am perfectly well aware that it would not be impossible for it to be discovered. I personally can’t foresee a way where you can absolutely guarantee there will not be any negative pushback, much as I wish there was.

Q362 Zac Goldsmith: The Food Ethics Council-I am just checking it was them-has said the competition law could be preventing co-operation between the supermarkets in relation to pursuing sustainable food consumption. Is that a problem that you recognise?

Mr Paice: I recognise that the supermarkets are extremely nervous about competition law. You may be aware that a few years ago most of the major supermarkets were fined pretty heftily by the OFT for collusion on the issue of milk prices. It is not for me to judge the rights and wrongs of the case, but that is what has happened, and a consequence of that is that they are extremely wary about even being in the same room together. We do have periodic meetings with the senior chief executives of the supermarkets, but it is on a very clear agenda that makes sure that there is nothing-we can’t talk about price or anything that could be construed as collusion. I can see the argument that they would be very nervous of it, yes. You would need to ask a lawyer whether in reality there is something in competition law that says they should not work together on sustainability. I don’t know. That would be for a lawyer to judge, but I am very conscious of their sensitivity over anything like that.

Q363 Zac Goldsmith: My final question is do you know what market share is currently enjoyed by Tesco, roughly where that is?

Mr Paice: I know they are the largest of the big ones. No, I shouldn’t make a guess in public. I know they are the largest of the big four.

Q364 Zac Goldsmith: I believe it is around the 25% mark; it may be more. I don’t know if anyone can find that. It is more than that, is it?

Mr Paice: I can actually; it is 30.5%.

Q365 Zac Goldsmith: It is 30.5%. That is a figure that has grown since I last saw it. At what point does it become a concern that they have too much buying power and that this is beginning to look more like a direction of travel suggesting a movement towards something close to a monopoly, certainly an oligopoly.

Mr Paice: I do not think it would be right, Mr Caton, for me to speculate on something as sensitive as market share and monopolies. That is the role of the Office of Fair Trading and their last investigation did not produce that conclusion. That body’s function is to do it, but obviously if there is new evidence then-

Q366 Zac Goldsmith: I take your point, but on that point the Groceries Code Adjudicator’s role is of added importance, given the fact that you have such a stark contrast in power between the suppliers and the supermarkets. If it does not have proper muscle and proper teeth then there is almost no point having it. Is that a view that you share?

Mr Paice: I certainly have long since believed that it was the right thing to do. You do have something like 75% to 80% of the grocery market in the hands of the big retailers. Clearly that is a massive market overall dominant position compared with 100,000 producers in England, the overall number on the RPA list.

That is why I have always argued that, yes, the issue of the adjudicator and a code is important. So too, though, is the issue of farmers working together to build up their own share of market clout through large scale co-operatives, grain marketing groups, and so on. We have two big dairy groups for the UK, Milk Link and First Milk, both with around 10% of the milk production in this country. In my view, that is a good thing and it is the way we should be encouraging the industry to try to balance it by working together themselves.

Q367 Neil Carmichael: A quick question about the adjudicator Zac has been pursuing. Of course, the adjudicator ought to be able to take action itself on evidence that it sees without waiting for a complaint, because that would mean it could have quite interesting explorations into the market. The other question I was going to raise was, of course, when products leave the farm gate and get to the supermarket, it is a lengthy process. A lot happens in between, and that is an area that requires some sort of adjudication as well. Do you agree? The role of the adjudicator will have to bear in mind the stages that the product goes from farm gate to-

Mr Paice: Let us be clear, the role of the adjudicator is the contract between the supplier and the supermarket, so that in the case of milk-let us take one of the big bottlers, Robert Wiseman Dairies, for example. The contract between Wisemans and the Co-op, who I happen to know they do bottle for, it is that contract that the adjudicator would be looking at. Whatever contract was there between Wisemans and the individual dairy is not covered by the adjudicator.

Q368 Chair: How does that deal with the 100,000 suppliers that you referred to?

Mr Paice: That is why I would like to think there will be far more dairy producers in this context working together, by joining one of those two big organisations I have referred to. There are some smaller groups. There is absolutely nothing today-not that there has been for a long while-to stop a group of dairy farmers working together to sell their milk as a much larger total volume to have some influence on the price to any of the processors. That is what happens in a lot of European countries, but I am afraid I do keep saying to the industry, "The solution is in your hands". British farmers are notoriously bad at working together. They are very independent people, whereas a lot of Europeans, of course with a history of much smaller farms, are much better at co-operating.

Q369 Paul Uppal: The second maxim for the afternoon, politics is always local. That would apply even more so in terms of sustainability in food. I am particularly mindful of the last response I had from you, Minister, that Government does not have all the answers. Can you provide or highlight any sort of examples of policy or initiative that could be borne out of the localism agenda of the Government, specifically highlight any initiatives there?

Mr Paice: Yes. I think some of the best examples are in public purchasing. There are now a number of case studies-not all of these are brand new, they have all developed over the last few years-whereby when you have driven power down to schools or hospitals, mainly those two types of institution but others are possible, and they then start purchasing locally they get, as you say, far more likely to be local, far more likely to be sustainable production. I have a school in my own constituency, I am very proud of it, Ely Primary School in Ely, where a few years ago they took back the budget for school meals, they appointed a cook. They didn’t call her some glorified name, they called her a cook. She has the budget; she buys food locally. The uptake of school meals has rocketed upwards. The children enjoy the meals and the cost has not gone up and the value is better.

There is a hospital in Nottingham, a bigger issue but similar approach, a clearly demonstrable benefit of going local. The Deloitte report of a year or two years ago illustrated a lot more case studies showing that it works.

Q370 Paul Uppal: Do you think the Government could be doing anything more to encourage that best practice in that respect?

Mr Paice: Yes, I do. Inasmuch as now we have rolled out our own Government buying standards in central Government and that they are now mandatory on central Government Departments, we need to be as active as possible, and that implies more active, in persuading all these, in this context, devolved bodies, whether it is local government or prisons or hospitals or whatever, to take their own budgets and to operate locally, and use these many case studies that now exist. We think that the Government buying standards are a set of standards that are very valuable and very valid, and we would like every public body at any level to buy according to those standards. We don’t want to make it mandatory. I know Mr Goldsmith has different views; we have discussed it before.

We take the view that the localism agenda means exactly that and that we therefore have to leave it up to local discretion, but we would strongly urge, and hope everybody else would urge, local bodies to follow the Government buying standards.

Q371 Zac Goldsmith: Can I add something to the back of that? What does it mean for the Government to urge? I take the point about localism. We have had that also, I think, in this Committee. What specifically can the Government do to push the kinds of examples that you just described and that are happening everywhere? How do you think it will become the case that those are the norm and not the exception, and how will you measure that?

Mr Paice: On measurement, I am not sure of the direct answer to that question, but obviously the measurement in my view would simply be the frequency by which it is happening and the volume of local institutions to do it. As far as how we roll it out or encourage the rollout, we are commissioning some research into the matter but quite clearly it is a matter not only for DEFRA-although it is a matter for us-but through the central Government Departments such as Education, Health, Justice, and so on, who are responsible in one way or another for the more localised public bodies, it is to constantly exhort and encourage. The other mechanism is through the facility now for local petitions whereby we would strongly encourage local communities who feel strongly about this to create local petitions, almost to mandate but certainly to strongly encourage their local council or school or whatever it may be to adopt these standards. These are some of the measures the Government has brought in more generally but it is just as applicable here.

Q372 Zac Goldsmith: Just for the record, when those petitions happen in a local authority, and if the local authority decides not to go with the demands that are set by whoever is signing the petitions, would you support those parents? Is there anything the Government could do? I know you can’t force the local authorities but you would actively take the side of those people who have organised a petition calling for a raise in the buying standards, for example?

Mr Paice: Because I actively support the principle of localised purchasing, yes, I would actively support the parents or the teachers or whoever it was in that particular context. But, as you say, I could not overrule the decision of the local body if they chose to ignore it, but there are democratic ways where the petitioners would be able to exact their revenge.

Q373 Mark Lazarowicz: On this question of encouraging, in general, better behaviour among suppliers, purchasers and the public, individually and collectively, I can see the value of the kind being suggested but I do wonder how far it is going to achieve the kind of results you want as quickly as you want. On local purchasing, leaving aside how that might work in a London borough-I am not sure what local purchasing means when it comes to agricultural produce-but more generally isn’t this going to take a very long time to make a real difference? I don’t just mean local purchasing but the general idea of voluntary nudges, I think they are called in the trade.

Mr Paice: Clearly it is going to take time. Whether it will take too long I am not so sure, but it is not something we expect to happen overnight. We do believe that as it becomes more commonplace the rate of take-up will increase because the evidence base will be stronger that it is right. I wouldn’t want anybody to believe that we are putting all our emphasis on this one solution to encourage sustainable agriculture. We are not. There is a whole raft of measures. It is such a broad tableau that we have to work on, but localised purchasing is one of it.

You also have it in the retail sector, because you have some supermarkets which have set up their own local hubs. If I use one example, the initial one was Asda who set up initially in Cumbria, but there are now many more over most of the country, local food hubs where local producers can supply into this hub, and equally the local Asda stores-I think the Cumbria one started with 11 local Asda stores-can go there to buy local products. If you go, as I have, to an Asda store in that area, there are parts of the store given up to local products. It is all part of Asda, it is not some sort of franchise or anything. By working with local businesses they have created a facility that a multiple retailer can have a significant impact on local food supply and demand.

Q374 Mark Lazarowicz: Another example of a voluntary approach, I suppose, is one where an individual customer can play a role by making choices, and of course things like labelling comes into play there. One of the comments, I think it is fair to say, made by some of the other witnesses, and I think is true again from personal experience, is there are only so many labels you can have on products in supermarkets.

Mr Paice: That is very true.

Mark Lazarowicz: First of all, much doesn’t seem to me to be happening in terms of labelling to encourage environmentally sustainable purchasing. There might be purchasing to encourage fair trade or value or whatever; in terms of environmental sustainability there is not much evidence of that happening. In any event, isn’t the greater problem there is only so far you can go in doing that decisively because there are so many criteria that apply and, if so, what do you do about it?

Mr Paice: Yes, you are quite right. There is only so much you can put on a label, and there is also the argument about what proportion of people even looks at the label. But product labelling is only part of the way of informing the consumer. You have the shelf labels, you have the big banners and all the other things, other ways by which a consumer can be informed about what is on that shelf that they are considering to purchase. There is a huge amount of work going into labelling; better design, the use of icons. The traffic light system personally I don’t think is the right way to do it. I think it has oversimplified it and produced some odd results, but these are all efforts by different organisations to improve labelling’s effectiveness and sometimes thereby to reduce it.

The European Union has just passed the Food Information Regulations, which will, for example, mandate country of origin labelling on milk, which is good. We supported that, but it means we are now embarking on the consultation about how we turn them into reality and apply it in the UK. That will give another opportunity for such discussions.

Q375 Mark Lazarowicz: What I am getting at in its entirety, as I am sure you realise, is that, of course, all these measures are important and can make a difference, but they are most effective as part of an overall package of measures, part of which has to be in some way more direct intervention either by the Government or by industry. I know none of us want to have a nanny state and all the rest of it. Nevertheless is there not a need for retailers and suppliers and producers to take an active role in deciding what they sell and how that meets environmentally sustainable criteria? Is there not a role for Government to take more direct intervention? People have suggested the idea of various fiscal measures, which I am more dubious about, but nevertheless there needs to be an overall package of measures into which these voluntary activities feed. There also needs to be a drive from Government to achieve that. This is not a criticism by me, but certainly over the last few years I don’t really feel it is at the heart of policy in the way it should be.

Mr Paice: I am not sure that I fully accept the criticism that it is not there. We are doing a great deal of work across the piece to promote sustainable agriculture. I go back to the Natural Environment White Paper where we specifically stated that there is this conflict, that Mr Spencer implied earlier, between the environment in all its aspects and increasing food production. So we have now set up what we have termed the Green Food Project, which is bringing together the environmentalists, the food manufacturers, the farmers, the Consumers’ Association, and so on, to steer more research and more work about how we break down that conflict and how we address it. That will be producing policy proposals, not just in that long term vision of the Foresight Report but the sort of stepping stone policies over the next three, five, 10 years.

I fully acknowledge that has not been widely publicised because it has only been going two or three months, but I think that is very clearly there and I think from that will stem a lot more policy change. Whether it will be in the holistic way that you envisage I can’t pre-judge, but I think that, on top of the work we are doing to encourage local food, local food hubs, the point I was just making about Asda, where a lot of rural development funding has gone in the last few years and will continue to do under this Government, all these things together are producing significant change.

We don’t have a big plan. No, we are not a Government that has, or at least not a Department that has massive plans, because much goes awry even if the intention is right. But I think I would resist the contention that we are not doing anything.

Q376 Paul Uppal: I am conscious of time, and I understand from my BlackBerry a vote may be imminent as well. On some of the figures I was looking at here, Minister, in terms of food waste, which is an issue close to everybody’s heart, of course, the figures that I have looked at estimate anywhere between 30% and 50%. I know in the Foresight Report they go for a target of halving food waste by about 2050. Could you elaborate on any measures that have been introduced to stem the waste that we currently have in such obscene and high figures. Secondly, because I am conscious of time, there is a bit of contention about the whole issue of £250 million has been spent on getting councils to return to weekly collections, and I know the recycling sector and waste sector have expressed concerns about that. Would you be able to touch base on that as well?

Mr Paice: The latter point, as you probably know, is a DCLG policy area. I have read stories about the levels of uptake but I am afraid I am not privy to any of it. In the Department of DEFRA, waste is not my portfolio so on that latter point I am afraid I can’t say much.

On the specifics of food waste, you are right, and the Foresight Report is right, that all the evidence is that far too much food is wasted and it is wasted in all sorts of ways. In the developing world a huge amount is wasted between harvest and getting anywhere near consumption. It is wasted at harvest; it is wasted in store because of pests and disease, long before you ever get to the issue of processing it, if it is going to go through any processing. In the developed world there is a lot of waste to start with because of high levels of specification about how round apples should be or red or whatever. Some supermarkets are beginning to move back from that and are now giving you the option of buying rejects. They would not put it quite like that but that is what it is. That is good, it is to be encouraged because they are just as wholesome food.

Then you have the waste that comes because food is not purchased, the stores overbuy or damaged products and all that sort of thing. That food can sometimes be used for animal feed but otherwise it goes into food waste, and we clearly don’t want any of it going into landfill, so we are very anxious that all that chain, where it can’t be utilised for animal feed, should go into anaerobic digestion.

Then you have a large amount of waste, something like 700,000 tonnes a year, of things like bread, biscuits, confectionery in the factories themselves. That all goes to animal feed. That gets eaten by animals. Then you have the catering waste, which of course used to go to pig feed but was banned at the time of BSE and banned across Europe, so that is an issue of anaerobic digestion again.

Finally, of course, you have the consumer waste after they have bought it because they keep it too long or they bought two and they decide they only want one or whatever it was. Work on that front, and that is a very important one, is firstly discouraging multiple pack buying, because that often causes waste-a lot of supermarkets are responding to that, thank goodness. Secondly is much better education of the consumer. We have a number of projects going on about teaching consumers how to cook, not in a sort of grand national project but localised schemes about how to prepare food more effectively to minimise waste and utilise all the food in the first place.

I think there are measures being taken and we are trying to address, as I say, waste wherever it happens in the whole of the production and supply chain.

Q377 Chair: I am conscious it has now gone 4 pm, Minister. Peter Aldous would like to ask a final question if you are prepared to wait a little bit longer.

Mr Paice: Yes, of course.

Q378 Peter Aldous: I just have one question. You did talk about in the past decade or decade and a half the industry being demoralised and perhaps now being countercyclical to other sectors of the economy. I think one could argue there is an exciting challenge as far as the sustainable intensification is concerned. That to my mind means there should be a lot of job opportunities. Do you think the industry is doing enough to promote itself as an attractive career option and how might the Government be able to help them?

Mr Paice: If I am brutally honest, I think the issue of numbers of jobs should be increasing is not necessarily a foregone conclusion. I know you will be able to, as I do, recognise that agriculture has been losing labour, frankly, since the agricultural revolution, but even in the last 100 years the number of people employed has gone down. I think it would be a rash assumption to say that trend will reverse.

What there is in agriculture is a much increased need for higher levels of skills and knowledge. I do make this point as much as I can. Even what are considered the sort of norm, ordinary jobs as a tractor driver or stockman, are now heavily involved with IT systems and all sorts of sophisticated electronics, whether it is dealing with sheep that all have electronic tags in them and it is all registered on a computer. We have moved so far compared with what a farm worker’s job was a few years ago, and this means that we need much higher levels of skills, so the Government is doing something about that. We have invested in a lot more specific apprenticeships in the food and farming sector and are obviously working closely with BIS on that whole sphere. We are targeting some of our rural development programme money on training and upskilling people. Then you come, as you say, to the issue of the industry where, yes, it has a big role to play to emphasise to people that this is a real career opportunity, it is a highly valuable job.

Sorry, I had better shut up, Mr Caton. I get quite excited on this issue. I will sum up by saying if you look at what the average person on a farm is responsible for, it is immense capital or product value now. I worked out that a cowman milking cows on an average dairy farm is probably responsible for £30,000 worth of output each day. On a combine harvester, combining 80 tonnes an hour at £150 a tonne, work it out yourself. This is a very seriously responsible industry and we need the best people in it.

Chair: Thank you very much. I think that brings our session to a conclusion. Thank you for the evidence you have given us today. In due course you will be seeing our report.

Mr Paice: I am sure I will. Thank you.

Prepared 14th December 2011