Examination of Witnesses (Questions 88-117)
Q88 Chair: Mr
Opie and Mr Jorêt, thank you both very much for being with
us. Perhaps you would like to introduce yourselves for the record.
Andrew Opie: I
am Andrew Opie, director of food and sustainability at the British
Andrew Jorêt: I am Andrew
Jorêt, technical director of Noble Foods, which is the largest
egg marketing company in the UK and is also involved in egg processing.
I am also deputy chairman of the British Egg Industry Council,
from whom you heard earlier through my colleagues.
Q89 Chair: At
the outset you might just like to describe the interests of Noble
Foods and where most of your production takes place.
Andrew Jorêt: We market
about 40% of the eggs produced in the UK. We are producing on
farms that are both owned by the company and are on contract to
us. Just under 20% of the eggs are from farms that we own; 80%
come from farms that are on contract to us. We are right across
Great Britain but are not involved in Northern Ireland, so we
are in England, Wales and Scotland.
Q90 Chair: Perhaps
I may ask at the outset about the labelling provisions generally,
how the animal welfare provisions affect you and how they are
being implemented currently.
Andrew Jorêt: We have always
had a very clear policy in the UK of clear labelling, as my colleague
Mark Williams indicated. We think that is important. I think
it is important that we are transparent on these issues. It then
becomes very much a consumer choice as to what type of egg that
person wants to buy when they have clearly in front of them the
production types available to them. I am not exactly sure when
labelling came in compulsorily, but certainly I was involved in
the industry when labelling was not compulsory. Our feedback
was that when it did come in, it did not really affect sales at
all. While labelling is important and it is important to be transparent,
personally I do not believe that it holds that much sway in terms
of what consumers will do.
Andrew Opie: Obviously,
we have always supported clear labelling and gone above and beyond
what is legislatively required, although these terms are well
defined. I would agree with that to a certain extent, in that
labelling is really only an indicator and helps consumers make
a quick choice; it does not necessarily sell them itself. But
the trend for shell eggs and increasingly for processed eggs is
the demand for free range, particularly from retailers in the
UK. Some retailers have gone completely for free range shell
eggs; some retain some caged sales but also have large numbers
of free range sales. But looking at the trends in terms of consumers,
over the last decade there has been a definite push towards the
free range end for eggs, and increasingly into processed products
Q91 Chair: Mr
Jorêt, I think you said in your memorandum that your company
produced over 60 million eggs for consumers. Presumably, that
is per year.
Andrew Jorêt: Yes.
Q92 Chair: Would
you say that 50% of those are already free range?
Andrew Jorêt: That is right,
Q93 Chair: That
is helpful. Do you have any concerns about how the directive
will impact on you?
Andrew Opie: Not
necessarily. The challenge for us is traceability. We heard
earlier about some of the concerns quite rightly raised by UK
producers that they are not hampered. I think retailers have
an excellent record in both traceability and also ensuring that
standards are equally applied across agricultural sectors. I
think pigs were mentioned in the earlier discussion. Obviously,
retailers are quite happy to be judged by their standards on imports
as much as they are on products produced in the UK, but certainly
in this case, while traceability is quite challengingthink
of the number of products in a supermarket that contain egg or
use egg in their productionall the major retailers have
been actively involved to ensure that the eggs that come into
their supply chain meet the regulations before they are introduced
Andrew Jorêt: Our concern
is really the same as has already been expressed by BEIC. We
estimate that about 30% of the eggs in Europe will be non-compliant.
We want very strongly this intra-EU trade ban on illegal eggs,
but even if the political ban is in place you then have to ask:
what sort of policing mechanisms exist? In practice what does
it really mean?
Our big concern is that there will be some seepage
and leakage. None of us minds competition but it should be fair
competition. Clearly, those people have not had to make the investments
that the UK industry has made. Those investments, which are the
biggest ones I have seen in my career in the industry, mean it
costs us more to produce out of those systems. You can very easily
be undercut by somebody who has not made that investment. Our
big concern in particular, as has already been expressed by previous
witnesses, is in the products area where eggs are an ingredient.
That might be eggs coming over to be used in manufacture in the
UK. Equally, it could be an egg product manufactured somewhere
on the continent with locally produced egg that then comes over
here. That is the bit we fear most.
Chair: That is very helpful.
Q94 Thomas Docherty:
What evidence is there that customer awareness of egg or hen welfare
is reflected in their decision about not only shell purchases
but the other 50% of the market?
Andrew Jorêt: Free range
started in this country in the early 1980s and has grown rapidly
since then. At the moment that rate of growth is increasing.
When you look at consumers' motivation for purchase, it would
be wrong to assume that all people buy free range eggs just because
of animal welfare considerations. Certainly, a lot of them do
but, as we find from our own market research, there is also a
significant body of people who have a perception that a free range
egg is a better quality egg in some way, shape or form. If you
do blind testing that is not the case; the eggs are of equivalent
What it also throws up is that there are people out
there who do not buy only free range eggs or cage eggs; some consumers
buy both. They might buy free range eggs if they are doing a
family breakfast at the weekend; they might buy a lot of cheaper
value cage eggs if they are doing a big family bake, so it is
not always animal welfare considerations. The talk today has
all been about animal welfare, but that is not always the reason
for the choice.
Q95 Thomas Docherty:
In speaking to quite a few colleagues ahead of this inquiry, they
were not aware of the range of products that contain eggs. I
suspect that is true for the wider consumer. After all, MPs are
supposed to be much more knowledgeable than the general public!
Do you think those consumers who do express a concern about animal
welfare and form the category of purchaser you mentioned are aware
that the products they buy that contain eggs are not necessarily
Andrew Jorêt: Again, unless
it is a very obvious product that contains eggs, such as a quiche,
there is probably value in saying there is free range or cage
egg in that quiche, but where you are talking about really hidden
ingredients in rather obscure uses, most people will not realise
that there is an egg product there, so how can they be concerned
about the type of egg that is in there?
Q96 Thomas Docherty:
I suppose that is true; yes.
Andrew Opie: I
guess that is true, but I think we have seen growth in the use
of free range eggs right across. It started very much at the
premium end and it has moved on. For example, we have seen some
retailers go to completely free range now for their processed
products. Remember that egg is also an allergen, so it is labelled
on all products. Therefore, if you wanted to look for egg or
see whether it was in a product, you would be able to see that.
I think that the growth will continue in processed areas. We
have seen it a lot in pasta and areas like that; now we have seen
it in quiches and more well-known products where you would expect
to see eggs, but the growth definitely continues.
There is a demand for free range. Interestingly,
the demand for free range has held up extremely well even in the
recession. Looking at the IGD's
current figures on shopper trends, it is quite clear that consumer
expectation to buy free range products will continue even into
next year, which is interesting.
Andrew Jorêt: I would concur
with what Andrew Opie said about demand. If you look at either
TNS or Nielsen data for the free range market, it is still growing
at about 12% per annum, which is quite substantial in the face
of the recession. The only egg that has suffered in the recession
is organic, which has probably halved in the last two years.
The response to that has been that a lot of producers have had
to switch off organic farms and convert them back to standard
free range farms rather than organic free range farms.
Q97 Thomas Docherty:
I go to Tesco on my way home, but I have to confess I am not aware
whether, for example, a Tesco quiche is labelled as free range.
It may be. Do you think that consumers are putting pressure
on retailers in particular, and that when they go into Sainsbury
or Tesco they apply pressure for them to switch to free range
in their quiches or other products?
Andrew Opie: Yes.
There is definitely a growing demand, and because it is a premium
product it will cost more to produce, because free range eggs
will cost more. The retailer will want to make that easy for
the consumer to find, and they will identify that in the product,
so "pasta made with free range eggs" or something like
that will be in the label so people can find it. It is not in
their interests to sell a product that costs them more to produce
for a lower price, when there might be an alternative product
on the shelves that is made with caged hens' eggs. So they will
try to make it as easy as possible for you as a consumer to find
it, because it is costing them more to produce and it is generally
a premium product.
Q98 Thomas Docherty:
Obviously, companies like Mr Kipling in a more high-profile way
made that move across. Could you comment on the impact on the
consumer of companies like Mr Kipling making that high-visibility
Andrew Opie: I
think it just continues that trend. We heard earlier that free
range is something that consumers seem to grasp and want; they
believe that if they spend extra on a product they will be rewarded
by a value product. I think high-profile brands help. You will
have seen some of the statements retailers have made in terms
of their determination to sell either only free range or to move
to free range products. That is because it helps them sell their
whole brand. It is enhancing their brand in terms of their consumers
and what they are offering overall on animal welfare. There is
definitely an incentive for brands to follow that kind of lead
and make it clear that they are selling free range and are supporting
the free range process.
Q99 Amber Rudd:
Do customers get most of their information about the products
from packaging or from other sources such as advertising, magazine
articles and so on?
Andrew Jorêt: There is limited
information available on the egg pack; there is standard nutritional
information and usually some description. You will also find
there is access to websites by trade associations, such as our
Lion website, which would be advertised. If you go on to that
there is a lot of information about all kinds of production methods
and anything you wantor even company websites if it is
a specific brand. I think people would get their information
from that rather than the limited amount on the pack itself, but
that pack can give you access, if you want it, to greater sources
of information through the web.
Q100 Amber Rudd:
Do you think it is good for business when companies advertise
that they buy or sell only certain types of high-quality egg?
Andrew Jorêt: As business
men, we think it is good anyway when people are promoting eggs
in whatever shape or form, full stop. It is right that the words
"free range" have almost become a brand. Therefore,
as Andrew rightly said, if someone is using free range eggs they
will want to advertise the fact that they are doing that because
they would see marketing value in doing that.
Q101 Neil Parish:
I think it shows that over the years you have been able to market
free range compared with battery hen eggs and people are beginning
to differentiate, and you see a much bigger take-up of free range
eggs. Do you think the consumer would be ready to differentiate
between a cage egg and an enriched cage egg? That will not be
the point here, hopefully, if we can stop them coming in, but
it will be in some Member States very difficult to market. What
is your view? What is the difference from the consumer's point
Andrew Opie: I
would agree with your assessment. I think the issue is free range
or caged. As we have seen with some of the other animal welfare
issues, in the case of pigs there were some issues about tail-docking
and some minor issues about welfare. It is much harder to sell
to consumers than stalls and tethers, for example. It is a very
visible thing; it is very tangible for a consumer to get to grips
with. I would think it would be extremely difficult. I am not
sure many people would want to advertise that fact. It would
be difficult to get that as a premium when you are in the market
against free range, for example.
Q102 Neil Parish:
Further to Mr Docherty's question, how much pressure are retailers
putting on food manufacturers to use higher animal welfare standards
Andrew Opie: It
is definitely a process that they are all going through now.
I have seen a couple of recent statements by retailers to confirm
that is the case and I have spoken to them myself, so it is a
case of going through the specifications with their suppliers
and making sure that they source from the right places, but this
is what they do day to day anyway. This is traceability and food
safety, so it is something that can be done and will be done.
It is quite a complex process, because we spoke about the number
of egg products that are used, but it is something they are going
through at the moment. It is possible to do it. If it is possible
for retailers to do it, it is possible for other manufacturers
to do it.
Q103 Neil Parish:
Especially when it comes to using powdered or liquid egg, surely
that must be the most difficult thing to trace.
Andrew Opie: It
is more difficult to trace, but we have seen cases. Unfortunately,
recently we saw a case in this country involving dioxins. There
had to be a very small withdrawal. Eggs had come from Germany
via Holland. It is possible to trace those and withdraw the product.
It takes a little time and work with your supply base, but it
is absolutely possible to do.
Neil Parish: The European
Commission does not seem to want to add an additional code for
the egg that does not comply with the legislation on enriched
cages and is produced now in standard cages. Provided it does
not come into the country, that is fine. I agree that if it does
not have any mark on it at all, it would not be identifiable because
you would not be able to trade it, but surely there must be temptation
in some Member States, especially if they have a mixed poultry
farm with some enriched cages and some existing battery cages,
just to put the same mark on it.
Q104 Chair: If
I may broaden that question, is the issue not one that was put
by Roy Kerr, an egg producer: it is not so much the eggs that
are produced in the EU Member State; it is eggs that are exported
into another EU Member State and are then in free circulation?
As he put it, "these are production units outside the European
Union whose main intended market is inside the European Union
to take advantage of the lack of border controls and traceability
of egg in liquid or product form". 
Do you believe that after the EU directive comes into effect,
that will be compounded, Mr Jorêt?
Andrew Jorêt: At the moment
there are not many third countries that can import shell eggs
into the European Union because of our salmonella rules. There
must be equivalence there, even though there does not have to
be equivalence on animal welfare. So to a certain degree we are
Q105 Chair: That
is in shell?
Andrew Jorêt: That is in
shell, yes. It is not true of eggs in product; it could be dried
product and so on. That is the problem area.
Q106 Chair: I
think the original question was specifically about liquid or product
form. Is this an issue now, and do you believe that it might
be a greater issue if the EU directive comes into effect?
Andrew Jorêt: It is not
a big issue today, but it will increasingly become an issue because
on the one hand costs are going up in the EU because of the directive,
and at the same time the protection that exists by means of tariff
barriers for imports from third countries at some stage will reduce
whenever there is a final conclusion on the Doha agreement. Therefore,
that would leave the whole EU potentially more exposed to competition
from certain countries. The countries we would fear would be
those like Ukraine, China, Mexico and the United States, who are
very big producers of very low-cost powdered egg.
Andrew Opie: It
comes back to the point I made earlier. Responsible companies
will think very carefully about their own supply chains. Would
you want to take from countries where you put yourself at risk?
Ultimately, aside from the food safety risk, there is reputational
damage if you had not audited something in your supply chain and
had not traced it properly and found it was a problem. I do not
believe that would be so for the major retailers because they
would not want to put their reputation at risk; they will make
sure that their supply chains are robust, safe and can supply
the kind of quality that they and their consumers demand.
Q107 Chair: Perhaps
I may run past you something Lord Rooker told the Committee in
our evidence session on animal cloning. He said that "you
can technically tell whether an egg is free range or not".
If I may expand that, other than whether a number is on it, how
do you establish whether an egg has been produced in a conventional
or enriched cage?
Andrew Jorêt: Are you asking:
is there a way to distinguish?
Q108 Chair: Can
Andrew Jorêt: No. In fact
that would apply not just to eggs in cages; it would apply if
you had unmarked free range and cage eggs. You would not be able
to tell one from the other. There are one or two technical tests
that people are beginning to look at, but it is more to do with
very technical issues about isotopes, which tell you the locality
where it might have been produced but not necessarily whether
it is free range or cage.
Q109 Chair: What
is your response to Mr Parish's question about the Commission's
reluctance to use production method codes?
Andrew Jorêt: While we would
like to have a differing production indicator, the likelihood
anyway is that we will have farms on the continent, in those countries
that do not comply, that are partially compliant. If they are
to produce illegal eggs I am sure they will also mark them illegally
anyway, so whether or not we have the number they will probably
use it wrongly. Therefore, I think the important thing for us
politically is to have the ban in place and then for us as an
industry to work very hard with our Lion scheme to say that, if
you want to ensure compliance, you go for Lion shell eggs or Lion
egg products. That is the pressure that we will be applying as
an industry towards the end of this year.
Q110 Thomas Docherty:
One thing that fascinates me is that if you go into the big supermarkets
these days you find world foods: Tesco has huge aisles and other
specialised retailers provide imported finished products. I suppose
my question is to Mr Opie, although Mr Jorêt may want to
add something. What is your impression of what will happen on
1 January if, for the sake of argument, Spain, Portugal and Poland
have not complied and they produce a producta cake, biscuit
or whatever elseand then expect to export it here? Has
your organisation discussed with the Government, be it BIS or
Defra, the legal implications and practicalities of a ban?
Andrew Opie: We
have not discussed that with them. Our companies are really looking
only at their own brand products, so they could not necessarily
speak, for example, for the manufactured products that are on
their shelves. Remember that they completely control only their
own supply chain. About 50% of products in a typical supermarket
would be own brand; about 50% would be branded products. They
have control of their own supply chain, so they would be in control
of those and they will be going through all the steps of traceability
at the moment. If you wanted to speak to branded manufacturers
you would have to ask them that question.
Q111 Thomas Docherty:
So for argument's sake, Sainsbury or Tesco have no view on whether
or not cakes or biscuits from Poland or Spain would fall foul
of that. I am surprised by that.
Andrew Opie: Our
members would prefer that you did not buy the branded products
and bought their own brand products. That is why they are so robust
about their brands. They will say that they have been through
all these traceability issues and can demonstrate to consumers
where their eggs are coming from and to what standards they are
produced, and they would hope that that would persuade the consumer
that that was the right thing to do, because then they would buy
Q112 Neil Parish:
You have partly answered my question. One of the things is the
policing of all this. I remember from the foot and mouth inquiry
that it is basically a paper trail from the country it has come
from, and very few physical inspections are ever done, and with
eggs it is probably even more difficult. From your point of view
is there anything more we can do to make policing easier and more
Andrew Jorêt: Unless you
start to look at port and border controls, not really. That was
really my earlier comment: we think it is very important that
politically this ban on illegal egg is in place, because then
if there is leakage and it is exposed, hopefully the issue is
that through embarrassment, people will stop doing it. I think
it is then down to us as an industry to look after ourselves,
and that is why we are very pleased we have a strong Lion scheme.
We are going to use that, and we will be promoting through the
Lion that if you want an assurance of compliance, look for the
Lion for both shell eggs and egg products.
Andrew Opie: Similarly
with the retailers, regulation is fantastic and enforcement is
great, but because of due diligence issues they invest in their
own supply chains; they carry out audits in their own supply chains.
Andrew will know as a supplier that they will come and see him
and his producers regularly to check that they are doing what
they say they should be doing to the right specification. A lot
of auditing goes on. For example, in food safety we have a BRC
standard that is used throughout the world in terms of factories,
productions and safety and the ingredients that go into those
factories. There are plenty of audits available to those companies
that are prepared to invest in them.
Q113 Neil Parish:
Do you do that on processed products as well?
Andrew Opie: Definitely
with processed products, yes.
Q114 Richard Drax:
Do you have any concerns that the implementation of this directive
could lead to an egg shortage? Is there any risk of that, or
Andrew Jorêt: The degree
of non-compliance in Europe that we anticipate is so great
Richard Drax: It is one
third, is it not?
Andrew Jorêt: that
it is unthinkable that that production will just be slaughtered
because it is illegal. That will not happen, so that egg will
be there. So I do not think there will be an immediate shortage.
Our concern comes back to unfair competition.
Andrew Opie: I
certainly would not think there would be any immediate problem
with shell eggs because they are 100% UK on major retailers' shelves,
so that is covered. We have heard earlier that all of them will
be compliant. As to processed eggs, a lot of that product would
come from the UK anyway; what went into the supply chain would
be manufactured here, and a small element would come from the
EU or outside the EU. Therefore, we would not anticipate any
problem, particularly not with shell eggs but not with processed
Q115 George Eustice:
Mr Jorêt you said earlier that you supported an intra-EU
ban on eggs that did not comply. I just want to ask Mr Opie whether
that is also the position of the British Retail Consortium. Would
you support an intra-EU ban on product within the EU that did
not come up to standard?
Andrew Opie: Yes,
absolutely. I said earlier that our main supplier base is UK
farmers. The last thing we want to see is our own UK supply base
hamstrung because it is being undermined by illegal imports.
It is not something that we will entertain in our supply chain,
so we do not see why they should also be subject to unfair competition.
We would not have a problem with that. It will not affect our
supply chains; we will still put the same products on the shelves
as we do now, and we are taking steps to make sure that we do
not take illegal eggs. Therefore, it would not affect us and
we do not see why UK farmers should be affected adversely.
Q116 George Eustice:
The other area in which I was interested was the extent to which
the move to enriched cages might affect demand for other production
systems, such as barn-produced eggs or free range. There is no
doubt that cage-produced birds became a kind of totem for factory
farming generally over the last 25 years. The Daily Mail
would cover itchickens are always up there. That is undoubtedly
what has driven the success of free range egg production, but
is there a danger that this undermines that if basically people
take the view that it is all okay now because these new regulations
are in place? Do you see that having an impact on demand for
Andrew Jorêt: I suspect
not, and that the people who are buying cage egg do so because
they are very price-driven. They probably do not want to be reminded
about the production method, if I am honest about it; it is all
about price. The colony egg will still be substantially the cheapest
form of egg production. Therefore, while we are talking very
much about free range growth, we are not also talking about the
complete demise of any cage production in this country. I think
that will go on for some time to come.
Andrew Opie: I
would concur with that.
Q117 Chair: Referring
to feed and energy prices, have they had a big impact on your
production and operating costs?
Andrew Jorêt: At farm level
very much so. Feed is the biggest single item of cost in eggs
at farm level, whether it is cage, colony or free range eggs,
and that has nearly doubled. That has put producers under enormous
short-term pressure because as of yet, that has not really translated
through into retail prices so we can feed back additional margin
to producers. Therefore, in the short run there is a problem.
My colleague Mark Williams indicated that there had
been a little imbalance in the market. Collectively, we have
slightly over-expanded on free range and have had a surplus.
That expansion is temporarily on hold while the market catches
up with itself, which it is doing. We forecast that by the end
of the summer we will be back in balance. We will then perhaps
see prices having to rise to reflect the higher costs.
When you look at forward pricing, wheat today is
about £195 per tonne; new crop wheat is still coming in at
about £170 per tonne. It is at a record high level; it has
never been there before. Therefore, it is not just a case of
going through a short period when there are high food costs and
we all tighten our belts and struggle and then carry on at old
levels. I think there must be some translation of pricing through
into the consumer market in the end.
Andrew Opie: It
is a very difficult market at the moment, because on the one hand
you have real pressures on suppliers, which we are very well aware
of. Retailers themselves have rising costs. Oil is really important
in terms of distribution and all those sorts of areas. On the
other hand, you also have consumers who feel increasingly under
pressure. Therefore, you have a market where according to our
figures food prices have risen by about 4%, which is unusual.
We have been through periods of deflation, not inflation. However,
we have consumers who are increasingly under pressure in terms
of their own budgets, so to try to pass those on but also ensure
a sustainable future for farmers is increasingly difficult.
Chair: You have been very
generous with your time. Thank you very much indeed for your
contribution to the inquiry.
2 Note by Witness: Noble Foods Ltd produces over 60
million eggs per week Back
Ev w99 Back