Examination of Witness (Questions 380-399)
Mr Cliff Morrison
30 APRIL 2008
Q380 Viscount Brookeborough: As wages
rise in eastern Europe, will the Polish blockers have a problem
too?
Mr Morrison: Probably, yes. At one time everything
was moving east into Poland, but now the bulk of it has gone further.
Q381 Viscount Brookeborough: So Mr
Bird's Eye is going further and further away with his fish finger
manufacture?
Mr Morrison: Yes.
Q382 Viscount Ullswater: Is the volume
of fish processing in this country going up or down?
Mr Morrison: Obviously primary fish has gone
right down. Secondary volumes are going up. We went through a
period where there was a slight decline in the proportion of frozen
fish products but, to counteract that, chill fish products have
captured a huge part of the market. Consumers now recognise the
nutritional value of fish and they recognise the quality of chill
products. That sector of the market has therefore seen a huge
growth. I do not have the figures with me but if you wanted that
kind of information, I could provide it to the Committee.
Q383 Lord Palmer: Could I ask a question
for clarification? When you talk about "secondary",
do you mean readymade meals, such as fish pie or whatever?
Mr Morrison: Yes. The primary processing is
essentially taking the fish, creating fillets out of it and selling
that as a basic product. The secondary processing, at its most
basic level, would be to take that fillet and to produce portion-controlled
pieces out of it—loins or tail pieces—which could
be sold into the chill market, nicely packaged. That is how the
consumer wants it these days. They do not want anything to do
with preparation. We can command a very good price for that, providing
the quality is there as well, of course. That would be secondary
processing, but at its most basic level. Most of seafood production
now is added value products, such as the fish fingers—again
at their most basic—crispy coated products, battered products,
or the fish pies. The biggest single meal in the UK is the fisherman's
pie. It outstrips any of the meat products or any of the vegetable
products.
Q384 Chairman: Tell us where it is
coming from. Where is the fisherman's pie coming from?
Mr Morrison: That is produced by Young's, by
Foodvest.
Q385 Chairman: And the fish that
goes into the fisherman's pie is coming from ... ?
Mr Morrison: There are two sources of the fish.
One is cod, which would come from blocks that would be diced.
This is whole fillet blocks. Essentially, those blocks would be
from the Barents Sea or Icelandic cod. People become very concerned
about the amount of cod that is available, but there is 800,000
tonnes of cod up in those northern waters. It is a local problem
that we have; it is an EU problem that we have in terms of cod.
There is a lot in the north. That cod would be frozen as what
is called "H and G"—headed and gutted. These days,
it tends to be frozen on board vessels; it is palletised and then
that fish would be delivered into, say, Rotterdam, as a major
exporting port. It would then go on to a container ship. It would
go to the processing factories in China, where it would be processed.
It would then come back as blocks or it could come back as fillet
portions, but not as finished products. As you will be aware—and
I will just concentrate on cod for the moment—most of our
cod comes from Norway, Barents Sea, Iceland, and they used to
make blocks out of it: cheap and cheerful blocks. They would do
that by mechanical means; so the fish would go through what is
known as a Baader filleting machine. The whole fish would first
of all be gutted; it would then go on to a machine and two blades
come along and cut the fillets off; then those fillets would be
trimmed up by hand. As you are probably aware, there are pin bones
down the centre of a fillet. What they would then do for speed
is what is called a "V-cut". When I first joined the
industry a V-cut would be 14% of the fillet. As the price of fish
has gone up and availability has gone down, then they cut very
much less out. That prime fillet that is now cut out as V-cut
goes for mincing and bone extraction; so you end up with a fillet
which maybe goes into a block and mince that goes into a block.
You have the two: a mince block and a fillet block. The yield
on that? 35%, something of that sort. However, if you take that
same fish, headed and gutted, and send it to China, the Chinese
are able to cut that fish manually—as we used to do many
years ago. They do it slowly and they produce no mince at all,
because they cut a very fine line down where the pin bones are;
they extract those pin bones; they close the fillet up so that
you no longer know that it has been cut; there is no mince, which
of course has a low value; and their actual yield can be 10% higher
than we can get here.
Q386 Chairman: The attraction of
China is obviously partly the low costs, therefore, but it is
also increased yield.
Mr Morrison: Yes, and because to put the fish
through these mechanical Baaders it has to be fully defrosted;
but the Chinese will handle it from almost frozen, just slightly
defrosted. You end up with a consistently better quality, a better
colour and this massive yield improvement. There is a huge advantage.
I know that there are a lot of questions about food miles, but
there is this plus-10% of yield and that is a natural 10%, not
10% of the yield. There is a lot of misunderstanding about bulk
shipments, but these modern vessels are very efficient. About
18 months ago the first of the large container vessels came on-stream
for handling frozen containerised fish, and other containers obviously—14,000
container units. That is the kind of single unit you see on the
back of a vehicle—about 20 tonnes. They can handle 14,000
containers. This was a great revolution. I was in Felixstowe last
October or thereabouts. I asked, "Have you had this new vessel
in often?" and they said, "There are three of them now".
We have therefore gone from one at the beginning of last year
to three, and they just keep growing in numbers. The UK Fisheries
Director, Rodney Anderson, and one of his colleagues were going
to China to discuss some projects, I am not sure what, in Beijing
last year. Since we talk a lot about this—and when Rodney
first came into the industry four years ago or so, Stephen and
I took him all round the processing industry in the UK and into
Scotland, with David Wilson who was then the Scottish Government
director—I suggested to him, "This will be an opportunity
for you to see exactly what happens in China". I was not
the least bit concerned about taking him, because the factories
over there are absolutely state of the art. They are all new.
All of the operatives are extremely well cared for. Most of them
tend to be migrant workers from the north of China. They have
extremely good facilities and dormitories. I therefore had no
qualms at all about taking him. He never actually said, but I
think it was a complete eye-opener; I think he changed his mind
totally on what he saw. The difference between there and here
is that if we say, "We want this in the factory. You will
do this, that or the other", they will do it to the letter.
That is very good.
Q387 Viscount Brookeborough: You
have partly answered my question, but when we did a previous inquiry
into fishing we were told that the freshest fish you could have
on your plate was that which was frozen quickest from catching,
and that actually fish that may have been brought some distance
that was not frozen was not necessarily as fresh as you thought.
First, you seem to be saying that the consumer actually disregards
that and likes chilled fish rather than frozen necessarily. The
second thing is to do with the Chinese factories. I was rather
worried that frozen fish was going all the way to China, then
being defrosted, then cut up, then filleted, then chilled and
then frozen again. I was always told that you must never defrost
and re-freeze fish without doing something to it in between, like
cooking it.
Mr Morrison: It is interesting that retailers
now, when they sell chill products, do say that you can freeze
it. One of the differences, of course, is that modern domestic
freezers freeze quickly. The issue with freezing fish is that
if you freeze it slowly you destroy the structure. Then, when
it is defrosted, you get all the liquor moving away just as drip;
so you end up with a rather dry product. In the industry, however,
we have produced double-frozen blocks for many years now; because
if you are catching at sea and it is H and G—headed and
gutted and frozen—it comes back and has to be defrosted
to make the blocks, and we have always done that.
Q388 Viscount Brookeborough: Then
it is re-frozen again?
Mr Morrison: Re-frozen, yes. There used to be
an exception to that, where there were fresh boats landing after
a six-day trip, and it is okay to process that as fresh. That
is known as a single-frozen block. The single-frozen block always
used to be a higher quality, because it had better texture, than
the double-frozen block. Certainly, with the way these Chinese
are producing product in air-conditioned factories, you would
be hard-pressed to tell the difference now.
Q389 Viscount Brookeborough: A home
freezer would not do that properly?
Mr Morrison: No, because it is freezing too
slowly.
Q390 Viscount Brookeborough: Because
this is blast-freezing.
Mr Morrison: Fresh products—yes, if you
can get fish that is up to eight days old, then it is extremely
good quality.
Q391 Lord Palmer: What roughly would
the timescale be from a piece of cod leaving the North Sea to
returning to a supermarket shelf in this country?
Mr Morrison: Typically, a chill product would
have a five-day shelf life. The fish could be five or six days
old; so 11 or 12 days, perhaps—something of that sort.
Q392 Earl of Arran: As regards the
legality of harvesting the supply chain, or illegality, in your
opinion what effect will this new proposed EU regulation, under
what I think is called IUU, have on the industry? Will it be effective?
Will it have teeth or is it just a bland statement, in your opinion?
Mr Morrison: It should be very effective. As
both FDF and as AIPCE we have supported the whole concept from
the very beginning when it was first proposed. We have contributed
through consultation right from the beginning and we have been
very, very positive; but we are now having concerns. The particular
section of the IUU regulation is Article 15, specifically 15.2,
which requires the fish to be certified as legal. That is okay
in itself, but the actual process that is being described is that,
at every point in the movement of that fish, you have to have
a paper document confirming that it is the fish that was originally
certified, right through the whole chain, right to us and onwards.
Taking the simplest case, without all of the other requirements—and
I have mentioned tuna already—a number of our members buy
tuna from the Indian Ocean. That tuna is flown into Heathrow on
a weekly basis and more regularly, and then it goes to their factories
for processing. It comes as tuna loins. A typical consignment
could be 50 tuna loins, originating from 50 fish. I had not realised,
until we had a discussion in Brussels with a supplier last week,
that they could come from 50 vessels, because it is literally
almost one vessel, one fish landed. We will therefore need 50
certificates, but the origin of the vessels could be from Sri
Lanka, from India, from Indonesia, or Thailand even. If those
vessels are landing into Sri Lanka, say, how will the flag state
give a meaningful certificate to say that that fish was caught
legally? I therefore have a question mark over the certificate
as it will be presented. The logistics of bringing those 50 certificates
together on one plane and then keeping track of this paper certificate
all the way through will be a nightmare. Of course, if you read
the legislation it says that if there is any doubt they can hold
product for 14 days—so it might be a bit complicated! If
you take the example of product going to China—and I have
mentioned the size of these containers—what we would have
would be frozen fish from a whole series of vessels, brought together
at a port, a border inspection port maybe in the Netherlands,
and we would need certificates for every one of those batches
from each of the trawlers. If it is the Netherlands, the Dutch
authorities will communicate with the Russians. This system is
beginning to work quite well under NEAFC Port State Controls—the
North-East Atlantic Fisheries—RFMO, Regional Fisheries Management
Organisation. This part would work quite well. The Dutch would
confirm that that trawler was allowed to catch that fish and that
it still had quota. You therefore get a certificate there. However,
the way the system is proposed to work is that it has to be a
paper system. The chap in charge in Brussels said that he did
not trust electronic systems because they could be manipulated,
but I am sure that paper can be manipulated too!
Q393 Chairman: Just put a couple
of noughts on!
Mr Morrison: We have this certificate, therefore,
and we could have a whole series of certificates going into containers
going to China; but when the fish is landed it will have to go
into a cold store to begin with, until they can assemble all of
the product; so you will need a traceability signature to say
that it went in, that the same volume came out and it has not
changed. It then goes on the vessel; it goes to China. That fish
could go to three different companies, say—this is just
me making it up, but it could easily happen—and so the Chinese
authorities are going to have to look at those certificates and
say, "Yes, this fish has come in". They are then going
to have to trace and sign off at each point where this has gone.
If it goes to three factories, the fish will be in different size
grades; so what we could find is that if Young's or Birds Eye
want a specific portion size, they will have to take from several
consignments. We then need traceability, linking the certificates
from the several consignments together, to make up an order; then
the Chinese have to countersign that again. It then comes all
the way back, and there will be quite a number of batches in the
containers coming back. We will have a great wodge of paper. The
EU is serious about doing this; we are serious about wanting it;
Defra is very serious about wanting it; but we see the whole thing
collapsing under a great wodge of paper. As AIPCE, we have therefore
been saying, "This is over-complicated". We went to
see the Director General, Mr Fotiadis, with his people and they
were adamant that they wanted to stick to this system. If you
look at what was introduced under the health regulations, you
have certified vessels, a certified chain, and certified factories;
all of these factories in China have been inspected. Our proposal,
therefore, is to link the health process that we have in place
with this certification—this system that they want. We do
not have all the paper coming back; that is all kept to the factories
and it is there for inspection if DG Sanco, the veterinary inspectors,
want to look at it. Then they can do a complete paper chase. We
can do the same. I do not see why DG Fish, or DG Mare as they
are now called, want to introduce such a complex system. Why do
they not try to merge the two? When we suggested this, they said
"Oh, well, that's DG Sanco and we're DG Fish". This
is absolutely crazy!
Chairman: We will be asking that question when
we see them.
Q394 Earl of Arran: Is the illegality
such that it requires this kind of offensive?
Mr Morrison: The Commonwealth Office is looking
at a new fisheries initiative and, last night, we attended; and
the DfID minister, the Defra minister and Elliot Morley were there
doing presentations. Somebody in the audience said, "You
shouldn't be looking at the illegal fishing that is going on".
That was originally estimated by MRAG here, on behalf of Defra,
as worth £9 billion worldwide, but they are now saying that
it is something between £10 and £22 billion, so it is
a huge problem. Somebody asked a question of the ministers last
night, suggesting that it is the processors who are in league
with the fishers to launder this illegal fish. It is quite likely
that some companies are; but, overall, I do not think that our
UK or most of the European companies are looking at this, because
it is international crime. There will be examples, but my concern—and
this is what we said in the original consultations—is let
us target the known fisheries and let us put in legislation to
target those, on a risk-based approach. That was totally dismissed
by DG Fish. They said, "No, we've got to have blanket legislation
and a blanket approach. Otherwise, this fish will be laundered
through". That seems wrong to us; but they are now talking
about maybe, when this blanket legislation comes in, targeting
vessels without nationality or what they would call "rogue
flag states"—which is fine, but they could do that
without having such a draconian approach. We have had discussions
with Defra, and certainly minister Shaw last night said that he
would prefer an approach of preferred economic operators and go
for a risk-based approach. He is clearly thinking in the same
way that we are. I wrote to the minister recently on behalf of
our members and I heard from one of his staff last night that
he is going to respond sympathetically. We want the legislation.
I would hope that we can have a practical working solution.
Chairman: Let us go to Lord Plumb on the assessment
process. This is a Young's-phrased question.
Q395 Lord Plumb: I assumed that the
"Ten Principles" that are set out in the statement would
be approved by all, but then I started to have doubts when you
were answering the last point on whether all would respond to
the ten points that are set out there. Under the "objective
assessment", there is reference to the fact that the status
of aquatic eco-systems is dynamic but that it is often poorly
understood. We have been taking evidence from the scientists and
this seems to be a major problem between the scientific evidence
that is taken and the fishermen themselves, who are at the surface
collecting the fish. How do you see this? Is there a sufficient
response to take account of the evolving scientific assessment
of the different fisheries?
Mr Morrison: You will be aware that ICES say
that we should have zero catch, and politically that would not
be possible in a number of instances; so Young's now do not take
cod from the North Sea. In the Baltic we have had this huge problem
of known IUU cod, that is estimated at 40% of the catch. There
has therefore been a huge debate, not only by Young's but by other
major companies, as to whether they should stay in the Baltic
or whether they should pull away totally from an EU fishery—which
is making a huge statement. Young's have therefore worked very
hard and have talked with ICES on the issues about management
control in the Baltic, and they have also addressed the Baltic
and the North Sea RACs and have tried to persuade them to be more
effective in reducing the level of IUU. As AIPCE we have an annual
general assembly, which last year was in October and, coincidentally,
it was in Poland. This was at a time when the Polish elections
were going on and there was this 40% of over-catch. The European
fisheries associations were also complaining through ACFA that
DG Fish was not taking effective action on this over-catch. Our
organisation was going to Poland and we decided that we must address
this issue directly with the Polish processors. We were expecting
reluctance; instead of that, they were with us and saying, "This
is terrible, because we cannot sell our processed fish into major
processors in Europe. They don't want it, because they are concerned
about the level of over-fishing". We ended up from a position
of expecting a problem to producing a joint statement with the
Polish processors—not fishers, although some of them are
linked directly with the catching sector through an integrated
business system. We actually produced a statement condemning the
over-fishing and condemning the Polish Government for not being
effective, which I thought was a great success. It is now coming
down. When you have a situation like that where the major companies,
Foodvest included—and one big company actually pulled out
totally—will make the necessary arrangements to withdraw
from a fishery, and to do that with an EU fishery, is terrible
really. However, looking wider, globally, Young's have developed
a system, which I suppose is a little bit like the MSC system,
where you look at the stock sustainability; you look at the eco-effects
of fishing; you look at the management controls; and you make
a decision from there. They do it on a risk-based assessment.
They do not do traffic lights, but another way would be the red,
amber and green. If it is green then it is okay—and any
fishery that is MSC they would say is green. They would therefore
say, "Yes, we can go there". If it is red, because it
is over-fished or the stocks are in a state of collapse, then
they would say, "No, we can't go there". If it is amber,
then there would be a decision made as to whether to take from
that fishery, or whether to take from it and try to exert political
pressure to improve its status. How do they do this? They have
employed fishery experts on a consultancy basis; they go and discuss
fishery management with ICES on a regular basis several times
a year; they do the same with other scientific experts; and they
will also speak to the trade associations in the relevant countries.
From all the data that they collect, they then decide whether
they are going to take from those fisheries. That is how it is
done. It is based on science. It is also particularly important
for data-deficient fisheries. It has meant that they have pulled
out from a number of fisheries. I know that others of our members—Birds
Eye, for instance—have adopted a similar system. It was
certainly in place in the Unilever days of Birds Eye and their
more global approach. I know that it is in McDonald's; I know
that Iceland have a similar kind of system. The difference is
that Young's have decided to come upfront and they have to stand
by it, whereas others do not have to make such a deliberate statement.
However, all of the companies do work towards this kind of approach
and, as I say, part of the reason has been that there has been
this big divide between science and politics. That is the basis
of it, therefore.
Q396 Chairman: It is very good that
the responsible processors are behaving like this but, at the
end of the day, the real test is do the stocks improve as a result
of your coming out or do other, let us say, less—I am trying
to seek a word—less responsible processors move in and say,
"We can make a killing now because our rivals have quit"?
Mr Morrison: This will be a concern for the
Baltic, for instance, because there is easy access right across
Europe. It is therefore essential that we have effective management
control to stop IUU. It is always a concern. Of course, if they
come out of a fishery—which is why companies will not come
out quickly from even something like the Baltic: they would prefer
to get it right—if they do come out and that fish then goes
into the market by other means, it will be there at a cheaper
price, which means that they have created an non-level playing
field. It is a very difficult balance, and I know that companies
have considered that in some depth in the past. I know that when
Unilever, prior to Birds Eye, was in existence in a fishery business
capacity they fought long and hard about Alaska pollock from eastern
Russia, where they thought it was probably better to be staying
in that fishery and trying to influence it rather than just pulling
away. That is the second-biggest fishery in the world. The Alaska
pollock fishery in the US is now MSC-certified, and so that is
the main supply route for Alaska pollock—which, next to
cod, is the biggest whitefish fishery that we have for processed
products. However, Russia, by continuing to be influenced, is
now looking at MSC certification as well. They are sorting out
the IUU problems that they have and they have recently gone through
pre-assessment. We could therefore see that second-biggest fishery
being very well managed in the future. There is also a good argument
to stay in the fishery, therefore, and to try to influence it.
Chairman: Let us move on to discards.
Q397 Viscount Brookeborough: Just
on the last subject for one second, on the traffic-lighting of
sustainable imported fish and Sainsbury's saying "red",
meaning that there were major concerns—"We will not
sell it"—are any western European processors selling
it, or is that a statement that everybody abides by?
Mr Morrison: I suspect that some would, yes.
If Sainsbury's say no, then, as we were saying, that would have
a huge influence in trying to manage it more effectively.
Q398 Viscount Brookeborough: Young's
have a very clear policy on discards. In the first paragraph of
their submission to us, they believe that there should be a complete
ban. Without a doubt, every sane person would agree that there
should be no discarding, but is it practical and what is the FDF
opinion on it being something which can be put into practice?
Mr Morrison: This is a difficult one.
Q399 Viscount Brookeborough: It is
an aspiration. It is a lovely aspiration.
Mr Morrison: In fact, that is what I have written
here. I have put, "The Foodvest policy statement on discards
is aspirational". It is designed to establish a point of
principle that discarding is fundamentally bad and, coincidentally,
was introduced at a time when Commissioner Borg was also making
the same kind of statement. I discussed it with Foodvest and they
said, "If we don't make that kind of statement, we will all
be down in the quagmire all of the time, trying to work our way
through it. We would like to rise above that. Let's make a clear
statement". I think that is a good approach. As FDF, with
all our membership, we have actively engaged; we have responded
on the consultations; we are backing reduced discards and backing
technical measures to reduce discards wherever we can. That would
be our position, therefore. I think that what they have done in
north-east Scotland in terms of their credit system, of not fishing
in areas where there is juvenile fish et cetera, is very creditable.
We would very much favour actions like that. We would also support
any efforts to reduce discards. However, it is difficult in a
mixed fishery. There is another problem that I have, and this
is a personal view. If we bring all of the discards back and we
try to create markets for them, are we creating a future problem
for ourselves? Many years ago when I used to work with United
Biscuits we had crumb, and we created biscuit for the crumb. That
then became bigger than we could get crumb for. Could something
similar happen if we started to land all this discard fish? It
is therefore much better to stop catching it—which I think
is where the EU wants to be. They do not want to land it: they
want to prevent it being caught in the first place. I think that
is where we should be.
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