Northern Ireland Forum

for

Political Dialogue

~~~~~~~~~

THE SOURCING IN NORTHERN IRELAND

OF AGRICULTURAL PRODUCE

BY NATIONAL SUPERMARKETS

AND RETAILERS

A REPORT

prepared by

STANDING COMMITTEE D

(AGRICULTURE AND FISHERIES ISSUES)

~~~~~~~~~

Presented to the Northern Ireland Forum for Political

Dialogue

on 23 January 1998

This report has been prepared by Standing

Committee D for the consideration of the Northern

Ireland Forum for Political Dialogue. Until adopted

by the Forum in accordance with its Rules, this

report may not be reproduced in whole or in part or

used for broadcast purposes.

Note

DRAFT REPORTS

THE SOURCING IN NORTHERN IRELAND

OF AGRICULTURAL PRODUCE BY

NATIONAL SUPERMARKETS AND RETAILERS

"What is happening in Northern Ireland, is, in retail

terms, a revolution. What has happened in the last

12 months is unprecedented and it is bringing about

unprecedented changes throughout the whole supply

chain."

Mr L O'Hagan

Chairman

Safeway Northern Ireland

11 September 1997

THE SOURCING IN NORTHERN IRELAND

OF AGRICULTURAL PRODUCE BY

NATIONAL SUPERMARKETS AND RETAILERS

CONTENTS

Page

1. INTRODUCTION 1

2. THE REVOLUTION IN RETAILING IN

NORTHERN IRELAND 3

3. SUMMARY OF EVIDENCE TAKEN BY THE 8

COMMITTEE

4. CONCLUSIONS AND RECOMMENDATIONS 18

5. SUMMARY OF RECOMMENDATIONS 29

ANNEXES

A. Membership of Standing Committee 'D'

B. Minutes of Proceedings

C. Minutes of Evidence

D. Written Evidence

1. INTRODUCTION

STANDING COMMITTEE D - TERMS OF REFERENCE AND

ACTIVITIES

1.1 The initial meeting of the Northern Ireland Forum for Political Dialogue

was held on 14 June 1996. One of the first actions of the new Forum

was to set up a number of Standing Committees to examine key issues

affecting the people of Northern Ireland. Standing Committee D was

given the remit of Agriculture and Fisheries Issues and was established

on 26 July 1996 with the following Terms of Reference which have

remained unchanged:

"To examine the problems being faced by

farmers and fishermen in Northern Ireland and

report to the Forum."

1.2 The Committee has been active since its establishment and has visited

farms, agriculture industry representatives, processors etc across

Northern Ireland. To date, the Committee has completed reports on

three specific issues - viz:

- Review of the Beef Industry Crisis in Northern

Ireland - 1 November 1996

- Review of Fisheries Issues in Northern

Ireland - 22 November 1996

- Review of the Current State of the Northern

Ireland Potato Industry - 7 March 1997

The Committee is presently engaged in taking evidence on a number of

other topics with a view to the production of a series of reports.

1.3 The membership of Standing Committee D (Agriculture and Fisheries

Issues) is shown in Annex A.

THE PRESENT STUDY

1.4 In early 1997, the Committee held a number of meetings in towns across

Northern Ireland to give farmers the opportunity to express their views

on current agriculture topics. In the course of these meetings, many

points were made to the Committee regarding the problems being faced

by all sectors of the agriculture industry. High on the list of concerns

however, was the advent of national supermarket chains in Northern

Ireland. The key points put forward by farmers were as follows:

- the standards set by the newly arrived retailers and the ability of

Northern Ireland farmers to meet these;

- the nature and content of the contracts offered by the retailers;

- the dangers which could arise from a small number of large retailers

attempting to control large sectors of the agriculture industry.

1.5 In the course of subsequent visits to farms, processors etc, this

message was reinforced to the Committee, and it was then that the

Committee decided to undertake an examination of the sourcing policy of

the major national supermarkets in Northern Ireland. Evidence was

invited from the major national supermarkets and retailers and from other

interested groups. The evidence obtained is set out at Annex C and

Annex D.

2. THE REVOLUTION IN RETAILING IN NORTHERN IRELAND

2.1 Prior to June 1995, when Sainsbury announced the acquisition of seven

sites across Northern Ireland, "supermarket retailing" was largely in the

hands of local companies, eg Crazy Prices, Stewarts, Wellworths. The

June 1995 announcement was therefore a watershed in grocery retailing

in Northern Ireland. Mr Len O'Hagan, Chairman of Safeway Northern

Ireland, in his evidence to the Committee pointed out that what has

happened in Northern Ireland is, in retail terms, a revolution. He

explained that within 1 year, Tesco, Sainsbury and Safeway, all major

players on the United Kingdom grocery stage made moves to open stores

in Northern Ireland and 65% of the ownership of retail outlets in

Northern Ireland changed hands. This produced a wide ranging effect -

consumers looking for higher quality and lower prices and higher service

levels - growers facing demands for higher standards of quality from

retailers - growers and processors facing high investment costs to meet

the quality and quantities required by retailers and consumers. The

national supermarkets all indicated that they are keen to source as much

produce as possible from Northern Ireland, and stated that their arrival

should be seen as an opportunity, not a threat.

SAINSBURY

2.2 As already indicated Sainsbury announced in June 1995, the acquisition

of seven sites, viz Londonderry, Coleraine, Ballymena, Sprucefield, East

Belfast, Newry and Newtownbreda, with a total capital investment of

£100m and the creation of 2,000 jobs. Three stores have opened to

date, Ballymena (in December 1996), Newtownbreda (Forestside - in

March 1997), and Coleraine (in December 1997). A further store is

presently being built at Craigavon and planning consent has been

obtained for a further two stores at Londonderry and Newry. Planning

consent has also been obtained for a retail park in Newry (not a

supermarket). As at October 1997, planning consent was awaited for

the East Belfast and Sprucefield operations. Since then, a further

announcement has been made regarding the company's plans to open a

store in Armagh.

2.3 Mr Ian Coull, Director of Sainsbury's, who has responsibility inter alia

for the company's investment programme in Northern Ireland, advised

the Committee that the first two stores had been well received, trading

far beyond expectations, with Forestside establishing itself as one of the

top five stores in the company's chain in terms of weekly sales. He

indicated that as at September 1997, the company's workforce in

Northern Ireland numbered 967 people representing 173 full time jobs

with the remainder being part time. Also worthy of note is the fact that

of the 967 employees, 152 had been on the long-term unemployment

register.

2.4 Mr Coull indicated that in June 1995 (prior to the establishment of

Sainsbury's in Northern Ireland) £80m of produce was purchased from

Northern Ireland sources (15 different suppliers). At the end of 1997,

Sainsbury will purchase annually some £110m from Northern Ireland

sources (84 different suppliers). With the experience of the past two

years as a guide, the company has revised its Northern Ireland

purchasing level target for the year 2000 from £160m to £200m and is

confident of achieving this.

SAFEWAY

2.5 In June 1997, Safeway announced a joint venture with the Fitzwilton

Group which included 15 of the large Wellworth stores plus four major

new developments. This joint venture was supported by £140m of new

investment - the new stores being scheduled for Bangor, Dungannon,

Cookstown and Downpatrick.

2.6 In August 1997, Safeway pledged to increase its total business with

suppliers of product and services in Northern Ireland, indicating that it

already sourced approximately £130m worth of products from Northern

Ireland and expected to increase this figure sharply. This announcement

further stated that Safeway was taking the following action:

- placing a multi-million pound contract for new Northern Ireland built

distribution trailers;

- seeking a local contractor for distribution of goods from port to

store;

- securing work with local architects, structural engineers, building

services engineers, quantity surveyors and landscapers.

The Wellworth store in Coleraine came under Safeway control from

4 August 1997.

TESCO

2.7 Tesco indicated that for a number of years the company has been

dealing in Northern Ireland through its normal acquisition of products,

and had been looking at investment in Northern Ireland retail operation

for some considerable time. The company's first move in this direction

came in October 1996, when the Tesco Metro store opened in central

Belfast. This store proved successful and provided an opportunity to

expand the company's supplier base by some 30 suppliers. In

May 1997, Tesco acquired the ABF food retailing operation in Northern

Ireland which included Stewarts, Crazy Prices, Bloomfields and

Westside Stores.

MARKS AND SPENCER

2.8 While Sainsbury, Tesco and Safeway, as United Kingdom supermarket

retailers are newly arrived in Northern Ireland, Marks and Spencer have

been present here for some 30 years. At present, the company directly

employs over 1,600 people and has invested over £150m in new stores

over the past ten years. Forecast employment in the year 2000 is

approximately 2,000 people. The company stressed its commitment to

Northern Ireland through investment in community and educational

projects, donations to charities, and membership of government agencies

such as the Industrial Development Board and the Training and

Employment Agency.

2.9 The company currently has eight Northern Ireland suppliers, five of

whom have supplied the company over the past 30 years. These eight

suppliers employ 650 people and do not only supply produce for the

Northern Ireland stores, but also have the opportunity to supply the

company's outlets in Great Britain and Europe.

OTHER SUPERMARKET OUTLETS

2.10 Having taken evidence from the newly arrived United Kingdom

supermarkets and from a major United Kingdom food retailer which has

been active in Northern Ireland for some 30 years, the Committee

decided not to seek any further evidence from other sources. The

Committee acknowledges the work done by a other supermarkets and

smaller grocery chains and convenience stores in Northern Ireland, and

its decision not to seek evidence from them in its current examination

should not be interpreted as a lack of interest by the Committee in their

activities. Most of these companies have been in business in the

province for some considerable time.

3. SUMMARY OF EVIDENCE TAKEN BY THE COMMITTEE

3.1 In approaching this examination, the Committee decided to seek

evidence from the major national supermarkets which had recently

arrived in Northern Ireland, and from another major food retailer which

has been present in Northern Ireland for some 30 years. In addition,

evidence was sought and obtained from representatives of the major

interest groups within the agriculture industry. The major issues

identified in the course of the many evidence sessions are addressed in

the following paragraphs, and full minutes of evidence taken at all

evidence sessions are reproduced at Annex C. The Committee expresses

its gratitude to all those who provided written and/or oral evidence and

who provided comprehensive answers to all the questions posed. The

Committee is particularly grateful to the supermarkets and retailers for

the Director level participation which made the evidence sessions so very

useful and informative.

SUPPLIERS TO THE SUPERMARKETS/FOOD RETAILERS

3.2 Prior to setting up business in the newly opened stores in Northern

Ireland, Safeway and Sainsbury had a small supplier base in Northern

Ireland for their Great Britain operations. As a result of takeover, Tesco

and Safeway inherited the existing supplier base from ABF Foods and

Wellworths. Marks and Spencer, having been in operation in Northern

Ireland for some 30 years has a well established supplier base.

3.3 Much confusion and concern existed among existing suppliers who

were contracted by Northern Ireland based supermarkets at the time of

the takeover activity by Tesco and Safeway. In general, the retailers

indicated that these suppliers have been looked after and given time to

adjust activities to meet standards set by the supermarkets and required,

they say, as a result of consumer pressure. In particular, Sainsbury

representatives indicated that they are prepared, without timescale to

work with suppliers and to assist where necessary by supporting grant

applications. Tesco representatives did not commit to a timescale but

pointed to the work being done with suppliers by their technical staff - it

was also pointed out that to date, no supplier had been removed from the

Tesco list. The Safeway representatives indicated that while a decision

will be made in 12 months' time about the future, suppliers will not be

turned away at this point if they have not yet reached the required

standard.

3.4 Tesco, Sainsbury, Safeway and Marks and Spencer have also given an

indication that opportunities exist for all their contracted suppliers to

provide produce for Great Britain and European outlets where these

exist. However, the standards set and required must be met.

3.5 All the supermarket and food retailers examined indicated that standards

are carefully and clearly set out and understood by the suppliers, and

achieved in partnership with the retailer.

3.6 In all cases, it was stated that the way is clear for new suppliers to

become involved, providing they are willing and able to meet the

standards required. Indeed, Marks and Spencer representatives stressed

that a new or existing supplier would not be asked to invest or to make a

commitment unless a genuine business opportunity existed. In addition

Marks and Spencer representatives indicated that such a supplier would

be given its support and assistance through the new operation.

3.7 The representatives of the Northern Ireland Agricultural Producers

Association explained that although the supermarkets are careful to point

out that they are providing employment for so many people and wish to

source Northern Ireland produce, they make it difficult for the vast

majority of farmers to supply them - eg the need for farmers to put in

huge capital investment to obtain a contract which is liable to

cancellation at short notice. Co-operation among producers was seen as

the way forward. Mr Craig, Chairman of NIAPA said "Farmers equally

need to support it and get the concept into their heads - they have not

been able to do that."

3.8 The attention of the Committee has been drawn to the refusal by certain

supermarkets to accept produce at central depots because it was

regarded as unsatisfactory. In a situation where suppliers have been

assisted by the supermarkets to meet quality standards required, the

Committee considers that, certainly in the early stages of a contract, it is

unnecessarily harsh to turn away produce that is borderline in

acceptability. It is not encouraging to a supplier who is trying his

hardest to meet set standards to be turned away. The Committee

sympathises with the plight of such suppliers.

ANIMAL WELFARE

3.9 With regard to animal welfare, the Committee questioned the

representatives of the supermarkets and food retailers about concerns

which had been raised regarding forthcoming legislation changes

affecting stalls and tethers in pig production and also on pressure coming

from the supermarkets to force beef producers to raise cattle on straw

instead of slats. The Committee also expressed its concerns regarding

the high standards of animal welfare required by the United

Kingdom/European Commission and the lesser standards imposed by

other countries.

3.10 The Tesco response is contained in a letter to the Secretary to the

Committee dated 8 December 1997 (see Appendix D) and explains that

the Tesco Pig Welfare Code of Practice does not stipulate an absolute

requirement for straw to be used, but does state a preference for straw

if available and commercially viable. An acknowledgement of the

situation in Northern Ireland where straw is not readily available and

therefore expensive is given, and the company points to a joint exercise

with RSPCA to develop rubber coated slats and to determine if these are

more welfare friendly than straw.

3.11 Tesco also explain that it is their policy that all pigs procured to supply

raw materials for the Tesco brand fresh pork product range in the United

Kingdom (currently sourced only from the United Kingdom) must come

from stall and tether free systems. However, the company points out

that its policy on pigs sourced to supply raw materials for its range of

bacon product, is to give time to all countries this involves, to ensure

compliance for the supply of Tesco products by August 1998.

3.12 Marks and Spencer indicated that they have been working with those

involved in pig production to ensure they will be complying with the

legislation changes affecting stalls and tethers, by and possibly in

advance of the enforcement date. The company stressed that it had

taken exactly the same stance with those suppliers in Denmark - "We

have no dual standards here and those who supply us from Denmark

....... will be on a level playing field with those who supply us from the

United Kingdom and elsewhere, and we think that that is the right way to

do it."

3.13 Sainsbury representatives explained that their technical experts had

examined the animal welfare issues relating to use of slats in Northern

Ireland, and had concluded that it is "a perfectly satisfactory means of

welfare for the animals". It was stated that the company has no plans to

change its attitude to the use of slats and no plans to bring pressure for

change - however it was pointed out that in Great Britain cattle are raised

on straw beds.

3.14 With regard to the pig welfare question of stalls and tethers, the

Sainsbury representatives explained that the company would differentiate

between pig meat which met United Kingdom/European Commission

animal welfare standards and other pig meat through labelling on the

packaging.

3.15 The Livestock and Meat Commission representatives confirmed that

there is no great cereal growing enterprise in Northern Ireland and that in

these circumstances there is a shortage of straw which leads farmers to

use slats. It was also indicated that research was being undertaken to

attempt to improve slats, - this was also confirmed by the Northern

Ireland Meat Exporters Association.

3.16 In response to questions regarding who is determining the welfare

standards being required by the supermarkets, the Livestock and Meat

Commission representatives suggested that the supermarkets were

responsible - in an attempt to gain competitive advantage.

3.17 Safeway indicated its policy on stalls and tethers is to move towards the

implementation of the legislation relating to this topic and to do so by and

possibly in advance of the enforcement date, recognising that producers

must be given time to make the necessary changes.

3.18 When questioned on this topic, other representatives, eg the Association

of Livestock Auctioneers and the Northern Ireland Meat Exporters

Association referred to the fact that straw is scarce in Northern Ireland,

thus making it extremely difficult for producers here to meet any

requirement to provide straw bedding - indeed the Meat Exporters

Association did point out that slatted housing is not a big issue at present.

SUPERMARKET CONTROL OF THE BEEF INDUSTRY

3.19 The arrival in Northern Ireland of the major national supermarket

operations was a major concern of the Association of Livestock

Auctioneers. In evidence to the Committee, the representatives of the

Association indicated their view that the supermarkets were taking

advantage of the opportunity presented by the BSE crisis by attempting

to secure almost total control of the beef industry. The Livestock

Auctioneers indicated that market monitors forecast that by the year

2000, 75% of domestic beef sales could be controlled by eight large

retail companies and that ultimately just two could control 50%. The

representatives of the Livestock Auctioneers also pointed out that the

response of the supermarkets to criticism that they have not pulled down

their own prices as far as they should have done, has been to dismiss

their increase in profits as an irrelevance. Instead, the supermarkets

collectively propose radical restructuring of the beef industry based on

tightening its costs at all stages of the production and processing chain.

The Association states that this attack on costs will focus first on the

auction system, a system not liked by the supermarkets because it is

seen as an unnecessary part of the supply chain which adds costs and

commission charges.

3.20 The Association representatives stressed its view that the supermarkets

did not like the open and transparent fixing of prices that the auction

markets provide, that the supermarkets take the view that "price calls the

tune, not loyalty or consumer demand". Consumers, it said, are not

demanding the standards required, the supermarkets are and they are

doing so to exert control over suppliers and producers.

3.21 The Livestock and Meat Commission, however, pointed out that 49% of

the meat purchased by householders is bought in large supermarkets

with butchers supplying 44%, freezer centres 2% and grocers 5%, and

went on to indicate that the red meat industry, unlike many other sectors

of the agri-food industry in Northern Ireland, has not been threatened or

undermined by the arrival of the "GB multiples", and that this has actually

been an opportunity for the red meat industry. Mr O'Neill, the marketing

manager of the Livestock and Meat Commission, recognising the social

implications of the new retail revolution in Northern Ireland, said:

"From the pure, hard, cold perspective of market opportunity

for our produce, these retailers represent one of the very best

in the difficult situation we are in at the moment - and, Heaven

knows, we need them."

3.22 The Northern Ireland Meat Exporters Association representatives took

the view that over the past two years United Kingdom supermarkets

have sourced more and more of their products in Northern Ireland

because of the high standards of the product. It was also pointed out

that rationalisation is happening both in the processing and retailing

business, with retailers wishing to deal with fewer people who should be

bigger suppliers. The benefit of this, it was explained, is that the retailers

will have to place more reliance on suppliers with the result that the

supplier can rely on a more stable price regime.

POTATOES

3.23 The Ulster Farmers Union referred to the sudden change in retailing

which had occurred over the past year with 65% of the ownership of

retail outlets in Northern Ireland changing hands. The Union

representatives stressed that time was needed to develop partnerships

and producer groups and that in particular, the people in the potato

industry were most worried about the future of that industry. To

produce potatoes of the quality sought by the supermarkets would, the

Union representatives said, require investment by each producer of

approximately £100,000 for irrigation equipment. This equipment would

have to be sited near the fields concerned and also near a water source.

3.24 It was pointed out that the Union had set up a Potato Industry Working

Group comprised of representatives of the growers, packers, the

Department of Agriculture for Northern Ireland, Department of

Economic Development and chaired by the Northern Ireland Food and

Drink Association. It was also explained that a Quality Assurance

Scheme for potatoes has been launched, that the Department of

Agriculture for Northern Ireland will use the uptake of this scheme as an

indicator of how committed potato growers are to their future, and that,

if the Department considers the level of uptake of this scheme to be

poor, it will not be prepared to put in any funding to promote the

industry. At the evidence session with the Union representatives which

was held on 27 November 1997, it was indicated that the uptake of the

Quality Assurance Scheme to date had not been good.

3.25 This topic was also addressed in the course of discussions with the

Northern Ireland Growth Challenge and the Northern Ireland Food and

Drink Association. Mr Bell of the Northern Ireland Food and Drink

Association, who also chaired the Ulster Farmers' Union potato working

group, indicated that the reaction of the potato industry was appallingly

slow - sufficient possibly to persuade him that it was not worth

pursuing.

MARKETING

3.26 Reference was made by supermarkets to the existence of a plethora of

organisations which are tasked with the marketing of Northern Ireland

produce, with the result that the message about the high quality is not

delivered strongly. While the Livestock and Marketing Commission

representatives indicated that in their experience, there was a seamless

relationship between producer, processor, LMC and Government, the

Northern Ireland Meat Exporters Association representatives took

another stance. They stated that a more structured, singular approach to

the marketing of Northern Ireland produce was required.

PRICES

3.27 The Committee is concerned that price increases made by supermarkets

and retailers are, in many cases, blamed by consumers on greedy

producers and processors. The producers take the view that being at

the start of the food chain, the returns obtained at the farm gate can be

unreasonable. Processors consider that they obtain their just deserts for

the value they add to the product.

3.28 The Committee has read with interest the report "Food Retailing in

Northern Ireland" compiled for the Industrial Development Board, the

Department of Agriculture for Northern Ireland and the Local Enterprise

Development Unit. Among many interesting aspects, this report

identifies who in the future will be winners and losers among food

processors and suppliers in Northern Ireland and goes on to identify the

characteristics of winners and losers. This is a comprehensive report

which should be required reading for all food processors and suppliers in

Northern Ireland. The Committee recommends it to all those interested

in this topic.

3.29 The Committee notes that the General Consumer Council has met with

representatives of the major national supermarkets and that the

supermarkets outlined their policy regarding sourcing of agricultural

produce in Northern Ireland. The Committee also notes that the Council

has identified the need for industrial support to assist traditional food

industries to cope with and adapt to the new market conditions and that

this support should come through Industrial Development in Northern

Ireland.

4. CONCLUSIONS AND RECOMMENDATIONS

4.1 The Committee recognises that the arrival in Northern Ireland of Tesco,

Safeway and Sainsbury has not only assured the continuation of existing

jobs in the retail sector, but has also provided additional jobs. These

additional jobs are not just in the direct employment of the supermarkets

but have also been created among the suppliers or the processors of

produce. This is to be welcomed. However, the Committee is also

aware that the arrival of the major national retailers was instrumental in a

number of employees in the retail sector being made redundant - 350

people at Stewarts Headquarters in Castlereagh lost their jobs in early

November 1997 and in addition traditional businesses such as many

family run butchers, bakeries and grocers have been forced out of

business. The Committee expresses its concern at the effect of these

job losses and closures on the social structure of the Northern Ireland

community.

4.2 The Committee acknowledges the challenge provided by the arrival of

the national supermarkets to Northern Ireland, and is secure in the

knowledge that Northern Ireland suppliers have the ability to deliver

produce to the standard required and within a reasonable timescale.

4.3 Northern Ireland consumers have also benefited from the arrival of the

new national supermarkets - a wider selection of better quality goods is

being provided. However, the Committee is aware that there are those

who remain to be convinced that the Northern Ireland consumer is

benefiting from better prices. This is an area which the Committee

considers that the supermarkets should act to pass on benefit to the

consumer. As it is clear that there are conflicting views regarding

responsibility for price increases applied to agricultural produce, the

Committee recommends that the General Consumer Council

should be tasked with an examination of the prices set and

obtained for agricultural produce by producers, processors and

retailers to ascertain where unreasonable profit (if any) is being

made and to ensure that consumers are obtaining value for money,

and that producers are not being disadvantaged.

PRODUCERS

4.4 The Committee welcomes the manner in which the national

supermarkets and retailers have assisted producers to rise to the

challenge of providing quality produce, and is reassured by the

commitment given to suppliers regarding the availability of outlets in

Great Britain and Europe, particularly since all the supermarkets can

point to Northern Ireland suppliers who are providing produce for such

outlets. The Committee also notes that the door is not closed to new

suppliers who wish to commence trading with the supermarkets.

4.5 The Committee is pleased to report that as a result of its active

intervention, a number of producers have been given the opportunity to

become regular suppliers of agricultural produce to supermarkets and

retailers. Suppliers and processors of agricultural produce now have a

commitment from the supermarkets and retailers, however it is

important that this commitment is maintained. The Committee

therefore recommends that the Secretary of State should task one

of her Ministers with the responsibility of maintaining a

continuous review of the commitment of supermarkets and

retailers to the Northern Ireland agricultural producers to ensure

that promises are kept.

4.6 The Committee acknowledges the work that has been done by many in

the agricultural industry, in particular the Ulster Farmers' Union and the

Northern Ireland Agricultural Producers Association in encouraging

producers to commit themselves to quality of produce, presentation and

packing and to deliver produce to this standard within the next eighteen

months to two years. The Committee is, however, disappointed at the

apparent lack of effort on the part of Northern Ireland Ministers to push

the supermarkets and retailers towards a higher level of sourcing of

Northern Ireland produce. The Committee is aware that, in the three

months up to early November 1997, only one Northern Ireland

Ministerial meeting with a newly arrived supermarket took place, while

during the same period Republic of Ireland Ministers were holding

regular meetings to push the sourcing of Irish produce. The

Committee recommends that the Northern Ireland Ministers for

Economic Development and for Agriculture should be seen to be

pressing supermarkets and retailers regarding sourcing of produce

in Northern Ireland.

4.7 Agricultural producers must react positively to the changed

circumstances now prevailing within the industry as a result of the 'retail

revolution'. If producers are to succeed in the future, it is the

Committee's view that they must accept that membership of Quality

Assurance Schemes is imperative, and that they may find it necessary to

co-operate with other producers if they wish to take advantage of the

opportunities presented by supermarkets and retailers. For example, the

Committee was told that the potato industry "is appallingly slow" to sign

up to its Quality Assurance Scheme thus endangering the input of

Department of Agriculture for Northern Ireland funds for the promotion

of the potato industry and frustrating efforts being made at many levels

to assist the industry. The Committee therefore recommends that

Government should take the lead in actively encouraging small

farmers and processors to form co-operative ventures to enable

them to take advantage of opportunities presented by the

supermarkets and retailers. Further, the Committee recommends

that producers in all sectors, but particularly in the potato sector,

should be alive to the advantages of Quality Assurance Schemes

and should join without delay.

With particular regard to the potato industry, the Committee recognises

the need for someone or some body to galvanise the industry, to plan for

the future and to take strategic decisions for the industry, eg the siting of

three or four large cold stores across the province which co-operatives

and others can use, and the contract growing of potatoes. The

Committee recommends that the DANI Minister, Ulster Farmers'

Union and the Northern Ireland Agricultural Producers Association

should together identify the responsible person or agency to take

the potato industry forward.

4.8 The Committee is also aware that in many cases, capital investment was

required to assist in the delivery to the supermarkets and retailers of

produce to the required quality, and that in many cases this expense has

largely been borne by the producers and processors without Government

assistance. The Committee concludes that the Government should

actively seek to assist suppliers to meet the quality of produce. The

Committee concludes that Government should actively seek to assist

agricultural suppliers in the delivery of quality agricultural produce.

However the Committee acknowledges that the Ministry of Agriculture,

Fisheries and Food at national level and the Department of Agriculture

for Northern Ireland at local level (plus the European Commission) while

responsible for the agriculture industry, are not responsible for the

creation of jobs or the development of the industry. While

recommending therefore that Government should augment

existing grant aid schemes to ensure that suppliers and processors

of agricultural produce can be assisted in providing the buildings

and equipment needed to deliver quality produce, the Committee

also recommends that the Department of Economic Development

should make funds available for the development of the food

industry at producer level in Northern Ireland.

4.9 The Committee considers that while a challenge has been posed to the

suppliers of agricultural produce by the arrival in Northern Ireland of the

major national supermarkets, a challenge also exists for the

supermarkets, and that is to convey a larger and clear commitment to

Northern Ireland. The Committee therefore recommends that the

newly arrived supermarkets should take active and overt steps to

demonstrate their commitment to Northern Ireland.

ANIMAL WELFARE

4.10 Having carefully reviewed all the evidence presented on this topic, the

Committee acknowledges that supermarkets and retailers must

implement legislation. However the Committee is concerned that certain

supermarkets are over-reacting in setting food safety standards. The

Committee particularly points to the apparent double standard applied by

Tesco in relation to stall and tether free pigs. In the Tesco letter dated

8 December 1997 (see Annex D) the Committee was advised that:

"It is Tesco policy that all pigs procured to supply raw

materials for the Tesco brand fresh pork product range in the

United Kingdom must come from stall and tether free systems.

However our policy for pigs sourced to supply raw materials

for our range of bacon product is that we need to give time to

all countries this involves to ensure compliance for the supply

of Tesco product by August 1998."

The Committee concludes that it is essential to give suppliers and

processors a clear lead in such matters. There should be no doubt that

all suppliers, United Kingdom based and overseas, must be treated

equally to ensure that no-one is disadvantaged. The Committee

therefore recommends that supermarkets and retailers where they

do not do so already, should implement a sourcing policy which

ensures that all suppliers in a sector are given equal treatment.

4.11 The Committee noted with concern the view expressed by the

Association of Livestock Auctioneers, that "Consumers ........... are not

demanding the standards required, the supermarkets are and they are

doing so to exert control over suppliers and producers." The Committee

recognises the supermarkets' desire to provide consumers with produce

which is as healthy and safe as possible, however the Committee

considers that the lead in the provision of healthy and safe food must

come from the Government. The Committee therefore recommends

that in establishing the new Food Standards Agency, the

Government should arrange that the Agency is given the lead role

in ensuring that food safety standards are set and met.

4.12 The Committee also noted that within the United Kingdom a ban exists

on the use of meat and bonemeal for cattle feed and on the use of

hormones. Such a ban is not applied in the European Union and

elsewhere in the world. The Committee is therefore concerned that

supermarkets and retailers, may when the price is right, purchase

produce from the European Union and elsewhere which is of a lower

animal welfare or health standard than that applied by the United

Kingdom. The Committee also notes that such cheaper European Union

or other products are placed on supermarket shelves alongside much

superior quality produce, with little or no guidance to the consumer

regarding its health or welfare status. With regard therefore to

agricultural produce imported from the European Union and from

elsewhere outside the United Kingdom, the Committee

recommends that the newly established Food Standards Agency

should implement procedures which would protect United Kingdom

consumers from produce which clearly does not meet the United

Kingdom health standards and/or which is produced under

conditions which are unacceptable within the United Kingdom. In

addition, the Committee recommends that produce imported from

outside the United Kingdom should be clearly labelled to show its

country of origin and that the label should demonstrate the

shortcomings of the produce when compared with United Kingdom

animal welfare and health standards.

4.13 The Committee acknowledges the view that supermarkets and retailers,

in their efforts to gain a marketing advantage over rivals, may each

attempt to set food safety and animal health/welfare standards. Indeed,

the Committee did see some evidence of such activity on the part of the

supermarkets and retailers in the course of the evidence sessions.

It is the Committee's firm belief that Government must take the lead in

setting the standards required to protect consumers, standards which are

to be met by all suppliers and implemented by all retailers. The

Committee therefore recommends that Government should accept

responsibility for the implementation of food safety and animal

health welfare standards. Further the Committee recommends

that decisions with regard to these matters should be made by

Ministers on the advice of qualified Government experts and after

extensive research.

MARKETING

4.14 In the course of the evidence session with the Sainsbury representatives,

it was pointed out by Mr Attwood that in Northern Ireland there are a

number of bodies which support various aspects of food production. He

suggested that:

"It would be more effective if there was one body which

represented the Northern Ireland food and drink industry and

promoted it in the same way as Jersey promote their industry.

The Jersey Marketing Board are very strong, but they do a

very good job in terms of selling the Channel Islands and

Jersey into the rest of the United Kingdom and further afield.

Northern Ireland would benefit from a more focused approach

from one body."

4.15 The Committee noted that the Northern Ireland Meat Exporters'

Association shared this view, indicating that while all who are involved in

the marketing of the agriculture industry have a part to play, there is a

need to ensure that no duplication of effort and resources exists and that

a focused approach is adopted. The Committee also notes the existence

of the Northern Ireland Food and Drink Association which has been set

up as part of Northern Ireland Growth Challenge with an envisaged life

of approximately 4 years and with the intention of involving the private

sector in the economic development of Northern Ireland. The

Committee therefore recommends that Government should

carefully examine the marketing of the agricultural produce in

Northern Ireland with a view to establishing one body which will be

responsible for ensuring that a focused and well directed

marketing policy is implemented.

4.16 The Committee noted that some supermarkets tended to give Northern

Ireland produce very little shelf space in comparison to the space

allocated to imports from the European Union and elsewhere, thus

making it difficult for consumers to identify Northern Ireland sourced

produce. The Committee recommends that all supermarkets and

retailers should make a point of displaying Northern Ireland

produce clearly and should also ensure that such produce is not

relegated to second place on their shelves by similar imported

produce.

CONSUMERS

4.17 The Committee also considers that a marketing initiative must be taken to

convince and persuade all those in Northern Ireland who purchase

agricultural produce - from household shoppers through to the

purchasers in large organisations, businesses, Government Departments

and Agencies (eg Hospitals, RUC) - to demand Northern Ireland

produce, and when it is not available to seek the reasons why. The

Committee has noted that the supermarkets have clearly indicated that

they are consumer orientated and will react to consumer demand.

Northern Ireland consumers have a responsibility to Northern Ireland

producers who have been identified as capable of delivering the highest

quality and safest produce in the United Kingdom. The Committee

therefore recommends that purchasers everywhere in Northern

Ireland should support the agriculture industry by demanding

Northern Ireland produce and not being satisfied until they get it.

5. SUMMARY OF RECOMMENDATIONS

ACTION BY GOVERNMENT

5.1 The Committee recommends that the Secretary of State should task one

of her Ministers with the responsibility of maintaining a continuous

review of the commitment of supermarkets and retailers to the Northern

Ireland agricultural producers to ensure that promises are kept.

[paragraph 4.5]

5.2 The Committee recommends that the Northern Ireland Ministers for

Economic Development and for Agriculture should be seen to be

pressing supermarkets and retailers regarding sourcing of produce in

Northern Ireland. [paragraph 4.6]

5.3 The Committee recommends that Government should take the lead in

actively encouraging small farmers and processors to form co-operative

ventures to enable them to take advantage of opportunities presented by

the supermarkets and retailers. [paragraph 4.7]

5.4 The Committee recommends that the DANI Minister, Ulster Farmers'

Union and the Northern Ireland Agricultural Producers' Association

should together identify the responsible person or agency to take the

potato industry forward. [paragraph 4.7]

5.5 While recommending that the Government should augment existing grant

aid schemes to ensure that suppliers and processors of agriculture can

be assisted in providing the buildings and equipment needed to deliver

quality produce, the Committee also recommends that the Department of

Economic Development should make funds available for the development

of the food industry at producer level in Northern Ireland.

[paragraph 4.8]

5.6 The Committee recommends that in establishing the new Food Standards

Agency, the Government should arrange that the Agency is given the

lead role in ensuring that food safety standards are set and met.

[paragraph 4.11]

5.7 With regard to agriculture produce imported from the European Union

and from elsewhere outside the United Kingdom, the Committee

recommends that the newly established Food Standards Agency should

implement procedures which would protect United Kingdom consumers

from produce which clearly does not meet the United Kingdom health

standards and/or which is produced under conditions which are

unacceptable within the United Kingdom. [paragraph 4.12]

5.8 The Committee recommends that Government should accept

responsibility for the implementation of food safety and animal health and

welfare standards. Further, the Committee recommends that decisions

with regard to these matters should be made by Ministers on the advice

of qualified Government experts and after extensive research.

[paragraph 4.13]

5.9 The Committee therefore recommends that the Government should

carefully examine the marketing of agriculture produce in Northern

Ireland with a view to establishing one body which will be responsible

for ensuring that a focused and well directed marketing policy is

implemented. [paragraph 4.15]

ACTION BY THE GENERAL CONSUMER COUNCIL

5.10 The Committee recommends that the General Consumer Council should

be tasked with an examination of the prices set and obtained for

agricultural produce by producers, processors and retailers to ascertain

where reasonable profit (if any) is being made and to ensure that

consumers are obtaining value for money, and that producers are not

being disadvantaged. [4.3]

ACTION BY SUPERMARKETS AND RETAILERS

5.11 The Committee recommends that the newly arrived supermarkets should

take an active and overt steps to demonstrate their commitment to

Northern Ireland. [paragraph 4.9]

5.12 The Committee recommends that supermarkets and retailers, where they

do not do so already, should implement a sourcing policy which ensures

that all suppliers in a sector are given equal treatment. [paragraph 4.10]

5.13 The Committee recommends that produce imported from outside the

United Kingdom should be clearly labelled to show its country of origin,

and that the label should demonstrate the shortcomings of the produce

when compared with United Kingdom animal welfare and health

standards. [paragraph 4.12]

5.14 The Committee recommends that all supermarkets and retailers should

make a point of displaying Northern Ireland produce clearly, and should

also ensure that such produce is not relegated to second place on their

shelves by similar imported produce. [paragraph 4.16]

ACTION BY PRODUCERS

5.15 The Committee recommends that producers in all sectors, but

particularly in the potato sector, should be alive to the advantages of

Quality Assurance Schemes and should join without delay. [paragraph

4.7]

ACTION BY CONSUMERS

5.16 The Committee recommends that purchasers everywhere in Northern

Ireland should support the agriculture industry by demanding Northern

Ireland produce, and not being satisfied until they get it.

[paragraph 4.17]

ANNEX A

MEMBERSHIP OF STANDING COMMITTEE D

(AGRICULTURE AND FISHERIES ISSUES)

Ulster Unionist Party - Mr R D S Campbell - Chairman

Mr J Gaston

Mr J Speers

Mr J Junkin

Democratic Unionist Party - Mr D Stewart - Vice-Chairman

Mr E Poots

Mr J Shannon

Mr W Clyde

Alliance Party - Mr K McCarthy

*Mr D Ford

Ulster Democratic Party - Mr J White

Progressive Unionist Party - Mr D Ervine

Labour Party - *Mr J Masson (resigned on 22.10.97)

*Mr P O'Connor

NI Women's Coalition - Ms R Keenan

*Attend the Committee on behalf of their Party under

Rule 14(4)(a) of the Forum Rules of Procedure

• Report: The Sourcing in Northern Ireland of Agricultural Produce by National Supermarkets and Retailers (Standing Committee D) (introduced on 1998-01-23 00:00:00 - CREATE - e837009) [This document] [view current proposal at this moment]
  • None (introduced on 1998-01-23 00:00:00 - REPORT_PROPOSAL - e837010) [view current proposal at this moment]