The Forum for Political Dialogue met between 1996 and 1998 in Belfast as part of the negotiations that led to the Good Friday Agreement.
To examine the problems being faced by farmers and fishermen in Northern Ireland, and report to the Forum by 31 December 1996. [Note that the Committee is alleged to meet every Thursday but we do not have records of their meetings. To avoid speculation on meeting dates we have only modelled sessions which we know took place.]
To see the full record of a committee, click on the corresponding committee on the map below.
Report on National Supermarkets and Retailers
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