Select Committee on Agriculture Appendices to the Minutes of Evidence


APPENDIX 32

Memorandum submitted by the Meat & Livestock Commission (F41)

INTRODUCTION

  1.  The Meat & Livestock Commission's major responsibility is to improve the efficiency of the production and marketing of beef, sheepmeat and pigmeat in Great Britain—in the interests of consumers.

  2,  MLC's comments are confined to the organic livestock sector; particularly supply, demand and structural issues. We are committed to helping the British industry meet the challenge of increasing production of organic meat to satisfy the growing demand in the UK.

  3.  The current situation is characterised by increasing interest being shown by producers in organic livestock production as they seek to diversify, reduce input costs and take advantage of higher prices for organic meat offered by abattoir operators and retailers. Major retailers are also looking to source organic meat but become frustrated when they cannot immediately access all their requirements from British producers. This has led to an unseemly scramble for available supplies with various inducements being offered to producers. A critical issue is how quickly British production can gear itself up to satisfying the shortfall in demand.

GROWTH IN ORGANIC LIVESTOCK PRODUCTION

  4.  By April 1999 more than 240,000 hectares of land was registered and managed organically in the UK.

  5.  Data from the Soil Association indicates that there were 4,000 organic cattle, 26,000 sheep and 12,000 pigs marketed in Great Britain in 1998-9. It is likely that these numbers will increase by 300 per cent for cattle and fivefold for sheep and pigs by 2001. However, even then they will account for less than one per cent of total GB production.

  6.  Substantial further growth in production is forecast over the next 10 years but it seems unlikely that by 2010 production will be in excess of five per cent of total production unless there is a major reduction in cost differentials between organic and conventional livestock. At present these are estimated to be +30 per cent for beef, +25 per cent for sheepmeat and +110 per cent for pigmeat.

  7.  There are still a substantial number of potential constraints to increased production, excluding issues of financial support. The conversion time for organic beef production is a minimum of four years and the cost of rearing organic dairy bred calves on organic whole milk give rise to expensive reared calves.

  8.  For pigs, the cost of conversion and the ongoing costs of organic pig production are substantial with producers needing in excess of 200 pence per kilo for finished pigs to break even.

CONSUMPTION OF ORGANIC MEAT

  9.  Estimates of organic meat consumption indicate substantial growth over the past three years but the total market is still less than two per cent of total meat consumption. This is significantly less than in some EU countries although the definition in some countries may be less strict than in the UK.

  10.  According to a recent survey of multiple retailers there is an expectation that consumption could grow over the next five years—however, opinions range from an increase to three per cent of total meat consumption to 10 per cent. Major concerns from retailers are availability of beef and lamb supplies and the price differential, especially for pigmeat. In view of the shortage of domestic supply, there has already been a dramatic growth in sourcing from outside the UK.

  11.  A survey of independent retailers also indicated that major growth in demand is expected. Concerns were also expressed about availability and price. However, it was interesting to note that of the 55 independent retailers surveyed, 80 per cent did not stock organic meat and showed little interest in doing so over the next few years.

CONSUMER ATTITUDES TO ORGANIC MEAT

  12.  A consumer survey commissioned from Taylor Nelson Sofres over the weekend 2-4 June this year provided interesting data on how the market has developed. Of 1,000 respondents 65 per cent did not purchase any organic food and nine per cent purchased beef, lamb or pork.

  13.  The survey indicates that between 40 and 50 per cent of current purchasers of organic food have begun to buy during the last six months. Three quarters of purchasers of fresh fruit and vegetables buy once a week or more, whereas less than half of total purchasers of meat buy beef, lamb, pork or bacon once a week or more. The percentage of "organic consumers" who buy 100 per cent organic varies from nine per cent for fruit to 24 per cent for bacon.

  14.  When asked why they buy organic food 41 per cent gave the answer "healthier, 34 per cent "tastes better" and 22 per cent "absence of chemicals and additives".

THE ROLE OF ORGANIC CERTIFICATION ORGANISATIONS

  15.  Certifying bodies are not allowed to give technical help to those involved in organic production, marketing and processing but inspect farms, abattoirs and processing facilities. They are approved as certifiers by United Kingdom Register of Organic Food Standards (UKROFS).

  16.  The substantial growth in applications for approval from farmers, abattoir operators and processors has stretched the resources of the certifying bodies and MLC has concern that the training procedures for those assessing abattoirs and meat processing plants is inadequate and should be put on a more formalised basis.

  17.  Confusion in the market place is exacerbated by different certifying organisations inspecting to differing standards.

OUTLETS/DISTRIBUTION SYSTEMS FOR ORGANIC PRODUCE AND PRICING POLICIES

  18.  In 1995 as the market for organic meat was beginning to develop, the Soil Association and Organic Farmers and Growers, in conjunction with Eastbrook Farm Organic Meats, sponsored a feasibility study which led to the setting up of the Organic Livestock Marketing Co-operative (OLMC).

  19.  The main objective of OLMC is to create an orderly marketing environment for primary producers, with ex-farm prices fixed for long periods. Cattle and sheep prices currently agreed for 12 months are based on the principle of "production cost plus".

  20.  The co-operative is endeavouring to secure long-term commitment, including finance, from four of its major abattoir partners who, in turn, are linked to specific major retailers.

  21.  However, organic production is still very fragmented with small consignments of rearing and finished stock scattered all over the country. The philosophy of organic production is that animals should travel the shortest possible distance to further feeding farms or abattoirs. To achieve this objective is difficult, especially for slaughter stock, as major retailers normally require animals to be slaughtered in nominated facilities. Equally, in rural areas, as small abattoirs close, even if the resulting meat is to be sold close to the point of production, the animals may have to travel substantial distances to slaughter.

  22.  The serious under-supply of all organic livestock, but particularly cattle, has resulted in attempts by major retailers to secure required supplies by offering substantially higher prices to farmers than those agreed as fair and reasonable by OLMC with its customers.

  23.  This short term opportunism must be considered counter-productive to the long term health and development of the organic market. Excessively high prices cannot be sustained at retail or by abattoir processors.

  24.  Organic production, particularly for ruminants, is currently resulting in wide variation in carcass weight and classification. Most major retailers work to tight specifications and on unacceptably high proportion of stock fail to meet these. Markets for non-specification product at premium prices are difficult to achieve, as are outlets for parts of a carcase which are not required by a primary customer.

  25.  Organic production tends to accentuate seasonality problems, particularly where grazing animals are involved.

THE ROLE OF ASSURANCE SCHEMES

  26.  Farm Assurance Schemes eg ABM/FABBL. FAWL and SQBLA are designed primarily to provide consumers with reassurance on food safety issues as they affect food production. Each scheme has standards and protocols, against which producers and their holdings are independently inspected on a 12 or 18 month cycle.

  27.  The concept is being extended in England and Wales by FABBL and in Scotland by SFQC to include all stages from feed supply through transport, auction markets, abattoir and processing to retailing.

  28.  Currently, none of the assurance schemes inspectors are able to inspect to UKROFS or Soil Association standards and organic inspectors do not inspect for assurance schemes but discussions are progressing on adding bolt-on modules to existing implementation protocols to resolve this difficulty.

  29.  It would be unusual for a customer to require a farm, in particular, to be approved as both farm assured and organic. The real difficulties arise during the in-conversion process, when both organic certification and farm assurances status may be required.

  30.  It is becoming increasingly common for transporters, abattoir processors to be required to be approved for food safety assurance, organic and possibly Freedom Foods as well. Each inspection carries a cost. Consideration is being given by the various parties to rationalising inspections beyond the farm gate so that one covers all schemes.

IMPORTS AND EXPORTS

  31.  Virtually no organic meat or meat products are exported, but as a retailer demand increases, imports are increasing. Beef to serve one major retailer's requirement is coming from South America while beef and pigmeat from Scandinavia and Northern Europe is also being imported. All such products are very price competitive, particularly at present with sterling at a high level.

  It is of concern that uniform standards for organic production do not apply throughout the world or in some cases are adequately audited. There is a need to resolve these issues so that organic production does not become discredited by consumers.

CONCLUSION

  32.  There is much potential for UK organic meat production to expand to match the considerable increase in demand. However, organic meat will remain essentially a growing "niche" market for UK producers. MLC will play its part in:-

    (a)  facilitating contacts between retailers and potential suppliers

    (b)  promoting harmonisation of assurance schemes

    (c)  production and marketing advice to producers

    (d)  developing training procedures for assessment of slaughtering and processing facilities

16 June 2000


 
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