MEMORANDUM SUBMITTED BY COVENT GARDEN
MARKET AUTHORITY (P 1)
1. We have been asked by the House of Commons
Agriculture Committee to submit a memorandum on the work of the
Authority and the future of New Covent Garden Market.
2. The Authority is charged by statute with
running an efficient horticultural market: our work is geared
to that end and to making best use of all the assets we have.
We see the future of the fruit and vegetable market as developing
into a one-stop shop for different types of food products to supply
the needs of London and, indeed, further afield in the United
Kingdom. We also see the flower market continuing to be the only
predominant separate and dedicated wholesale flower market in
3. The Covent Garden Market Authority was
set up by the Covent Garden Market Act 1961 to control and manage
"activities relating to the dealing in bulk in horticultural
produce". That Act vested the land of the former Market site
in the Authority.
4. Subsequent Acts (1966, 1969 and 1977)
laid down changes to the composition of the Board of the Authority,
the acquisition of the present site at Nine Elms, the operation
of the Market and set out our financial powers and limitations
to those powers.
5. We are required by the 1961 Act (as amended)
to break even, taking one year with another. The precise wording
of our financial duty as laid down in the latest Act (1977) is
"it shall be the duty of the Authority so to exercise and
perform their powers as to secure that their revenues are not
less than sufficient to meet all sums properly chargeable to revenue
account, taking one year with another".
6. Any profit we make is subject to corporation
tax and the balanceunder a MAFF formulais remitted
to MAFF. For the year 1999-2000 we made just over £1.4 million
7. We submit an annual report and accounts
to the Minister of Agriculture. Copies are placed in the library
of the House of Commons. Copies of minutes of all Board meetings
of the Authority are supplied to MAFF. Members of the Board are
appointed by the Minister of Agriculture (one nominated by the
Minister of Transport). In all these ways we are publicly accountable
for the Market.
8. We also have a number of statutory committees
which include representatives of the Market Tenants' Association
and the Transport & General Workers' Union (which represents
the workforce) as well as representatives of the National Farmers'
Union, Road Haulage Association, Freight Transport Association,
Fresh Produce Consortium (both retail and international divisions)
and Transport for London. In addition, we have contact with MPs,
members of the House of Lords, other MAFF-supported horticultural
bodies, the Food Standards Agency, commercial/agricultural attaches
of various embassies and high commissions, and the Authority has
recently joined the London Chamber of Commerce.
9. The Authority is a member of the World
Union of Wholesale Markets and the National Association of British
Market Authorities (on whose Wholesale Committee the CGMA General
Manager sits). Last year the Association of London Markets (a
body representing all the London wholesale markets) was revived.
The CGMA's Chairman was elected as Chairman of this association.
10. Under statute the 56-acre site at Nine
Elms is vested in the Authority. Parts of the site could be sold
with the agreement of or at the direction of the Ministerand
the proceeds of sale would be included in any profit and therefore
go to MAFFbut that could only be done if such sale did
not deleteriously affect the statutory duty of the Authority in
running an efficient market.
11. Since 1990 the policy of successive
governments has been to dispose of the assets of the Authority.
However, primary legislation is required before this can take
12. On 1 April 1999, the Minister of Agriculture
stated that he had looked again at the assumptions which underlay
the policy of seeking to sell the Market. As a result he had noted
that "This Market is a going concern. It is an established
part of London's catering industry and its importance is growing".
He stated that he would continue to seek legislation which would
enable the Market to be sold, as he considered there was no good
reason why MAFF should be involved in owning a horticultural wholesale
market. However, he would explore how the site might be developed
and the conditions under which it might be sold as a going concern.
13. The Minister's statement ended the decade
of uncertainty that had affected the Market's future and was,
of course, welcomed by the market community. Wandsworth Borough
Council (in which borough the Market lies) also welcomed the statement.
Wandsworth have long been supporters of the Market. Indeed, with
2,500 people working in the Market it is the biggest single source
of employment in the borough after the local authority itself.
14. The majority of the horticultural produce
of fruit and vegetables sold in the Market goes to the catering
trade which, in turn, supplies schools, hospitals, airlines, hotels
and restaurants. As a rough estimate, about 25 per cent to 30
per cent of fruit and vegetables goes to the retail trade (greengrocers).
As the number of greengrocers has declined in the last 20 years,
so the growth of supply and distribution to the catering trade
has increased. So, equally, has the growth in demand for more
exotic types of produce and for availability of different types
of food produce from one site.
15. It could be argued that there will always
remain a basic number of retail greengrocersparticularly
in rural areasbut there is no doubt that the catering trade
is now, and will continue to be, the main customer for the wholesale
markets. The same is true for the other wholesale markets in fish,
meat and poultry.
16. Supermarkets, of course, have increased
in size and number and are the main point of sale for the home
domestic market for food. They source direct from the grower (both
domestic and foreign). They may try and supply the catering trade
direct but it is difficult to see the advantage for them in doing
this: to do so they would in effect act as wholesalers themselves.
Some caterers could try and source food direct from the grower,
but there would be considerable structural problems in seeking
to do this. There is, therefore, in our view, a clear case for
the continuation of the Market as a wholesale market.
17. Section 18 of the 1961 Act lays down
additional functions of the Authority and Section 18(f) states
the Authority shall have power "to carry on all such other
activities as it may appear to the Authority to be requisite,
advantageous or convenient for them to carry on for or in connection
with the discharge of their duties or with a view to making best
use of any of their assets".
18. Our main physical asset is our 56-acre
site in the heart of London and this is clearly important for
much of the catering trade. In September 2000, a specialist trader
in smoked salmon, smoked meat and other gourmet foodstuffs (Grivan
Products) opened its premises in the Market. One of its major
reasons for acquiring a lease from the Authority was the location
of the Market.
19. The Minister of Agriculture attended
the official opening of the Grivan stand and said "The caterer
needs a one-stop facility. The location of Grivan Products at
New Covent Garden shows the way".
20. The statutes governing the Market and
the Authority mean that at least 50 per cent of our produce must
be horticultural (fruit, vegetables and flowers) but equally,
it means that, subject to Ministerial approval, up to 50 per cent
can be non-horticultural.
21. We already have traders in fruit juice,
ice, wine, shellfish and cheese and, more recently, smoked salmon
and smoked meat. We believe the future lies in the expansion of
this non-horticultural type of food and related food produce so
that the concept of the fruit and vegetable market developing
into a one-stop food shop becomes a reality. Also we believe that
the future of the flower market lies in the increasing range and
quality of flowers and sundries available, both to the retail
florist trade and also to the companies, hotels and restaurants
that make increasing use of flowers and floral displays. In these
ways, we believe we are fulfilling our statutory duties of running
an efficient wholesale market and making best use of our assets.
Moreover, we are actively considering implementation of a long-term
programme of structural refurbishment and improvement.
22. New Covent Garden Market is the largest
horticultural wholesale market in the country with, as our Annual
Report and Accounts shows, an annual turnover of some £478
million. Although competition in the horticultural trade remains
very fierce and price margins are extremely tight, we believe
that the future of the Market is bright through implementation
of the above measures.
23. If the Market remains within the public
sector then we believe that our policies as described will be
fulfilling our statutory duty and making best use of our assets.
If ownership of the Market were to change then we believe that
development of our policies would be in the best interests of
any possible purchaser.
9 January 2001