Select Committee on Agriculture Minutes of Evidence



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 the country.

  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 balance—under a MAFF formula—is remitted to MAFF. For the year 1999-2000 we made just over £1.4 million gross profit.

  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 Minister—and the proceeds of sale would be included in any profit and therefore go to MAFF—but 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 place.

  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 greengrocers—particularly in rural areas—but 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


 
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