Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 520-539)



  520. Mr Hughes, as a fresh meat buyer you must have a background absolutely slap, bang in the middle of that.

  (Mr Hughes) If we found we could buy cheaper then we would do so. It is as simple as that. We do not have a policy to buy British meat, although in actual fact most of it is. We as a pan-European company would buy whatever is cheapest provided it meets the specifications that we agreed with our suppliers.

   (Mr Hawkins) I do not think it would make very much difference to our procurement policy, certainly not in the short term because when we go abroad it is basically for three reasons, either it is not grown or reared in the United Kingdom at all, or because seasonally it is not available, or because there is some short-term or structural supply constraint in the UK, as for example we have with beef at the present time due to the foot and mouth cull which obviously has impacted very largely on the beef herd. I do not think in the short term or medium term there is much impact. You asked a question about what commodities were price sensitive and I think wheat would probably be one of them. We do not buy wheat direct, that is done by the bakery industry and so on, but it is not long ago that the EU opened its border to a large consignment of Black Sea wheat. It went into Spain and Portugal but the fact that it was in the EU market at all (at a much lower cost than the locals could produce) affected the market price quite considerably. That impacted of course on the UK. That was a decision that we did not take obviously.

Mr Martlew

  521. You say your company is a pan-European company, so how is it different trading in the UK compared to, say, Denmark or Germany?

  (Mr Hughes) Because we have stores in Denmark, Germany, the United Kingdom, Sweden and Poland we will do a lot of joint buying if we can with our colleagues, say in Denmark, so we will put our volumes together and purchase something cheaper than we can buy by ourselves. You have to remember we are a very small company in the UK.

  522. Does your company deal differently with farmers or suppliers in the UK than it does in Denmark or Sweden? Are they more difficult to deal with in Denmark or Sweden? Are your suppliers not very good at getting a good deal in the UK?

  (Mr Hughes) I do not think the mechanism of buying is any different between ourselves and our colleagues elsewhere in Europe but, as I say, I think the only reason we would look at joint buying is really to have some benefit on volume. That is the top and bottom of it really. But the way they treat their suppliers or our suppliers or joint suppliers is actually not very different.

  523. Can I come to you all now. What trends have you seen over the last few years in supermarkets and how do you expect that to change? What do you expect supermarkets five or ten years in the future to be like and how can the British farmer plug into that? Are you telling them what you are going to do in the future?

  (Mr Hughes) I think as far as we are concerned we are going to see probably more fresh food sales in stores, less of the canned and jarred varieties. We will see more value added, the same as every other retailer in the UK. In terms of how we tell the farmers, then I guess that is really down through our customers who tell us and then we tell our suppliers.

  (Mr Hawkins) You probably covered this with the three previous witnesses in some detail but one very clear trend is the decline of consumption through supermarkets of primary products like milk and meat and various other traditional products on the fruit and veg side like potatoes. That is a long-term trend which in most cases has been going on since the late 1960s and has continued in the past ten years. And, correspondingly, there is the well-known growth of convenience-type foods. The sale of cereal-based convenience products like pizza and pasta is up 90 per cent over the last ten years and because these convenience-driven changes are basically the lifestyles and all the other things we are familiar with, we do not see any change in those, certainly not the foreseeable future, and the difficulty therefore is for us to translate that through to the farmer in terms which mean something to him. If you have got somebody who has been producing potatoes or rearing sheep for generations, if you like, how do you make the convenience market and its growth meaningful to them? What does it mean? What kind of products should they be producing? Should they be in sheep or potatoes at all? Should they be getting out of it into something where there is more margin? Big issues.

  (Ms Walters) We would certainly echo various trends. 20 per cent of UK shopping is now done, as is known in the trade, as top-up shopping. So it is very much convenience shopping. It is not people going and buying just the pint of milk or the loaf of bread; it is people picking up what they did not buy in their main monthly or weekly shop and also impulse buying for eating tonight. That is added value ready-meal type food products. That does have a very direct bearing on farmers because you are not asking purely and solely for primary produce to put into the market-place. What you are asking them for is good quality primary produce which then becomes the ingredients in the value added food. Also what we are finding is a big rise in demand for fresh fruit and vegetables. The UK farmer is never going to be able to grow oranges and bananas but broccoli, that type of thing. Also the use of potatoes, which our farmers are growing, is changing. It is not potatoes people boil any more, it is potatoes which will form part of a final food product which is then sold on our shelves. I think farmers are being encouraged to respond to those consumer trends but there is clearly progress to be made.

  524. In reality more and more we will not be getting food coming from the farm to supermarkets but from the farm to the food processor?

  (Mr Hawkins) As indeed a lot of it does now. The primary products go to processors and packers as well as dairies and abattoirs.

  525. It is really food processors who will be demanding from farmers these particular different types of product, not yourselves. We have almost done to death the issue of local produce in your supermarkets. In reality what has happened over the years, whether people like it or not, is you have decimated the local markets by decimating local shops, which they used to buy from local farmers. That is the reality, although there are some still very good butchers in my area that compete on quality, if not price. What recompense are you trying to make? We have heard from some of the other supermarkets. Is there a positive policy of stocking local products and what is your definition of "local"?

  (Mr Hughes) That is very difficult to answer. What is local produce? What is local to London with eight and a half million people?

  526. We are asking the questions here.

  (Mr Hughes) I am trying to get round it to say really that for us, with very small stores across the country, it is not practical to have a separate procurement policy effectively for each of those stores.

  527. You are perhaps being more honest than the other supermarkets.

  (Mr Hughes) I would not say we would not have anything to do with it. If the opportunity arises, it is a different thing. I am clear we do not have a buy local policy.

  (Mr Hawkins) Let's define our terms because "local" food is used very flexibly. We are not interested, frankly, in stocking our stores up with a very large number of low volume items that have a very limited local following. What we are interested in is dealing with small suppliers, you can call them local if you like, who have something different to offer, it may be a premium product, it may be a gap in the market, it may extend our range, it may have certain local or regional attributes, but it has got the potential to grow into a more regional product, developing with the supplier and the supplier can grow and develop his sales through our stores. We have had a number of examples over the years of products, particularly in Wales and the West Country and in Scotland, where we have started on a very local basis and gradually we have been able to grow that product and now they are sold nationally. Welsh mountain lamb is a classic example. Three years ago Welsh mountain sheep farmers were highly dependent on export markets and going nowhere. They sold all their product through livestock markets. They are very dependent on fluctuations. Now they supply us direct. We started from scratch with 15 stores selling this product in Wales and we now sell it in all our stores in England and Wales. That is an example of how you can make a local or regional product into a real commercial success. That is what we are interested in.

  (Ms Walters) Can I share an anecdote with you about our experience of local sourcing which will reveal some of the difficulties in terms of it. Up until a few years ago—and we have 1,000 stores UK-wide—our store managers would source sandwiches directly with local suppliers so it would happen at a store manager or area level. In more recent years in order to comply with ever more strict and more rigorous food safety legislation we had to look at the introduction of HACCP systems—hazard analysis and critical control points. We needed to introduce those HACCP systems in stores and also with our suppliers in order to claim due diligence defences in the court of law and also assure customers of the integrity of the produce that we were selling. With 1,000 stores, with potentially 1,000 relationships with local sandwich suppliers, it became impossible to maintain quite that volume of relationships and so it probably was a very good relationship, it was helping the local rural economy and probably was a good product (although I certainly did not eat the sandwiches that we sold in our Isle of Skye shop). However, we had to move out of that particular relationship because of the regulatory burden. So there are lots of reasons behind the decimation.

  (Mr Hawkins) The other thing we must not forget is of course the fact that a product which is produced by a small local or regional supplier does not mean it is exempted from all the due diligence and quality control procedures that all our products have to go through. The fact that it has a local label on it means it has to conform to those standards. Sometimes we have to spend a lot of time with local suppliers getting them up to the standard in order that they can supply us with what we need.

  Chairman: Regional products are products which have a regional identity, which is the French model, but products which have a regional sale are entirely different. If I want my local cheese I go to a cheese shop or for meat I go to my local butcher. I do not expect to find it in the supermarket. Michael?

Mr Jack

  528. One of the factors that may be inhibiting the prospects for UK-produced food is the recent discussions about food safety. We have the paradox that everybody who has come before us has talked about increasing the level of sales against a background where media stories talk about people losing confidence in British food. How do you see that argument? Are your customers not confident of the British food you are selling and therefore does that not present a barrier to greater consumption of UK-produced food?

  (Mr Hawkins) I will not quote our research because you will say, "You would say that, wouldn't you?" I will use IGD research instead, which is regarded as rather more objective, and all the work they have done with consumer groups and quantitatively as well suggests that the alleged loss of confidence in British food, like William Pitt's death, is "much overdone". The IGD calls the consumers "investigators" to distinguish them from spectators and abdicators. They are the small minority of people who are very interested in food issues and have some understanding of them. Those are the people who are broadly ABC1s, they have relatively high incomes and are relatively well-educated. That is a bit of stereotype for the sake of convenience, but those are the people who have certainly lost some confidence in red meat. When we talk about British food having a confidence problem it very often boils down to a red meat problem because of the scares we have had over the last few years. It is perfectly understandably when you look at some of the headlines and visual images we have had. BSE has had a particularly powerful influence on those people. If we can crack the problem of one standard of assurance throughout the red meat supply chain and reassure people that hygiene standards, again at every stage of that supply chain, are the highest we could possibly achieve, then we will begin to win back those customers whom we have lost from the red meat market. In terms of whether the issue goes wider in terms of public confidence, I do not think it does. I think most people still have a lot of confidence in food produced in the UK.

  529. Do Simon and Katharine agree with that?

  (Mr Hughes) Our red meat sales are doing better actually, which is quite gratifying. It is down to what Kevin was saying in terms of some of the social and economic definitions. Yes, As, Bs and Cs probably do spend more time looking at the food they are buying and I think our customers do not really have that choice. By definition, most of them are on a budget. Having said that, I think in general terms they expect and are quite assured by the quality of product and the safety of the product that the supermarkets as a total sell. I do not think that there is a problem with people's confidence at the moment.

  (Ms Walters) I definitely echo these sentiments. If you are talking about food safety you have to consider it in the round, and if you look at most food safety incidents they are caused in the domestic setting. You can have very rigorous hygiene standards throughout the food chain until you get the food leaving the shop and going home. In terms of incidents most of them are caused by people eating food which is past its sell-by date, etcetera. The Food Standards Agency certainly does a lot in raising consumer awareness on those types of issues.

  530. You mentioned a moment ago the element of traceability, due diligence and food legislation which we have to comply with here. That in its own way should send out a message of reassurance. On the other hand, there is quite a lot of propaganda to suggest that food coming from outside the UK is less safe. Is it possible to turn the story of exacting analysis of the supply chain here to an advantage, an advantage that people are prepared to pay for in terms of something which will benefit British farmers? Put the other way, do people think that our food is any safer than imported food?

  (Mr Hawkins) Difficult question. On the basis again of research rather than personal opinion, quite a lot of people do not pay too much attention to whether it is foreign or British because they buy on other reasons, price relative to perceived quality. We may be in danger of confusing a number of different issues here. One is the problem of illegal imports where there are certainly some doubts about the quality of what is coming in. Also of course, there is the food service sector, which nobody has mentioned yet and which is certainly, first of all, a major location for a lot of food poisoning cases, according to the Food Standards Agency and, secondly, it is almost impossible for trading standards officers to have any surveillance over it at all because of sheer number and size of catering establishments. We have a major problem there in terms of traceability and control. Of course, when you go into a restaurant you have no idea where the food you are eating has come from, the conditions under which it has been prepared in the kitchen, or indeed anything else.

  531. Do you all require from those who supply you from outside the United Kingdom to have precisely the same standards?

  (Mr Hughes) Yes.

  532. So would I be right in saying that it is quite difficult therefore from the point of view of our inquiry, which is if you take subsidy out farmers lose money, to turn food safety into something which will bring a little more cash to the farmer?

  (Mr Hughes) I do not think the idea of having dual standards between UK sources and sources outside the UK is applicable any more. I know from our point of view we would expect all our suppliers to attain certain minimum standards which apply right across the board.

  533. Can I just ask you about standards, Kevin? I think you mentioned the Red Tractor symbol. Some have suggested that that could be a universal base for a quality assurance scheme. There are something like 30 different forms of assurance scheme around. Do you think that there are too many? Is it too confusing? Is it possible to have a unified standard which is to the advantage of British agriculture?

  (Mr Hawkins) Some of the consumers I was talking about earlier, the investigators, say that they are confused and I think a lot of people would probably find it easier to be reassured if there were one standard in which they had full confidence. The problem with the Red Tractor is that it is relatively new. A lot of people have not even noticed its existence on packets and products and it is like building any brand, it takes a long, long time and a lot of effort. Should there be more rationalisation and fewer quality symbols, safety symbols? Yes, of course, but I think the real problem, as indeed Curry suggested, would be to tackle the interests that already exist in those established marks, whether it is the Wales and Scotland marks or the Meat and Livestock Commission. They have spent a lot of time and effort building up what they consider to be customer recognition for those marks and I do not think they will easily consent to having them rationalised, as Curry would like it, behind something that was only launched two years ago. On the general point you are making, yes, I would agree with it.

  534. Could I ask Katharine Walters because of the Co-op's very strong connections with supply chain production, one of the points that come out of the Curry Report is that it is disappointing that some people will not adhere to high standards whatever assurance scheme might be available. Why do you think some people do not want to know about something which seems to be so utterly basic not only to the individual's business but also to the general question that the assurance message is sent out on behalf of home-produced product.

  (Ms Walters) I can only talk for our own farmers? group as opposed to the farming industry at large. Certainly for us as a large-scale commercial food producer, from the outset we were involved in negotiations about the establishment of the Red Tractor and, indeed, most of our food products grown on our farms do adhere to those standards, so we certainly take assurance very seriously as a food producer.

  535. Is it the case, Simon Hughes, that you require—and you mention specifications—that your suppliers adhere to certain food assurance schemes otherwise you will not buy from them?

  (Mr Hughes) Currently on red meat we expect a UK source to have a local farm assured scheme and on produce we buy a produce assurance scheme.

  536. What about the Safeway stance on that?

   (Mr Hawkins) The same. We have our own standards for farm assured meat. All the supplies we get from the UK are from farm assured. When we import beef from Ireland, which we have to do for the reasons I gave earlier in order to promote it, because the volume is just not available in the UK, the food suppliers and farmers we have been dealing with for a long time certainly achieve our standards.

  537. When a retailer puts his brand name on something why on earth should he do anything to risk it?

  (Mr Hawkins) He would be a lousy businessman.

  538. Even it were cheaper to buy.

  (Mr Hawkins) That is why I said at the outset in response to the Chairman's question about short-term and medium-term price fluctuations, that if that means compromising quality then we are not interested. The more you rely on imports, the bigger the potential problem of control and traceability and due diligence you have because you are dealing with people who are so much more remote. It is much easier to deal with people a few miles down the road from their suppliers or at least in the same broad geographical area than it is if you have to go hopping off to the United States of America.

  539. Can I conclude from this that British producers looking to the future should not think they can hide behind a safety message as a defence against competition to supply whatever it is they are producing from anywhere outside the UK?

  (Ms Walters) They should not hide behind safety but boast about quality.

  (Mr Hawkins) Yes, I agree.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 30 April 2002