Select Committee on Welsh Affairs Minutes of Evidence



Examination of Witnesses (Questions 80-99)

MR HUGH RICHARDS, MRS MARGOT BATEMAN, MRS MARY JAMES, MR BRIAN WALTERS, MR TERRY BAYLISS AND MR SIOÔN ARON JONES

TUESDAY 4 DECEMBER 2001

Chairman

  80. Thank you for your written evidence and also for that. Mr Richards?

  (Mr Richards) Chairman, ladies and gentlemen, thank you again for allowing us to come here. As you so rightly said, Chairman, I am bitterly disappointed and ashamed, in fact, of trying to represent agriculture that I have to be here today but with respect to yourself and your Committee I feel it is an obligation that I am here. As far as a PR exercise for yourselves, it might have been a good thing had you taken the evidence as part of the Winter Fair. I am sure there would have been a side room there with a large audience who would have been more than interested in listening to you taking the evidence and us giving the evidence, but that is by and by and here we are today. I try to represent an industry that has gone through difficult times, difficult times that have been magnified with the problems of these last eight to ten months. We look at the situation in Wales where the average farm income has been about 4,100, those are the figures up to February of last year and I do not look forward to the figures that will come out in February of this year allowing for all the problems there have been. Farmers are a fairly resolute bunch, we try and plough on when things are getting very, very difficult. The difficulties of the last 12 months, or the last ten months in particular, have not made the job any easier. We are prepared to do anything that is suggested to us to take us forward, from collaboration, co-operation, innovation, we have been there before, we have done it all, we have had to change to survive. I always try and say that I will not farm like my father farmed, neither did he farm like his father farmed on the same farm, and I hope that my son, if he wishes to continue farming, will not be farming in the same vein. It is very much a changing scene. Only this week I tried to reflect on the number of farms—it is an old story as far as I am concerned—in my farm lane. When I went home in 1960 there were 26 farming families there producing milk in every farm; there are only three full-time farmers on that lane now and no-one producing milk. It has changed quite considerably. We have changed over the years and have to change to adapt and adopt. We need some sort of direction. We are having it to an extent through the Assembly and both organisations here work closely with the Minister for Rural Affairs in the Assembly in trying to find a way forward, but unless the marketplace returns us a better price for our commodities in the future I question the survivability of a lot of us in the future.

  Chairman: Thank you for that. I think your suggestion of meeting in Wales would have been a good one except we spent most of last week in Wales and our constituents expect us to be here as well occasionally. It is difficult.

Mrs Williams

  81. Could you tell us how many farmers and farms are there in Wales and do they divide between the two organisations?
  (Mr Jones) With regard to our evidence in the appendices, which are the latest figures we have, there are approximately 28,000 holdings in Wales. With regard to the FUW, as an indication, we send our monthly journal, Y Tir, Welsh Farmer, to approximately 14,000 members, farmers in Wales.
  (Mr Richards) There are approximately 28,000 farmers, as Siôn says. We have 15,300 audited members who are actual members. As far as sending our monthly magazine, we could not say. With all due respects, I receive Y Tir.

Chris Ruane

  82. Are there many farmers who are members of both unions within your membership and does one tend to represent larger farmers and the other smaller farmers or are they exactly the same?
  (Mr Jones) I think there are farmers in Wales who are members of both unions. I used to be a county executive officer in Caernarfonshire, as it was, as one or two Members will know, and, yes, there were members of mine who were also members of the NFU. I do not think that you can generalise about the type of farmer in Wales, whether he is a member of the NFU or the FUW. There are some large farmers who are members with ourselves and also some small farmers who are members with ourselves, and I am sure the same is true for the NFU.

  83. Is there a geographical difference between you? Are you stronger in one area?
  (Mr Jones) I think that we have respective campaigns in areas across Wales where we try and increase our membership and there are fluctuations across Wales where we are stronger in some areas and weaker in others.
  (Mr Richards) I do not think we would gain very much by pursuing where our membership is, Chairman.

  Chairman: It was very much an introductory question, I do not think we need to go into it in a great deal of detail.

Mr Caton

  84. To what extent has progress been made since the publication of our last report on this issue concerning a move towards more value added production in Welsh farming?
  (Mrs James) I think we have made substantial strides. Clearly we are in an evolving situation. Since we were here giving evidence last time I think everybody has recognised that net farm income in Wales has continued to plummet. There has been a general recognition in the industry that producing stock and milk of the required quality and perhaps getting a penny a kilo or a penny a litre extra for that milk is not going to be a sufficient way forward to secure viability in the future and they need to add value to their produce and actually draw down stakeholders in that value added process in order to safeguard their future viability in the industry. Certainly we, as an organisation, have been exhorting our members to look at what they can do in their own circumstances to add value to their products and what we have ended up with is a situation where we are certainly seeing an increase in the level of niche marketing, people adding value, particularly to farmhouse cheeses which we are getting quite a reputation for in Wales now. I think what we are actually missing out on is the bigger collaborative venture, the bigger co-op venture. Clearly we have had a very successful venture in terms of South Caernarfon Creameries, for example, which is world renowned, quite frankly. What we are not doing is emulating that right across the board through the principality so we can put mass primary production in terms of lamb, beef and milk into processing facilities. We have seen an initiative through the Agri-Food Strategy in terms of the Welsh Meat Company and clearly that is at a relatively early stage at the moment but we are hopeful we will see that progressing into the future. I am sure Terry will wish to comment about Farmers First and, as Chairman, I will leave him to comment on that.
  (Mr Jones) I think you will see from the evidence which we have provided and the examples which we have provided that there is a recognition within the industry that a challenge lies ahead and individual farmers are looking at their farming structures and will be able to do so hopefully now through the Objective 1 Farming Connect Scheme whereby farming businesses will receive business advice free of charge which will enable them to make a decision on the future role which they wish to play within agriculture and the future direction they wish to take. This grant scheme business review is a requirement of any subsequent grant applications. Certainly within the last few months foot and mouth disease has prevented many farmers from farming, there have been very many restrictions on farms. I am sure that this has provided farmers with a focus looking at the future of their industries. I support Mary's comments with regard to the size of the initiatives that have taken place thus far. The Snowdonia Cheese Company has already been mentioned, for example. I would like to bring in Mr Terry Bayliss with regard to the larger ventures which have come into existence since the previous inquiry which the Welsh Affairs Committee undertook.
  (Mr Bayliss) You mentioned added value. One thing we have got to be very careful of is that it is added value and not added cost. We need to make sure we get those products into the right place and into the right forum. In 1998, because of the state of the industry, we set up an industry called Farmers Ferry where we went out to farmers and set up a company limited by guarantee where we raised 980,000 from 6,000 producers to export live lambs to the continent. That developed to get rid of what was then a surplus of sheep because of the banned trade on the old ewes and they were kept to produce lambs for an extra year rather than being sold as meat in the year they should have been. In the year 2000 we went out with a share offer for a company, Farmers First, which was then going to be the carcass arm of the Ferry because we found there were markets over there for carcasses as well as live lambs. We then went out with a share offer in July 2000 where we raised 2.1 million from 3,000 producers. We have marketed through those two organisations in the region of three million lambs. As I said, we raised 2.1 million from the farmers, that is farmers wanting to help themselves. We are told all the time about matched funding, which we have gone out for, but I am afraid the only match we have found at the moment is either a Swan Vesta or England's Glory. I am afraid we have to jump through hoops to be able to raise this funding and if you are progressive with a business and move toward too fast you then exclude yourself from this funding because you have already done something. I think the Government need to set up some sort of banking organisation for companies in our situation that want to progress and move forward. We are not even asking you to give us this money but to lend this money at a realistic rate without having to add this massive security. We have found that we can get money much easier from banks abroad than we can get from the banks in this country and we think it is disgraceful when banks in this country will not back their own industry and other banks in foreign countries will.

Chairman

  85. Before I bring Mr Williams in I think that is a very good point because we are looking at Objective 1 funding as well in this issue.
  (Mr Richards) The question of Finance Wales comes up here and Finance Wales does not give anything to agriculture. Farmers are barred completely from Finance Wales unless you are doing a farm diversification project or a wind turbine, something along those lines, but with traditional adding value to commodities that we produce traditionally we fall outside.
  (Mr Jones) If I may follow on from Terry's comments, an important point to make as we begin this inquiry is to emphasise the way in which farmers have reacted to the challenge. You ask what has changed since the last inquiry, well, we have here evidence and further evidence in our report of farmers helping themselves and contributing to a venture which they hope will provide them with added value and a fairer return for their efforts.

Mr Williams

  86. Before I ask the question could I just say that I am the living embodiment of somebody who belongs to both the NFU and the FUW.
  (Mr Jones) Thank you for your support.

  Chris Ruane: Your supports.

Mr Williams

  87. I am also a shareholder in the company of which Mr Bayliss is Chairman. I put that on record really. Could we return to Finance Wales. Surely Finance Wales would be a body that you could approach in terms of a free standing company such as yourself?
  (Mr Bayliss) Yes. We have not approached Finance Wales, only the WDA. As I say, if you are progressive it is like going for a house grant, if you have started the work you are excluded from the grant. In farming we have to work to the gestation cycles, as you will know, we have to work to the seasons, and if we are going to fit in with those seasons and those cycles we have not got time to wait and twiddle our thumbs, we have to move forward. I am afraid you have got to make a decision whether it is going to be financially more sound to move forward and struggle or to wait for a grant that may help you in the future but it may be too late then.

  88. I think we would all welcome farmers becoming more involved further up the food chain but where do you think the real returns will come to farmers in that process? Will they come in an increase of the price of the primary product or will it be some sort of dividend from profits made during processing?
  (Mr Bayliss) We have got to get closer to the retail price. At this moment we have imported an idea into the country, we have now bought the licence, which they will be demonstrating at the Winter Fair today, which is called meat chips. We have moved right up the processing chain to get that product for children to develop a liking for lamb. The MLC say that lamb is not being eaten by children any longer, it is being eaten by the older generation, but this product is unique in getting it back to the children. This is a fantastic product. It was three years in development in New Zealand and they are now selling one tonne per million people per week. We have got the licence for 55 million in this country and 355 million on the continent. We are very excited about this but we need funding. We are struggling at the moment because of lack of funds.
  (Mr Richards) As I said in my opening remarks, the only way we are going to get anywhere is the price for the primary product and anything you do is a bonus on top of it. If we are part of that chain the bonus will come back to us but we have got to find some way or other of having a better price. You heard the evidence before from the milk guys, they are back down to 20 p/l. There are people who have had letters this week who are on milk committees supplying ACC Llandyrnog and I was shown a letter last night that they have just been told it is dropping a penny/litre. I am aware of a small co-operative operating in South Wales where it dropped three pence a litre last week. All of these people have had WDA money to set them up and running until the real marketplace kicks in. Lamb is a different scenario now, all of a sudden because Europe has lifted its restrictions we see lamb moving up 30/40 per cent, in price in the last three weeks. Somebody during the course of this summer has been taking our industry to the cleaners, to put it mildly. That is the problem I see. We are not sufficient in the food chain and we are being dominated by too many big boys out there who have tremendous clout in it.
  (Mrs James) Coming back to Mr Williams' point, I think we would see it as getting a return from both ends really. We would expect to get a little back in terms of providing the quality that the processors would want and clearly there will be greater transparency if there is that closer association. We would also expect to be getting a bigger proportion back in terms of the value added, which is why that particular element is so important.
  (Mrs Bateman) I think it is not just the money which should be made available to budding entrepreneurs who are wanting to go into processing, it is the whole scenario of planning, the whole atmosphere of encouraging entrepreneurs. Since 1999, when the Agri-Food Partnership was set up in Wales, we have been addressing that particular scenario as well by getting involvement from all parts in the local government area and colleges, etc., so there is a really valuable exchange of ideas, of information on conditions prevailing and so on, so people can get a rounded picture of what to do if they do want to take that step as primary producers who have an idea, who want to go together with other producers so an idea which is there initially can really take shape and have success. We have got to get to a situation where we have an atmosphere of encouraging entrepreneurs. Let us face it, not everybody can do that and there are farmers who simply by virtue of their background, by virtue of the farm they have, cannot diversify. The big buzz word is "diversification" but that does not apply to everybody and those who can do it ought to be helped as much as they can.
  (Mrs James) I think diversification comes from a position of strength. The problem we currently have in the industry is an economic one. Given an average net farm income of 4,100, which all investment has to be funded from, clearly people are in a straitjacket in terms of the financial springboard they need to buy into processing facilities and to actually diversify.

Mr Caton

  89. Mr Richards, you just talked about comparative clout in the process and in your written memorandum you talk about the imbalance in terms of size of farming businesses and others in the food chain. How do you suggest this imbalance is tackled?
  (Mr Richards) Over the years, as far as our farm structure is concerned in the UK, we always had a fairly large farm structure as compared with Europe. During the 1940s, 1950s and 1960s we were able to stand on our own two feet but now we find ourselves under pressure from the rest of the world, globalisation that has taken place, and we have to work together to co-operate and that is what Europe has been doing for years. Europe has been part of supply co-operatives and producer co-operatives, that has been the norm there, machinery co-operatives. The only way we are going to go forward and survive as an industry is for us all to be working together. Right, you say, this is the way forward, yet when we had a co-operative like Milk Marque, what does your Government do? It says split it up. This is one of the worries that my industry feels now, if we are going to put all this money in and work together, are you going to come along and allow something like the previous witnesses told you about the New Zealand joint venture which is allowed to come in here and virtually take over the butter market at the drop of a hat. Herein lies the problem. I see the way forward but have the farmers the conviction to do it and have they the capital to do it?

  90. Does the FUW agree that a major part of the way forward is this co-operative approach?
  (Mr Walters) Certainly I was involved with Milk Marque and it was an immense disappointment when we were going down the co-operative side and yet the Government forced the splitting up of Milk Marque into three co-ops. As John Duncan mentioned this morning, Axis and Scottish Milk were referred to the Monopolies Commission to an inquiry. Mrs Williams, you questioned in the evidence with John Duncan the milk price going back, can I give you my example. We got married in 1986 and our milk price was 16 pence a litre, exactly the same as it was in the summer of last year. Since then I have gone organic but that has not turned out and I am sure you will refer to that later. Certainly as a Union we very much support the co-operative way forward but we are very afraid of how the Government will react when the co-operative goes over that 35 or 40 per cent.

Mrs Williams

  91. That is the main fear you have, that is why there is a reluctance amongst farming communities.
  (Mr Walters) If you take First milk, it is the largest group. If they decide to join with anybody else it will be referred again to the Commission.
  (Mr Jones) The great problem with the industry over the past five to ten years has been the lack of security. Farmers are very unsure as to how to plan for the future. Farming at a minimum revolves around a five-year cycle and changes to a farming business take a long time to implement and need a lot of planning beforehand. Therefore this lack of security which has existed in the past and continues to exist holds farmers back from perhaps plunging in wholeheartedly in a particular direction whereas the situation in the European countries, which have now established co-operatives which are very strong and market dominant, has evolved over a period of years. We are but on the first step of the change, a wholesale change, which is going to be an evolutionary change which is going to take time. For example, the Farming for the Future document which the National Assembly have published recently, we as a Union were calling for such a document to be put in place in the early 1980s, so farmers would have security, so they would have some kind of leadership and documents which they could follow and work towards. Machinery links have previously been referred to. Farmers are working together now much more as happens on the Continent, but it is taking time and we do not feel confident that the structures or the policy exist which are going to allow farmers to have the confidence to use their meagre resources or invest their meagre resources in a co-operative venture which may or may not succeed depending on market forces.

  92. So you are saying really that the document published by the Assembly is going along the right lines?
  (Mr Jones) The Farming for the Future document, as we refer to in our evidence, argues that there is a choice of direction which faces the industry, that is whether to compete in markets for basic agricultural commodities or, alternatively, to seize those markets which offer opportunities to add value. The document slants much more towards the added value market, but what we are saying is, as Mr Richards referred to earlier, we also have to remember the importance of the commodities market and, as Margot mentioned also, some farmers are not able to change and therefore the commodities market is important to them. We do support the document. We are glad there is a vision that has been published but there is a lot more that can be done to assist farmers to follow a particular direction.

Adam Price

  93. I think this is a very interesting discussion because, yes, we are all familiar with the need to add value and it has become a mantra; we are all signed up to that. However, we are talking about the continued importance of the primary base price, if you like, because even if you do sign up to the value added future there is a transitionary period and if you lose your primary base during that period there is no value added future. What we have, though, of course is a policy over many, many years which did lead to global free trade and to a policy of cheap food, much more so than our European partners. What opportunities are there, practically speaking, for government to affect the market for the primary commodities?
  (Mr Jones) Terry Bayliss has referred previously to the fact and Mr Bayliss's business has come on leaps and bounds considering the difficult environment under which it has had to operate. There are so many opportunities which they see as a business where they can develop further very quickly. One of the main problems which we have as an industry, which the President of the FUW and Mr Richards were referring to incessantly, is the weakness of the euro and the strength of the pound. That would have an overnight impact on farmers' incomes.
  (Mr Richards) Therein lies a major problem. There is the compensating thing, I mention it now, of agri-monetary compensation. We welcome Fontainbleu and the Government received back in rebate 35 billion or 36 billion. Of that 2.2 billion should have come to agriculture over the past five years, but we see governments have only claimed just over 785 million and there lies part of the solution. If you look at the milk price today, the milk price today on a comparative basis puts us ninth or tenth in the league. If you we talk about the euro going up to 70 pence then we are second in the European league straightaway just by that. We are hit on three fronts, imports, exports and our support payments. Those are the three effects and that would correct a lot of the problems.

   (Mr Bayliss) We talk about the euro against the pound but even with that hardship and that difficulty we are able to export as we have just seen, as Hugh said earlier on, with the prices, four weeks ago the price of lamb per kilo was 160. It jumped very fast at 10 pence a week up to 190. This week it is 2 but because there is an export market we can get 245 a kilo for export lamb, so it shows you the strength of that market over there and how being excluded from it we are vulnerable. You mentioned just now about the prices we receive and about working in a global market and the prices abroad and cheap food policies, but we were being told before foot and mouth by the multiples that if we put our price up any higher we would then be penalised because they would go abroad for the meat, and when foot and mouth came and they had to go abroad for the meat they were saying to the housewife, "You have got to pay more now because we are bringing it in from abroad and it is costing more money". Where are we coming from? Who is telling lies and who is not?
  (Mrs James) Could I make a point on the back of that, if I may. It is a fact that really we have been taken to the cleaners. Prior to the re-opening of the markets we saw weakly clean lamb prices, for example in July of this year, at 164.7. I will not bore you with the intervening months which were something similar. We got to November, there had been an announcement about the potential to re-open the export market, no lambs had actually gone, and all of a sudden we were back to 195 pence per kilo. None of the circumstances had changed apart from the fact that a pronouncement had been made that the markets were going to re-open for export. Given the supply situation as well, one would expect market prices to reflect the interaction between supply and demand, and there has been a huge reduction in the volume of sheep, for example, on the market this year and yet we have seen market prices plummet.
  (Mr Jones) I would just like to support what Mary said and also to return to what Mr Bayliss was saying. Since we are discussing the role of the supermarkets we would just like to emphasise the point that prices quoted to farmers for beef, lamb and pork were in many instances lower than they were prior to the foot and mouth outbreak. This is an important point. Despite the supermarkets' claim that meat products had to increase in the shops to reflect the situation of shortage, imports were being sucked in prior to the foot and mouth crisis on the basis of price and this factor was used to dictate the price paid to UK farmers for their livestock. During the months immediately post the FMD outbreak, supermarkets claimed that they had to charge more for meat at a time when farmers received less for their livestock than they did prior to 23 February. That is point 14 in our evidence which I hope you will be able to raise in the future as you invite people in before you.

  Chairman: That is the purpose of the exercise. Mr Williams?

Mr Williams

  94. If we are saying that farmers have been cleaned up, who is cleaning up? Whenever we look at it, it is very difficult to find anybody to put their hand up and say there are exorbitant profits being made at any particular place in the food chain.
  (Mr Richards) I am at the stage where I have to go and push the trolley for my wife at Tesco's on a Friday night. I should be pushing the trolley but I go around and study the price on the shelves and try to translate back what I am having or people around me are having. You heard it today. We are talking 17 or 18 pence per litre for milk and you see it there, you are talking 40 or 50 pence a litre. I supply swedes to a supermarket. Last week I was getting 2.60 a quarter (which is 28 lbs). In my supermarket on Friday night they worked out at 14.10. Nothing has been done to them, there is no difference at all. I put them in the nets, they pour them into crates. We have washed them, we have done everything, there is no preparation, there is no cling filming, nothing at all and I deliver them to a central place[2].

  95. Perhaps you could let us have that in written form.
  (Mr Walters) I can give you an example also on organic potatoes. We have experimented on half an acre of organic potatoes this year and in supermarkets, which is the most expensive place you can buy them, it varies from 1 to 1.20 a kilo. In a health shop they are only about 80p or 90p. I am not sure what the farmers are getting, down in the 30s or 40s pence per kilo so there is a significant mark-up and it is being marked up in supermarkets and yet they proclaim they are saving the householder money. If you go back to the milk situation, if you take the mark up of milk from the farmer to the consumer in the UK, the mark-up is 250 per cent but if you compare that with Germany it is 130 per cent, so there is quite a difference there.
  (Mr Richards) We must not get carried carry away and condemn supermarkets. We realise that 80 per cent of the groceries are sold through them, they are an important avenue as far as selling our food, but there must be something and this Code of Conduct that came out last year is not worth the paper it is written on, I am afraid to say.

  Chairman: We were in the position of condemning the supermarkets in our report. If you compare them to supermarkets in the European Union, their margins are practically double. In certain areas they seem to be making more, possibly swedes is one of them. Mr Ruane?

Chris Ruane

  96. Before I reach my main question, if the mark-up on turnips or swedes was times seven, on meat times two or three, why is it not possible for you to act co-operatively and have large farmers' markets in established urban areas? If I could buy my turnips at a third of the price and meat at half the price and it is fresh and well-presented in a farmers' market, I would definitely drive past Sainsbury's and go to that market and buy it fresh knowing that my money is going directly into the pockets of farmers in my constituency and not being sucked out through Sainsbury's down to London.
  (Mr Richards) Farmers' markets have been good and effective and we totally support them but, with respect, the average housewife turns up at a place where she can park her car, do all her shopping in one place, where she does not have to worry about the traffic warden coming along and you can do it all. Okay, farmers' markets have some vegetables but as far as meats are concerned, the question then arises where are you going to kill animals? Small abattoirs have virtually been drummed out of existence.
  (Mr Bayliss) If I could support you on the abattoir front, we desperately need an abattoir in West Wales. We are up to capacity in our abattoir now in Kenilworth. We did try to buy one but I am afraid the deal fell through. As a result of one man who works for the MLC feeding the information to the Government and saying some time ago that we were over capacity in abattoirs, the Government then withdrew from supporting the rebuilding of new abattoirs. At the sheep event last year he withdrew to a certain amount from saying that we were over capacity in large abattoirs because I tackled him in this meeting and he said we are very short of medium sized and small abattoirs, but I am afraid he did not make that clear in his first presentation which made the Government go down the route of not supporting the construction. Of course, we are into the situation now where everyone is trying to stop transporting animals at long distances but there is no answer to this when you have got such a shortage of abattoirs.

  97. Again before I come on to my main question, you mentioned before the problem of price stability with Europe; if we were in the euro would that help bring about some degree of stability for you? Would your two respective Unions campaign for it if there were a referendum?
  (Mr Jones) Yes, in that I think this is a vitally important debate which we as a Union have to have in consultation with our membership. Obviously there are issues about what level you enter the euro and everybody is aware of them. Since we have not developed a firm policy as yet in favour or against the euro, my own personal view is yes it would provide the security that farmers want to see. At the moment we are hopefully going to end up with a fixed premium with regard to sheep support. That will allow farmers to plan ahead as opposed to the present situation where there are large fluctuations, we have not as an industry been able to benefit from agri-monetary compensation which Europe have argued our farmers are eligible for and should be receiving, whereas if we were part of the euro then there would not be that anomaly which has worked against Welsh agriculture for many years.
  (Mrs James) It will not, with respect, address the anomaly that the support price will still be fixed in euros and until such time as we are part of the single currency you will always get those currency distortions. The crux for us is the rate at which we were to go into the euro which is clearly crucial to the whole exercise, but in terms of transparency, clearly, one can see much more plainly the prices prevailing through out the EU.

  98. Thank you for that answer. To come back to a point of information, as has been explained to me by the farmers in my constituency when we discussed the demise of Milk Marque, as they explained to me, when Milk Marque was in existence they could not vire any of that milk towards vertical production because that would decrease the amount of milk available which would then increase the price of it. If they were able to take milk out from raw milk production into cheese then that would give them a certain degree of control over the price. With the demise of Milk Marque and England and Wales being split into three, Axis, Milk Link and Zenith after a period of 12 to 18 months the Minister said, "We will allow you to go into vertical production. You can take some of that raw milk out of there and put it into cheese." Is that not an opportunity to influence the price of milk which would be better for the raw product and also, by taking it into vertical production into cheese, to get added value, so you are in a win/win situation if you do go into vertical production?
  (Mr Richards) You heard the story this morning from John Duncan about what First Milk are doing as far as Felinfach is concerned and that is certainly adding value. Added to that we have the problem in Wales of finding Wales the brand. Scotland are miles are ahead in developing Scotland the brand. For the same cheese produced in Scotland he gets 3,500 and we are probably selling the same cheese out of Felinfach for 2,200 just because of a brand development. Here I start criticising the organisation I spent some time with, WDA and agri-food. They are not developing this brand that has to put Wales on a pedestal. We have got the product, it is just selling the brand that goes with it. We produce the quality, no problem there.

  Chris Ruane: There is an opportunity out there. There are four million Americans that claim Welsh ancestry.

Chairman

  99. Mr Ruane, we have got a lot of questions. I know you are an Objective 1 expert but get back to the questions.
  (Mr Walters) Can I add something there, the milk price is dictated by what you sell as the lowest commodity. At the moment skimmed powder has fallen to a record level by 200 a tonne in a short period of time. You are basing the price on what you sell the lowest commodity at even though the milk price is set for farmers all over the country.

 


2   See page 41. Back

 
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