Select Committee on European Communities Minutes of Evidence


Examination of Witnesses (Questions 160 - 179)

WEDNESDAY 10 JUNE 1998

MR RICHARD WADSWORTH

Chairman

  160.  Good morning, Mr Wadsworth. May I welcome you to the Sub-Committee. Thank you very much for coming to assist us in our enquiry into genetic modification in agriculture with particular reference to the European Community regulation. You have kindly sent us a paper which is very useful. You gave a brief introduction to Iceland. I wonder if I could start by asking you to expand slightly on that? You mention the size of Iceland Frozen Foods. Could you perhaps put that in the context of the industry as a whole, in terms of your market share both as far as frozen food goes and retail generally?
  (Mr Wadsworth)  It is about three per cent of the grocery market and about 17 per cent of the frozen market.

Lord Wade of Chorlton

  161.  I think the Committee would be interested to know just how you adopted this anti-GM approach and whether it is entirely because of visions of principle within the company or whether it was decided on the commercial benefits that might come from it. Following on from that, we would be interested to know, as a result of your answer to that question, if in fact it has proved commercially justifiable and what the commercial impact has been upon the business. Perhaps I could add to that that, if it was a matter of principle, then what sort of changes would you wish to see that would make genetically modified foods acceptable?

  A.  The board of Iceland are concerned about the technology and possible dangers to health, the environment and the fact that the approval controls for GM foods are inadequate and rudimentary by comparison to GM approvals in the pharmaceutical area. If you consider for example the benefits that might come to society from work on GM products in the medical area, the controls in that area are much stricter. The benefits in the agricultural sector are much less and yet the controls are less. The balance does not seem to be correct. They also believe that customers are being denied the choice by the failure to segregate the commodity crops. From a corporate view, and this is the main reason for making the Iceland brand GM-free, our research shows that the majority of customers, over 80 per cent, want a choice, so this has to be a good commercial decision. With regard to the actual justification commercially, since January of this year we have seen like for like sales gains of 14 per cent. It would thus appear that the approach has been commercially justified, although some of this improvement in our sales performance will be down to other activities, such as the introduction of home delivery and the special deals that we have on offer.

Chairman

  162.  So your objection is not really on principle? You are not calling for a ban on all genetically modified foods? I suppose you could not really because your raison d'etre as a company in supplying modern genetically unmodified foods would not any longer exist.

  A.  The key issue here is about the fact that genetic modification can provide significant benefits for society but we have to balance it with the risks that are present. What we are saying is that the debate that has been going on has not been raised with the consumer's interests at heart and that is what we are trying to do. We are trying to raise the profile of the debate and get consumers involved, make sure the authorities have the appropriate controls for the introduction of these products and give the consumers the choice. If the consumers then choose to buy biotechnology products, that is then their choice but they have to be informed about what is going on and they have to be protected by the approval system to make sure that the products are acceptable.

Lord Gallacher

  163.  Mr Wadsworth, how widely across the product range have you extended your non-genetic modification policy?

  A.  We currently have approximately 2,000 lines, just over 1,000 of which are Iceland brand. Of these approximately 400 were affected by the introduction of the commodity crop such as soya. All of our brand range is now being made with non-GM beans.

  164.  In view of that extension are you finding any problems with supply?

  A.  In trying to establish supply in the first place that was difficult. We had to completely change the way that we buy in foods. Normally we would approach manufacturers and they would approach their manufacturers and the raw materials suppliers for the GM-free materials that we are looking for. When we tried to do this we approached our supply base. They said it was too difficult to do, so we approached organisations like IGD and the FDF to see if they would be able to help through the trade associations. What it came down to at the end of the day was the fact that if a manufacturer is trying to buy a small quantity of non-GM material it is not viable. The costs of segregating that small quantity of material are too great and that is what everybody was saying. They were all saying it was impossible. What we have had to do is completely re-think the process. We have approached all of our supply base and we have obtained the quantities and materials specifications that they require for the raw materials. We then amalgamated that information and went out to seek non-GM soya beans at source and then bring the bulk quantity that we now require back through the supply chain. We have had to go completely to new sources of supply and we as a retailer are now buying in bulk non-GM materials and supplying those not just to our own suppliers but to anybody else who wishes to buy them. In terms of maintaining that supply, yes, it will become more difficult as more products come on to the market that are GM. We are already working on trying to make sure that the maize that was planted in France this year will be segregated and, if not, that we will have appropriate plans in place to make sure that we can obtain materials that we wish to obtain.

Lord Redesdale

  165.  The work you have undertaken must have had quite a large cost implication. How do you justify that?

  A.  You talk about a large cost implication. In fact the costs are greatly exaggerated in terms of trying to get these schemes established. The reality was that once we actually raised the awareness to the industry that we were very concerned about the introduction of genetically modified crops and that we did want to provide a choice and that we were going to do everything we could, we then had quite a few companies that made contact with us offering supply and offering help. We have had a great deal of help in trying to identify sources of materials. For example, Brazil had no non-GM soya planted at the time that we were all seeking it and they had vast quantities of material and yet nobody had actually really been able to get in contact with the right people in that country. Once we made people aware that we wanted that sort of material it was actually our friends and colleagues in America that helped us find the material in Brazil that we were looking for. That helped us reduce the cost of seeking the materials. Yes, there have been costs of people going over to Brazil to look at plants and check the plants out. There has been a cost in terms of verifying the plant and making sure that that plant can produce non-GM product consistently to the quality that we require, but in the scheme of things the actual costs are not as great as you might imagine.

Baroness Young of Old Scone

  166.  Consumers are worried about other sorts of technologies for the production of food as well, for example irradiation. Do you have a similar policy for other technologies in the production of food?

  A.  Our involvement with this issue does not actually signal a change in the position of Iceland. This is a particular issue that we actually felt very strongly about. However, we do have a policy which prohibits suppliers of our own brand products from using irradiation. We also will be opposing the use of growth hormones to increase milk production as this is in our view clearly unnecessary. It is not new for Iceland to be raising issues on behalf of consumers. However, often this work goes on unnoticed as it is done through trade associations, and when people work together to resolve issues then that does not get into the media. It is when we try to resolve those issues and are unable to through the normal channels that it becomes more of a debate in the open.

  167.  I was interested in your evidence that you seemed to indicate that you were doing this because consumer concern was there but that it was quite difficult to get corresponding independent scientific advice because of a bias in the scientific voice, and that was quite surprising. Perhaps you could enlarge on that.

  A.  It is our view that historically people would go to academics for an independent view which would actually provide advice on behalf of the community, and often governments have relied on that source of expertise to provide an independent view. The difficulty now is that so many of the academics are involved in biotechnology and that is where you are getting your expertise from. Governments are interested in this area and are spending millions of pounds investing in academic research because of the race to exploit this technology. There was a recent article suggesting that there will be three million people employed in biotechnology by the year 2005. Governments and trade areas do not wish to be left behind on that development of business. Our view is that certainly, as we have seen in the development of regulations, there is a strong bias to try to help get these products to market. The fact that we have had to change the regulations several times, including labelling, clearly shows that those experts were not considering the consumers' views initially. Those consumer views are not new. Those views were known two years ago and yet the expert advice that has gone to Government has not provided protection to the consumers. When we seek clarification from the Committees we tried to work through the trade associations to get answers to some of our questions. Initially it was very difficult. In fact we have had a response through the British Retail Consortium which suggested that it was not the duty of the Chairman of the Advisory Committee for Novel Foods to respond to trade associations about their enquiries. They also suggested that they could not consider any item which was slightly outside the scope of their investigation. Clearly that has been wrong and this debate has been going on between the trade associations and the advisory committees for some time. When you then see members of the advisory committees openly defending the biotech industry on TV programmes, then it does worry us that perhaps the independence of these committees is not as balanced as it should be. We are not suggesting that these academics are deliberately trying to let products through, but it is very difficult to be truly independent. We would like to see on these committees a little bit more of a balance of people that have consumer interests at heart, whether it be consumer associations or, to be honest, in our view, members of the trade, whether that be retailers or manufacturers, and even those that may support biotechnology. We believe this would give a better balance in those advisory committees to the work that is going on in them. We had a situation last week where one of the members of the Advisory Committee suggested that there had not been any accidents. Now, it is difficult for us to find out the details, but we were informed by somebody from the biotechnology group that in actual fact some oil-seed rape had been planted in the United Kingdom accidentally outside the trial plots and had to be ploughed in. Now, if that is not an accident, then I do not know what is and if the person involved who is actually on the Advisory Committee does not know about that, then they should, so I am concerned about that. It is very difficult for us actually to suggest any particular queries other than general issues, but we would like to see a far better balance and certainly the actual track record is the proof that consumer interests have not been at the heart of some of the decisions.

Lord Gisborough

  168.  On what sort of scale has your approach been copied by other retailers?

  A.  We understand that Sainsbury's and Tesco's both now use non-GM material. They are actually trying to remove the soya protein elements in their own-brand products, but they are not removing the non-protein derivatives, such as soya oil. Recently the level of products converted to non-GM quoted was actually 90 per cent for Sainsbury's and 70 per cent for Tesco's. One of the main difficulties for anyone trying to move on to the non-GM is actually trying to find the sources, as we indicated earlier, and that is why at Iceland we have actually established a separate company within the Iceland Group which now provides non-GM materials to anybody who wishes to buy them. We have actually contacted the other retailers and actually offered to make the details available. We have offered assistance and we are in correspondence with one or two of them, so we do expect to see more people following Iceland in the United Kingdom. I would like just to add to that that we have also been contacted by retailing groups across Europe and have recently been over to the German equivalent of the British Retail Consortium actually sharing our experience with them, so we do expect other retailers across Europe also to follow.

Lord Rathcavan

  169.  We have seen an enormous explosion in the growth of some GM crops in North America, particularly soya and maize. Do you think that your approach of segregation is sustainable in the long term and is segregation by producers similarly sustainable?

  A.  Ultimately, this will be decided by the consumer. If they continue to confirm their wish to buy non-GM products by changing their shopping habits, we believe that the demand will grow, and as it does, it will improve the chances of us maintaining our stance. A key issue in the United Kingdom will be the controls in place for the planting of new crops and particularly with oil-seed rape. Cross-pollination of this crop can occur over considerable distances. If farmers are allowed to contaminate non-GM crops with genes from GM plants from cross-pollination, then this will make our life very difficult. More immediate is the problem in France where GM maize has been grown this year and the industry is still determined to mix this with conventional stock. We really are looking to make sure that this is actually segregated and if the industry is not prepared to segregate that material, we will be pushing for some kind of regulation to make sure that it is, particularly while the debate is still going on. So in terms of long-term sustainability, as new crops come on stream, it does become more difficult. However, as the demand grows, then more sources are open to us, so it is difficult for me to predict. I was going then to go on to the second part of the question which is actually regarding producers and the segregation of materials within their sites, the manufacturing sites. This actually is not necessarily particularly difficult if you think that they handle many critical products and raw materials and they have to provide segregation and traceability for those materials, and that is part of providing good-quality and safe foods. We do not see that the GM issue will actually create any more difficulties for the manufacturers in actually providing the supply that we require and the traceability that we require; the techniques are ones they have used. It is an added problem, but in actual fact the actual techniques used are the same as for controlling other raw materials.

Chairman

  170.  Is it very demanding on your manpower to ensure the traceability and segregation of overseas products which are produced for you?

  A.  In terms of manpower, not particularly again because it is not as if at this time we are using hundreds of sources. We have a particular source in Canada and a particular source in Brazil, so that is two primary sites that we need to watch over and the controls then in Canada are being operated to farm level by the operation in Canada and paid for by the operation in Canada, so in terms of our resource, then that is limited. What comes down to the work that we have had to do is actually going through all the ingredients in our products with our supply base and identifying all of those which might contain GM material, like soya and maize. That takes some time.

Lord Rathcavan

  171.  Taking into account the extra management effort you have had to put in and the extra overhead that you have created, what is the percentage extra cost of your soya compared to the commodity soya? Are you able to put a figure on that? At the moment obviously you are operating on a fairly small base.

  A.  In terms of the actual soya material that we are purchasing, we can confirm that the soya flour we are buying we are actually buying at the same price as the soya flour that we were buying before. There is no added cost to a manufacturer for buying non-GM soya flour. We are also able to buy soya protein isolates and soya protein concentrates, on balance, at the same price, one slightly higher and one slightly less. The only product material that is actually costing us more is soya lecithin. Soya lecithin is actually used in the manufacture of chocolate as an emulsifier and that material from Brazil is costing approximately 10 to 15 per cent more than the GM material. We are working with the Brazilians to reduce that cost and we are hopeful that we will be able to bring that back down to the normal price. The reason for this similar price comparison is that at the moment the difficulties of segregation are less because the areas where we are buying materials from actually do not plant a great deal of GM material. When the level of GM presence in the whole market grows, then the difficulties of identifying and preventing cross-contamination will grow. For example, in Brazil, Brazil was not growing GM crops and, therefore, you had a good deal of certainty about the actual material that you were buying. As time goes on and they start to plant GM crops, then watching for materials being co-mingled and cross-pollination will be more difficult and may incur more costs. At this time the actual cost increase is minimal but in the future that might increase.

Chairman

  172.  You refer to difficulties in segregating oil-seed rape. In your paper you refer to the possibility of drastic solutions being requested by you, namely regional segregation. Could you say a bit more about what you have in mind when you talk about regional segregation of oil-seed rape?

  A.  Well, simply that I understand that when biotech companies want to keep their GM crops separate because of the chance of resistance going from one crop to another, as in certain states in America, I understand that they have a simple rule that you will only grow one crop and not the other crop. It is quite possible to conceive of the fact that you may turn around and say, "In this county you can grow a GM crop and in that county you cannot". That would allow for very clear segregation of materials. It of course should be based on not just a regional area as a county necessarily, but also the collection points for the materials, so you keep one collection point and channel clean for non-GM and another collection point and channel, and the associated farms, can then handle GM material. That would be a way of actually maintaining segregation. It is either that or you have to have spacial separation between a farm that wishes to keep their crop non-GM and any other farm around that wants to plant GM, and that I can imagine would be quite difficult.

Lord Wade of Chorlton

  173.  Who would have the authority to tell a farmer what he should grow, not grow and where?

  A.  That would be the Ministry.

  174.  But nobody is suggesting that that is going to happen.

  A.  That was one suggestion.

  175.  From whom?

  A.  From ourselves in terms of a possibility that you can make regulations about what is grown and provide a provisional licence, if you like.

  176.  But nobody has accepted that responsibility to authorise what people should grow and what they should not grow; it is free will.

  A.  What I am saying is that apart from some of the biotech companies which have very strict contracts with farmers about what they will grow and what they will not grow.

  177.  But that is a freely-entered-into contract.

  A.  I accept that and what we are really saying is that we have to find a way of providing farmers who wish to continue to provide non-GM crops with an ability to do so.

  178.  What I do not understand is why have they not got that ability to do so? If somebody wants to grow a non-GM crop, who is to stop him?

  A.  Because the farmer next door may actually produce a GM crop and with cross-pollination, within two or three years his crop will be contaminated and he will not be able to sell his crop as a non-GM crop and that seems to me to be wrong.

Lord Willoughby de Broke

  179.  Mr Wadsworth, you have already touched on the question I wanted to ask you in your earlier answers when you described the way you sourced your soya from Brazil and Canada. The American producers say that it is almost impossible to segregate the soya, but if there was a significant enough market in the EU, could there be a rethink on behalf of those producers, do you think?

  A.  Well, in addition to our current sources which are outside the US, we are already working to provide non-GM soya derivatives from America. We are on target to achieve the supply of identity-preserved US soya derivatives from the 1998 crop. As a result of our activity, we have persuaded the American Soybean Association to moderate its stance in this area. Although they do still believe that the mass segregation of non-GM soya from GM soya is not achievable, they are now identifying suppliers' details for those that are able to provide an identity-preserved material which, in our view, is equivalent to segregation. This is a significant change and will open up many more opportunities for us to work back through our traditional supplies. It has never been our intention to try to move away from the current supplies from America because we have no problems with American supplies, but all we wanted was an availability of their non-GM material.


 
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