SAMW – Annual Conference 2009

SAMW President Allan Jess opened the conference saying that there was no lack of challenge for the Scottish Meat Industry. “Economic shocks of the last year have brought new meaning to the term boom or bust and it is impossible for the conference to avoid the pressures that we are all feeling.

“Starting with the positive – our industry is run by professional people with willing staff full of enthusiasm. Our product is, and always has been, top quality. Domestic supplies are also perhaps a little more valued and appreciated today than they were in the past, even a year ago. That is a welcome bonus for our sector.

“On the other hand we continue to face far too many frustrating, costly and time consuming battles over industry rules and regulations. The most crucial of all – the cost of applying these regulations to our businesses. As SAMW President who is now in his fourth year, I happen to think that we have a damned good industry; an industry we can be proud of.

“Sometimes however to is difficult to balance our status as an industry with the way we are treated on a day to day basis. The adoption of proportionate risk based approach to what we do, for example, is long overdue. Regulations in other food sectors are risk based, so why not us? Even the production of human health products is risk based. It is nonsense that we are so heavily and unnecessarily regulated. We are a responsible industry.

“We are also deeply committed to maintaining high standards of health and hygiene, so why do we continue to have such an overpoliced system of in plant inspection with all the antiquated terms and conditions that this involves.”

Allan acknowledged that the Meat Hygiene Service has a Transformation project in process but he added “quite frankly if I had waited for that to be concluded before voicing my concerns I would have needed another year as President to be sure of having my say.

“There is no guarantee that transformation will succeed which is why we object to paying through the nose for it before it is delivered. We have been pressing the MHS to modernise its approach to meat inspection for long enough. We are also urging the Food Standards Agency to review it BSE controls more rapidly and more effectively than they have managed to date.

“It would be bad enough if it was just a matter of being over regulated but on top of that of course we are fighting a constant battle over costs. The latest 4% increase approved by FSA this week is the last straw. With inflation at minus figures and businesses under extreme pressure, what does FSA do? Hang on grimly to its 4% increase and try and present that as a good deal for industry.”

Allan attacked the FSA Board members blinkered understanding of the sector claiming that is was beyond belief and insulting in such an influential body such as the FSA. He questioned that FSA were merely dancing to a tune played by DEFRA.

“What this proves is that the recent FSA consultation was just a farce, the Board ignoring the evidence of overwhelming opposition to get their own way. What other businesses would expect their customers to pay increasing costs for a service that they admit themselves is far below par.

“Ultimately whether or not the 4% increase goes ahead in Scotland will be decided here by the Scottish Government. Our view is clear, MHS and FSA are not fit for purpose in Scotland and not worth the taxpayers money that it takes to support them. In the longer term we may need to pursue other alternatives to UK FSA and Meat Hygiene Service.”

Allan went on to show slides that reflected Scottish beef livestock numbers down to 1.8m in 2008, 2.7% less than 2007 and 6.9% below the 2004 figure. The UK figures at 9.9m followed a similar trend but in France where there had been a degree of coupled support for production, the total at 19.4m was 1.3% up on 2007 and 2.2% up on 2004. Sheep production equally concerned the SAMW President with Scotland's sheep population falling 7.7% to 4.7m, a 13.3% decline since 2004. The UK decline had been the same in 2007-08 but their 21.9 sheep was still 10.4% less than in 2004.

“We are extremely close to losing critical mass but whatever happens to prices in the short term there can be only one conclusion – namely the eventual reduction of processing facilities and the scaling down of Scotland's livestock industry. That will have a massive impact on the whole rural fabric within Scotland. As a country we have a rich history as a source of high quality meat and given the right support and initiative incentives I believe we have an equally positive future as well.

“What we see at present places an enormous question mark against the growth objectives which are being pursued by Scotland Food and Drink. It is clear that the Scottish Government wants to expand output significantly over the next few years, we strongly support that but unless a way is found to re-ignite the Scottish livestock sector however, there is no way Scotland Food and Drink's goal can be achieved. It certainly won't be achieved on a diet of whisky and shortbread alone.”

Ian Anderson, Executive Manager of SAMW described Richard Lochhead as exhilarating and refreshing as he introduced the Cabinet Minister ahead of his keynote speech.

Richard Lochhead accepted a role in ensuring that the red meat industry had a great future to look forward to. He said “I want to make it very clear that the Scottish Government is committed to working with the red meat sector for the long term because the red meat sector is of huge value to Scotland. It accounted for 31% of the total agricultural output in 2008.

“Processors are a key link in the supply chain bringing quality produce off farm and on to our plates. 25000 people are directly employed in farms and primary processing. For every person employed on farm we have to remember that a further two jobs in the supply chain directly rely upon them. These jobs are very crucial to Scotland's rural and national economy. They all support our farms, crofts, hauliers, markets, butchers and so on.”

The Cabinet Minister had recently visited the product development department at Ian Galloway's Glasgow plant where he said it brought home to him the special skills that exist in the sector to add value to the primary product. He said:-

“You should be justly proud of your industry's contribution to Scotland's economy and wider society. The key to future progress lies in the Scottish Government and the wider industry working together to ensure that we do have a sustainable and viable sector for a long time to come. It would be my ambition to have a red meat sector that punches above its weight in the economy.”

Acknowledging the turmoil created by the financial markets and economic downturn Richard Lochhead expressed his understanding of how the market for hides is suffering from the decline in car manufacturing due to the fall in demand for cars.

He explained that the Scottish Government was proactive and positive in doing what it could to support the Scottish food industry. A supplier development programme with Scotland Food and Drink and Sainsburys supporting 12 companies to develop supplying Sainsburys he claimed would deliver over £5m to Scottish companies.

The Cabinet Minister claimed that 37 companies had so far benefited to the combined tune of £12m from the Food Processing, Marketing and Co-operation Grant Scheme.

“Our support to date will bring in another further investment of £54m to the Scottish food sector. That will hopefully help companies deliver benefit right through the supply chain. These grants are another example of how we can work together to meet the challenges of the global markets.

“Projects in your own sector have benefited as well. £267,000 was awarded to Simon Howie Butchers to upgrade facilities and purchase new processing equipment; £122,000 was awarded to Lynch Quality Meats to increase production and broaden their range and £294,000 went to Sandyford Abattoir Limited to utilise fifth quarter for sale in UK and export markets.”

Richard Lochhead went on to say that in a small nation like Scotland there are opportunities to work together to tackle issue. Issues like the vest amount of regulation highlighted by Allan Jess. In Scotland there is good track record of working together as in 2007 with the Foot and Mouth disease outbreak and to protect Scotland from the threat pose by Bluetongue in England and mainland Europe.

“Scotland's approach was in contrast to the UK government in this issue who let the industry bear all the costs. The same can be said about the UK's approach to cost and responsibility sharing. Sharing costs and responsibility doers make sense in the longer term but rushing in to this at a time when financial pressures are high is not wise. We need to make progress at the right pace for your businesses and for Scotland.”

He accepted that the regulatory framework required to be proportionate and kept under constant review. Following a meeting with SAMW in April Lochhead understands that BSE impose compliance costs that the industry can ill afford at a time when margins are under pressure.

“We must be mindful that reducing controls must be done in a manner which preserves public confidence in our product and brand as well. Any changes need to be carried out in step with our European partners. That said one area where these controls are lagging well behind the science is the age at which bovine vertebral column must be removed and disposed of as specified risk material. I invite the Food Standards Agency to make this a high priority area for action.”

The MSP for Moray continued his aim at FSA with an observation about its responsibility for the Meat Hygiene Service.

“Perhaps spurred on by DEFRA's bad example of cost and responsibility sharing the FSA believe that it is right that meat processors should simple meet even more of the bill in these tight economic times. I do not think that timing has been the FSA's strongest points in these last few months. I don't think that this is the right time to dramatically increase the burden of costs on your sector. I have been disappointed by the lack of sensitivity to soak up more costs in the current economic climate however I do acknowledge that progress in tackling the long standing weaknesses of the MHS is being made. I think we all accept that there is a long long way to go.

“Before I consented to the consultation getting under way last December I made it clear to the FSA that I wanted to see a fully comprehensive economic impact assessment of the current proposals. More recently in a meeting in Edinburgh with Deirdre Hutton (Chair FSA) last month I invited her board to reconsider the timetable for moving to full recovery of MHS costs against the backdrop of current economic pressures.

“I want to assure you today that continue to put the interests of Scotland's red meat industry at the forefront of my dialogue with MHS. At a time of zero inflation I do have concerns about the proposals for an increase of 4%. Vetoing that 4% is certainly an option that I am giving serious consideration to.”

The Cabinet Minister reminded the conference that decline in livestock numbers is not alone to Scotland. South American beef and New Zealand lamb are also declining. He said that even though he had no “magic bullet”, the Scottish Government has an opportunity to address this with the CAP Health Check and the potential to use Article 68 to support beef production.

The concluding speaker was Brian Pack, chief executive of the ANM Group. As he said, he will be a “free man” come Thursday 30th April when he steps down after 19 years at the helm of ANM.

Among his regrets is the fact that the red meat industry has been saddled with a huge burden of additional costs over the past 15 years. It is time, said Pack, to commission a multi-disciplinary team to look at what the risks from BSE to humans really are and regulate accordingly.

The scare theories propagated by Professor Lacey in the 1990s suggesting that millions would die from variant CJD have not been borne out and there is considerable scope for amending meat inspection rules.

Pack said: “I do wonder if the time is not right for some civil disobedience in that the industry should decide what it is willing to pay, and refuse to pay any more – and let's have the battle.”