SAMW Conference – 20 April 2013

President Alan McNaughton made the opening address that set out industry concerns.

“Our future is at substantial risk by the following – We have a serious and persistent lack of livestock supplies, we have an unsustainable surge in raw material costs and very fragile consumer standing.”

Ever since the CAP was last reformed declining numbers have been serious problem for the last 8 years. Market forces have failed correct the imbalances between supply and demand that had been predicted without a need to return to coupled subsidy payments. McNaughton claimed it certainly had not worked.

That is despite three periods of rapid price inflation in those last eight years. Cost price of sides of beef has risen from 180p per kilo in 2004 to over £4 per kilo today. Special lines such as Aberdeen Angus were now at £4.40 and organic product was as much as £4.70 per kilo.

Even though on farm costs have increased during that time such increases in value to have failed to stem the downward trend in production.

“As a result we are now seeing record farm gate prices for cattle following yet another short term price rise that has added 10% to value in little less in the last couple if months. No one can live for very long with that sort of price increase. Not only is the current level of livestock prices putting an inevitable squeeze on processing margins it is also about to raise serious questions about the ability of consumers to keep increasing their spending on food and in particular the high priced proteins of lamb and beef.

“So far consumers have not been asked to pay the full price increases needed to support today's ex farm price. The retailers price wars has led to meat being sold at virtual negative margins or no margins. What will happen if consumers are asked to pay, when they are asked to pay?

“It is in that context we need to consider where the supply problems and CAP Reform leads the industry in our united quest to build for the future. The big positive is that we have products and provenance which buyers want and a reputation for quality that is still second to none. What we need now to go with these strengths is a sensibly applied support structure designed to give producers the confidence to re- invest without at the same time driving retail prices above and beyond what consumers will pay.

“The UK government has a pivotal role to play in helping to create this new production environment. A platform for business growth that we have been pressing for ever since CAP Reform first appeared on the EU calendar.”

SAMW has written to Defra Secretary Owen Paterson, who negotiates for the UK on CAP Reform, complaining about allowing France coupled payments up to 12% while limiting Scottish producers to 7%.

“This is not the way to deliver the future as we see it. Unless the correct decisions are taken now and quickly, it is frighteningly easy to imagine where we could end up in another eight years. We could possibly be looking at fewer businesses than we have now paying high prices for cattle to a much smaller, perhaps minuscule, number of producers.”

He did not want to scaremonger but he had been warned by one of his members to stand up and say everything was rosy because it ain't!

“Surely sense will prevail and solutions will be found to take us forward as an industry. We certainly cannot handle another eight years of downturn since the last CAP Reform.”

In last 12 months progress has been made towards New Food Body for Scotland. Already the devolved Meat inspection had improved operating performance and communication. SAMW welcomed input into the consultation but recognised that with that set to run until late May they would just have to be patient. SAMW were seeking an ultimate goal of a structure which is streamlined and efficient.

Appreciate invitation to be part of two government advisory groups.
One was looking at the Horsemeat issue and controls that should be in place to avoid that recurring, the other group was looking at Food Chain Provenance and the branding of products.

He lamented over misguided restrictions on livestock movement of animals and excess bureaucracy in relation to the certification of some of the key abattoir workers involved in animal welfare. Unnecessary Certificates of Competence and the gold plated training costs that go with it were very unwelcome.

Charles Milne, Director of the Food Standards Agency
Welcomed the positive comments about FSA in AM opening speech.
CM opened by discussing the New Food Body in Scotland consultation. Project is a Scottish Government project. Already the transfer of Meat Hygiene staff has occurred under Ian McWatt. Trying to build respect into the job and made a plea to do that at plant level especially when it comes to accommodation within plants.
The NFB is an opportunity to deliver uniquely Scottish solutions. Scope is subject to consultation. This will be a minimum of what already exists but should be wider he asked? Should it have a public health remit, include Animal Health, Provenance, all areas of Food Labelling.
Another part of the consultation talks about doing things in other ways eg where Local Authority monitors controls on all food commodities in approved establishments.
A NFB must implement EU Law and concern over how Scotland would influence decisions made in Europe. CM felt that Scotland would be more distant but believed that a separate Scottish body could have significant influence in Europe.
Consumer Engagement would remain extremely important, trust in FSA translate to trust in the product. NFB would be a non ministerial department not dependant on a yes vote in September 2014.
The consultation by FSA is in three areas
1. Enabling legislation to display food ratings
2. Look at whether or not need additional powers, are there better more effective methods.
3. To enable powers on food standards issue to cover horsemeat issues.

Transition of meat inspection from UK to Scottish delivery
1. Effective
2. Address charging regime in Scotland
Over 50% of Scottish companies have discounts but needs to be addressed for fairness. White meat plants have greater discounts. A need for a level playing field could not be disputed. Un-worked time needs to be constantly reviewed if costs are to continue to be driven down. Scotland has the lowest cost per livestock unit.
EC intent is to reach full cost recovery because in the current economic climate some Member States cannot afford to continue to pay for this.
Changes by 2018 and need potential impacts to be seriously noted.

Horsemeat enquiry will be led by Professor Jim Scudamore to review issues on NFB.
The incident, gross adulteration, trace contamination, surveillance. CM said that no processors in Scotland implicated with usage of horsemeat.
Issue of faith emerged when pork found in Halal meat.

Issues that came out of it
Gross adulteration- 1% threshold set by UK that has now been adopted worldwide. 25 products in UK were identified and withdrawn and all tested for Bute.
Lots of trace results caused by carry over and there is a need for a debate on acceptable levels. ( USA has limit for mouse and rodent DNA in products because of cereal contamination).
Research into what is reasonably acceptable. It is not acceptable or economic to have one species plants
Consumers issue is one of trust.
Contamination of horse with beef is different from lamb in pork. Faith communities concerns make this more important.
Enforcement including surveillance and monitoring is the third part of the problem addressed through FSA. UK and EU testing France , Denmark and Greece highest levels and 4.66 %. UK levels were below 1%.

CM closed by saying that FSA wanted to work with industry to provide a positive environment for growth.

Javier Dominguez, Deputy Veterinary Director and Head of Strategy Unit at FSA addressed the meeting on the subject of Building Future Meat Controls from PST experience to 21st century. He gave a summary of the changes in meat inspection, proposals, implementation and pointed at where reforms could assist.

EU asked EFSA in 2010 to review inspection of pigs (completed by October 2011), Poultry (by June 2012) and other species (later in 2013). He made reference to increased incidences of campylobacter and salmonella and while poultry was the major source of Campylobacter, pork is now the main source of salmonella. Microbiological hazards are the greatest.

Cost of one million cases of food borne illnesses, 20000 hospitalisations and 500 deaths comes to £1.5 billion each year in the UK. Therefore FSA has a strategy to try to reduce this and this includes research. Make better use of the data because some was only ever of interest to PhD students. Javier believed that better use could be made of food chain information and Risk Assessments would be carried out on visual inspection of outdoor pigs for example.

Minimising the handling of carcasses would seem to be a benefit since swabs revealed greater contamination after traditional meat inspection as opposed to visual inspection. Research on consumer understanding revealed that they did not know about the levels of veterinary presence in abattoirs. He also felt that focus should be proportionate and address food businesses where there was a history of poor compliance.

Changes will be proposed for post mortem inspection and on salmonella testing. EC initially proposed a five fold increase but reverted to status quo. Now legislation will require collation of salmonella testing results. He finished with a swipe at another apparently fruitless exercise to test Trichinella. It was 1969 when there was the last human case of Trichinella. In GB we are free of Trichinella and in Northern Ireland the last case was in 1979. Testing he suggested should not be as prevalent.

Mark Taylor of Kantar examined what consumers wanted.
Meal preparation time is still about time. Health is still important. Fried food tops the bill of concerns but red meat perceptions have not changed significantly. Snacking diminished but more about meals. Consumer want to get back into from scratch cooking.
Consumers switching to discounters. Simplification of cooking methods, repertoire of vegetables and meals is diminishing. Big rise in simple Meal Deals.
Move towards cheaper and more versatile meal solutions. Move from meat and two veg to dish based solutions. Traditional tastes are taking more of a back seat, nation's taste is changing.

Trust is top of the agenda and offering something different is important. One person meals continues to matter. Post war pensioners are more important – there is a new type of granny.

Opportunities? Quick but healthy. Habit but try something new. The average shopper buys 300 items out of 30,000 lines. People stick to what they know but brands are still very important.

Price inflation is having an impact on choice, consumers buy more on deals, they are eating in more often, shopping more often and making food go further. Kids change everything, change what we eat and what we do. Treats are more important to a younger consumer.

Richard Lochhead, Cabinet Secretary since May 2007 addressed the conference on the prospects for growth. His theme was maximising the value of red meat brands – the Recipe for Scotland's Future Success.

Red meat crucial to Scotland's rural economy and processors are of course have a key link in that supply chain. £200m is added by the meat processing industry in Scotland and it is a feather in the cap that the worlds leading chefs are using Scotch Beef and Scotch Lamb.

High standards and reputations can be undermined by fraudulent practices, he stressed that Scotland was not implicated by the horsemeat scandal. He felt that customers continued to need assurances that the Scotch brand can still be trusted. The scandal has rekindled interest in where food comes from and that should be good news for the Scotch brands. Consumers want provenance and trust in the Scotch label. They do not want a complex chain of supply that can stretch across the whole of Europe.

The Cabinet Secretary told the conference that they need to strike while iron is hot to build on the work already done on developing the brand. For that reason £1 m has been given to QMS to support marketing Scotch brands and strengthen the visibility of the label. Part of this funding is already bring used to start up a new licensing scheme for secondary processors and manufacturers so that they can use the Scotch label on their products.
He claimed that there was increasing interest in provenance can only be good for the sector.

Lochhead also made a strong plea for the larger players to put their weight behind the Scotch label and take a fair price and promote the brand in a clear and transparent manner. He said that there was comfort that in the last couple of months all retailers had reaffirmed their commitments to source red meat that provides clarity of origin and provenance.

This was he hoped no flash in the pan actions just to get them through some difficult PR. he challenged the retailers to turn this rhetoric into reality with permanent commitments backed up by long term contracts.

Acknowledging that the size of Scotland's beef herd is a concern with its scarcity of livestock the Cabinet Secretary said that this needed to be addressed in the next CAP. UK Minister Owen Paterson is a million hectares away from Lochhead's view. He said “in my view it has never been more important to make sure that the red meat supply chain is supported.”

As the Scottish livestock industry struggles to be viable, he argued that Scotland must be allowed to use up to 15% of the £500m of CAP funding to support the beef industry through coupled support. Cutting the CAP budget has been the priority for all too long. CAP as it stands is not fit for purpose for Scotland but Lochhead promised to work with his colleagues in Europe to turn that around. Scottish Government will work in partnership to build a viable future.

The Cabinet Secretary stressed his concerns over issues outside Scotland's control and closed on that political point.