Chamber
Plenary, 04 Oct 2006
04 Oct 2006 · S2 · Plenary
Item of business
Food Supply Chain
I apologise for missing the first part of the debate.
The short inquiry that the Environment and Rural Development Committee conducted in December 2005 was in response to widespread concerns about food supply chain issues. Perhaps it is worth reminding ourselves of how important the food and drink sector is to rural development. Scottish agriculture provides 36 per cent of inputs to the Scottish food manufacturing industry and 24 per cent of inputs to the food and drink manufacturing industry as a whole. About 40 per cent of jobs in the food and drink manufacturing business are in rural Scotland.
In the Liberal Democrat manifesto of 2003, we made commitments to support the Scottish food and drink industries by encouraging localised food distribution systems that involve more local processing of produce; to promote direct sales, farmers markets and alternative marketing schemes to ensure that producers have a stake in each stage of the food chain; and to support local food chains in order to reduce the number of food miles. Those issues were picked up in the inquiry and in the committee's recommendations. The committee recommended that the Executive use every possible avenue to promote procurement of local produce and it believes that the Executive should produce clear objectives and procurement guidelines to ensure that locally produced food is used.
Some work has been done on that. In 2005, the Executive published research into the opportunities and constraints in the public sector food procurement market. Subsequently, the food forum network has been used to bring potential suppliers and public sector procurement officers together to improve the information flow.
Further research has been commissioned to examine successful local food procurement models and to improve understanding of the practical issues for producers. There is good practice out there—East Ayrshire Council has adopted a procurement model that has improved the quality and freshness of ingredients and has reduced packaging waste and food miles, but which still conforms to EU procurement rules. It can be done.
The committee also recommended that the Executive re-examine how business support can assist in farm diversification and in developing and incentivising local food chains more effectively. Another recommendation of the committee was that the regulatory framework be considered so that Scottish farmers are not disadvantaged by regulatory costs.
Those recommendations are fine and there is much consensus about them, but the two big unresolved issues that prompted the inquiry concerned supermarkets and competition rules. Sustainable trading relationships throughout the food supply chain are essential and it is important for companies to have fair and transparent contracts.
When we looked into people's concerns about the food supply chain, we heard allegations that supermarket buyers impose arbitrary price reductions at short notice or even retrospectively, that producers are forced to enter unsustainable buy-one-get-one-free promotions and that restrictions are placed on selling produce that is surplus to contract requirements. I have experience of that in my area. Christine May mentioned carrots. In my area, a successful local business that employed 40 people in supplying carrots to supermarkets was put out of business overnight when the price was reduced, without warning, from 16p a pound to 12p a pound. When that company went out of business, 40 people were thrown out of work, which had a devastating impact on the local economy. It cannot be in the interests of retailers or consumers for short-term price pressures to put local suppliers out of business.
The committee therefore recommended that the Executive consider how it can use its contacts with supermarkets to influence their contract practices. We hope that we can influence supermarkets to consider spreading more evenly and transparently the risks of promotions and to consider contracts that would allow edible produce that supermarkets might reject to find other suitable markets, which would avoid discards.
The second big issue that came out of the inquiry is competition and how competition rules are interpreted in this country. The industry needs further co-operation and collaborative activity—that must be clearly stated. We asked the Executive to consider the lessons that can be learned from examples of collaboration among farmers in other countries. There is significant scope for further development of agricultural co-operatives, so it is important that the Competition Commission's current inquiry pay heed to our representations on the effect on Scottish interests of restrictive interpretations of the market effects of collaboration in the Scottish food industry.
This is the third inquiry that has been undertaken into the subject, but this time the right questions have been asked: we hope that the right answers will be given. The inquiry is important and its recommendations were sensible and widely welcomed. Many of the recommendations are being progressed. I hope that they bear fruit.
The short inquiry that the Environment and Rural Development Committee conducted in December 2005 was in response to widespread concerns about food supply chain issues. Perhaps it is worth reminding ourselves of how important the food and drink sector is to rural development. Scottish agriculture provides 36 per cent of inputs to the Scottish food manufacturing industry and 24 per cent of inputs to the food and drink manufacturing industry as a whole. About 40 per cent of jobs in the food and drink manufacturing business are in rural Scotland.
In the Liberal Democrat manifesto of 2003, we made commitments to support the Scottish food and drink industries by encouraging localised food distribution systems that involve more local processing of produce; to promote direct sales, farmers markets and alternative marketing schemes to ensure that producers have a stake in each stage of the food chain; and to support local food chains in order to reduce the number of food miles. Those issues were picked up in the inquiry and in the committee's recommendations. The committee recommended that the Executive use every possible avenue to promote procurement of local produce and it believes that the Executive should produce clear objectives and procurement guidelines to ensure that locally produced food is used.
Some work has been done on that. In 2005, the Executive published research into the opportunities and constraints in the public sector food procurement market. Subsequently, the food forum network has been used to bring potential suppliers and public sector procurement officers together to improve the information flow.
Further research has been commissioned to examine successful local food procurement models and to improve understanding of the practical issues for producers. There is good practice out there—East Ayrshire Council has adopted a procurement model that has improved the quality and freshness of ingredients and has reduced packaging waste and food miles, but which still conforms to EU procurement rules. It can be done.
The committee also recommended that the Executive re-examine how business support can assist in farm diversification and in developing and incentivising local food chains more effectively. Another recommendation of the committee was that the regulatory framework be considered so that Scottish farmers are not disadvantaged by regulatory costs.
Those recommendations are fine and there is much consensus about them, but the two big unresolved issues that prompted the inquiry concerned supermarkets and competition rules. Sustainable trading relationships throughout the food supply chain are essential and it is important for companies to have fair and transparent contracts.
When we looked into people's concerns about the food supply chain, we heard allegations that supermarket buyers impose arbitrary price reductions at short notice or even retrospectively, that producers are forced to enter unsustainable buy-one-get-one-free promotions and that restrictions are placed on selling produce that is surplus to contract requirements. I have experience of that in my area. Christine May mentioned carrots. In my area, a successful local business that employed 40 people in supplying carrots to supermarkets was put out of business overnight when the price was reduced, without warning, from 16p a pound to 12p a pound. When that company went out of business, 40 people were thrown out of work, which had a devastating impact on the local economy. It cannot be in the interests of retailers or consumers for short-term price pressures to put local suppliers out of business.
The committee therefore recommended that the Executive consider how it can use its contacts with supermarkets to influence their contract practices. We hope that we can influence supermarkets to consider spreading more evenly and transparently the risks of promotions and to consider contracts that would allow edible produce that supermarkets might reject to find other suitable markets, which would avoid discards.
The second big issue that came out of the inquiry is competition and how competition rules are interpreted in this country. The industry needs further co-operation and collaborative activity—that must be clearly stated. We asked the Executive to consider the lessons that can be learned from examples of collaboration among farmers in other countries. There is significant scope for further development of agricultural co-operatives, so it is important that the Competition Commission's current inquiry pay heed to our representations on the effect on Scottish interests of restrictive interpretations of the market effects of collaboration in the Scottish food industry.
This is the third inquiry that has been undertaken into the subject, but this time the right questions have been asked: we hope that the right answers will be given. The inquiry is important and its recommendations were sensible and widely welcomed. Many of the recommendations are being progressed. I hope that they bear fruit.
In the same item of business
The Presiding Officer (Mr George Reid):
NPA
The next item of business is a debate on motion S2M-4884, in the name of Sarah Boyack, on the Environment and Rural Development Committee's eighth report of ...
Sarah Boyack (Edinburgh Central) (Lab):
Lab
I thank Parliament for giving us the time to debate an issue that the Environment and Rural Development Committee feels is an important topic. I want to than...
Mike Rumbles (West Aberdeenshire and Kincardine) (LD):
LD
On the issue of milk, the report states that the committee"was not able to get a clear answer to critical questions such as exactly where the retail price of...
Sarah Boyack:
Lab
We managed to get the starting price of milk as it comes out of the farm gate and we managed to work out—not surprisingly—how much it costs on the supermarke...
Alex Fergusson (Galloway and Upper Nithsdale) (Con) rose—
Con
Sarah Boyack:
Lab
If Alex Fergusson lets me move on, I will take his intervention later.There is also an issue of scale. Because there are major contracts that cover the whole...
The Minister for Environment and Rural Development (Ross Finnie):
LD
I thank the committee for its report, which is on the food chain, although by delving into that subject, the committee inevitably embraced a range of other i...
Stewart Stevenson (Banff and Buchan) (SNP):
SNP
The minister will be aware of the Welsh Assembly Government's modest intervention, in that it seeks to buy locally for Government purposes. Has he talked to ...
Ross Finnie:
LD
I have talked to the Welsh Assembly Government—I will return to that subject.I will focus on the size and scale of the market. If we are to have successful f...
Mr Jamie McGrigor (Highlands and Islands) (Con):
Con
Can the minister tell me how much red meat we import?
Ross Finnie:
LD
I might have to get the member an accurate figure for that later, but if I am right, the United Kingdom is not self-sufficient in red meat—that is quite inte...
Alex Fergusson:
Con
I hear exactly what the minister is saying; indeed, he said some of it in response to a parliamentary question that I asked a couple of weeks ago. Nonetheles...
Ross Finnie:
LD
That is not a question of where the money has gone but it shows that negotiation up and down the chain is exclusively between the processor and the retailer....
Mr Mark Ruskell (Mid Scotland and Fife) (Green):
Green
Will the minister take an intervention?
Ross Finnie:
LD
No, I must conclude.On public procurement, as I said in our formal response to the committee and as Sarah Boyack has rightly pointed out, we changed the guid...
Richard Lochhead (Moray) (SNP):
SNP
The SNP very much welcomes today's debate and the committee's report.Scotland has a reputation for being a superb food-producing nation. When food producers ...
Ross Finnie:
LD
We need to be careful. The member refers to profit margins. My understanding from this morning's reports is that Tesco's turnover has increased by 12.7 per c...
Richard Lochhead:
SNP
I appreciate the minister's defence of the supermarkets, but I ask him to allow me to develop my point. Our primary producers in Scotland will not record sim...
Mr Ted Brocklebank (Mid Scotland and Fife) (Con):
Con
As both Sarah Boyack and Richard Lochhead said, one of the most disturbing aspects of the committee's inquiry into the food supply chain was that many produc...
Stewart Stevenson:
SNP
Is that the Conservatives' way of apologising to milk farmers in Scotland for the abolition of the milk marketing boards?
Mr Brocklebank:
Con
I will speak about milk farmers in a moment. Whatever responsibility the Conservatives had, Alex Fergusson and I will be delighted to take it.Sarah Boyack an...
Christine May (Central Fife) (Lab):
Lab
What will the new Conservative party offer to the market this time next year?
Mr Brocklebank:
Con
I will be happy to address that as I develop my speech.
Alex Fergusson:
Con
Next year when we are in the Executive, that is.
Mr Brocklebank:
Con
Indeed.As we heard, the committee was frustrated in coming up with clear answers to many of the questions that we asked. As we know, the Competition Commissi...
Maureen Macmillan (Highlands and Islands) (Lab):
Lab
The committee's inquiry and report on the food supply chain has confirmed what many of us believed: the policies of many, but not all, of the supermarkets co...
Alex Fergusson:
Con
I am sure that Maureen Macmillan accepts that there is vegetarian input to much of the demand for organic produce. Where in Scotland would she grow organic c...
Maureen Macmillan:
Lab
That is not the point. What can be grown here should be grown organic; I do not object to importing organic cashew nuts.Importing produce in such a way if we...
The Presiding Officer:
NPA
We move to the open debate. If members stick to six minutes, including interventions, I will just about get everyone in.
Christine Grahame (South of Scotland) (SNP):
SNP
I may very well be short of six minutes, Presiding Officer.I want to pick up on four points: the role of supermarkets; procurement; local food economies; and...