Oral evidence: Food security: demand, consumption and waste, HC 703Wednesday 29 October 2014
Oral evidence, 29 October 2014.
Witness
Tim Smith, Group Quality Director, Tesco plc, gave evidence.
Chair
Good afternoon and welcome, Mr Smith. It is good to see you again back here as a witness, and thank you very much for contributing to our inquiry into food security: consumption and waste. Obviously we have been on a journey at Tesco since the adulteration scenario. How have you reviewed your supply chains since that happened?
Tim Smith
We have done it from a customer’s eye, from their perspective, and what they were telling us was that we needed to make our supply chains shorter and simpler, so we have done that. We have brought food, where we have been able to, closer to home, in terms of the sourcing, so more British proteins particularly. We have done the things in that way that our customers would have wanted to, but we have taken the additional precaution of doing far more testing on species; we have done more work on becoming as transparent as one can be about the way the supply chain works, so providing better information. That transparency, coupled with the thought that what gets measured gets done, has helped us make our partnership with suppliers that much stronger. Where I would have talked to the Committee previously about partnership and felt confident, I would be much more confident now that the supply base would feel they were in partnership with us.
Chair
One of the things that struck the public in January 2012, or whenever it was, was the fact that Tesco, for one, seemed to take as a given the supply chain once it was in place. Are you now conducting tests to check the integrity of the supply chain is as you expect it to be, so that they are sourcing the food from whence they said they said they were sourcing it?
Tim Smith
We have used whatever technology is available, largely DNA speciation checks, so we have done over 6,000 checks to date since we last met, and those tests are based on risk. They are proportionate to the sort of risks that you might imagine, for the species to become mixed in a processing plant, and so on. To keep us as straight with our customers as we can, we publish all of that information on a quarterly basis now on the website, so those that are interested can see the work we do, and if they want to suggest where there might be the potential for things to go wrong then we encourage them to do so. It is very much done with the customer’s eye, as opposed to thinking about this from just a pure evidence‑gathering base.
Chair
I do not wish to be pedantic, but you do actually go and check the supply chain, so the food is where is comes from—where your supplier says it comes from. You actually physically go and check it, not just the product.
Tim Smith
Yes, physically. For example, on protein, every one of our suppliers and their suppliers have to use an approved source, let us say for meat, and each one of those will have had a physical audit to the standards and specification. If you were to talk to one of our suppliers, they would say, “The Tesco food manufacturing standard is pretty much the gold standard,” and we are auditing against that at least once a year and in some cases more often.
Chair
So you physically check?
Tim Smith
Physically check.
Chair
What role do you think that Tesco, as a supermarket, should have in ensuring the security of UK food supplies?
Tim Smith
First of all, I think it is a global priority, and on that basis alone we have our responsibility pretty clearly marked out by customers. They, of course, are deciding what they buy, where they buy it, and how they buy products, and if we do not deliver—this is from their perspective—then we would not have a business. Customers expect and trust Tesco to take a robust, whole-system approach to food security and sustainability, and that means providing affordable food at the right quality, sourced responsibly. I could go on and say a little bit more, if you wish, about what that means for us and for our partners in the supply chain?
Chair
We will explore that as we go forward. You obviously have a commercial goal—you have got to make a profit—so how can you deliver security of supply chains given that is your goal?
Tim Smith
It is a balance, but just returning to what I said a moment or two ago, if we do not have customers walking through the door taking products from our shelves, because they believe what I have just said is true, then we cannot make a commercial return for our shareholders. It is very much driven by that customer perspective.
Chair
Is the testing that you do posted on your website?
Tim Smith
Yes, all of it.
Chair
How would you as a company define food waste? What definition do you use?
Tim Smith
It is effectively a whole-system question, so it is from the point at which a seed goes into the ground to the point at which the last remnant is disposed of in a customer’s home. We are able to define certainly the top 25 source of food waste in our supply chain and that of our suppliers, and our customers, where that waste occurs.
Mr Spencer
If I come into one of your stores, and I am really keen to make sure the food I am buying is sustainable, how do you inform me and the rest of your customers that that is a sustainable source of food in your products?
Tim Smith
That is a great point. The trust that we are building for the brand depends on customers being able to read on the packaging as much as they find useful, and we ask them what they would find useful, about its source. If it is pole-and-line-caught tuna, for example, that will be very clearly labelled. We try not to over‑face them with the amount of information, but the conduits that we have got that allow customers to raise questions at the store level, through the customer service contacts they might make, or, simpler still, by visiting the website and checking on providence and so on, it is completely transparent. If somebody has a secondary question then we will always find somebody who knows the answer to that.
Mr Spencer
If you try to look for a product, and obviously you have already got the providence on there as well as the brand, and it might be fair trade—you have got to have the salt content, the calorific content, and how many air miles it has done; there is a limit to how much you can get on a label. We heard from Jay Rayner last week, the restaurant critic, who seemed to suggest there was not really an appetite in the retail industry to label up food in terms of sustainability. Is that a fair criticism?
Tim Smith
I am not sure I agree with Jay. What we are doing for customers in our labelling regime, apart from the legalities, is we are giving them the best information that they have told us they want in order to make a decision on choice. If somebody finds it useful to know about the provenance of a specific protein, then that information will be there. It is not going to be in flowery marketing language; it is going to be in language that means that nobody could be misled. The first rule of thumb is: do not mislead a customer when it comes to provenance or sustainability.
Mr Spencer
I am wondering what the Government can do really, and retailers, together, because obviously your priority is that customers buy it from a Tesco store rather than somewhere else. That is understandably your first priority, but surely there is a role for Government and for those retailers to influence where and how they buy that food, and make sure it is sustainable. How do they do that?
Tim Smith
It would be helpful, in terms of unblocking differences and confusion for customers, consumers and citizens, if the Government were able to devise a food plan that unblocked any of those consumer‑driven concerns. Does it mean what it says on the label in every retailer? Does it mean that, if I go to a fast-food restaurant, it is produced to the same sustainable standards and same food safety standard? All of those things apply, and having one simple food plan in the future that unpicks a lot of those barriers to consumer knowledge would give rise to a greater assurance for consumers and for our customers about the provenance of that food, which they are undoubtedly interested in, but have a very short amount of time to take in the information.
Mr Spencer
One of the challenges I suppose is that all of those retailers have got their own kitemark, Red Tractor—if you look at all of those different bodies that are trying to influence, as well as LEAF and organisations like that, is there any work going on anywhere to try to co-ordinate that work to make sure our food is sustainable?
Tim Smith
Not in one single kitemark, or if we can describe it as an icon. When, post the horsemeat crisis, we had to deal with how best to label food to enable customers to get the best information, the single biggest determinant was that they trusted the brand, so whether that is Tesco or one of our competitors, they knew that there were things that stood behind that, in terms of food safety checks, and provenance checks. If we were making a statement, the most important thing was they felt they could trust us about each of those, and then a bit lower down the scale, but important, were Red Tractor and Freedom Foods, and the organic symbols. They use those kinds of things as endorsements and confirmation.
Chair
One witness suggested last week in the session that it might be an idea to carbon footprint—to weigh up the carbon footprint of every product. I understand that Tesco had planned to introduce a measure of carbon footprint for the lifecycle of its products and provide that information on labels to inform consumer choices. Has that been abandoned?
Tim Smith
We did try the scheme. We did it with the Carbon Trust. If you are very interested in the subject, and you knew the context, as a customer, of the information you were being presented with, it was probably helpful, but the vast majority of our customers were just confused by the information. Out of context, because it was not appearing anywhere else, and there was not a generic thrust to make that happen in all retailers or in cafes and restaurants as well, it got lost in the noise of packaging, as Mr Spencer was saying. It meant that we did not get any real buy‑in from the vast majority of our customers, who frankly do not have enough time to spend dwelling in the store looking at each of those labels.
Chair
How much would it have cost per product?
Tim Smith
I do not think we contemplated the gross or the net cost, but it added cost to the way that we were evaluating the product—each individual product.
Neil Parish
Good afternoon. How much are consumers influencing Tesco’s sourcing policy and security of its supply chain, for example, by buying British produce, because there was no doubt there was a huge drive from consumers after the horsemeat scandal? Has that tailed off? What is actually happening now?
Tim Smith
The short and simple answer is that customers have always influenced our procurement and supply chain practices. We have probably taken the view that, as we tell them more, they might be more interested and then there will come a point at which we might reach a natural cut-off. We made a commitment to, wherever it was feasible, wherever it made sense—and that is largely shorthand for making sure that we did not make ourselves or the offer to customers uncompetitive—bring food closer to home. By now we have gone to 100% fresh British chicken, and that meant 20,000 tonnes of additional chicken being purchased here in the UK. That is the equivalent of 200 chicken sheds. To go the next step and follow through on that commitment, and put chicken into all of our ready meals, for example, from Britain, would probably cause concern amongst planners and farmers alike. We are encouraging of British agriculture to do more for us; the fact is that if we put our hand on a lever and ask for a particularly British source, we will get a very good response from farmers, but it sometimes would distort the market; it might just not have the capacity to meet that demand. Where it makes sense we have brought more food closer to home. Specifically to the customer point, the closer the product is to the farm, by and large, the more interested customers are in its direct local provenance. That is why we source 100% of our beef from Britain and Ireland, because that is what customers find to be the appropriate answer to—
Neil Parish
I very much applaud what you are doing, but what worries me is at the moment it is still in the public’s mind, but eventually you will gradually go back to your bad old ways of just sourcing whatever you can get the cheapest, if I could be so bold?
Tim Smith
If I can be so bold and reject your premise that we ever did that.
Neil Parish
I thought you might.
Tim Smith
From our perspective, because this is driven by customers, if, for example, there is a change in their approach to sourcing, first I would be very surprised. This is one of those moments in our history when customers got closer rather than further away from the source of their food supply, and I think we would all feel that in the last generation we have not done enough to keep customers, consumers, citizens close enough to where their food comes from. I think that has changed in a positive way. I should mention our Farm to Fork Trail, which has got 330,000 children more connected now with the food supply chain. I think for that reason, having rejected your first premise, the idea that customers will move away for anything other than some massive price shock, for example, is unlikely.
Neil Parish
My next question is linked, really: what are the key factors consumers should weigh up when deciding if they should buy imported foods?
Tim Smith
Their interest when they report it to us, certainly in these times, is principally price, quality, availability, the concept of freshness, and a little bit further down the track will come, in most cases, the provenance. They will trust all those things are right, because our brand is there, and, because we label so clearly, any concerns they have they should be able to see, at least on the front of the pack, whether that meets their expectations. If they believe that we are sourcing produce that we could buy in the UK from a foreign source, and there seems to be no obvious price reason for that, then savvy shoppers will always tell us and will always know that they feel uncomfortable with that. I would not want it to happen, but they would be the first to catch us out.
Neil Parish
Can I take you on to the seasonality? Some of us always argue these days that we buy the same sort of vegetables all the times of the year, irrespective of whether they are being produced here or not. To what extent should you, as a retailer, influence the pattern of what people are buying, so that they are actually buying more of a British vegetable that is available in season here, rather than necessarily always having asparagus, or whatever?
Tim Smith
Let me take the asparagus example: we found that the asparagus season was shorter than customers wanted it to be, so we sourced asparagus from South America when the British season had finished, and then worked with the British supplier, who I visited, to extend their season. As demand has now gone up for asparagus within Tesco’s customer base, it means that that farm is able to extend their season, using innovative agricultural practices. I would best describe that as a win‑win, because we are selling more British asparagus, the farmer has got the confidence to know that we are going to take the whole crop, because we do not make it as soon as it was. If you cannot put the genie back in the bottle, that ability to source that at the right price for customers has built demand, and it has not had a detrimental effect on the grower.
Neil Parish
I understand the argument, and I am not against what you are trying to do. It is good to extend the season as far as we can here, but to what extent are you trying to influence consumers to buy a British vegetable and not an imported one, and an alternative?
Tim Smith
We have to make it clear to them when we have been able to secure British produce, and if you visit our stores you will see the fairly liberal application of the Union flag on produce that has been packed for us and produced in this country. I think we will see more of that; I think people are more interested in that provenance. The other thing that is interesting is that there is an assumption that we would generally move to a crop from overseas once the crop here started to have perhaps a less than perfect appearance. I have just been to an apple farm in Kent where they had flagged they were going to lose about 20% of their volume because they did not think they would meet the standard at the end of their cropping, so we changed the standard. We know that that has got the potential for customers to be slightly concerned about the appearance, but it is important to us to give confidence to the grower—a cooperative of growers—that what was going to happen was that if they ran into supply chain problems, or they got this slight blemish coming through—
Mr Spencer
Just about your win‑win: have you thought about the community from South America where you were buying that asparagus from, and whether they felt they were winning in that you were pinching their valuable water source? They were using a valuable water resource to irrigate asparagus for Tesco in the UK.
Tim Smith
It is one of those parts of our business that is pretty well under‑discovered, that wherever we are sourcing from another country that has got resource problems, whether it is to do with water or land, or even the vexed question of human relations for that type of crop, then we will have sent in technical and ethical experts to make sure we are not going to have an unintended consequence on the people, most importantly, and then on the kind of environment that they are cropping from.
Chair
What are your sales of fresh meat now compared to, say, 2010?
Tim Smith
I think the difference would be we expect to try to stimulate demand, for example, for British lamb. We think we have probably gone as far as we can for now on beef, but we have created sustainable farming groups for each of the main protein areas, and those that do not have them this year will have them next. Those sustainable farming groups are flagships for farmers and producers in Britain to understand that they can have a long‑term contract, that the partnership approach we take means that we will help them source animal feed at best possible price, fuel and all those other consumables, and that we will genuinely share information using our producer network, so they can talk to each other, they can talk to us, and they can effectively talk through us to customers, building that relationship with customers.
Sheryll Murray
Expanding on the fresh meat, given the exalted health and environmental benefits, should retailers, and/or Government, do more to help or persuade consumers to eat less meat altogether?
Tim Smith
When we are thinking about food security there are three mitigating factors and three things that can be done: you can make the system more efficient by producing more using the same resources; you can transform the system, and, where there was no possibility of generating a foodstuff from a particular piece of land, do that—that is true of our grape business in Ecuador, for example; or you can restrain demand in some way. I do not think that is our job; that is the role of Government, sometimes the NGOs, and sometimes just simple civil society working in its own way. We will respond to what customers tell us they would like us to do. There are obviously opportunities for us to make it clear. When there may be concerns about the consumption of red meat, we might help send market signals just on the equivalent protein, say, in chicken and so on, but our general thought here is that we should be guided by our customers.
Mrs Glindon
What does Tesco do to enable low-income households to secure affordable and nutritious food?
Tim Smith
The way that we position the Tesco brand within stores now has a “good, better, best” hierarchy of product. That means that are we utilising more of the whole crop, say, in bananas, by allowing the product that might not meet the first grade to appear as the Everyday Value product—every bit as wholesome, every bit as nutritious but maybe cosmetically slightly different. The Everyday Value segment allows those customers who want to buy bananas on a frequent basis to enjoy exactly the same opportunity as the next level up and the Finest at the top of that. We have many hard-pressed customers who take their food shopping to the point where they know the price of absolutely everything, and we know that all too well. We sit and listen to customers tell us where price matters most. That is why we do as much work as we do to invest in those basic commodities—milk, butter, eggs and so on—that customers want us to keep a low price of. It is an investment and it has to be done to meet our customers’ needs. We know only too well the proportion of the population that relies on us being able to produce food at those sustainably low prices but at a level that allows all parties in the supply chain to benefit, including the customer.
Mrs Glindon
How do you think supermarket companies can help customers who cannot order online or easily get to a major store when they are on a budget?
Tim Smith
The growth of the convenience outlet—certainly we see this and others will report it too—has been a phenomenon that we might not have anticipated five or 10 years ago. Our smaller stores—Metros and Expresses, and Tesco has a chain of convenience stores called One Stop—are all servicing a community that is either there for pure convenience of the individual customer or family or because people cannot travel to our out-of-town stores. The role of the town-centre within-the-community store is clearly one that is set to continue for the foreseeable future. It means that in the UK we are really fortunate, because we do not have to worry as much as others do in other countries about the concept of food deserts. There really is not as much worry for UK citizens about their ability to source fresh fruit and veg, for example—which is really important—from their local convenience store at a price that allows them to keep in that market with their families.
Mrs Glindon
Do you think those stores give the same value as the larger stores?
Tim Smith
Ours do, yes.
Mrs Glindon
How does Tesco ensure that it achieves a sustainable balance between driving down prices for consumers and ensuring that it is worthwhile for UK farmers—for example, the dairy sector—to continue to supply them?
Tim Smith
In most cases that partnership works seamlessly. The markets are coupled. We are working in partnership with our farmer growers in the United Kingdom and elsewhere to help them be as efficient as they can, and 90% of our suppliers will have been working with us for probably more than seven or eight years. Most of them have built businesses on the back of certainty, the partnership approach and getting a return, because no supplier would work with us if they were not going to make a return. I do not want to go into too much detail because it will take too long, but in the dairy example that you quote we have taken away the coupling between the price we pay for milk to farmers—because we pay on cost of production—and the price that we charge to customers. When we changed the price of our four-pint to £1, we took two full-page adverts out. The first said: “Milk: four pints for £1” for customers. To reassure our dairy farmers, we said: “And it will not make any difference at all to the price that we pay our dairy farmers”. It is almost unique in the way that that cost of production generates something around a 32p-per-litre return for the farmer as opposed to being linked to currency and commodities, which most other schemes are. That is quite unusual, but we have to recognise when there is a market failure in sight, and that might have happened in the dairy sector if we had not put a market protection in for the farmer.
Mrs Glindon
Is the so-called “price war” with the discount supermarkets—Aldi and Lidl—likely ever to result in unsustainable profit margins for our farmers?
Tim Smith
There is no business for supermarkets if they do not have a robust, sustainable supply base. In all of our dealings with suppliers and with customers we know that we are finely honing that balance. When we are thinking about how we reduce the costs of our operation and the cost of producing product for customers, the suppliers are probably a priority, in terms of making sure that they can continue to have a sustainable, profitable business. As I said, many of them—90% or so in the UK—have been with us for approaching a decade on average. That we want to continue. That is our avowed intent.
Mrs Glindon
Even as Aldi and Lidl encroach further and further into the market.
Tim Smith
Ultimately, their supply chains will become of a scale that means they have got to make exactly the same sorts of decisions, and then the choices that are open to customers will become more apparent. Our range, our availability and our freshness—the consequence of the investment we have made in stores—holds the point at which Aldi and Lidl will grow to a point they have got to make some decisions. We are quite clear about what we are going to do.
Richard Drax
Chairman, for the sake of transparency I ought to say that a family trustee is a non-executive director of Tesco. It is not going to influence things today, but transparency is important. Can I talk to you about surplus food redistribution, if I may, Mr Smith? What engagement do you have with charities and other organisations so far as redistributing your food to them is concerned?
Tim Smith
On an ongoing day-to-day basis—so, every day of the week—we have a hierarchy of distribution of food that, having been reduced to clear and still being of the right quality, goes to charitable bodies like FareShare. Our objective there is to have zero food going to landfill. If food goes past the merchantable quality date, whatever that might be, then it would probably go for AD before it went to landfill, but in the middle of that process, the really important piece is that FareShare or similar charities across the UK would benefit. That is on a day-to-day basis.
Richard Drax
Can you be specific as to exactly how many charities you deal with? Do you deal with foodbanks, for example?
Tim Smith
We do. The other ongoing part is that there are 350 stores that have got permanent collection points for customers to donate to the Trussell Trust foodbank. That breaks into two. There are events three times a year where we will gather together food in a more well-publicised way—I think members of the Committee have seen that in operation—but that does not prevent any local store and any local charity agreeing to do something that would benefit the community. It is really about the communities we are operating within. Having this national picture is interesting, but what really matters is how it impacts on each local community surrounding each store.
Richard Drax
You have touched on and I just want to explore a bit further the difference between what is edible and safe food. Would a change in the regulations help you redistribute better? Sell-by dates and all the rest of it.
Tim Smith
Not really. We have moved to single-date coding, so you are either going to see “best before” on a quality basis or a “use by” date for those products that could be impacted by food safety risks. We and our suppliers work really hard to give the maximum amount of life that we can and the regulatory framework that we work in—EU and UK—allows us to do as much as we have done. If we could push it any further we would, and I do not think we would find Government unhelpful on that. It is the due diligence of our own people and our suppliers that set those dates.
Richard Drax
You have just said if Government could go further, you would. You would like the Government to go further, would you?
Tim Smith
No. Sorry; do not misunderstand me. What I meant was: if we can find a way of extending the shelf life of product that helps reduce waste, then we do. In the example of bananas, I know between ourselves and our customers we have gained about 10 days’ shelf life on a banana because we have changed the way the pack house works. It is those sorts of things that we are trying to do. The concept of what is fresh and what is not fresh has changed in customers’ minds in the last decade. Wherever we can, safely and using the best endeavours of the supply base, we make that shelf life as long as it can be.
Richard Drax
Would you support FareShare’s call for a tax break for businesses that donate food for good causes?
Tim Smith
I do not think our behaviour would alter if there were a tax break. This is happening in France, is it not? We are vaguely interested, but it would not really change what we do without our suppliers and it would not change what we do with our customers. I am neutral on the subject, on the basis that it would not change anything we do.
Richard Drax
Can we now go on to waste by consumers? What are you doing to try to tackle that one—to educate or influence customers so that they waste less food?
Tim Smith
We have to give them as much information as we can on the pack about the life that product would have. That is why single-date coding helps. We have taken away the distortion of “display until”, which is for us. We give them the best information that we can on the conservation guidelines on the front of the pack. We will then provide advice about what to do with leftovers. As it runs up to Christmas, for example, you will find on our website we will be telling people, as they have consumed so much and there is still so much food in the fridge or in the larder, what some ideas are—some tips—for leftovers and so on. It is really important that we do not stimulate demand that results in waste.
Richard Drax
What about the multipacks and the buy-one-get-one-free and all that sort of—
Tim Smith
We have listened to what customers said about buy-one-get-one-frees and we have not had buy-one-get-one-frees on fruit and veg and bagged salads since April.
Richard Drax
And multipacks?
Tim Smith
Multipacks yes. Customers told us this works better. They might buy three packs for two when they can choose from a variety of different product. It might be a bagged salad, some tomatoes and some spring onions, all sold on that value footing. That is where customers have told us they would like us to invest that promotional money. They really resent, as you and I probably would too, finding a bag of salad at the bottom of the fridge that they have bought on a buy-one-get-one-free basis, so we do not do it. We have stopped. We listened to customers.
Richard Drax
What about targeting, for example, low-income families with packaged meals that make sense for them—i.e. there is a meal for one person if they are on their own or a meal for a mother and father and one child or two children? Have you gone down that road to perhaps better target so they do not waste?
Tim Smith
Yes, we do. You can now buy half loaves of bread; you can buy smaller packs of most of our key commodities. We have listened to what customers have told us about whether the pack sizes need to be adjusted. Inevitably you are going to end up with packs that do not suit everybody all of the time but, to the extent that shelf space is available, we will make it available for single-person households, for those people with three in the household, and we will listen carefully to what customers are telling us about waste, just to make sure that, inadvertently or not, we have not created a new waste story. We are trying constantly to eliminate food waste and help consumers do their best to eliminate food waste too.
Richard Drax
What more should the Government do to support WRAP and others helping consumers to reduce food waste?
Tim Smith
WRAP do a great job. We are hugely impressed by their work and we have worked with them certainly to help us on the technical side. I would like to see WRAP encouraged to do more—to go further. I would like to see work done that extends their influence or effort into areas beyond retail, not because it takes the focus off us but because food waste in non-retail settings is probably a little bit the iceberg under the water. We should have a clear position for WRAP and give them the confidence to know that if they want to innovate to create opportunities for retailers, for suppliers and for others to work with them they have the necessary resources to make all of that happen. I have not detected too much of a problem with that recently, but we just would want that to continue. More power to their elbow.
Richard Drax
And more money.
Tim Smith
If that is what they need. It is not always the case that arm’s-length bodies or others need—
Richard Drax
More powers.
Tim Smith
I do not think they need powers. They just need influence. It is their ability to persuade those people who are not yet persuaded of the benefits of reducing food waste, because there are people outside of the core mainstream retailers who are not.
Richard Drax
Right. Supermarkets are quite powerful, are they not?
Tim Smith
Supermarkets have their place in society.
Richard Drax
Does Tesco support a new phase of the Courtauld Commitment? If so, what commitments should it entail?
Tim Smith
We are signed up to Courtauld 3. The issue for me in this sustainability component will be how we continue to engage our customers in ensuring that what we are doing has validity to them and is something we are doing effectively on their behalf. Initiatives come and go. Work that we have done in the past you can mark down on the ledger; you can say we have made substantial progress on refrigerants and so on. We all need to be seeing this in a wider context. If it were to be positioned as part of a food plan, then that would be probably more helpful than a normal business setting, but we are happy to work with Government and advisers and to do work with those people that is properly resourced to enable us to know that if we press a button something positive is going to happen for the environment and for our customers.
Chair
In 2013-14 you published the figures for food waste, which I understand were 56,580 tonnes wasted.
Tim Smith
Yes.
Chair
Was that between the field and the store?
Tim Smith
No. That 1% of our food sourcing is what is wasted in the gap between when we as Tesco take title to the product and when we sell it to customers. It is that amount in our distribution centres and in our stores. We can then look at the two sandwiching parts of the food supply chain and say, “If we are wasting 1% and these are the 25 areas that we concentrate hardest on, then 15% of the volume is being wasted in pre-Tesco activities and we have to work really hard on that, and then 15% of the waste again is on the consumer side.” We all think we could do with having more traction with our customers in that area.
Chair
On the 15%, say, with your contractors, what are you doing to reduce and minimise the waste further?
Tim Smith
We have taken the approach that if you measure something and you set achievable targets for the supply base and you get to know them better and you take some of my earlier comments about reducing the number of suppliers and reducing the numbers of links in the chain, then inevitably that leads to opportunities, as it has done in grapes, bananas, potatoes, eggs and bakery, to reduce the volume that is created and not ever consumed. Whether it is in the field, whether it is in the pack house or whether it is in the store distribution network, there are initiatives that take account of where that hot spot might be. In grapes, for example, we took out one of the two pack houses needed—one in the country of source and one in the UK—and that gave us more shelf life, which gave us much lower waste than we had previously seen. The same thing has happened on bananas.
Chair
Where do you dispose of the food that is edible that is wasted?
Tim Smith
There is none of that going to landfill. We have got a hierarchy. As it approaches the usable date, it will be reduced to clear—very clearly marked down—and then after, if it can be, it will go through to the food charities that we spoke about earlier. After that, as I said, there is almost nothing left. Less than 1% of the total waste in the system is in a retail setting. We are talking about tiny fractions.
Chair
How do you sell your comedy carrots?
Tim Smith
I do not think we have ever referred to them as “comedy carrots”.
Chair
The less aesthetically correct. You should call them that. Maybe that is what you are doing wrong.
Tim Smith
We should call them that, you think?
Chair
Yes. You heard it here first.
Tim Smith
I will take that one back to the marketers and see what they make of it. If we look at the specification and the standards for, let us say, carrots, there will be none of this perceived Euro-nonsense about what a carrot has to conform to; it will be to do with freshness and quality. There will be an appearance part to that, but most of what we are thinking about is the customer. We are thinking, “Is this a merchantable quality? Is it going to keep well in the store? Are customers going to be happy to buy it?” That is partly the role of the Everyday Value component of our offer. Nobody is under any illusion that the carrot itself will not be fine. It might not be as perfect looking as the one that is being sold on a pure provenance basis and has been selected on that basis, but if I go to farms or anybody in my team goes to farms and we find out that we are in any way disposing of product that has got that ability to be sold through in our shops, then we stop that, and we invite farmers, producers and growers to contact us if we think we are applying our standards too rigorously. The example I gave of apples is a perfect one, where there was a phone call and a visit from one of my guys, who said, “I can see that there is a blemish, but I cannot see that that then should result in you ditching that crop”. That is how we would stop it.
Chair
Thank you very much indeed, Mr Smith. You have been very kind and very generous in answering. Thank you for being with us today. Examination of Witness
Witness
Nigel Jenney, Chief Executive, Fresh Produce Consortium, gave evidence.
Chair
Good afternoon and welcome. Thank you very much for being with us to participate in our inquiry on food security: demand, consumption and waste. Would you just like to give your name and title, if you would, Mr Jenney, for the record?
Nigel Jenney
Nigel Jenney, Chief Executive of the Fresh Produce Consortium.
Chair
Thank you very much indeed. What would you say was the average length of the supply chain of your members?
Nigel Jenney
In terms of numbers of businesses from grower to retailer? Is that the question you are asking me?
Chair
Yes.
Nigel Jenney
In essence it is very small. Historically you may have had the perception that these supply chains were very convoluted and very complicated. In reality they have shortened considerably in the last five or 10 years through the sheer drive for efficiency and maximising the shelf life of the products that the industry wishes to sell to its customers.
Chair
Would you say it is pretty local?
Nigel Jenney
Fresh produce is sourced from all over the world, so I am not quite sure what you mean by “local”.
Chair
How much would you say of UK fresh produce is home grown now and how much could be potentially?
Nigel Jenney
In terms of our overall supply at the moment—a really simple analogy from my point of view—approximately a third of our fresh produce is grown in the UK; a third is grown in Europe; and a third is sourced from somewhere else in the world. In terms of the UK production, which I think is your specific question, there has been and there is continuing to be considerable interest in British-grown produce. You will all have seen the successes of our sector in the soft-fruit sector and also the top fruit—the apples and pears—sector. They will continue to grow over the coming years, but it will still be a relative balance of our consumer needs of range of products we wish to consume, frankly, versus the wonderful climate that we call the UK.
Chair
Indeed.
Mrs Glindon
How can retailers make sure that they achieve a balance between locally and globally sourced food that best ensures security of fresh produce supplies?
Nigel Jenney
Ultimately where retailers or anyone choose to source their produce from in terms of origin is driven by what we as consumers wish to aspire to. Your previous guest highlighted the Tesco philosophy. They are managing sourcing from the UK and elsewhere in the world, and I find that quite typical, frankly. We are in a situation where, from a consumer point of view and depending on the sector of the industry we are talking about, one of the key drivers that consumers are particularly interested in from certainly food‑standards surveys and everything else is price rather than origin. Origin would not be in the top three of the criteria they would use to select fresh produce.
Mrs Glindon
What factors will determine how vulnerable these supply chains are to disruption—if there was a failure of UK harvests for specific crops?
Nigel Jenney
That is always a challenge. From time to time throughout the world there have been food supply issues. From a UK point of view, as I have already mentioned, we have a very balanced food supply chain in reality. Two-thirds of our food is coming very short distances if we think our European colleagues are not too far away. Depending on where you are in the UK, you could be closer there than other parts of the north of England and Scotland. There is certainly a reasonable balance, but that is driven by the range of types of products we wish to consume and the time of the year we choose to consume them in.
Richard Drax
On to affordability, which you have touched on, and price: what can producers and retailers do to encourage low-income consumers to buy more fresh produce?
Nigel Jenney
It is a challenge, but it is a huge opportunity for the retailers and the industry. The advent and the development of convenience stores makes fruit and vegetables more accessible to a broad range of consumers, but—some of the inquiry team visited New Covent Garden Market in London recently—wholesalers and wholesale markets for food-service businesses are a wonderful example of an alternative but very important route to market for consumers to enjoy fresh produce. We enjoy something in the region of 6,000 street markets in the UK. It is a fantastic way of getting fresh produce literally to the doorstep of those consumers who may find it difficult on occasions to travel to their nearest store of some alternative. The great thing is, from recent surveys also, street markets serviced by wholesalers offer a fantastic range but very competitive retail prices. Fresh produce is of a modest value in general terms in major retailers, but, even with the challenges of the Aldis and the Lidls, in street markets it tends to be in the region of 20% less than your local multiple retailer.
Richard Drax
How do we remedy the lack of choice for consumers in areas mainly comprised of fast-food outlets and stores selling packaged convenience foods?
Nigel Jenney
That is an ongoing challenge. As an industry what we are able to do is offer a very broad range. One of the things that is often ignored is that if I asked you all today to tell me how many fruits or vegetables you can mention but not different varieties, you might do well at 20 and you might do very well if you get to 30, but as an industry we are offering over 400 different types of products—not varieties; different types of products—to us as consumers every day.
Richard Drax
Right. Where this is not available, how do we remedy this problem? How do people get access to it if it just simply is not around them?
Nigel Jenney
Where there are extra challenges, one of the key opportunities is either food hubs or the street market concept. What I would be very keen to see is an increased number of either independent greengrocers or street markets popping up throughout major cities and elsewhere in the UK to provide that low-cost opportunity to enjoy fresh produce.
Richard Drax
Why do fresh-produce retailers, including supermarkets, frequently choose not to locate in some low-income areas? I suppose there is quite an obvious answer to that one, is there not? I would be interested to hear what you think of that.
Nigel Jenney
Possibly you should have asked that question to my colleague before. There is a commercial reality, is there not? Do they believe they can make that individual store a viable paying proposition? That is the challenge in many respects, but it is worth committing that time and effort to provide that range and affordability of produce.
Richard Drax
Sainsbury’s has opened a store in my constituency in Weymouth. Interestingly, they have got a bus service, which I do not think I have heard of too much. They go out into the community to bring people in. Maybe that is a solution for supermarkets to look at.
Nigel Jenney
A bus service is a great idea. I have certainly seen in more rural areas that the NHS has now provided almost, if you like, mobile shops; they are managing the range of food that can be purchased so it is healthy and enjoyable.
Richard Drax
Or they could send vans out with food like an ice cream van and rather than “ting-a-ling-ling; the ice creams have arrived,” the fresh veg has arrived as well.
Nigel Jenney
There is a fantastic business opportunity, is there not?
Richard Drax
If I get booted out next May I know where I am going to go.
Chair
We might all be joining you.
Mrs Glindon
How can producers and consumers ensure that the retail industry’s specifications, for example, for aesthetically pleasing fruit and veg do not lead to food waste?
Nigel Jenney
There is a combination of things here. As an industry we have been subject to a whole range of regulations, like many others. In terms of the physical specification of those fruits and vegetables, there are 10 detailed European regulations for 10 key commodities and then there are general specifications for all the rest that really underpin the standards that we as traders or retailers can sell fresh produce at. What we do find if we are talking about major retailers specifically is they tend to offer different pack sizes and different qualities of product so you as consumers can choose to enjoy whichever type of product you wish. They have done a great deal in recent years to be much more flexible with their specifications to utilise as much of that crop as nature has provided, but ultimately what is not used by major retailers and others innovative businesses do use in alternative ways. It is not wasted in terms of not being used by consumers; it is converted into another product. That ugly carrot or that ugly potato may be in your ready meal this evening.
Mrs Glindon
I hope it will not be in my frozen chips.
Nigel Jenney
I kept off the subject of chips, you see.
Mrs Glindon
How can the Government help more people eat more fruit and veg?
Nigel Jenney
Without question the Government initiative in terms of the 5 A DAY campaign has got huge recognition. The reality is it is converting us as consumers to make that next step. As an industry, we have certainly helped fund and have funded a campaign called Eat in Colour—we have a website running—that encourages consumers to eat healthily with lots of fun things to do and lots of recipes and tips for how to use food that may not be quite as good as the day you bought it. One of the key challenges is how we encourage consumers at all ages, but particularly the young, to get that positive habit as early as possible. Currently there is the school fruit and vegetable scheme supported by Government, under which I think five and six-year-olds have a piece of fruit or vegetable on a daily basis. That has been proven to be highly successful. Certainly as an industry we would love for that to be extended further in some way to really reinforce and maintain that eating habit as we go through our teenage years.
Mrs Glindon
Other than the excellent campaigns, what specific research and development could the Government support?
Nigel Jenney
In terms of consumers’ eating habits and why they do or why they do not?
Mrs Glindon
Yes. What else could they do to—
Chair
Eating more fresh fruit and veg a day.
Nigel Jenney
One of the things is that some consumers have a perception that fresh produce is expensive or do not quite know how to prepare it. In reality, it is fantastic value for money. An average family of four only spends something like about £4.50 a week on fresh fruit and vegetables. You cannot buy much in a retail store for £4.50. It is a bottle of wine, in reality, as an example. What we need to do is reinforce the enjoyment and the pleasure of eating fresh produce and the benefits. People know it is healthy—the reality is we have all got that message—but we have to make it more exciting and more innovative in terms of providing that opportunity for consumers and families.
Chair
You say in your written evidence that “the Government should do more to refute inaccurate claims made under the 5 A DAY brand”. Could you elaborate on that?
Nigel Jenney
That point really is that there is the Government 5 A DAY scheme and there is a 5 A DAY brand. If I want to use that particular brand, I have to be accredited and I will be monitored from time to time. What we see from time to time is that some less responsible businesses may not use that brand but use almost a lookalike brand, which in reality is not delivering the same message nor delivering the same health benefits.
Chair
Again in your evidence you say that “around 67% of fruit and vegetables are imported to the UK”. There is quite a deficit—you go on to say mostly with EU member states. Should we be doing more to promote the sale of home-grown fruit and veg?
Nigel Jenney
We should be doing more to promote the sale of fresh produce regardless of its origin. Ultimately, whether I buy a British apple today or a French apple today, I will encourage consumers to enjoy eating fresh produce and hopefully eat more. At the end of the day, the reason why we import fresh produce is, simplistically, because it is either not in season in the UK at this time or it is not a product we grow in the UK. When you look at the list of what we all enjoy, our key favourites are bananas and citrus, neither of which we grow in the UK or are probably ever capable of growing in the UK.
Chair
I was surprised that the banana is probably the single most popular product—
Nigel Jenney
By a long way, yes.
Chair
You say that “the Government must have a cohesive policy for public sector procurement which encourages greater consumption of fresh produce”. Are you saying that they do not have such a cohesive policy at the moment?
Nigel Jenney
There have been issues over the last few years. Frankly, it has not been clear. Whilst I would fully support the concept of individuals wanting to buy British produce or wanting to buy local produce, whatever that means to us as individuals, I am more concerned about making sure there is an availability of fresh produce for us to enjoy regardless of origin.
Chair
Thank you very much indeed for being with us. We will now go and eat our potatoes—or chips—but thank you very much.
Nigel Jenney
And laugh about my ugly veg. There we go.
Chair
Thank you very much. We will try to eat more than our five fruit and veg a day. Thank you very much for being with us and for your contribution. Oral evidence: Food security: demand, consumption and waste, HC 703 2 [1] Additional information provided by WRAP, 11 November 2014: the actual amount of chicken wasted is equivalent to 86 million chickens per year, not 76 million chickens.