Oral evidence: Dairy prices, HC 817Tuesday 25 November 2014

Oral evidence, 25 November 2014.

Witnesses

Dr Judith Bryans, Chief Executive, Dairy UK, and Christine Tacon, Groceries Code Adjudicator, gave evidence.

Chair

Can I welcome you both and thank you for contributing to our session on dairy? Just for the record, starting with Christine Tacon, can you say who you are and what you do?

Christine Tacon

Good afternoon, everybody. I am Christine Tacon, and I am the Groceries Code Adjudicator. I think you have heard my name and my role mentioned a few times so far.

Dr Bryans

I am Judith Bryans, and I am the chief executive of Dairy UK.

Chair

Excellent. I am sure you will have plenty of time to make any comments you wish to during the course of the session. Just a couple of preliminaries, if I may: you have heard the interest in the Groceries Code Adjudicator. Can you understand the reason why you were not given the remit to cover processors and retailers at the outset, and why you were not given the right of own initiative? You are probably aware that we would have liked to do the pre-appointment scrutiny, but it fell to a different Committee. We fed in a number of concerns, amongst which was that you should have the right to do own initiative and the right to spot-inspect. Do you have any idea why you were not given those powers at the beginning?

Christine Tacon

It is a complicated set of questions. May I just quickly lay out what I can do at the moment, so that you can put that all in context? I think that might be helpful. I am grateful, given the obvious interest about my role in this area, to be able to raise awareness of what I have got the powers to do. The Groceries Code Adjudicator was set up under the Act in 2013. It was to enforce, monitor and ensure compliance with the Groceries Supply Code of Practice, which I will call the code, and is not to be confused with the dairy code, which was established under the Groceries Market Investigation Order in 2009. It only covers the 10 large retailers with a turnover of over £1 billion, so it is by no means all the retail market. It only covers 15 practices that the Competition Commission flushed out as areas where they thought the retailers were using their strong position in the marketplace to put excessive risk and unexpected costs on to their suppliers. The sorts of things that are listed are actually in your written evidence. They are things such as delaying payments and demanding retrospective lump sums, and not compensating for getting forecasting wrong. They were practices that were happening in many cases unexpectedly to the suppliers. However, it has got no powers and nothing in the code that relates to price or share of margin, or any practices that are about the indirect suppliers, which is why you have been hearing talk today. It is about the direct suppliers to the retailers. The order that created all that comes under the Competition and Markets Authority. They established the code and they decided what the retailers had to do to comply. Every retailer has a code of compliance officer. I mention that because that has actually been quite key to me in getting the progress that I have. I wanted to do the role because I am an engineer. I worked in fast-moving consumer goods, I worked in farming, and I was getting very frustrated about the inefficiencies of the supply chain. I am sure you have heard about some of that today. My passion is about trying to get the supply chain working well.

Chair

If you pause there, because I think there will be plenty of opportunities to tweak out more when we come to the questions.

Christine Tacon

Yes, but it was just about the code and the order. I thought it was important to describe that.

Chair

If I could just ask both of you, perhaps starting with Dr Bryans: do you think that we are disadvantaged by not having more co‑operatives in this country? Is it something you would like to see in the dairy sector develop further? I just see in my own area that they are very proud, the farmers, and independent, and they do not see this as a natural move.

Dr Bryans

We have three very strong co‑operatives across the UK, when we consider Northern Ireland and GB. As farmer owned and led organisations they are very strong, but I also see that our PLCs are very strong, and they have their own dairy farmer supply chain groups. I do not think that the farmers in either of those are any less proud of the organisations they represent.

Chair

Any comment you want to make, Ms Tacon?

Christine Tacon

No.

Mrs Glindon

I would like to direct my questions to you, Dr Bryans. What do your members report as being the impact of the 2014 price drops on farmers and processors?

Dr Bryans

It is a really serious situation at the moment for everybody—for both farmers and for dairy processors. If you look at the GlobalDairyTrade auction last week we have seen prices weaken even further. They are the markets that processors are trying to sell product into, on behalf of the dairy industry. It is obviously a global market situation related to oversupply. It is exacerbated by Russia. It is exacerbated by China not purchasing very much stock at the moment. In relation to GB, I think the impact is reduced profits for both dairy farmers and dairy processors, and actually hampering people’s investment plans going forward.

Mrs Glindon

Is it worse than 2012?

Dr Bryans

We think it is worse than 2012, actually. We are not, as an organisation, in the business of predictions, but when we look at forecasts from people like Rabobank and those that do, we are looking very much, going forward, at this continuing well into 2015. If you look at the published AMPE price for milk in October and you make an insertion for the GlobalDairyTrade auction last week, you are really putting a price there somewhere around 17.6 or 17.7 pence. With intervention just below 17 pence, if that continues, let us be clear about the fact that we may have issues around intervention early in 2015.

Mrs Glindon

How far, from the crisis in 2012, do you think the industry has been able to respond in improving exports and processing capacity?

Dr Bryans

The industry has done an awful lot since 2012. We have invested, and our members would have invested approximately £100 million in capex every year over the last five to seven years. The industry is trying to export more. It is trying to open up new markets. What we have to remember is that as a country we have not previously really had a culture of exporting in the way that many of our competitors have in the Netherlands or New Zealand or Ireland. Nonetheless, we are trying very, very hard to open up those markets, and there is no reason that they should not open up for us. There are certain things, if you wanted to help us, you could do. Certainly making export certification a one-stop shop would be a particularly useful thing for the industry, and resources to UKTI to help the industry with trade missions would be very helpful as well.

Mrs Glindon

Has the rationalisation of the industry affected the viability of the dairy farming sector?

Dr Bryans

This industry has evolved and will evolve further. The rationalisation has been driven by the need for efficiency within the sector. I do not think it has hurt the dairy farmer. What has hurt the dairy farmer and what has hurt the dairy processor is the extreme volatility that we see in dairy markets. This is a cyclical feature of the market, and obviously as an industry we need to develop instruments to deal with that better going forward. However, I do not think we can blame what is currently happening on rationalisation.

Mrs Glindon

Finally, how do you think the sale of Dairy Crest’s liquid milk business will affect farmers or impact on them?

Dr Bryans

It will have a significant impact on the supply chain in the UK, but it is something that the businesses feel is very important. It is important for the supply chain in this country.

Ms Ritchie

Again for you, Dr Bryans, has the EU milk package helped to stabilise milk prices and farmer incomes?

Dr Bryans

No, it has not. Obviously the dairy package was designed to try to help the farmer have more negotiating power within the supply chain. Very few countries have taken up putting in place producer organisations. Where producer organisations exist, they have not necessarily stabilised the milk price. I do not believe they can do; even if a producer organisation was in place and could help with negotiations, they are still going to be exposed to what is happening within the world market.

Ms Ritchie

The EU is opening up the dairy industry fully to the market under CAP post 2015 approaches. Would you support reconsideration of this under the current exceptional circumstances, with the Russian ban on EU dairy imports skewing prices heavily?

Dr Bryans

There are a couple of things. The Russian ban is a really interesting one. I talked to a member last week who had done a calculation saying that the milk in the EU that went into the product that should have gone to Russia was about 2.1 billion litres. If we put that in context in terms of the UK, that is probably five large creameries all rebounding onto the EU market. Has it been a problem for the dairy industry? Yes, it has impacted significantly on prices. Has it exacerbated this period of volatility? Yes, it has, but it is exceptional. As an exceptional event, I do not think that we would let it interfere with the fact that we think that abolition of quotas and opening up of the markets is the way to go.

Ms Ritchie

Does the EU need to provide significant short-term funding, for example for storage capacity, to get the industry through the immediate crisis? I have talked to your equivalent, Dr Johnston, in Northern Ireland, and they are looking for EU intervention, because the larger amount of milk actually has to be exported from there.

Dr Bryans

Private storage aid is not enough and is not well managed enough. We have seen examples of that and we have heard examples of that, in terms of Italy getting in there first with all its cheese. Beyond Italy, it is just the fact that if private storage aid had continued it was too short. It would have been putting product back out into the market in April, where there was a spring flush. However, we think that we are getting to a stage where the EU may need to intervene. It really needs to look at the intervention price, because the intervention price is far too low at the moment. I know intervention is politically sensitive. Nobody wants to think about butter mountains, but that is not what we are asking for. As we move in a transition from a regulated EU market to an unregulated EU market, we just need the European Commission for a short time to be able to help manage the volatility, and looking at intervention is a way to do that.

Ms Ritchie

What should the UK Government be arguing for from the EU to support UK dairy farmers?

Dr Bryans

A few things, I think, from our perspective. Yes, it should be looking at intervention, but it should also be looking at various other things. We have within the European Union a wonderful thing—the regulation for the promotion of agricultural products. Mike Johnston, who you mentioned, has made great use of that in the past, as have we, in terms of promoting the integrity of our products—the nutritional integrity—to the consumer. That promotional pot we fight for with every other commodity within the European Union. In 2012, when there were issues, there was additional funding put into that pot, specifically for dairy. The Dairy Council for Northern Ireland and the Dairy Council here and in the Republic of Ireland were beneficiaries of that and were able to promote to the consumer increased consumption of dairy products. Helping us to increase the consumption of dairy products is really important, whether that is done through promotion or through, for example, schools, hospitals, Government Departments being willing to buy dairy products.

Neil Parish

Good afternoon. How successful has the code of best practice been in rebalancing the power between farmers, processors and retailers of dairy products? We talked quite a bit in the last panel. What are both of your views on that?

Dr Bryans

There are a few things there. The voluntary code of practice has been very useful in improving relationships across the supply chain. This is because it has removed some of the concerns and stresses of dairy farmers—things that they were worried about in terms of the contractual relationships, such as retrospective pricing. However, it is really important for everybody to mention, and I know my colleagues mentioned it earlier, that it was not ever built to deliver a price and it cannot address pricing issues. I am not entirely sure that there is any code in a free market that can address a pricing issue. In terms of the voice of the dairy farmer within the supply chain, we have some very strong co‑operatives in this country, and farmer-run businesses. We also have dairy supply groups attached to our PLCs. I think there is greater trust along the whole supply chain, and I think the code has really helped with that, but we must not misunderstand what it can do. In terms of your retail question, the code currently does not address any issues in relation to retailers. To be perfectly honest, we would not necessarily advocate, even though it was a recommendation, the code being used with retailers, because we think at the point where a retailer makes the code a condition of supply, it goes from being a voluntary code to being a mandatory code. At the point where the voluntary nature of the code goes then the dairy package kicks in, in terms of regulation. At the moment we have dairy farmers who, for the vast majority, have evergreen contracts with certain security of supply. Under the dairy package, Defra have always interpreted the requirements to mean that every time a price changes, whether it is up or down, a contract is terminated. In that particular circumstance, particularly with the volatility at the moment, that would actually give insecurity to the dairy farmers.

Neil Parish

What about the point about transparency? If there is a price war between large retailers, can we be absolutely certain that they are actually paying for this, or are the farmer and the processor paying for it? This is one of key issues to all this.

Dr Bryans

From our own perspective, we do not have sight of how supermarkets set prices. There are a couple of things that need to be considered. The processor and the retailer are the major route of dairy products to market from the dairy farmer, so they are an integral part of the supply chain. They are not the only part of the supply chain in the picture. There are lots of other routes for dairy products to reach the consumer. The dairy industry’s other customers would again be hospitals, schools, Government Departments. So a simple farmer, processor, retailer model does not really represent the whole industry.

Neil Parish

Can I just say to the Groceries Code Adjudicator, you talked a bit about what your present rules are. To what degree can you help in the present situation?

Chair

We are coming onto that aspect.

Neil Parish

Yes, we are coming onto that, but it is just really on where the rule is now and what you can and are doing about it.

Chair

Can we come onto that in a moment?

Neil Parish

All right. Just one final question then: does the code need to be put on a statutory basis to extend coverage from the current 85%? There is obviously 15% not covered at the moment.

Dr Bryans

Again, I think if you put the code onto a mandatory basis it ceases to be a code. Those elements of the code that can be there because it is a voluntary code and not regulated, and not falling under the dairy package, would disappear. So that is difficult. Also if you look at some of the people who have not signed up to the code, a lot of them are very small family businesses who have been in relationships with their farmers for generations. A lot of those people would not have signed up to the code because they do not see that code as being relevant to them, because they have known their farmers for so long. They do not feel that the code represents them, because they feel that they never engaged in practices that it was put there to deal with. Again, as I said earlier, if you make the code mandatory, the security of supply becomes a problem.

Roger Williams

Could you tell us how the code could be extended up the chain and what would be the practical barriers of doing that?

Dr Bryans

For us we see a few barriers in doing that. The first one would be if you look at those very small businesses who have not signed up to the code—it is, after all, a voluntary code—you are very often talking about small artisan or speciality cheese-makers. If the retailer requires somebody to be code compliant in order to supply them, you could find an awful lot of those people losing their contracts and going out of business. In practical terms, when the recommendation was made in terms of extending to retailers, we took competition law advice on this because we were slightly concerned about it. The competition law advice that we received was unequivocal that extending it up the supply chain would be counter to competition. I am very happy to share with this Committee the full competition law advice that we received in written form, for your consideration.

Roger Williams

That would be very helpful, actually. Thank you.

Chair

Now moving on to the Groceries Code.

Mr Spencer

You have laid out a little bit as to where your remit is, but I think it is fair to say there is confusion as to how far you can go. Can you just lay out, in fairly simplistic terms, where you see your remit, particularly where applicable to the dairy industry?

Christine Tacon

It is absolutely clear that any direct supplier anywhere in the world to any of those 10 large retailers is covered by the Groceries Supply Code of Practice. So any processor that is a direct supplier to the retailer is automatically covered. I have spoken to quite a few of them. I have spoken at Dairy UK events and have met quite a few as well. The processors themselves are covered. I think we have confusion largely because there were many, many people lobbying for many years for the code and my role, and the NFU was one of the big lobbying organisations. I think very many farmers thought I was going to be there to get involved with price. I have been asked to get involved in the price of beef and milk and fleece. None of these can I get involved with: first, because I cannot get involved on price, and secondly they are very rarely direct suppliers themselves. However, a dairy farmer who supplied a retailer directly would be covered. It is just about whether it is direct.

Mr Spencer

Is it fair to say, then, that when supermarkets go on price promotion and they pick milk as a price promotion target, clearly in a fair world everybody’s margin would get squeezed a little bit. However it appears, from the outside, that some people in that supply chain have their margin protected. Is that something you would support? Is that the model that you recognise?

Christine Tacon

No, it is not, and it is not something that I would actually get to know the intricacies of how it worked. Where I would hear about it is if a processor had a supply agreement and had maybe arranged for a certain number of promotions and a certain way of doing things, if the retailer was varying that supply agreement and not giving them sufficient notice. Then they could come and say to me, “We have agreed this for the following year and they have changed this and they have changed that”. In fact, the sort of things that they generally talk to me about is that the retailer is making deductions from payments or holding money back that they are due. That does come under my remit, but not what the retailers might be doing with price. It is about a variation to the supply agreement that they come to talk to me about.

Mr Spencer

So the issue basically is the contracts, not the interpretation of those contracts?

Christine Tacon

Exactly. It is whether they have reneged on the contract or are varying them without proper notice, or the other things like holding back money, or various other things that I have heard about.

Roger Williams

There has been a lot of support from farmers about having an extension to your remit to cover the dairy industry. What are the pros and cons of extending your remit to cover relationships between third parties, such as farmers, and supermarkets? That is brought to a head really by a change in the share of the market from many supermarkets, and trying to regain that share. Are their suppliers being used to achieve that, rather than taking it from their own resources?

Christine Tacon

I am not an expert on the dairy market, so I do not think I can really comment on that at all. The issue at the moment is the fact that I have a very clear order, which has got the code defined in it, and actually I have got enough things in that code to go for. There are things to work on on that. The Competition and Markets Authority told me which of the retailers I have to work with, and I cannot really make recommendations to change that. I feel in a very awkward position in all this. I have got a very clear code and retailers to work with, which has been defined by the Competition and Markets Authority, and my role has been defined by Parliament. I sit here listening to this and feel a bit helpless because of the role that I have been given.

Roger Williams

That is very helpful because, as you understand, farmers have got some real expectations, which you cannot really fulfil because of the reasons that you have put forward. Could I ask whether you have had any discussions with Government or indeed the Competition and Markets Authority about the possibility of extending your role?

Christine Tacon

The truth of it is that I have not. Under the Act that sets out my powers and statutory functions, change is up to Parliament to decide. Any proposals, as the Chair mentioned before, should come from the Department for Business, Innovation and Skills. They are my sponsor Department, although I am independent as a regulator. I think you will understand it is not appropriate for me to promote or comment on whether my job should be changed. I am doing the job I am given. However, I am able to make representations to the Competition and Markets Authority if there is anything in the code that I think needs to be added. Everything that has come up so far I have been able to put under one of those 15 practices. Particularly, one of the practices is “no delay in payments”, and there is a load of different practices I can put under that heading. So I have not yet made any recommendations as to where I think the code is inadequate. In discussions with the Competition and Markets Authority on this theoretical situation, they said it may well be that if I did make a recommendation they might have to do an investigation in order to write it in, because all those 15 practices came from investigations.

Chair

Can I ask you an indelicate question? Do you believe you have any real teeth in the present powers that you have? Because we would like to help you, and give you real teeth.

Christine Tacon

In relation to the job that I have, I am really pleased with the package of teeth that I have got. I can launch an investigation, and an investigation has incredible powers in terms of demanding records of emails and contracts and everything else to be able to look at. If I find a breach of the code in that investigation I can either make a recommendation, name and shame, and, as you probably all know, because it was debated very heavily in Parliament, I have the power to fine. The only thing is that, at the moment, the maximum level of fine has to be laid as a statutory instrument, and that has not yet happened. However, the knowledge that I have the power to fine, the fact that, when I put it out to consultation, I put out a very large figure as a mechanism for a potential to fine means that I am getting full co-operation from the retailers. At the moment I very much feel, in the remit that I have got, that I am really pleased with what I have got. The threat is enabling me to make the progress that I am, without actually having to use it.

Chair

Can we ask how many investigations you have commenced, and how many you have concluded?

Christine Tacon

I have not launched any investigations yet.

Chair

Is that not very bizarre, because you very kindly provided some written evidence, for which we are very grateful. As you will be aware, the written evidence has the same value as any oral evidence. To be absolutely brutally frank, it is list of meetings that you have had and people that you have addressed. Where we got very excited in the previous Committee where we submitted our letter to the BIS Committee, we really felt that you should have real teeth and, as I said earlier, that you should have the power to undertake proactive investigations. The difficulty you have is that those areas outside beef, milk and fleece, where you have the powers, no one is realistically going to approach you, because they tend to be such small suppliers that they can be identified, and they would therefore probably lose their supply chain. No one is going to come to you, realistically, in the terms and conditions that were given to you—this is what we said at the time—if they can be identified. We had some very strong recommendations from amongst others the NFU, the CLA and the CFA—the farming organisations. It was particularly welcomed that you would look at the relationships between the small growers and vegetable producers in this country, but we are not going to get any developments because they are not going to come to you if they can be identified. You are not allowed to proactively investigate, so where are we?

Christine Tacon

I just want to clarify something. Firstly, I cover groceries, so it is everything: I often talk about “alcohol, toilet rolls and apples”. I have spoken to a vast number of vegetable and fruit growers who tend to be direct suppliers, so that is why I am able to cover them. I have been collecting all sorts of stories and anecdotes about things where people believe that the code is being breached. As I get sufficient evidence of those, I am raising them with the code compliance officers and have been going very public on my top five issues, which I was saying have repeatedly come up when I speak to people. Although I have a duty to protect anonymity, the great thing is that whether I am talking about toilet rolls or apples, very many of the practices are common, so I can raise them with the code compliance officers without risk of breaching any anonymity. I should say that the code compliance officers are not allowed to be in the buying chain of command. They tend to be in legal or audit, and I am tipping them off that they are breaking the law. So it is pretty powerful stuff, I am able to say, and I am already hearing back about certain practices that I have been talking about, such as requiring people to buy packaging from certain people where suppliers end up paying a premium because maybe there was historically an extra flow of money going between the packaging supplier and the retailer. I am hearing that these things are stopping; suppliers are told, “I can get my packaging from who I want to”. I am getting other people saying payments had been held up; they are starting to come through. I am also hearing that the retailers are saying many more suppliers are raising the code in negotiations, so when somebody is overstepping the mark, the suppliers are having the confidence to say something back. So I am getting a large amount of feedback in terms of things that are going on, but also that we are improving things. I think all your witnesses said they were hearing that progress is being made. An investigation is a very big legal—potentially two a year—nine-month process to get somewhere, and I am getting progress on every area by saying, “I have got evidence”, and nudging and pushing things forward. I have also got very strong traction with the retailers at board level because I am not just telling them where they are breaking the law; I am saying, “You need to change the culture in the business as well”.

Chair

So hand on heart, you can tell the Committee today that behaviour has changed from this nudging and gentle pushing?

Christine Tacon

I hear lots of feedback on it.

Chair

I am sorry, it is anecdotal.

Christine Tacon

Suppliers are not slow in telling me when I am doing okay or when I am not, and I am getting feedback that things are getting better. I did a survey in May, and I will repeat that survey, and I want to be held to account on what that survey of suppliers is telling me. YouGov did it before, so the anonymity is protected, and that is what I want to be measured by, and the suppliers tell me they want me to be measured by a more collaborative supply chain, so I will see it in that.

Jim Fitzpatrick

Ladies, my apologies for missing the start of your evidence. Accepting what you just said, Ms Tacon, about the premise that progress has been made and an investigation of itself is demonstrating results, you just said that the level of fine you ultimately might be able to impose has to be determined by statutory instrument, and it has not yet been laid. Is that a surprise that it has not been laid yet? Are we even asking for it to be laid? What level do you expect it to be laid at, as and when it comes forward?

Christine Tacon

I made the recommendation, which I was required to by law, in December last year. I hoped it had would have been laid by now. I had a meeting with the Minister in the last two weeks, and there is a hope that it will happen quite quickly. They are aware that what I really need is clarity. I need those retailers to know what that maximum level of fine will be, and I have had other people who are frustrated, who think I have not launched an investigation because I have not got my statutory instrument. That is not the case, but I really do want that done. That is part of my package.

Chair

So you do not actually have the power to find at the moment?

Christine Tacon

I have got the legally defined power to fine, but the maximum level of fine has not been endorsed.

Chair

So can you help us: how much can you fine at the moment?

Christine Tacon

At this present moment, nothing. I need that statutory instrument.

Chair

So you cannot actually fine?

Christine Tacon

Not until the statutory instrument has been laid that will determine the maximum level of fine.

Chair

So what teeth do you have?

Christine Tacon

I know that that statutory instrument is going to be laid because Parliament passed the fact—

Chair

How long has the adjudicator been in existence?

Christine Tacon

Since June 2013, and I had to make my recommendation on the maximum level of fine by December 2013, which I have done.

Jim Fitzpatrick

What was the maximum level you recommended?

Christine Tacon

I cannot say that. I can tell you that I put a figure out to consultation, and what I put out to consultation was 1% of UK turnover.

Jim Fitzpatrick

I can imagine why those you are investigating would think that that is pretty serious and they should be moving if they think ultimately 1% of their turnover could be the cost of not making progress. Did the Minister give you any indication that it would be laid before the election?

Christine Tacon

I asked that question, and the indication was they would be very surprised if it were not.

Jim Fitzpatrick

We have got the Secretary of State here tomorrow; maybe we can ask her.

Chair

Indeed. That is very timely. Were Parliament to recommend a change to your remit to enable you to initiate investigations off your own bat, presumably you would welcome that?

Christine Tacon

In all honesty, I am quite happy with my current situation. I can initiate an investigation, but I need to have reasonable confidence as to why I am doing it, and I can be challenged under a judicial review if it is felt that I have done it on a flimsy basis. So when people have been talking to me about issues, I have been saying, “You need to give me some evidence on that. I will raise it with the code compliance officers anyway, and I will try and make progress without it, but you will need to give me some evidence about what you have just told me, so that I have then got reasonable certainty and evidence as to why I am launching that investigation.”

Chair

That evidence would be secret so people do not have to expose themselves?

Christine Tacon

Yes, I have a duty to protect their anonymity. I will take evidence from a trade association, and they can give me a dossier of evidence that is all redacted if they want to. That would be sufficient for me to launch an investigation, and I have been working with trade associations, trying to guide them as to what I would need.

Richard Drax

You mentioned that there would be two investigations a year.

Christine Tacon

It was predicted that my office could afford to do about two a year, yes.

Richard Drax

Affording is one thing, but having the manpower, in essence, is quite another. Would you have the manpower, if that is the right phrase, to launch two investigations at the same time, or more?

Christine Tacon

I am a corporation sole, so there is just me, but my staff are seconded from the civil service. I actually have a head of investigations already on the staff full time, but if I was launching an investigation we have to second people from the civil service. If I had three or four on the go at one time I would just be seconding in more and more people, so my staff is not a restriction at all.

Chair

Thank you very much indeed; very illuminating. Can I just return to Dr Bryans? You said it would be helpful to have support for trade missions from UKTI. I am slightly surprised that that is not already happening.

Dr Bryans

Certainly we have been working with UKTI recently within the dairy exporters group, but there are lots of things that need to happen in order for us to develop the same culture of export that other countries have. The things that the dairy exporters group are working on, the things that the recently revised—or resurrected, perhaps I should say—Defra export certification group are working on, will all very much help the dairy industry going forward. If there are some more things that you would like to do for us, I will tell you what they are now. It would be really helpful if you could help us with sympathetic planning laws, both for processors and for dairy farmers. Sometimes the cost of appeals is significant and very difficult for people to get through. In addition to that you can help us to promote dairy products within your Government procurement. I think promotion of dairy products is very important. One of the issues that we do have, and it was not just an issue last year with Change4Life, but continues to be an issue, is alignment of policies with Defra and the Department of Health. As we sit here, we have fabulous products. We have a short traceable supply chain. We have worked really hard as an industry to be leaders in terms of sustainability, and we have naturally nutritious products. All this gets lost. It is a global world, and the issues that we have at the moment are global, but when you see a very supportive Defra—and they are very supportive—trying to help the industry grow, asking the industry to grow, and then you see policies coming out of DH, which are just impossible for the dairy industry to contend with, without causing a significant problem—the example I will give you is salt targets that have been set for 2017 for cheese. If we were to meet those targets, our products would be unsafe, and we are just not prepared to produce unsafe products. People around the world will see statements coming out of DH which do not encourage dairy consumption. So on the one hand you have Defra asking us to grow, and on the other hand you have DH doing things that are unhelpful. We would like to see a change in that.

Chair

We are something like the eighth largest exporter of agricultural products. Denmark exports more than we do. Why do you think Denmark is in a stronger export situation than we are?

Dr Bryans

Countries such as Denmark, Ireland and Northern Ireland, uniquely within the UK, have a culture where they have always exported more. They have opened those markets already, and they work very strongly to maintain those markets. In GB we have not had that culture previously, and now we are developing it because we are looking at the end of quotas and we are looking at the fact that we have a very positive dairy industry in the long term. In October next year my organisation is bringing the European dairy industry to the UK to showcase British dairying because we really believe that going forward, whether you have a company strategy that is looking at import substitution or exports, the reality is British dairy has an awful lot to offer. We want to showcase that to the European dairy industry, so I think those things will come. Export will come, but other countries have more of a culture of it.

Chair

Thank you. You have both been very generous with your time, and I apologise once again for the late start to this session, but Ms Tacon and Dr Bryans, thank you very much indeed for contributing to our session. We will keep the lines of communication open. Oral evidence: Dairy prices, HC 817 20