Ms Shelby Matthews and Mr Simon Michel-Berger

3 MARCH 2005

  Q440Earl Peel: I think there is this confusion.

  Ms Matthews: We are importing fresh chicken from Thailand.

  Lord Haskins: It is being flown.

  Chairman: We have got another five minutes.

  Q441Countess of Mar: We have talked to some extent about consumer pressure and supermarkets and I was wondering what power the consumer has in Europe over the purchasing. Obviously all this stuff is purchased by the major companies from Brazil and various other places. Does the consumer have any power or is it purely and simply the purchasing power of the supermarkets? They put pressure on us as producers in the United Kingdom, for example, huge pressure, but they do not seem to be doing the same thing, although Tesco pays lip service to what they buy from Africa, they are not maintaining the same standards for Thailand and Brazil.

  Lord Haskins: I do not think that is right for Tesco. Their standards in Thailand are as high as they are in England.

  Countess of Mar: Are they?

  Lord Haskins: Definitely.

  Q442Countess of Mar: Who is purchasing the stuff that is coming in at such low prices?

  Lord Haskins: The catering trade.

  Lord Plumb: It is also going through supermarket shelves.

  Chairman: They say now that one pound in eight of every consumer spending goes to Tesco.

  Countess of Mar: That is not necessarily on food.

  Chairman: No, but it just shows the incredible success of the big supermarkets.

  Q443Countess of Mar: Look at what is happening to Boots and Marks & Spencer.

  Ms Matthews: As we understand it, a lot of these imports of poultry coming in are going into all of these new products like chicken nuggets and so on.

  Q444Lord Plumb: As a final point, obviously from what you say, and we are not surprised to hear you say what you have said, farming is going to face a pretty tough time over the next 10 years, if not longer and, therefore, farmers have to be gearing themselves to the market and finding a way through it.

  Ms Matthews: Yes.

  Q445Lord Plumb: What is COGECA doing because that is the co-operative arm of COPA as I have always seen it? What encouragement can they give to farmers to help them to get together to co-operate and to try to build some of the co-operative marketing organisations that do exist in various parts of Europe which do not seem to exist in the United Kingdom?

  Ms Matthews: You are certainly right that with the pressures we have to focus on getting as much as possible from the market. There is a big feeling that farmers should move towards more co-operatives and these co-operatives have to get bigger, and some of them are getting bigger. There are diverse types of co-operatives in the European Union so it is very difficult. Denmark is at one extreme, Spain is completely different and then you have the UK. What we want to focus on as well is strengthening ties in the food chain with the supermarkets and looking at farmers who make contracts with supermarkets and how we can get a better link between the farmer and the supermarket and make the contracts a little fairer.

  Q446Lord Haskins: When we talk about decoupling in Britain at any rate that is because the supermarkets are no longer absolutely sure that the goods are going to be there, because the old scheme guaranteed that there was always going to be supply, but they are now getting concerned and beginning to talk about going into long-term profitable contracts on things such as milk because that assumes that the supply will drop quite significantly and then the seller will be in a much better negotiating position. There could be a good element in all of this.

  Ms Matthews: The fact that we have these direct payments, which for us are absolutely essential to cover the production costs to meet all these controls and so on, because they are decoupled to meet WTO requirements you are obliged not to produce in order to meet the requirements. We feel this measure is not getting across to consumers and society and they think that farmers are getting even worse because they are being paid to do nothing except mow their lawns or whatever.

  Q447Chairman: Could I ask a final question going back to the CAP budget. One understands that France will always defend the amount of money going to the CAP but what about the other contributing countries, particularly Germany, for example? What is going to be their attitude?

  Ms Matthews: I think the economic situation in Germany and the history of the importance of the budgetary issue means it is going to be very difficult. I think Germany is going to take quite a strong position on the budget.

  Q448Chairman: Is going to take?

  Ms Matthews: I fear that they will take a strong position to limit the budget.

  Q449Chairman: Yes, and, if necessary, to limit the CAP portion of the total budget.

  Ms Matthews: Yes.

  Q450Lord Haskins: Stick to the 1 per cent.

  Ms Matthews: That is what we have to fear, particularly with the problems that Germany is facing at the moment. If it was a different economic situation it might be different but, given the current situation, it is not looking particularly good.

  Q451Chairman: Thank you both very much indeed.

  Ms Matthews: It was a great pleasure to talk to you.

  Q452Chairman: As we write the report, if we have any further questions might we come back to you in writing?

  Ms Matthews: Of course.

  Q453Chairman: We very much appreciate your experience and knowledge.

  Mr Michel-Berger: Since the issue of agriculture in Brazil and competitiveness has arisen quite a number of times in our discussion today you may be interested to hear that the NFU is producing a major report on agriculture in Brazil which has been done already and will be published in the near future. If your officers contact the NFU, I am sure they would be very willing to provide you with a copy of that.

  Chairman: That is very interesting. We will certainly do that. Thank you.