Cynulliad Cenedlaethol Cymru

Can I welcome all Members to the meeting of the Climate Change, Environment and Rural Affairs committee this afternoon? The first item is for me to welcome everyone, and there are no apologies, no substitutions. Are there any declarations of interest?

[Inaudible.]—of interest. I refer Members to my declaration in the Members' declaration of interests that's on the website.

Thank you, Andrew.

That takes us on to the first item, which is COVID-19: evidence session with the agricultural sector. Can I welcome John Davies from the National Farmers Union, and Dr Nick Fenwick, the head of policy of the Farmers Union of Wales? Croeso. Welcome.

Can we start by going straight to questions? And if I can start, we've been told that consumer buying has shifted even more to supermarkets and to certain products, e.g. mincemeat and chicken pieces, rather than the higher quality cuts of meat. I regularly get constituents complaining about the lack of availability of the more expensive meat cuts in supermarkets, including one who contacted me yesterday who put in an order for a substantial amount of meat, none of which was available at a major supermarket. Is this a problem you recognise and have you got any views on how it could be overcome?

John, I'm happy to go after you.

Yes, fine. Well, thank you, Chairman, for the opportunity to address the committee today, and, obviously, we have seen a massive challenge to our supply chains. When you consider that roughly £100 billion-worth of business was done through the retail sector and equally balanced was the service sector and out-of-home eating for another £100 billion, overnight, we saw that closed down. So, it is a massive adjustment then to repurpose and get some of those supply chains working efficiently.

We have been under immense pressure in that, Chair. We really have seen some pressure around those supply chains, but I think everybody has performed pretty well, on the whole. There would be some retailers that would have been better than others, and, obviously, we look to work with them more closely to ensure that everybody gets the fantastic choice of British and Welsh products.

I think around the beef side of things, initially, there was a massive surge in demand for mince, and that really did catch people out. But, thankfully, now that balance has come back into equilibrium, or more of an equilibrium, and people are buying some of the other cuts that they're not quite so used to doing. That's been helped by a marketing campaign that has been run from Agriculture and Horticulture Development Board, the Scottish and Hybu Cig Cymru, of course. So, that's helped the balance there a little bit, and retailers have actually been promoting some of the higher value cuts as well. That's been really welcome.

So, there's been a bit of challenge around the dairy sector as well, and, obviously, that's been deeply concerning, because some members have had to dispose of milk and the consumer has been short of milk, and the vulnerable and the shielded have found difficulty in getting those products. So, that's really, really concerning for us, obviously. I think we've really got to look at these opportunities to make sure that the most vulnerable are able to access some of the fantastic products that Welsh farming produces. So, I think I'll end there, Nick, to leave you to cover off.

Thank you. Well, John has absolutely summarised the current situation and that over the previous eight, nine, 10 weeks, I suppose, by now perfectly. I would add to his praise for all the work that's been done in terms of promoting. Some supermarkets, as John said, have performed better than others, and some of been less supportive than they might have been. But, on the whole, we are not seeing, in terms of the livestock industry in particular, anything like the adverse effect that we would otherwise have seen had it not been for the work of Hybu Cig Cymru, and indeed the work of the supermarkets. I know that both unions met with all the supermarkets many weeks ago now, and I think if there's a lesson to be learnt here, it's that the supermarkets do drive sales. They often claim that it's the consumers that drive the sales and they have to cater for what the consumer is asking for, but, actually, it's as much to do with what the supermarkets are actually pushing and putting out on the shelves. That, actually reflects, Chairman, your experience, where, if it's not on the shelf to buy, then people aren't going to be able to buy it, because it's not available.

The one thing I would add, then, in terms of what John is saying is that we also need to be looking to the future. Indeed, we are in regular meetings with other stakeholders, almost on a daily basis, about what happens as we start to see the increase in volumes in the sheep industry, because we may be coping at the moment, and the supermarkets may be doing a good job on the whole in redressing the imbalances, but with lamb numbers about to start really growing in terms of their sales, then we are looking at a potential supply issue, so we need to keep that pressure on.

Could I just say—could I just comment as well, Chair, around the local shops and the local butchers and the role they've played? There's been some really excellent news around the way people have supported their local retailer, be they the corner shop or the local butcher or whatever, and I'd really like to support that circular economy with high provenance and high animal welfare and everything else that goes with it. So, there have been some good outcomes in that way as well. Thank you, Chair.

The other thing, of course, when you talk about retail, is the height they put meat on the shelves—when they put it at a high level it has a much better effect than if they put it very low down, where people have to bend, or very high up, where people have to stretch. So, that can have an effect. But Llyr Gruffydd wants to come in now.

Yes, Chair. Some of the evidence I saw showed a slight uplift, and obviously the aim is to get a 3 per cent uplift. So, the first initial signs—. As Nick says, it will take time to get more solid evidence, but the first initial signs are showing that it is being successful, and farmers have responded as well, of course. We are in the spring flush at the present time. There's nothing that produces milk like the fantastic green grass that we have here in Wales, and they have managed to suppress that spring flush as well. So, farmers are taking responsibility as well in that way.

Llyr, I think what has worked quite well is the sharing of data. You'd have some business, processing businesses, that would be totally focused on the service sector and the eating out and home sector, and we have managed to repurpose some of that milk into the retail sector. So, I think that has been useful early on, and it has allowed the supply chain to flex and adjust to the new normal that we're finding ourselves in now.

Okay. Could I ask about the sector's involvement in some of these strategic decisions? I'm particularly interested in Welsh Government liaising and involving the farming unions, for example, in groups and bodies that have been set up in response to some of these situations that we've found ourselves in. Could you maybe characterise to me whether you feel that you are having sufficient opportunities to express views directly to Government and, more importantly maybe, whether the Government is actually listening to those views? 

I would say that we've had very welcome engagement. There is something called the agricultural resilience group, which was set up some years ago in response to extreme weather, and that group is now meeting—. In fact, there is a meeting going on—. Well, it was to have been held as we speak, I think, maybe; John and I had to cancel our attendance. So, that meeting today, that was to do with beef, and there are various other sub-groups of that agricultural resilience group, and they are meeting virtually on a daily basis. 

So, the most valuable thing that's coming out of there is the sharing of information between stakeholders, because, as you can imagine, things are changing on a very rapid basis. Especially at the beginning of the lockdown, things were changing very, very quickly as we saw cafes, et cetera, closing down. And the sharing of that information and identification of problems, or developing problems or likely problems, was absolutely critical in terms of, for example, ensuring that the levy boards worked with the unions, et cetera, and, indeed, Welsh Government, to try and negate some of the problems we were starting to see develop, and some of them were very, very acute, as you'll be aware. 

So, while we may be frustrated with certain elements of what both Governments may have done, I have to say a lot of things were solved quite early on when, for example, problems with slaughterhouses, et cetera, were identified quite early on. I think that's a fair reflection; I think the engagement has been very good and really it provides a template for how we should be working from now on, even in peacetime, if you see what I mean. 

I'd like to say that I think it's a two-stage approach, really, and the first part of it is a data gathering and a process where you identify the most serious problems. And if we look at the fisheries sector, obviously, a support package has been formulated quickly and put into place there. And, obviously, we do have about 175 producers in Wales in the dairy industry that are very severely affected, and it's really important now that we do get that package in place there. We were a few days after the Department for Environment, Food and Rural Affairs announcing that we would be looking at a package but, obviously, the finish line is more important than the start line, I guess. So, the Minister has made some firm commitments that that will be ready within 10 days or so, so obviously we're coming towards the time now where we'd be really keen to see more detail on that. 

And around the beef sector, there is work going on on that, and it's really important now that we move this from the data-gathering, problem-identifying sort of position to the delivery part. I've just put the phone down to my counterpart in Northern Ireland, Ivor Ferguson, who's president of the Ulster Farmers' Union there, and they today have announced a £25 million support package, which is spread across the dairy, beef and ornamental sectors. So, that's where we are, and Scotland are working very hard on a similar package. So, it's really important that we move forward at pace, because there's a need to address these issues. 

So, finally on markets, then, and redirecting produce or finding new markets for that produce that isn't currently being used, we've mentioned relaxing competition law, John, you mentioned the data sharing, we've got the action from Hybu Cig Cymru, the AHDB campaign as well. What else do you think that the Welsh Government particularly should be looking at in terms of utilising some of the produce that isn't being taken or used into other directions? 

I would say there's opportunity into our sheltered avenue; I would say there's opportunity to make sure that we repurpose some of the parcels that are destined for the most needy. We were using a national supplier; I understand there is a trial project where we're using a Welsh supplier, where there are a lot of Welsh products in it, and that's been received very warmly by our most needy people throughout Wales. So, I'm really pleased to see that happening. Not only is the quality better, the vegetables are lasting longer and there's some really good feedback coming through that. So, I think that's fantastic if we can get Welsh products into those most needy homes. 

I would absolutely agree with that and, in many senses, what we're seeing in terms of that positive story is a template for how we need to be looking to move on in future, both in terms of public procurement more generally and procuring more local food for the public sector, but also working to ensure that local supply chains that are into retailers, small and large, can have their origins in local slaughterhouses, local producers, local farms, et cetera. The one thing that we have noted is that while local shops, garages, et cetera, have seen a huge increase in sales, which is very, very positive, the infrastructure in many areas is simply not there anymore. So, we don't have the small dairies, we don't have the small slaughterhouses in large geographical areas. So, there is a lesson here in terms of both protecting what we already have, what is still there, or trying to create new bodies, new factories, or whatever it might be, and encouraging retailers, large and small, to work with local supply chains, so that we have a more diverse range of supply chains, not simply these massive supply chains.

And that's also an advantage in terms of minimising disease risk, because you're having people moving less distance, food moving less distance, et cetera. That doesn't mean to say that we don't need those major supply chains, because, since before the time of Babylon, the whole point of people living in urban areas is they rely on rural areas to give them food. And that is Wales's key role: to produce food and send it to our urban areas in England and the Valleys and even further afield. 

There are lessons to be learnt here too, Llyr, I would say, about how Welsh Government ensures that it does not work in silos. When you consider the food and drink action plan, how does that tie in to the latest plans around 'Sustainable farming and our Land' and those plans? There's a real need to mesh those and give the multiplier effect by those gears working together. So, there are lessons to be learnt about short, sustainable, strong supply chains going forward here, and we really need to make sure that we do learn those. 

Thank you. I don't want to stop anybody coming in, but we've spent 17 minutes and we've still got more on this one area. I'm going to call Neil Hamilton in next for one question, then Jenny Rathbone in for a question, then Andrew Davies in for a question. We'll then go into talking about farm payments. So, Neil first. 

I'd just like to ask a question about the food security implications of this crisis. Overall, we're about two thirds self-sufficient in the food products that we can produce in this country and sell in this country. I don't know what's happened to the international supply chains for supermarkets, relative to domestic supply chains, as a result of this crisis, but, clearly, there are opportunities here for British farmers and Welsh farmers if the supermarkets are looking ahead. Obviously, Brexit uncertainty is still very much top of the agenda. At the end of the year, we don't know what the arrangements might be with the EU, and therefore supermarkets might want to take precautions about resourcing in advance of the end of the year. So, there could be a hidden opportunity in the course of this crisis for both farming unions and others in the farming sector, together with food retailers, to try to boost the proportion of agricultural produce that is sold in supermarkets and sourced from the UK and Wales in particular. So, I wonder if I could have John and Nick's view on the current situation, and the opportunities that there might be hidden within it.

Well, thank you, Neil, for that question. Obviously, we believe that we should produce food here that we are able to produce, because we have a very clear vision and ambition to be the most climate-friendly food producers in the world, and I think there's a great deal of opportunity there. For a generation, we haven't seen the shelves empty in a supermarket; we go in and we expect the shelves to be full and to be able make a choice of what we want, don't we? As our generation, we've been an incredibly fortunate generation there.

There are real challenges down the road here, because we have a lot of our vegetables and fruit supplied from southern Europe, and there are real challenges there for those supply chains. So, we're not through this yet, and it's really, really important that we do value the strength of those supply chains and the sustainability of those. So, I would say there is an opportunity, but, obviously, we are keen here, ready, willing and able to do our very best to ensure that the nation is properly sustained. 

Nick.

I would agree with everything that John has said. Committee members will have heard me say before that, in 2007 and 2008, when we had extreme weather events around the globe, and then an economic collapse, we saw food shortages develop very, very quickly on a global basis, over a period of many, many months. This time around, we are seeing supply chains effectively close down over periods of weeks—very, very rapidly. And that shows how quickly major global emergencies can have an impact on food supply chains. And, obviously, this pandemic has a low mortality rate compared with others that we've been on the verge of seeing globally, and if such a pandemic were to occur, then we would see far worse situations in terms of food supplies. We know that Africa is facing severe problems in terms of food shortages—the United Nations and other bodies are reporting that because of the pandemic, and other issues. Ironically, only in late February, the press reported that a Government adviser was advocating that we didn't need farmers in the UK—we could be like Singapore. Within weeks of that report, Singapore was developing its own food supply policy, and is now desperately trying to produce its own food—or more of its own food—because it doesn't have an agricultural sector. And that shows how exposed we would be, or any country is if they don't have a secure food supply chain of its own.

Okay. Jenny Rathbone.

Nick makes a very important point about our global responsibilities and the shortage of food in Africa. But we can't be exporting raw milk to Africa—that's just not practical. So, I wanted to ask you about how we make for shorter, sustainable dairy supply chains. Because what we saw was Freshways, based in Acton, saying, 'Well, we're not going to come and collect your milk on one day'. So, how are we going to enable dairy farmers to have a bit more control over the end product of their milk? Because, obviously, liquid milk, I think people agree that it has gone down, because fewer peoples are having lattes. Are we going to get more of the milk made into cheese and butter, things that have a longer shelf life, to avoid some of the problems that we have seen with the processing end of this?

There's a real need to invest in the processing capacity that we have here in Wales. We have some dryers in Wales, and they are running flat out, and some of the cheese and butter makers are absolutely at full capacity. It's really, really important, I believe, that we invest in processing capacity here in Wales, not just for the farming community, but for our rural communities and the whole Welsh economy. And we really have to take a careful look at this going forward, I would say, Jenny. There are opportunities there, and we need to exploit them.

Thank you.

I have nothing to add.

Thank you. On to you, Andrew. And can you also, after you've asked your question on markets, go on to farm payments?

Yes, no problem, Mike. Thank you, gentlemen, for your evidence so far. I just wanted to pick up on a point that John made in reply to Llyr on the dairy support package that's been brought forward by the Government. Last week, in evidence, the Minister said that she thought it would be about 100 farmers that would benefit from the package; you used the figure of 175. Given that she's funding this from her own budget and the payment is likely to be £10,000 per farmer, that potentially—if your figure is correct—could need the Minister to find an extra £0.75 million. So, I'm just trying to work out where your 175 has come from.

Okay. I won't name specific companies because we have commercial confidentialities coming into play here. But we have one company with 25, one with 50, one with 59, and another with 50. So, that's over 180, to me, isn't it?

And have you made that evidence available to Government, to obviously give them—?

Yes, we are in regular contact, and I think it's about validating those now. I would have thought that those figures are pretty robust.

Okay. Thank you for that clarification. I just want to move on to farm payments and support payments to the agricultural industry. Obviously, they're going to be of greater importance this year with the constraint on normal marketing conditions. What confidence have you got that the department will be able to deliver the payments on time and within the windows that are specified? 

Okay. Well, obviously, the Rural Payments Wales Online system in Wales is the best in the United Kingdom. When I'm speaking to my counterparts, I'm particularly proud of praising that, and our payment figures have been consistently ahead of everybody else year on year, and, combined with the loan scheme that was put into place this year, it's been reasonably good. Where we have seen some delay is around some of the rural development programme schemes and Glastir and the like. There is a delay now, because people have been repurposed and the like, so I think we need to be careful here. I would suggest 'steady as it goes' here. If we implement too much change too rapidly, we're going to be in a really, really vulnerable place. So, we need to look very carefully at what the trading environment is, and we need to say, 'Steady as it goes', and just keep as much stability in the system as possible. 

I would agree entirely. We are so proud of our RPW online system and the Welsh Government is rightly proud of its payment record for the basic payment scheme, the pillar 1 scheme, and that's been the case since 2005, when we first moved over to flat rate payments. We have had the odd blip, the odd bad year, but when you look at what's happened in other countries, England in particular, we have fared or performed far, far better—we are the lead. We have taken the lead and have done for decades now.

The pillar 2 payments, and in particular Glastir payments, are, this year in particular, problematic and that's an additional problem because these payments tend to be income foregone payments for work that was done in the last calendar year. So, these are payments for work that people have already effectively paid for or lost money because they participate in these schemes, and so the compensation is overdue. We reckon there was about £80 million outstanding mainly for farmers who were participating in the pillar 2 schemes, the Glastir-type schemes, about four or five weeks ago. I haven't done a calculation of the latest figure. We know that there's been some improvement, But that's an awful lot of money to be outstanding, and, of course, this isn't money that goes straight into farmers' bank accounts; it basically goes out into the wider rural community  because it's going to pay bills, so it affects far more than just individual farmers. 

And we would have significant room for improvement with regard to the RDP. In terms of it being repurposed now and redeployed, we think it's absolutely vital that emergency measures are brought in for an emergency situation. So, there's a lot of room for improvement there, I would suggest. 

Okay. I get that and I appreciate the Chair will want to move on, because we've spent half and hour on two questions, but I'd like to press on two points if I may. The Minister—and you've just introduced that into the equation there, John, the repurposing of the rural development plan—highlighted this review going on in the department at the moment. Have you, as unions—the FUW and NFU—been involved in that repurposing review that's going on? Or is it very much an official-led review and it's the civil service doing all the work on that?

And, secondly, we know that there's additional money being made available via the Bew review—£5.2 million, I believe—which will come to Wales. Have you had any confirmation how that money might be fed into the support payments here in Wales?

And, finally, you have touched on, as unions, the need to use the modulated money in this particular year—the 15 per cent of modulation—to support direct payments. Have you had any positive feedback from the Government in relation to that specific proposal, because, obviously, those types of decisions will need to be taken pretty rapidly, given we're now moving into the second half of the year?

From our perspective, we've had limited engagement in terms of commitment around those. We have suggested all of the above there, and we think it's really, really important now that we do work together on this, because there's real urgency around this. If we don't get this sorted, some of that may have to go back, and people are keen to move on and do things. But it's really, really important that we get some solid plans in place around all of that. I did write around the 15 per cent and we are still awaiting a reply on that. So, it's really important that we get some traction on those key issues.

Yes, we're in exactly the same situation. I'm afraid to say there's been a lamentable lack of transparency around what is being discussed in terms of re-appropriating or redirecting rural development funding. We're hearing lots of rumours from different types of meetings that this may happen or this may be changed. Farmers have received letters in relation to potential delays or potential changes to the rural development—

[Inaudible.]—for cutting in there, but I just listened in the earlier part of this session to you were saying what great engagement you've got with Welsh Government. Now I'm hearing you've got lamentable engagement with Welsh Government. The two can't run coherently side by side.

With respect, they can, because we were talking about two different things. I'm talking about the rural development plan and that context, which is quite different from what I was talking about in terms of the agriculture resilience group and the market issue. So, the first question related to the market, and that's what I was referring to, and that good engagement. In terms of the rural development plan, which—[Inaudible.]—a very different issue. As I say, there is a—[Inaudible.]—what we're hearing and picking up, through farmers receiving certain letters as regards delays, et cetera. So, I wouldn't conflate those two issues; there is a big difference there.

We've also written to the chairman of the programme monitoring committee regarding this issue because we really need to have that open, frank discussion with all stakeholders involved as regards changes to the RDP, rather than it being held behind closed doors. And actually, the reason that the ARG has been generally very positive is because of that engagement with stakeholders and the sharing of information. I've yet to see a situation going well where decisions are made behind closed doors in the absence of stakeholders, which appears to be what's happening with regard to the rural development plan.

Okay. Thank you. I think we're going to have to move on a bit. Can I move on to Llyr Gruffydd and support for the dairy industry?

Thank you, Chair. I'm just interested to understand where you think we are in terms of this scheme now, because John touched earlier on the need for that money to reach those who require it. The Minister told us last week that they would certainly receive it—those were her words—within seven to 10 days. Well, that means anytime from tomorrow to the weekend, really. So, in order for that to happen, I'd imagine that applications would need to have been submitted to be processed by now. So, what's your understanding of where we're at in terms of that?

I would not be confident in that timescale at the present time, Llyr.

Well, that's—. Sorry, Nick.

Sorry. I would just say that, as things are still being—[Inaudible.]—to happen, there are some market issues there that we understand may be problematic, in terms of design of scheme that doesn't actually adjust the market, and there are certain hurdles to be overcome. But we would naturally hope that those would be overcome in the coming days rather than weeks.

And I'm sure we'd all concur with that. Okay, maybe that's something we need to pursue as a committee with the Minister, then.

Just generally, then, I was reading that—. I'm coming back, really, to the numbers being affected by this. I think the number across the UK was—I've seen a figure—estimated at 5,200 dairy farmers having been impacted, and it equates to about a £20 million cut in the price that they get for their milk. I'm just interested in whether—clearly, you welcomed the scheme—at £10,000 maximum, you think that's sufficient, because I'm aware that some will be making losses in excess of that, certainly. So, that's my first question. 

And then, in relation to the actual numbers who, potentially, would draw from this—clearly, John, you suggested around 180 odd; the Minister told us around about 100—I'm just wondering whether you think it should be quite a dynamic support scheme in that the Minister said there would be a five- to six-week window for people to apply. Well, clearly, there may be instances of people needing that support later on. We may even go back into lockdown with other implications that we haven't seen. So, should it not be more open-ended than that?

I think we need to retain some flexibility. I think, under the framework that has been announced, it's a similar framework to the DEFRA scheme, so we've used those figures to calculate. We have supplied data into Welsh Government and we think we're fairly robust on those figures. There will be some farmers that—well, nearly every farmer will have lost significantly more than what the compensation is, and there will be some many times more than what the compensation is, but we are pleased that Welsh Government do recognise this support for the family farm in Wales. And in the same way as the tourism sector, there's a range of effects there; we're looking for equality and equilibrium. I believe they have built some flexibility into the fisheries scheme, so obviously if that has been done in that scheme, we could possibly have the same flex in the dairy scheme.

Yes, I would regard this—we would regard this—as a short, sharp shot aimed at that number of farms that John referred to or maybe that the Welsh Government—. Somewhere between maybe the two figures that John and the Welsh Government are using, but either way it's a small proportion of those who have been impacted overall in the dairy sector and it's actually a small proportion of those across all sectors who have been affected in Wales, and we need to ensure that we have flexibility and have an open view of future schemes, particularly with regard to the sheep industry, but also the beef industry. I should clarify that the beef industry is struggling at the moment, but we also need to bear in mind that we have gluts of lamb potentially—the normal seasonality of the lamb system. So, we need to make sure that we can stay flexible in terms of introducing support and targeting it where it's needed, and that flexibility would apply for the dairy sector—

Nick, you're breaking up quite often now. I'm not sure whether you're speaking or not, but we seem to be losing bits of you. Can you either move your microphone or directly use the computer, because we're losing about one in 10 words?

You're probably not missing too much. Can you hear me now?

I can hear you now, yes. 

Chair, can I just move on a little bit then to beef and lamb? I mean, clearly, the Government was criticised for being slow in bringing forward the dairy support scheme that they have done now eventually. Clearly, the message is that the beef sector needs support as well and the news that's coming from Northern Ireland now suggests that some other Governments are moving on on this in some way. So, would you—? I mean, the Minister told us that she was monitoring, I think, the situation. I can't remember the exact words she told us last week, but she was keeping an eye on the beef situation. So, your advice, I'm sure, would be to start looking at potential schemes now, so that they're ready to go, urgently in relation to beef but also in relation to lamb, given that, as you've said, there'll be more and more lamb coming on line over the coming weeks and months. 

Yes, that's exactly the points that we had made, I suppose, nine weeks ago now, in writing to the Minister when this all kicked off. Maybe it's eight weeks; time flies under the lockdown somehow. We were talking back then about things like intervention by private storage aid and, indeed, private storage aid has now been introduced across three—[Inaudible.]

We've lost you again, Nick.

What we have done, Chair, is deliver details of the schemes that are implemented in other countries, Scotland and Northern Ireland, and also we've looked at some of the ways the Irish Government have supported their industry as well. So, it's about using best practice. 

Yes. And it's concerning that it was mentioned earlier that the Welsh Government are now coming across certain issues in relation to implementing the dairy support scheme. Well, clearly, if they'd started work sooner, then those would have been ironed out before we get to a point where you need to try and get the money out the door. So, that's a lesson for them, I suppose, in relation to beef and lamb. 

Okay. I think we'll take that as a statement rather than a question, Llyr— 

Yes, there we are.

—and I'll move on to Joyce Watson and bovine TB testing.

Hi. I hope you can all hear me. There were concerns raised about testing, about the fact that there was a shortage of vets, the way that testing could be done with social distancing and also, I suppose, more important for farmers was that they wouldn't fall foul of the rules and the sort of double jeopardy that could lie within that for them. The Minister, of course, did respond and underlying all of this, of course, it does restrict any movement whatsoever of cattle, with which I'm sure that you would all agree. There has been a TB hub that's providing up-to-date information. What we want to hear, really, is: is that working now for the benefit of those who need that information?

I think in relation to this, Joyce, it has worked very well. In all fairness, the Minister and the chief vet and their teams have brought in some flexibility around the testing regime in terms of social distancing on the very smallest of animals and they have brought in a flexible approach, where if somebody is in a very vulnerable age group or for health reasons, they've brought some flexibility there where you aren't facing the double jeopardy, as you mentioned. So, you know, there's been quite a workable solution found to these issues, because obviously, whilst animal health is absolutely utmost, human health is really important as well, so we'd like to put on record our thanks for the way that has been implemented.

I think in terms of the hub—. Is the microphone working now?

It's working perfectly now, Nick.

Yes, okay. We would also welcome some of the concessions being made, or that have been made, although I think there's room for certainly a little bit more flexibility there as regards some maybe more obscure aspects of it. The last thing we want is somebody getting ill and, in the worst-case scenario, dying because they felt they had no choice but to come into contact with others.

The TB hub has been problematic in terms of its ambiguity as to whether rules apply in England and Wales, and we felt for a long time before this outbreak, this pandemic, that we need a dedicated, detailed Welsh hub, or indeed for the TB hub to be far better in distinguishing between the rules that apply in England and Wales.

Okay, thank you.

Thank you. Neil Hamilton on public access to farmland.

I suppose the risk of spreading the virus by accessing public footpaths and so on is pretty low in most cases. Obviously, there's a higher risk in areas of outstanding natural beauty or noted beauty spots where loads of people might be congregating together at any time. The Welsh Government has introduced emergency regulations to restrict access on certain routes. I wonder if you've got any views on this, and whether you think this has been adequate, inadequate, too draconian, or whatever. And looking ahead, with the relaxation of the current lockdown—however slowly that takes place—to what extent is public access to farmland going to pose a problem, and to what extent is it going to be a problem for farmers?

I'm sitting here about 5 yd away from the busiest footpath in mid Wales; it's the Glyndŵr's Way, and it's been very, very busy. At the beginning of the outbreak, there were maybe 50 or 60 people coming past here a day, if not up to 100 at the weekend. That's fine; we don't mind that. I'm sorry to bring our own farm into this, but as long as we're aware of where those people are, we don't mind; we're used to a lot of people here. When you've got maybe 100 people touching a gate that you are going through and you have to go through at lambing time every day, then obviously that's a hundredfold the risk that you would have if there were zero people or one person coming through a day.

So, that is clearly a huge, huge concern, and it's one of the issues that caused the most number of calls to us, particularly at the beginning of the pandemic for very understandable reasons, because we naturally have some people who are receiving treatment for cancer or some people who are very elderly, who are still actively farming at a very busy time of year, feeling that they've gone from having two or three people through the farmyard to having scores of people through the farmyard at a when time when they knew they had problems with their immune systems, et cetera. The Welsh Government reacted quickly initially as regards to contact between countryside visitors, and that was welcome, I think, and very sensible. But in terms of the flexibility allowed to some people who are still experiencing large numbers of people within yards of their doorways and through their farmyards, I think those people are very, very frustrated, and they continue to feel very vulnerable and exposed to the disease, to this virus. 

I think, really, the message has been very clear that Welsh Government have delivered, and obviously people are very, very aware of that, and they are very concerned for the safety of themselves and their family if they're in a vulnerable position. We also agree with everything that Nick said there, really, and we applaud the flexibility that's been brought in re-routing some paths, et cetera.

Thank you.

Thank you. Back to Joyce Watson and seasonal workers. 

Yes. Well, I'm sure some of you might have seen the news last night on the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which will have implications for seasonal workers going forward, and it's concerning. But, anyway, coming back to the here and now, the NFU has raised concerns about the demand for seasonal workers, and the fact that it might not be met, and I'd like to understand what that means in Wales. Lamb has been mentioned several times today, and shearing is one of those areas where people share workers in rural areas amongst each other, and between each other, but they also bring people in. So, I just want to try to understand how things are working. We've seen furloughed workers having the opportunity to work where it's possible, to take employment elsewhere, and there has been the coronavirus job retention scheme, announced by the Minister. So, we just want to understand how those things are working for you.

Okay, so if I do shearing first then. The British Wool Marketing Board and the National Association of Agricultural Contractors have drawn up some excellent guidelines to ensure that people stay safe and that we ensure we keep the segregation there, and that we keep the shearing team very much as a shearing team and then we keep the farm team segregated. So, I'm happy that those deliver a safe way of working. In terms of a shortage of shearers, that is quite likely. You know, we do have quite a few New Zealanders and Australians come over, and obviously that isn't going to be straightforward for this season. But, you know, we believe the season may take slightly longer, but we just have to work through those controls.

Around the horticultural sector, the seasonal agricultural workers scheme isn't at the level it needs to be at the present time. We need to ensure that we do use as many people as possible that are interested in picking for Britain. We do have a website that has gone live. It's shown quite a lot of interest and it's really important that we match up those people who are interested with those opportunities. We have some fantastic companies here in Wales. If you look at Puffin Produce down in Pembroke, they've done a really good job of promoting Welsh products, and there are opportunities going there, going forward. I was with Peter Segger and his team up in Lampeter just a few weeks ago, and if we can relocalise some of these supply chains, there would be a good outcome from that I would suggest.

I've nothing to add other than to praise the British Wool Marketing Board and the National Association of Agricultural Contractors for the work, very early on, that they did in terms of drawing up those recommendations that John referred to. I think, as we start to hit the main shearing season, we will start to see potential problems that we will have to try and find solutions to. Hopefully that won't happen, but, you know, it's early days.

On to Jenny Rathbone and horticulture.

Thank you. We had a little nibble at food security in the earlier part of this conversation, and 0.1 per cent of our land is used for horticulture at the moment, which is not nearly enough in terms of ensuring we all have our five a day. What is the NFU and, indeed, the FUW doing about really ramping up the production of horticulture—not just the potatoes I know that John has planted, but the higher value things like salad and soft fruit?

Okay, large areas of Wales aren't that suited to it, so we have to look—. That figure is a little bit unfair, Jenny, because we're taking the whole of Wales there. I think we need to look at the parts of Wales that are suitable for that production.

But you're absolutely right—there are real opportunities here, and really the wheel will turn, I believe, and there will be more demand for really local opportunities. There are a number of examples where members have planted on the outskirts of villages and towns, and I'm particularly pleased by that.

We have been talking to supermarkets, along with the Sustainable Food Trust, to see whether they could create room for local products within their stores, because that is the place where people normally go, but it's not been enthusiastically received at present. So, it's a whole supply chain challenge here, and we're up for that challenge, Jenny, and I believe there are opportunities there.

We've spoken about this, Jenny, in the past, and I think we absolutely agree that there are those opportunities. We've worked with the Welsh Government in terms of promoting its agricultural map, with a lot of excellent work that I think the committee is aware of in terms of reassessing the agricultural potential of different areas—well, the whole of Wales—down to a very fine resolution.

But, at the end of the day, I think we need to be realistic that it's not up to bodies such as the FUW to go out and tell its members to produce a certain commodity. It's actually something where we really need to see us all working together to make sure that there's the market there. We must be aware that the reason that a lot of areas that used to grow horticultural produce stopped doing that was simply for plain old-fashioned economics, because it was cheaper to do it in Norwich or somewhere like that than it was over here, and it was simply to do with market forces.

So, if we want to change that, we need to make sure that our local shops and our supermarkets are on board with this principle, as I said earlier on, of being happy to be outlets that are involved in those new supply chains and giving the guarantees that, if somebody does take the risk of doing something that maybe has not happened since their grandfather's or great-grandparents' time, they are not going to be faced with having a crop of something that nobody really wants.

Well, we know from the—

Can I add, Jenny, on that? We used to have Gower potatoes and they were very popular. We used to have Gower strawberries and they were very popular. Both have declined dramatically, and I wonder if there are any comments on that before I go back to Jenny.

What we've seen, Mike, is a centralisation of food distribution. We had a situation where product would be grown in Wales and transported across the country just to come back to Wales. So, we really are up for this debate and discussion about our supply chains and the food miles involved in them, and nothing would make me happier than to be able to source fantastic quality Gower potatoes from my local store—after I've used all my own, of course, Jenny, which I'm happy to report are just sprouting and just missed the frost last week.

Lucky you.

Okay, but we really need to focus on this because this is extremely important. We can't simply be subject to the demands of the supermarkets, who want things all the year round and all looking exactly the same—you know, the cauliflowers all of the same size. This is a nonsense and it's not any longer what the consumer wants, because we know that those who have been supplying people at home with veg boxes simply can't meet the demand. And we've just had earlier conversations about the need to bail out dairy farmers, sheep farmers, beef farmers. Surely this is an argument for diversification so that people are less subject to the winds of change because of a particular problem in a particular area? How are we going to ensure that we can supply our schools with fresh food as opposed to it coming from goodness knows where?

I think, Jenny, we're back to this issue that we were talking about earlier on, which is about local supply chains and catalysing the recreation of those local supply chains. I do think that supermarkets are instrumental to this. If you go to the continent, you see supermarkets that will sell packaged stuff from hundreds of miles away alongside locally produced plums and apples and whatever the fruit might be, and those are in boxes as you walk into those shops. That's something that either we've never had here or it certainly doesn't exist now; I don't remember that ever happening with major supermarkets. And I think that we all need to work together—local authorities, supermarkets, farming unions—to try and restore that type of attitude where you have a mix of foods that have arrived in those shops via various different supply chains, including local supply chains.

And I think, as well, Jenny, we're going to have to also look at the planning system; we're going to have to ensure there's sufficient flex within that. Because when you consider we have had some members turned down with applications for small-scale plastic tunnels, which would facilitate the growth of more out of season and a longer season, we just need to make sure that we are all singing from the same song sheet here and we do have that joined-up approach. So, that's an approach that involves the route to market, the retailer, the primary producer, local authorities, and Welsh Government, I would suggest.

Thank you. Okay. I think that's all we've got time for on that particular subject.

Thank you very much. Back to Andrew Davies, on agricultural pollution.

Thank you, Chair. After your earlier evidence, gentlemen, of the wonderful co-operation and sharing of information that goes on between yourselves and the Welsh Government, which was very heartening to hear, what was your reaction when you heard the Minister's announcement about the nitrate vulnerable zones regulations in her statement on 8 April? I assume you are fully aware of that.

Surprise, disappointment, and disillusion.

Yes. I'm afraid it's an appalling state of affairs, with very little proactive work to consider proportionate, targeted addressing of the problems that we all want to address in terms of agricultural pollution, which are very localised. Very little work has been done in that context to do what the unions and other bodies, including Natural Resources Wales, worked very hard to put proposals on together, now more than two years ago. That work seems to have been just buried in a box and ignored. Basically, there's been a cut-and-paste of EU regulations—more or less a cut-and-paste—and then, simply, their publication, ultimately, and it is very, very disappointing and, ironically, it is something that will be very, very bad for the environment and will cause pollution.

So, the wonderful co-operation and sharing of information that goes on in the agricultural resilience forum, this was not shared with you at all during those resilience forum discussions that were being held week by week, I think you indicated.

Obviously, the Welsh Government has lots of different departments that deal with different things, and the agricultural resilience forum deals with a very different type of issue; it's basically set up to deal with emergencies. As I said before, it was set up to deal with weather emergencies originally—I think, originally, after the 2013 extreme snow that we had very late in the year, and, at times, it's been woken up since then, when we had the drought, and then, obviously—. So, it deals with certain acute issues and I would not wish to retract the praise for the communication that's happened within that group. That doesn't mean to say that I am not harshly critical of the actions of Welsh Government as regards other issues, and particularly the decision to publish those all-Wales regulations in draft form a couple of weeks ago.

So, just two things, if I may, on this, then. We had the announcement on 8 April. What representations have you made and what responses have you had from Welsh Government in light of the publication of those regulations? Secondly, the Minister, last week in committee evidence, said that the regulations would be implemented at the end of the COVID-19 crisis. What would you determine as being the end of the COVID-19 crisis for the industry?

We spoke to the Minister the day before, or the day when the traffic-lights system was announced, and we agreed that when we were on the green traffic-lights system it would allow proper scrutiny and proper process to be carried out. 

She'd had—

Sorry, Nick. She assured us that that would be the case, so I was reassured by that.

And we've met, as have the NFU and other stakeholders, repeatedly since that announcement and repeatedly expressed concerns about what has happened, as we have done for many months. So, there have been a number of meetings. I think there was one last Monday—a week Monday—of the overarching group that deals with the issue of agricultural pollution, on which Natural Resources Wales and a range of other bodies sit. So, there have been probably four or five of those meetings in the last eight weeks where this issue has been really the main issue on the agenda.

The critical thing to this is that the Welsh Government needs to undertake a proper regulatory impact assessment regarding what are the most draconian proposals, the most far-reaching proposals as regards agricultural pollution to have been put on the table for decades. Any such proposal demands proper understanding of what its implications are in terms of costs and potential adverse impacts on the environment. To date, what we have seen are draft impact proposals that are very lowbrow, very shallow and fail to take on a long list of concerns, including tenant farmers. That's just the thin end of the wedge. NRW have criticised it for not complying with the Welsh Government's own guidelines as regards impact assessments.

And there's a real need for that existing regulatory impact assessment to be released into the public domain so that we can have some proper scrutiny of that, then, Andrew.

Joyce Watson wants to come in next.

In terms of the NVZs, there are areas, we know, and you know them, where there are particular problems, and you said that, really, in your opening gambits. So, we have to deal with that, and we're all agreed with that, because most landowners, farmers, caretakers of land don't want to pollute. That's a fact. But there are repeat offenders in some cases. So, when you said that the blanket application of the NVZ right across Wales would do harm, I'd like to understand exactly what you mean by that. I know that you could probably spend a whole day talking about it, but we've got a few minutes, so, if you could give me some of the top-line concerns that you have.

Well, the NVZ regulation, Joyce, is a whole-Wales recommendation. We have certain areas of Wales where there are absolutely no problems whatsoever, where the water quality is significantly improving. I was particularly pleased to see the announcement around the beaches and the improvement there. So, we have many, many areas of Wales with absolutely no issues at all.

Yes, we accept there are areas where there are problems, and those need to be addressed. But, from day one, it demands that every farmer complies with those onerous regulations. From day one, every farmer farms by the calendar rather than the weather conditions. That is simply not how you farm. You do not farm by the calendar. You must farm by what the weather conditions are and what suits in that way.

So, these regulations have proved completely ineffective throughout Europe where they've been implemented. They've faced massive opposition, and I really don't feel, at a time when we're going to be leaving Europe, that we should be then bringing in one of the worst pieces of regulation that Europe has been responsible for.

So, just to expand, one of the issues would be the closed windows for spreading slurry. What would happen in such a period? We've seen two examples of this in the last eight or nine months. Had those regulations been in place already, then we would have seen two periods where it caused acute problems going into the window last autumn, because of wet weather, which meant that it would have been inappropriate to spread, but, under the window conditions, a lot of people would have been forced to spread to make sure that they could go into the period with sufficient capacity to last them for a very long time without spreading slurry. Then, as we come out, what you see then—you will have heard this across the European Union—is what they call national slurry spreading day, where everybody has no choice but to go out over a very short period and empty their slurry pits, rather than doing it, as John says, at the time when it's most appropriate to do it and the weather suits it.

There is an inherent running cost to this. There is an inherent paperwork cost, even for people who would not currently have to be in an area—. And when we say 'in an area where there are problems', we're talking about the majority of Wales. They would not currently be in an area where there's a problem, and yet they will be required to spend hundreds if not thousands of pounds on administrative costs, conducting very, very complicated equations or calculations. For many of those, that will involve a consultant. I would urge you to have a look at what these really mean for people. It is very, very complicated and burdensome. 

Thank you. Jenny Rathbone, and then if you'd like to go on to 'Sustainable Farming and our Land' at the end of it. 

Thank you. I just want to say that, if businesses in my urban constituency pollute the water, they get fined, and I just wonder why you think that farming businesses don't need to also comply with the principle of not polluting the water tables. 

I think everybody needs to comply with the principle of not polluting the water tables. We have 18,000 permitted outfalls, Jenny. What's your view on them?

Well, I'm afraid that level of detail I can't respond to. I just think we have to find a way here—nobody's obliging people to spread nitrate on the land. We have to ensure that all our businesses are able to operate sustainably.

I was referring to water companies there, Jenny, obviously. I think we need to have a level playing field, and you're absolutely right—nobody should be allowed to pollute. I'm just really interested in what's your view on that.

Okay. Well, that's something I'd have to look into, and thank you for pointing it out to me. 

Thank you.

Anyway, just moving on—

I think, Jenny—. I think the point is that if you treat every business in Wales as being akin to one that is polluting in an area with high pollution, then you would soon have a backlash from all the businesses in Wales, because they would be pointing out that to base rules in a food factory that are designed for a completely different environment is totally disproportionate and represents huge, disproportionate cost. And, actually, it doesn't do anyone any favours, because what you need to do is take resources and advice and target them at the problem areas and the problem individuals rather than having a blanket approach that actually spreads money so thinly that it doesn't help anyone and the messages get lost. 

Okay. All right. Well, we clearly need to come back to this. 

Just moving on to 'Sustainable Farming and our Land', clearly Menter a Busnes has now been tasked with engaging with the public in terms of how we take forward the consultation responses. I just wondered how much you see this as an opportunity for farmers to diversify. We know that this summer there aren't going to be many people wanting to climb on a plane, and lots of people might be interested in glamping in rural areas, where they're away from crowds. Is this something that your members are actively thinking about as a business opportunity? 

I think it's premature for a lot of people to be thinking along those lines. Actually, if the last eight or nine weeks have told us anything, it is that we need to have a policy that encompasses food and places food at its centre. Farmers are, at the end of the day, food producers; agriculture, by definition, in most senses is to do with producing food, and we have for the first time experienced food shortages— certainly in my lifetime—at a huge level. 

So, I think there should be a real refocusing of the Government's thinking in regard to the 'Sustainable Farming and our Land' consultation, which we still feel pays lip service to food production, rather than the sort of things that we—[Inaudible.]—10 minutes ago as regards food supply chains and making sure that we have decent food security. And it's interesting to hear in the debate around the agriculture Bill that happened last Wednesday that there was cross-party support for the need for policies that have food production at their heart. And anything that detaches us from that—. So, that's where the focus should be. Anything like glamping, et cetera, is a bonus, but we are food producers at the end of the day, first and foremost. 

I wouldn't disagree with that, but I just think that we know that some of our sheep farmers in the uplands find it really quite difficult to make a decent living, and therefore there have to be other ways in which they may be able to diversify their business. 

Look, Jenny, we are open to each and every opportunity that is presented. At the present time, though, I would suggest there's a need to pause and look for the lessons learned out of this crisis. There are many lessons to be learned. This is the fifth meeting today that I've taken part in; two would have had to mean that I would have had to go to London this morning. I haven't burned 1 kg of carbon today, and I think there are some really serious lessons to learn, and that not only goes for the way we produce our food—it goes for the way we live our lives across the board. 

So, we shouldn't be rushing now to look at this and rush this through, because if we're not careful we'll have a half-baked policy that is not responding to the opportunities out there, many of which I completely agree with you in terms of relocalising and repurposing. So, we've got to have an approach here that is measured and, at the present time, we're in crisis-management mode. From the beginning of the day to the end of the day, our role is to make sure we play our role in feeding the nation. 

Now, when we get through this, we are really keen then to look at those opportunities. And there's an almost indecent rush in terms of getting the Agriculture Bill through Parliament. We had 40 organisations—. For the first time ever yesterday, Jenny, we signed a letter with 40 farming and non-government organisations on the bottom of that letter, looking at protecting our standards, whether they be environmental, whether they be animal welfare—across the piste. That must be an opportunity, surely, and we just need to operate in this new world out there, I would suggest. 

So, I would pause at the present time. I know there are difficulties in getting a significant number of people to properly focus on this consultation at the present time, and there's a real need to allow people to have that head space to focus on their family's welfare, their business welfare and then look to the future when we know what the environment is that we're operating in. 

The problem is that time isn't on our side. Certainly, the Welsh Parliament wasn't dictating the timetable of the Agriculture Bill, and the UK Government seems to be absolutely resistant to deferring the negotiations beyond the end of this calendar year with the European Union. And that, I think, does force us to look at this in a rather more urgent way because, otherwise, events will overtake us and then we seriously are not prepared. Would you agree with that?  

If you're not careful though, Jenny, you will synchronise a number of major challenges and you'll have a tsunami of events hitting you at the same time. So, we need to be really, really careful there. 

Absolutely, and we need to bear in mind that what's being proposed, actually, at a time when we're not just talking about the threat in terms of food security, which has suddenly become very clear to people, but also a whole host of other things relating to the types of food we eat, how they're produced, because what we're in principle talking about here, both in England and Wales, in terms of the proposals, is further decoupling of support from our food supply chain—sorry, from food producers. So, we're moving further away from controlling food effectively and making sure that payments are directed towards active farmers, family farms—the people who have been doing a fantastic job feeding people in recent weeks—to one that is more removed from food production than it has ever been since 1947. 

So, I think John is absolutely right; we need to slow down. Only earlier on today, we were talking with this committee about the delays in Glastir payments. Glastir payments are based on contracts that were created through a system that they are now proposing is taken forward through the 'Sustainable Farming and our Land' process. It is almost a carbon copy of the way in which Glastir contracts were introduced some seven, eight years ago, where you had farmer meetings, you had one-to-one sessions, you then had draft contracts, you then had consultants or visits from people, and then you ultimately signed a contract. They're now taking—. It's proposed that a carbon copy of that inadequate scheme, in terms of the degree to which payments are released, be now taken forward as being the only scheme available in Wales, at a time when we've got a fantastic basic payment scheme, where payments do get out on time. 

Last year, together with the FUW and the YFC, we launched our vision for this scheme, which was a three-legged milking stool, stable stool, on which to place our ambition, which had environment, productivity and stability all there as opportunities, to make sure that we are able to shape the scheme and that it's fit for the future, in this world which is very much less stable than what it was at that time, I would suggest, Chair.  

Okay. Well, I certainly would concur with your concept of stability, environmental protection and security of supply. But, unfortunately, some of the actors in all this are beyond our control, and we absolutely have to come up with the best possible defences. 

We've now run out of time, and we've got another panel coming in shortly. Can I thank you both for coming along and talking to us, and engaging, as you always do, in a full and frank discussion around the issues? One thing, and this is not for you to answer now, but one thing perhaps we could discuss in the future is where we want to see agriculture getting to. We always seem to deal with the next stage. How do we want to see the long-term future of agriculture in Wales? And perhaps we could discuss that at some stage, obviously not today, but, in 50 years' time, what do you want agriculture in Wales to look like?

Thank you both very much again, and I look forward to seeing—. I was going to say 'look forward to seeing you shortly', and I'm sure we will. Thank you very much. 

Diolch. 

Thank you for the opportunity. 

Can we have a short break until three o'clock? Okay. Thank you all very much. 

Colleagues, we move into the second session of the afternoon. I welcome Gwyn Howells, chief executive, Hybu Cig Cymru; Andrew Opie, director, food and sustainability; and Pete Robertson, acting director, Food and Drink Federation Cymru. Welcome to all of you. If you're happy, we can move straight to questions. And if I can ask the first one: what more do you think the Welsh Government could do to support the Welsh farming industry and the food and drink industry in general? [Interruption.]

That was interesting. Who wants to go first? Can you hear me? [Interruption.] So good, I ask it three times. [Interruption.] Can we adjourn for a few minutes? As you've probably noticed, we've got a technical problem. I've never been quite so popular my question needed to be asked three times. [Laughter.] So, we'll adjourn and we'll try to sort it out. We seem to be on a continual loop.

Can I welcome people to the second session of this afternoon? We have Gwyn Howells, chief executive of Hybu Cig Cymru; we have Andrew Opie, director, food and sustainability, from the Welsh Retail Consortium; and Pete Robertson, acting director, Food and Drink Federation Cymru. And if I can ask the first question: what more do you think the Welsh Government can do to support the Welsh agricultural industry and the food and drink industry in Wales? Who wants to go first?

Would you like me to answer that one in terms of the agriculture industry and the downstream situation? What I would say obviously is we are in very, very different times—very strange times—and nobody really saw this coming and to the extent that we have suffered in terms of primary production and, indeed, the supply chain, and the ensuing consumer panic at the start. In terms of the Welsh Government, I think the Welsh Government has responded rapidly to a changing—an ever-changing, indeed—environment, as indeed have the farmers and the supply chain, to continuously adapt to circumstances as they change, and, as we speak, obviously they are still changing.

So, it is a case of monitoring, I think, what's going on in the supply chain and particularly from a consumer point of view, given that the closure of the food service sector, which is probably half of the market, which has disappeared overnight, has meant some serious ramifications to the retailers, to the processors and indeed the farmers. Obviously, we saw that in terms of the dairy industry and indeed the beef industry. We haven't seen major repercussions yet, other than in the first week of lockdown, in the sheep industry, but I think there's very much a watching brief on that, given that the food service is still out of commission, and in mid summer the supply of sheep meat from Wales will exceed demand and, therefore, there might be some problems ahead for that sector.   

And can I just add on to that, Gwyn? I think, when you talk about the manufacturing sector, first of all, I'd echo your comments around the challenges that we all face and the challenges that the Government face. I think it's been incredible how well the food industry has reacted. We talked about that huge spike and there were many manufacturers who had double, triple volume requirements, and, at the same time, because of the uncertainty around the treatment of the virus, they had 20 per cent to 30 per cent levels of sickness, at the same time, and they were trying to keep the shelves full.

But it's a mixed picture—it's a very mixed picture—and I think if I was, in terms of the Welsh Government, listening, connecting, communicating are going to be absolutely critical over the next period, because, as Gwyn mentions, there are some businesses out there—food and drink—as innovative, alive, hungry businesses where their market has just disintegrated overnight. What's interesting, when you talk to them, and I talk to them through some of the cluster groups that I attend, is their determination and their innovation to try and find new routes to market. I think that's a testament to those businesses as well as a testament to the larger businesses that service into retail. 

I think the start point, in terms of getting hospitality back on its feet, is clearly something that would start to create positive movement across all of the sectors. Actually, it's not even just the food sector. We also need to consider—. I spoke to one of our suppliers, and it was packaging and plastic packaging that was the biggest challenge that they had at the moment. So, it's quite a holistic view for sure, because we're only talking food and drink, but it's obviously agriculture and all the rest of it, and environment as well. I just think that if the Welsh Government can keep talking, keep engaging with the industry, keep listening and communicating as well as it possibly can, then everyone can get—. Because everyone in this call and everyone who's getting involved in this are trying to do their best for what is a core industry in Wales. It's really important to the people of Wales, and that's something that I think is really important for us all to remember. 

Yes, and I'm just going to build on Pete's point really. I think, for us, the really important thing and the role the Welsh Government played was ensuring we could manage the market through the most difficult period we've probably ever faced in terms of unprecedented demand for food, managing the supply chain and ensuring we could get as much Welsh food through the chain and onto the shelves quickly enough, which was actually the main problem here. It wasn't necessarily that there wasn't food in the supply chain; there was plenty of food in the supply chain right across Europe. The problem was actually getting it up on the shelves.

The role that the Welsh Government played, along with the other Governments of the UK, was to relax some of the key regulations, such as delivery curfews, for example, to allow us to get food into stores 24/7, around the clock, work with the UK Government on things like relaxation of drivers' hours to ensure that we could make the most of our available supply chain, because the key thing was really keeping pace with the unprecedented demand.

I think, going forward, there are some other areas of food that the Welsh Government can support to continue to reopen as quickly as possible. The obvious one would be food-to-go operators who are, of course, allowed to open at this stage. They've been quite cautious, for good reason, about their reopening plans. And it would be good to see some public support from the Welsh Government for those type of businesses to reopen, because, of course, if we look at milk, for example, coffee chains are really important in terms of taking some of the surplus milk that we're seeing the problems with. So, we've seen great support in Northern Ireland from the Northern Ireland Minister there, for food-to-go outlets to reopen, and also from the DEFRA Secretary of State doing the same thing as well. It would be great to see the same support from the Welsh Government.

Thank you. Llyr Gruffydd.

Thank you, Chair. Yes, getting those retailers back up and running is clearly going to be of benefit to all suppliers, really, but that needs to be checked, obviously, by the reality of where we're at, and doing that in a responsible way.

So, I'm just interested in hearing from you what more the Welsh Government, particularly, could do in relation to—. We had some very positive feedback on the Hybu Cig Cymru work from the farming unions earlier, and that's very welcome, clearly, but I'm just interested, Gwyn, for example, in what you need now to take that to the next level. We shouldn’t accept that you've done a good job and that we just take over at that level, because we could be in this stasis for months to come yet, really. So, I need to understand what more we need to take it to the next level, and likewise in terms of manufacturers and processors and retailers, of course, notwithstanding the fact that reopening is the ultimate, really. So, what kind of further interventions or financial support would you be looking for in order to maximise these opportunities?  

Well, if can come back to you on that, Llyr, I think beef is a case in point, where we undertook our own HCC beef promotion campaign back at the beginning of April, knowing that there was an imbalance in terms of retail demand. Mince was selling, and very few other joints and steak meat was selling because, traditionally, and conventionally I should say, they would be sold through the food service sector. So, at that point, we went ahead with the campaign on a Welsh level, but also persuaded and collegiately worked with our sister companies in England and in Scotland to work on a national GB campaign to influence consumers in terms of roasting beef joints and steak meat joints, which was a campaign worth £1.2 million. That's live as we speak now, and it will be for the next 10 weeks.

I think the retailers have responded very well latterly, where they were quenching the thirst of the consuming public earlier on in the COVID crisis, because they were buying more mince, more mince, more mince. But latterly now, there's been a shift and there is more balance in the offering, in terms of the retail environment, and I'm pleased to report that the message of buying balanced carcass cuts is actually the message that's coming through. Obviously, there's more work to be done, certainly, and, obviously, we measure that in terms of when will there be some normality in terms of—. Okay, the food-to-go might come back soon, but the food service—the pubs and the restaurants and the other dining facilities—I suspect will take a bit longer, both in the UK market and, indeed, in Europe, and therefore that is the worry, and that's the factor that we've got to weave into the planning of what we do next.

We need more resource and to work more with the retailers to ensure that that demand continues in the retail environment so that it does compensate for the loss of the food service sector. But, obviously, it won't entirely compensate for the loss of that very, very important market.

Before moving on to the others, I'm just interested, really, because this could be a stop-start process for many, many months, couldn't it? It could be two steps forward, one step back, so we might be in and out of this kind of situation. You touched on lamb earlier. I'm just thinking what type of planning and what type of activity should the Government and agencies such as yours be undertaking now so that we're not scrambling in three or four months' time trying to deal with oversupply in the market. We're invariably going to have to deal with that, I'd imagine, but, you know, that we minimise the impacts or any adverse impacts.

That's a very, very good question. Let me update you on what we're doing in terms of planning for various scenarios, indeed, that might hit the sheep industry. So, what we're doing at the moment is modelling the supply of sheep meat with demand in the various sectors. The retail sector, we know, will be operating as we know it now. The food service sector obviously  will be closed at the moment both in the UK market and, indeed, in our very important European market and further afield. Therefore, whilst they may come back over the coming months, there will be probably, given that—. And sheep is different to beef in this respect: given that the seasonality of supply will hit its peak from August, September onwards until the end of the year, if the food service sector doesn't come back to its former glory, if you like, there could be some considerable pressure on the sector that will mean a possible lack of, or less demand, which will mean producer prices could suffer later on in the year. Therefore, we're doing that modelling now to understand what we need to do in terms of the consumer messaging and obviously to see what interventions, other than HCC's interventions, will be needed further along the weeks and months to come.

So, whilst the sheep sector at the moment is fine and everything is working fine, demand is stronger than supply at the moment. That will change at some point in the midsummer—there's a big lamb crop on the ground because the season has been very good weather-wise, and therefore there could be a storm brewing for the sheep industry. Without being pessimistic, I think you've got to be realistic and plan for it now, and we are doing that modelling work, over the last few weeks, and we'll refine that over the coming week or two to ensure that we are ready for the interventions that are needed later on.

Thank you.

Okay. Can I take that question from a manufacturing perspective? Thank you. The majority of manufacturers—the situation is they're either mothballed, as in the business, they're entirely furloughed and not moving forward, they're just about running along in terms of keeping on although they've lost some businesses, or some of them are pretty much even. So, there's a mix of different aspects and support. For the mothballed people, obviously the support is, 'How do you start up?', and from starting up, one of the key aspects across the industry that FDF have been calling for—and hopefully we're going to see some news later this week—is around the credit insurance guarantee. The credit insurance guarantee is very important, because, as Gwyn was talking about, the hospitality sector—if we're in a situation where there's a credit guarantee from someone in the hospitality sector who actually you might not know if they're going to maintain trading, having that credit insurance guarantee gives you a certainty to supply and gives you a certainty to kick-start that particular approach. So, that's one particular thing that we would be looking to be considered. 

The other one, I think—[Inaudible.]—and it's a classic supply chain word: the one thing you want in any supply chain is supply chain agility and what I would say is what we would be looking for is agility in terms of the schemes and the funding solutions that are provided, because, quite often, different businesses have very different dynamics. I'm sure you'll appreciate that. Some will have different scale of challenges, and, ultimately, even if a business—. Say your business has dropped by 30 per cent, you've still got to go out and buy the stock to build that back up again, to get those sales back out there, to manufacture those products, to pay those people to get that moving. So, rather than turnover-dependent support, what's really helpful is business working capital support of some sort. And I can't suggest to you how you would measure that, however I'm just thinking, the agility to open minds to that type of thing.

And I think what I would also say is we know there have been many schemes in place and there are some sectors of the industry who would be looking for support, and, obviously, given that the economic resilience fund was paused and that's now under consideration, I'm sure the Government's already got a clear view of who those groups are and are looking into those particular types of support.

And I think from our perspective, just to build on what Gwyn has said, obviously retailers have spoken to the Government quite frequently through this period and we know our suppliers very well; we source a lot of our meat in Wales for our Welsh supermarkets and we know that there's been a massive problem with carcass balancing, and anyone who's been in a Welsh supermarket in the last couple of weeks will have seen steaks on really good promotions at the moment, as well as other meat products, as retailers do everything they can to absorb some of that extra capacity that's in the market. But I think what it really does for the Government, looking forward into maybe the medium and the long term, is it shines a light again on this perennial problem of carcass balancing and how you solve that problem of carcass balancing. You will not solve that uniquely just through the retail chain. That's not going to happen. What you need is robust markets outside retail, whether that's within the UK—and that could be Government procurement as much as hospitality, or manufacturing absorbing more of the products that are produced by Welsh farmers or robust export markets, which, again, there must be—. There's a question mark over those as we go into the UK trade deal as well, so for me, retailers will always step up to the plate and do everything they can to absorb some of this capacity, but we've probably done as much as we can and there's still a problem. We're trying to address this perennial problem of carcass balancing and how you can solve that across the wider food industry and outside the UK.

Thank you, Chair.

Andrew Davies.

Thank you for the evidence so far, gentlemen. Just two things if I may; one to Gwyn and one to Andrew. Gwyn, in respect of supporting the market and the Government's the only organisation that can do this, do you see intervention as one of the things that will have to be brought into play to support the market, especially when more stock starts coming forward? In Ireland, they're making extensive use of that at the moment, and I think that's given a respite to the beef industry. So, from a marketing point of view, with your modelling, do you see that as a necessity for Government to use intervention?

And, secondly, Andrew, you touched on the service sector and the opening of coffee shops as an example of helping out the dairy industry. Is there any sort of figure out there that would say that if coffee shops could open in a meaningful way, x amount of milk would be diverted into that outlet? Because it's good to try and quantify some of these measures that could make a big difference in the supply chain that would take pressure off maybe some of the interventions that Government is having to make at the moment, such as the dairy aid package.

Would you like me to go first, Chair?

Yes, please.

Thank you, Andrew. Yes, I think interventions of all sorts will need to be looked at. Obviously, the EU has already announced some intervention measures across Europe, and they are open at the moment, which includes aids to private storage for beef, sheep and dairy products. Now then, I'm not sure what the—. That window is now open, in terms of putting product into store. I'm not sure if that will help the lamb industry, because, as I say, at the moment, supply isn't in kilter with demand, and therefore not a big issue. Beef: I think there is evidence that the beef supply is tightening slightly, and a bit of movement in price.

I think there are a couple of things: to take the beef issue to start off with, I think if there is some intervention that probably could be meaningfully looked at in terms of beef supply, and I'm looking now at not only the short term, but the medium and long term, whereas for the beef industry in Wales, we've probably lost something like 22 per cent of suckler cow numbers over the past 15 years, so that's an unrelenting decrease in the number of cattle, and if we want a vibrant, efficient and hopefully profitable beef industry, which probably has hitherto not been the case, and therefore the slide in numbers, I think we need to probably look at how we can stimulate and underpin some of that suckler cow production in Wales so that we have beef from both the dairy herd and indeed the suckler herds in the future, and that we have a mix of portfolios and that we don't end up with only sheep in the LFA areas—the less favoured areas—and obviously, we'll have dairy beef from the dairy fields. But I think that is something that we probably as an industry and Government are in dialogue on now, and I think that's something that we need to look at, not only in the short term, but certainly in the long term as well, and when we come, probably, to rehearse post-CAP Brexit policy in Wales and the rest of the UK.

Andrew, I'm not sure I've got those figures to hand, unfortunately. I probably could dig them out. I think the Agriculture and Horticulture Development Board do produce those figures, but about half the milk that is produced in the country is liquid milk, and about half then goes directly into processing. Off the top of my head, and this is with a caveat that I would need to check it, I have a figure in my mind of around 60 to 70 per cent of that goes to retail—so what's that, 30 to 35 per cent, in effect, leaving 10 to 15 per cent that would go into hospitality. So, you're looking at about that sort of area, but I could check that and come back to you. So, it's a significant amount and, of course, I think as one of your previous speakers mentioned, the problem is this is liquid milk that needs to find a home for processing, so the processors need to be available to process that milk if it isn't already available. So, our view is the quicker you can absorb some of that through the coffee shops reopening, the better it's going to be for the dairy industry.

Thank you. Joyce Watson wants to come in on this now.

Whilst I appreciate what you've just said, Andrew, and Gwyn, there has to be within this a reality check. Where we are at the moment is in the middle of a coronavirus, which we can't see our way out of because there's no vaccine whatsoever for that. So, that's limiting, of course, the opportunities for people to move around whatever or whenever they want to do that. So, in terms of opening up coffee shops or any such food industry outlets, it seems to me very limiting. So, if we're going to rely on that, we're clearly not going to be very successful in moving certainly milk. Andrew, I just heard you say that 60 per cent of milk goes into those outlets. Again, and I'm sort of asking the question, looking at processing that surplus, which is 60 per cent surplus going by your figures, and tell me if I've got that wrong—

That's not what I said—sorry, Joyce. I'm just going to correct you just so we get the figures right. First of all, there's a huge caveat that I need to check those figures. I'm working off my memory here, but I have a memory that if you take that 50 per cent of dairy production goes into liquid milk—so this is the bit that we're talking about—at least 60 to 70 per cent of that goes to supermarkets, so that's what—. You're left with maybe 10 to 15 per cent of liquid milk in the country—that's what I'm talking about, not 60 per cent going into coffee shops.

Okay. So, we've still got 10 per cent surplus.

Probably higher. 

So, we're not going to be able to build the processing plants overnight to deal with that. So, I suppose the question here has to be: should we be reducing the capacity within the very large dairy sector that is overproducing the surplus that we're going to find ourselves in, I suspect, for at least 18 months?

Well, my understanding is dairy production has already fallen in terms of farmers' production of milk has fallen by 2 or 3 per cent, I think, to take account for some of these issues. I think the point that I was making, and to your point, Joyce—we've got two months' experience now of operating through retail stores within secure social distancing; they've been open throughout the COVID incident, serving customers every day. We've given the same advice to our members who operate in the food-to-go sector; they've been reopening stores over the last four to five weeks—absolutely cautiously, I absolutely take your point. So, for example, they have to limit the number of customers that can come into the store, they can't serve the same kind of volume of customers at the moment. But there are thousands of these stores that are not open at the moment; they could be reopened over the six to eight weeks. Now, that doesn't answer your question completely—I absolutely accept that there will probably be some capacity of milk that cannot find a home even when they are open, and I guess that is the question you're probably posing to the Welsh Government: where does that milk go, where does that find a home or how do those farmers get paid for that?

Jenny, did you indicate then or just wiggling your pen? [Laughter.]

Yes. Yes, please. Just very quickly on this. We're told that there's a shortage of plastic bottles, well, why can't we sell milk in plastic pouches, which is what it used to be sent to the hospitality sector in because they didn't need it in branded labelling? And also, as I represent an urban constituency, the more able of the restaurants and cafes have already reopened as food-to-go businesses—that's in Cardiff, I don't know what's happening in Swansea. So, I think that the food-to-go sector could increase as restaurants and cafes realise it's either re-open in a different market or forget about it for quite a long time. But I think the key question that remains is the shortage of processing capacity in Wales to turn that milk into cheese and butter, which is much easier to store and release to markets further afield. I just wondered what needs to be done to do that.

I'm sorry, I don't really have the answer to that. It's a pretty expansive question. It comes to the point earlier on about the fact: is there an over-supply in the marketplace, is there a strategic and structural over-supply in the marketplace or not? Obviously, that then brings in lots of other dynamics around the agriculture, the sector, the dairy and how it impacts the farmers. So, in terms of what you would do, you would look at the entire supply chain end to end and see where the bottlenecks are and see where the over-supply is. And I think an important point is: look to the future. I think that one question that we will need to address at some stage is: is our future where we've been, or is our future somewhere different? Maybe this is the type of topic that might have to be within that conversation. 

Thank you. Moving on, Neil Hamilton on food retailers' response.

Yes, supermarkets are overwhelmingly important in food retailing and they've had to adapt to current market conditions in various ways, like expanding online trading rather than in-store trading. This coronavirus, I agree with Joyce, is likely to cause convulsions for 12 to 18 months at the very minimum, but there are changes that this is accelerating that would have happened anyway to an extent, and we have to accommodate those. But, we have the overlaid uncertainty of what happens at the end of the year with a deal or no deal with the EU.

We're only about two-thirds self-sufficient overall in food products that we can grow in this country. As supermarket contracts are vitally important here, I don't know what's happened to the disruption of international supply chains relative to domestic ones, but just taking a precautionary view of trade negotiations with the EU, it must make sense to source more food from within the United Kingdom and from within Wales in particular. So, what collectively are you doing to take account of these changes, which to a greater or lesser extent might be taking place anyway? So, using this as a kind of hidden opportunity within a bigger dark cloud.

There's no doubt that something like COVID focuses everybody's mind on the resilience of the supply chain. Actually, the supply chain proved itself to be remarkably resilient, and probably confounded many of the commentators before the COVID incident and during the COVID incident that it would be such a massive problem. In fact, everybody, as we said right at the start, got the food they needed in the UK and the supply chain showed itself to be flexible and robust. 

Now, interestingly, to your point around self-sufficiency, really what we're talking about is the imports to here are imports of products that we don't produce, so they'd generally be out-of-season products. So, the main products that we were importing through February, March and into they key part of the COVID incident were, no surprise, salad vegetables, soft fruit, some of the vegetables we don't grow here but will be coming into season. So, almost 95 per cent of our tomatoes are imported at that time of year; I think about 70 per cent of our soft fruit is imported. So, these are things that it would be incredibly difficult for us to produce here. 

Now, don't get me wrong, where we can increase sourcing and where we can increase sourcing from Wales, and provided that meets the criteria that consumers will demand—that it's affordable and it's good quality—we'll sell it in Welsh supermarkets. There's no doubt about that. But I think we probably do need to recognise that the volume of imports, particularly at the early part of the year when we have our hungry gap in this country, is enormous. So, Spain, Portugal, Italy, all huge areas of imports. Interestingly, through COVID, although Spain and Italy were two countries heavily affected by the virus, supplies were not interrupted. We did not see a problem in terms of bringing in Spanish strawberries, Spanish raspberries and even Italian pasta, and about 90 per cent of pasta in supermarkets comes from Italy. All of those continued to come, even though their countries were on lockdown and they had a severe problem with the virus. So, for me, actually, it showed the opposite of worrying about the resilience of the supermarket supply chain; it actually showed the robustness.

But what it also did was shine a light, I think, on one of the previous points you made there, Neil, and the importance of the UK-EU trade deal. Because, actually, the biggest hurdle we now face, coming out of COVID, is 1 January next year, when we go into the new world of being outside of the EU. Where we are so reliant on those products that I've just mentioned, we need that very swift transport across the short straits, across the channel, to get into Welsh supermarkets. So, we need a good deal with the EU that avoids tariffs, reduces the friction as much as possible, and then our supply chains will be just as robust as they were during the COVID incident.

Well, if the EU remains intransigent, I'm afraid you're not going to get that, because we're making a load of impossible demands on Her Majesty's Government. But, yes, I accept, obviously, that out-of-season vegetables, soft fruits and so on will have to be imported. What we can't grow in this country, then obviously we have to import, if there's consumer demand for it.

But, for example, we import a third of our beef from outside of the UK, and the same is true even of lamb—not the same statistic, but we do still import a significant proportion of it. So, there are lots of food products that we could produce in this country, which could be sourced. Obviously, this can't be done overnight, but we have to plan ahead, and I think we have to plan on the basis that there's going to be only a limited deal with the EU, or possibly even a 'no deal' with the EU. In those circumstances, then I think we should be looking to increase our self-sufficiency in the supply and retailing of food, and this crisis gives us an opportunity to think, perhaps, more clearly and more urgently about that. And this will be part of the solution to the producers' problems—

I think we also export a third of our lamb, don't we, to the EU? And without that export, the profitability of Welsh lamb farmers would be—well, they'd be unprofitable, basically, and they wouldn't be able to supply us otherwise. And the point about the import of the beef comes back to the point that I made earlier, and I think Gwyn touched upon, which is carcass balance. It's what consumers actually want to buy when they go into stores.

We talked earlier about mince. Well, we saw mince sales absolutely rocket for a short period during COVID because people feel comfortable buying it, they know how to cook it, they know what to do with it. So, until you change that consumer demand, we will continue to import, primarily from the Republic of Ireland, beef that is turned into mince and sold in stores, because that's what consumers want. So, you've got a much bigger issue than simply self-sufficiency. You've got to take consumers with you on a journey that accepts an increased food knowledge, which they would need to know—how to buy and cook certain different types of meat—and move away from their kind of traditional methods of cooking that they exhibited during COVID.

So, for me, I still believe we have a very robust system; it's perfectly possible to do a good trade deal with the EU and the UK, which keeps friction to the minimum, and that keeps our supply chains robust and Welsh consumers happy.

I think Gwyn wants to add something.

I think it's a very, very important point that Neil Hamilton makes in terms of—. I think we've got to—. Hopefully, we will have an unfettered trade deal with the EU, come the end of the year, because there will be a pressure and a cliff edge facing the industry between now and 31 December. But there is also an opportunity for us in Wales in terms of thinking about the challenges that society has been through, indeed, over the past weeks and months, and how can the food equation look better in the future. And given that we will have the responsibility of planning agricultural policy and food security matters, sustainability matters, in the months ahead once we leave, or once we officially go from the CAP to our own regime, I think the levers could be there to actually solve the food security issue and ensure that society has a sustainable, strong food offering for the years ahead. I think that's an opportunity out of all this learning we will have because of COVID-19. So, I think it's crucially important that we take that opportunity once it's available, and I think it'll put the rural economy in Wales on a stronger footing, being able to supply and produce sustainable food, high-quality food, and the UK market working with all the supply chain, including the retailers, in a collegiate way to deliver top-quality food to the consuming public of these shores.

We're talking fundamentally here about marketing issues, aren't we? Consumer preferences, for example, educating—the word that Andrew used a minute ago—the consumer into eating cuts of meat that they're perhaps not used to dealing with. I accept the point about carcass balance, that's particularly true of lamb, and so here we've got to work together again to diversify the products that the British public can buy, and educate them into the opportunities that are there. This is obviously not a silver bullet and it's going to be a significant challenge, but given, as Joyce said, and I think she's right, that we've got 12 to 18 months at least of this kind of disruption for a variety of reasons, it's vitally important that you work on this with Welsh Government, with UK Government in order to preserve the countryside as a working operation that is vitally important for the whole of the rural economy.

A lot of nodding here, Neil. Yes, sorry, Pete.

Thank you. One other development that's related to this topic that we've been seeing a lot of—. You talked about the rural economy, Gwyn. In quite a few sectors, a lot of businesses, because the hospitality market channel to them hasn't become available, have then innovated their product ranges, innovated their packaging ranges, and they're actually looking for different market channels rather than going into hospitality, so direct-to-consumer, business-to-consumer offerings. And there are a lot of businesses trying to grapple with the e-commerce side of a business, starting from scratch, which is not an insignificant challenge.

What that does is it allows local businesses, using a similar type of—rather than look on Amazon, you go somewhere else. But, actually, to harness that rural economy and still be able to meet—. Because one of the key points is because something's in the rural economy, it still needs to have the value, it still needs to have the quality, and it still needs to have the cost. So, the supply-chain offering, going forward in the future, needs to be agile and reflect that to make sure that those businesses can be competitive next door.

Let's take one example from a behavioural point of view. How many people are going to eat lunch differently at home now? If we work more from home, how many people are going to eat lunch differently at home now than they would if they went to an office or they went to their work? The nature of consumption is going to be different. And if you think about the movement, moving forward, in terms of—. We talked about food to go; you can deliver pre-packed lunches. Think of all the vegetable boxes, the lunch boxes, all those types of things that happen. These are the types of things that the innovative food and drink manufacturers are looking at.

So, again, I would try and grasp that. I would try and harness that as much as we possibly can, and really nurture that energy and take the opportunity, because there are some opportunities. You have to wipe the challenges away and say, 'Look, these are the opportunities,' and grasp them best you can. So, that's one specific aspect I think we should look at.

Thank you. Joyce Watson.

On something that Gwyn said and also Neil Hamilton, if we're talking about—which we are—a Government that's intransigent and determined to take us out of Europe at the end of the year, overlaid with all the problems that we've already got, it's all very well and good saying we can make our own rules, and we can for internal markets, but 40 per cent of lamb is exported. It will have to be exported under the same rules and conditions that apply now within Europe for them to accept it. So, moving on, then, that's a significant challenge, particularly for lamb, here in Wales.

The other issue that I want to pick up is we did see lots of mince on the shelves in the supermarket, and lots of people did buy it; I was probably one of them. I'm quite a good cook, and I couldn't find anything else, so I'm not sure which way round it was, whether the supermarkets were trying to make—there's good profit in mince, I have no doubt—high profits out of giving us what they thought we wanted rather than the consumer actually getting what they actually wanted. 

Can I pick up on Joyce's point regarding exports? I'm sure Andrew will comment on the stocking policies of supermarkets, which I think have changed anyway from the start of the crisis. But I'm with you, Joyce, in terms of I'm extremely worried about the possibility of having no deal with Europe post January, and the tariffs that will apply for lamb, for example, will be between 40 per cent and 85 per cent, and therefore exports to the European Union with those tariffs would not be competitive, and given what you have said—35 per cent of lambs, or one in every three of the lambs born in Wales, find a home mostly in the European Union—that is a worry to the industry in terms of how sustainable the industry and profitable it will be going forward. So, that is crucially important, that we get that unfettered free trade deal with the EU with the minimum amount of non-tariff barriers.

Obviously, that's only months away, so let's hope that happens, but, in the meantime, obviously, we are looking at markets further afield—in the middle east, which has seen some growth in the last year, and in Asia indeed. But they won't plug the gap immediately that we have with our single biggest trading block, which is the EU, and that is where the value is. I hope that the negotiations do bear fruit in that respect, or else we will have a very, very uncomfortable industry.

Just to pick up on the—. Sorry, Chair.

I wondered whether you or Pete wanted to come in. Go ahead, Andrew.

Yes, I was just going to pick up on Joyce's point. Gwyn will know the figure better than me, but sales of mince represent a very high proportion of beef sales generally in Wales. Gwyn, I don't know whether you know what the figure is.

Of the whole carcass—it is between 50 and 60 per cent of the whole carcass is minced, and therefore it's a significant part of the offering.

Yes. Supermarkets obviously will try and react to those products that were most popular with consumers. It wasn't just toilet roll and hand sanitisers and various other issues—at the peak, it was dried pasta in particular, some of the tins, and mince was a good example of that. Mince sales actually continued to accelerate for a period just after that lockdown, around 23 March.

But I think, returning to the point that I made earlier, if you go into a supermarket and they have responded to the challenge, they have got huge promotions. This is a great time to eat steak at home at the moment. There are amazing promotions in every Welsh supermarket at the moment, and other prime cuts of beef as well. So, it's a real treat, and no doubt supermarkets will be looking to see what the reaction of consumers is during this period. Now, of course the issue always with consumers comes down to the value issue. So, there is a value issue that takes into account the cost of the product as well as the quality, and the perception of quality of that product and maintaining that going forward will be the key thing for producers. But we've certainly seen a rebalancing of beef sales over the last couple of weeks, and, like I say, it's a great time to eat steak at home.

Chair, could I just add something from a manufacturing perspective? We've talked about the demand, and one of the things that is a huge issue—obviously you’ve got a forecast level of demand and you operate on a manufacturing principle that you work towards that. When your demand can increase by a level of four or five times in some cases, what you're forced to do is you're forced to make difficult choices. So, the difficult choices become: do you supply the range of products that you have? And then as soon as you've got a range of products, clearly it creates inefficiencies, because you've got changeovers, down times, various different things in the practical world of manufacturing, and in some cases—. So, for example, we had some members who normally would have, say, 80 references of product that, through the five/six-week period, went with 15, because the only way that they could manufacture the huge increase in demand was to rationalise their range to give them the opportunity to meet the demand. So, to a certain degree, in a time like this it's not a surprise that you've experienced, Joyce, less choice than you would have expected at this point in time, because that's just the tough choices that you have to make in manufacturing. 

Thank you. Jenny Rathbone. 

Thank you. I just want to pick up on some of the lessons learnt from the onset of the crisis and the lockdown. Because one of the issues that we face is that the food distribution network is excessively centralised. So, I know that all Welsh eggs going to a particular supermarket coming from north Wales go all the way to Norfolk and then come back again and are sold as Welsh eggs. It seems to me that, in the context of the climate emergency that we all face, there needs to be some reframing of the way in which we supply our shops. Whilst that may look efficient to particular large-scale retailers, it isn't a very carbon-efficient way of doing things. I just wondered what supermarkets have learnt from this crisis, because we had ridiculous situations where eggs were short in the supermarkets simply because they couldn't find cardboard boxes of six and 12, which seems difficult to understand, put it that way.

I guess it's not that difficult to understand if you go through a massive change in the whole food supply chain over the period of two or three weeks, which is what we saw. And, actually, the reaction of the supermarkets, and the suppliers, for that matter, to react to that I think has been unbelievable. The hard work and the commitment not just of retailers but suppliers to feed Wales through that period was incredible, frankly. Yes, there were some problems with packaging at the time, but that was because those eggs were destined for hospitality, where they can go in a big tray, rather than putting them into the smaller boxes that would be in the retail stores. So, there is always an issue like that. 

Similarly, Jenny, to your point about pushing products around the country, it's about efficiency, at the end of the day. So, if we look at our food supply chain over the last three or four decades, everything is more affordable in this country than it has ever been, near enough, which is great for lower income consumers, because it gives them access to food that they wouldn't have had three or four decades ago. I think the most democratic part of our economy is the food supply chain, and it delivers superb value to everybody, whatever your income status. I think that's something to always hold important here.

Now, you do make a good point around the climate change issue, and that is something that we have not ignored, even through COVID. The big issue at the moment is to look at the climate change impact and emissions right along the supply chain. So, you're absolutely right that it should include the transport and distribution element. It should also, obviously, include the farm-level emissions and how the feed that's given to those chickens that produce the eggs—also what their impact is. So, things like soy and various other areas. That's something that we're very actively involved in at the moment. All of the supermarkets are looking at net zero, how quickly they can get to that.

So, the points you raise are absolutely live ones at the moment and everybody will look in their supply chain to see where are the hotspots in the supply chain in terms of where are the most emissions in the supply chain, how can we cut those out. It may be in distribution, as you point out, it may be at the farm level—it may be in the feed, for example. But all of those issues are under consideration at the moment and were before COVID-19, and I don't see any change in emphasis as we go into the postponed COP 26 next year and the commitments that the retail sector is going to make to that.

So, you make a very good point. We are looking at emissions right across the chain, including transport and distribution, and we're definitely going to be making some very bold and ambitious targets and predictions in the next year or so. 

Well, that's good to hear. I just want to pick up, though, on the point about the efficiency of the supermarket sector, because it rewards large businesses who are able to provide those predictable, constant supplies of white cauliflowers all the same size, which means that we are actually wasting an awful lot of food because it doesn't meet those standards. And it's partly the way in which we've marketed these things—that, unless the carrots have all been washed, they're obviously too dirty to buy. We clearly need to have a rethink about this, and taste surely has to come into the equation, not just quantity. And so I just wondered what rethinking is going on about that in terms of how we support our local Welsh economy. 

No, I agree with you, Jenny, and it would be good to return to those days. In fact, one of the issues coming out of Europe is that we won't have all of the marketing standards which—some still apply to food in our supermarkets at the moment, and are enforceable by law. I think there's—

I don't buy that, because in other countries it's not like that. 

Well, I think there's still 12 standards—. We asked for all of those to be removed about a decade ago. We were successful with about two thirds of them but we couldn't get them all removed. So, we've got an opportunity to do that. 

But the second thing I was going to say was that, if you look in your supermarkets now, you'll see a lot more of the 'ugly' fruit and 'ugly' vegetables as retailers look to source those more to make more of the crop—the whole crop, rather than part of the crop. And the third element is that there's some really good research going on with the Waste and Resources Action Programme and various other organisations at the moment that looks at how farmers interact with retailers. What are the signals in terms of buying patterns when we come to a sunny bank holiday weekend, for example, that we make sure we order exactly the right amount and don't leave it so difficult for the supplier to maximise, and sometimes over-supply, because they're worried about not meeting their contract?

So, all of that research is on, because it comes back to my central point about climate change and emissions. If we can cut out food waste, that's a massive impact in cutting the emissions in the food supply chain. 

Okay. Thank you. 

Andrew Davies wants to come in on this. 

Yes. Thank you very much. Andrew—and also to the other witnesses, if I may—you touched on how farmers interact with supermarkets, and supermarkets interact with farmers. I have to tell you, Andrew—and you know this as well as the other witnesses and politicians here—that, at the start of this outbreak, two major supermarkets bought 60 containers of Polish mince into the country when farmers were taking a kicking from the processors on the price they were being paid. How does that show interaction in a positive way when their own market is being taken out from under them by bringing in containers of Polish meat, when the domestic market can be supplied? 

That was a very, very small proportion of the meat that was sold in Wales or throughout the UK to get through an exceptional period, when consumer demand, as we've already spoken about, particularly for mince, was exceptionally high. So, they were simply finding, where they couldn't get it locally, that they were sourcing a small amount to supplement. It was clearly labelled on the shelf, it got bought—so, consumers had the choice of whether to buy it or not and they did—and both of those companies very quickly, once they were over very initial short-lived hump of that excessive demand, switched back 100 per cent to their UK suppliers. 

So, I think we need to keep it in proportion. We need to remember it was an absolutely exceptional period, and it was for a very short period. In no way does it change their long-term commitment to their suppliers in Wales and the UK. 

I take that point, Andrew, you make, but, if there's a shortage in the market, that normally sends the price up. In this instance, the wholesale price that farmers were being paid was being cut by the processors, and they were bringing in product from overseas to undermine the market. Now, the domestic market couldn't supply that mince—and I know that, because I'm in the beef job myself—but two supermarkets saw the margin and they took the opportunity. Now, that's up to them if they want to do that, but you hit on about building relationships; that does nothing to build relationships. 

Well, I think most farmers would understand the point that was made, and they also would understand that the processors are the ones that are setting the price for the carcass of the animals that are coming into the abattoirs and the processors, not necessarily the retailers, because we're back to carcass balance again—about the proportion of the animal that the supermarkets require. So, it's a much more complex piece than just simply trying to point a finger at a retailer for doing a particular thing. 

Thank you. Okay. Thank you, Andrew. I think you call that capitalism, actually.

Can I just say a few comments to end this session? I think the supermarkets have had a tremendous record, after the initial problems, of dealing with vulnerable people and making sure that vulnerable people, those on the shielding list, have got food. I think that is something—. Because it worked so well after a bit of a hiccup initially, everybody's taking it for granted it was going to happen. But I think the supermarkets did very well on that. And the support for key workers as well—and there are different kinds of key workers—that's been very welcome. So, I think that we've asked you lots of questions, and some of our questioning has not always said, 'Well done', but on those two areas things have worked out well. And I think that when criticism is there it needs to be made, but praise for the supermarkets for the way they've dealt with that.

On meat, the only thing I would say is that there are a lot—. It depends how you put them in the supermarket. When I've been visiting supermarkets, you can get plenty of mince, plenty of chicken, and we tried to get a lamb shank and failed. We get the beef and pork and the other lamb bits from a local butcher anyway. But there were problems, or bits that people wanted they weren't able to get.

Yes, it was a difficult time, wasn't it, for everybody supplying at that time? And that's why we were clear that everybody's going to get the food they need for a period—it was for a very short period. I think we've seen that change, and actually I think most people were very surprised how quickly the supermarkets returned to normal after that weekend of 21 and 22 March, when we saw the real peak in buying. And, Mike, if you keep demanding it, retailers they respond to the demand, so if you and your colleagues keep demanding it, and keep buying it, then they'll keep selling it. 

You mean I'll eventually be able to buy self-raising flour. [Laughter.]

It's back to the bags again. Who was talking about the egg boxes? Back to the bags for flours. There's plenty of flour in the system; can't get it in small enough bags.

Anyway, can I thank you very much for coming along and answering our questions? I found it very informative, and I'm sure my colleagues have. So thank you very much, and hope to see you all again shortly. Thank you.

Can I now move a motion under Standing Order 17.42(vi) and (ix) to resolve to exclude the public from the remainder of the meeting? Okay. Thank you.