Cynulliad Cenedlaethol Cymru

Thank you. Good morning, everyone, and welcome to the Economy, Trade and Rural Affairs Committee, where we take our second evidence session on our food processing and added value to produce produced here in Wales. Before I move on to the witnesses, I'll first of all call for any apologies. We have apologies from Jenny Rathbone, and we have a substitution for Luke, with Rhun ap Iorwerth substituting for Luke this morning. I call for any declarations of interest. I declare my interest as a farmer.

Thank you, Chair. I declare an interest as an honorary member of the British Veterinary Association. 

Any other declarations of interest?

I also declare as an honorary member of the BVA.

Okay. That's the declarations of interest taken care of. The Welsh Parliament is a fully bilingual institution, and there are translation services in the committee room here, and obviously the broadcast that is broadcast live of the committee proceedings is also translated as well for the benefit of our great viewing public across the globe. 

We have questions that we wish to ask today. All committee members will pose questions. The session will last approximately an hour, and I thank you, witnesses, for coming in and obviously answering those questions, and also those witnesses who have provided written evidence for us today so that committee members can be informed of your positions.

What I'll do, first of all, for the Record of Proceedings, is ask you each to introduce yourselves and the organisation that you represent. I'll start with you, Nick, if I may, and work across the panel, and then we'll go straight into questions. Nick, could you introduce yourself and state the organisation you represent?

Okay, yes. Good morning. I'm Nick Allen. I'm chief executive of the British Meat Processors Association. We're a UK body, and we tend to specialise in representing the larger meat processors in the country. So, here in Wales, we have three key members—so, Kepak, Pilgrim's and Dunbia—and they probably account for the slaughtering of something close to 90 per cent of the animals that are slaughtered in Wales.

Thank you. José.

Good morning, and thanks for having me. My name is José Peralta. I'm the chief executive of Hybu Cig Cymru, Meat Promotion Wales.

I'm John Thorley. I'm chairman of AIMS, that's the Association of Independent Meat Suppliers. We're an organisation that was started off about 25 years ago as very much a highly technical organisation. We cover UK and are very closely linked with Europe, because we see all of that as something that is very important to the future of the meat industry and to trade in Wales particularly. 

Thank you, John. I'll start off the questions, if I may. John, I'll put this question to you first. We'll spice it up a bit, and work back this time round, we will, then. The Welsh Government came up with a vision document for what they wanted to see from the food and food processing sector back in 2021. Is it your contention that that vision document is delivering and will deliver in the future for the benefit of primary producers, namely farmers, but also for the processing sector, to add that value to Welsh produce?

I actually don't think it does. I'm very concerned, and my organisation is really concerned, about the fall-off in numbers of sheep particularly. My history, as you know, my background, is sheep and cattle, but I am particularly interested in the reduction that has taken place in the sheep world, bearing in mind that that also affects the processing side, because if we haven't got the basic material, then we have nothing to go down the line with, and that is a very important part of the entire business as we see it.

Thank you, John. José.

I just think, if you look at the raw numbers and you look at the growth in gross value added in Wales in that period, you could argue that it has been a success from that point of view. But I think, to me, there are two or three things that need to be highlighted. One is that it depends how you measure things and whether you delete inflation or not, for example. I think there's a question about what is the right measurement that we should be using to measure that success. Normally, you tend to look at things like market share of the markets that you're in, or you tend to look at things like counting widgets and making sure that you sold more widgets than yesterday rather than pure price, because the price could be driving a growth that, to a degree, could be false and unsustainable. I don't know what the answer is if you measure it that way, but if you look at it in raw numbers, yes, you could argue it's a success that way.

But I mirror what John said, which is, when it comes to red meat, which in essence certainly I am here to represent, the challenge is that, fundamentally, the number of livestock available has actually dropped significantly and is likely to carry on dropping, and that poses a big question mark about how do we carry on in the future with an industry that remains competitive.

Nick.

I would echo everything that's been said and would not waste time repeating it. My members are incredibly concerned about the direction of travel, and it doesn't just apply to Wales, but right across the whole country, but I think it's particularly significant here in Wales—the decline in livestock numbers, the projections and, dare I say, actually the attitude and the desire it feels as though there is in the Welsh Government to drive a further reduction in numbers. Big investors in Wales, big employers in Wales, are incredibly concerned about the future—and more than concerned, I would say they're incredibly depressed about actually what the future holds for them.

Kepak have submitted evidence to us as, obviously, one of the big processors, that highlights that some of the measurements that are in the vision document are not necessarily the measurements that should be used today to measure success, such as profitability in the sector, such as training and opportunities for people to come into the sector. I'm talking about the processing sector here, because, obviously, you need butchers, you need meat processors. Would you agree with those comments from one of the big processors that exist here in Wales?

Absolutely, yes. They are one of our members and we're very close to them, and I would agree with everything they've submitted, really, yes. And certainly, never mind the overarching decline in livestock numbers, as an industry we're trying hard to recruit. When we started off, when Brexit happened, we had a large number of employees in the country that were non-UK, because you had free movement in Europe, and you had a lot of your staff that had come from right across Europe. They've gradually gone home again and been excluded, so we're struggling for labour. We're now struggling to put schemes in place that actually train people and find enough staff to work in those sorts of plants. And quite frankly, if it wasn't for the decline in livestock numbers, and therefore they’ve been under a lot less pressure, there would be a lot more problems in terms of actually being able to get animals off farm and get them processed. So, yes, I agree entirely with everything Kepak have said.

To you two gentlemen, you've indicated that there are some points of positivity in the vision document. But equally, now we're some four years on, what would you like to see in a refreshed vision document that would ultimately capture the essence of what we need as a successful livestock and processing sector to promote Welsh produce and, as I said, importantly, add that value to Welsh produce? José.

I think, to me, there are two key things that would be very interesting to see. One is to have an underlying strategy for each one of the food sectors that is very clear and all links together to the overall vision, because, to a degree, the vision as portrayed in the documentation from the Welsh Government—it's a set of very nice and good aims, but I struggle to see sometimes what's underneath that's going to drive all the different elements to get to that final aim. And as importantly, I think it's important that there's also a larger degree of integration between the different sectors and the strategy of the different sectors. To quote you an example, you could actually have a very successful manufacturing facility somewhere in Wales manufacturing facility somewhere in Wales that’s done very well, but it may have done very well with something that has nothing to do with its Welshness; it just happens to be that it’s in the right location with the right skills. That’s perfectly valid, and perfectly good, but I think we're interested to see what we are going to do about taking Welsh products, with a Welsh brand, all across the supply chain, with the right strategy in each and every one of those of different elements. And it’s going to be different by type.

John. 

A couple of things, really. The first one—Kepak are also members of ours, and we support what they’ve said entirely. They really are a very forward-thinking bunch, and if they have a line, then there will have been a very good reason for it. So, that is important, actually, as we go forward.

The business, then, of identifying how we can get Wales to be operating as a cohesive unit I think is something that we would also support. And we support that on the basis that my background was dairying, but dairying with sheep alongside. And I remember the advisory people coming and telling my father, 'Now, look, Mr Thorley, if you got rid of those sheep, you’d keep more cows, and cows make the money.' Well, cows did a lot of things. They certainly made the apparent money, but they didn’t make the pasture. It was the sheep that made the pasture that allowed the cows to do a good job with the grass produced. So, that is vitally important from the production end, as we see it going through into the processing world.

My final question to all of three of you is: this inquiry is about trying to capture more value of the primary product that Wales produces. Obviously, we’ve heard and seen strong evidence that indicates a declining footfall of livestock numbers in Wales. We’ve seen, obviously, over the last 20 or 30 years, a dramatic decline in abattoir provision here in Wales. Are we chasing a hare that we will never catch, in trying to capture greater value for Welsh primary product, or are we just managing the decline of the livestock sector in Wales, and, ultimately, it is very difficult to see how we’ll retain more of that value here in Wales? John.

Can we answer it honestly?

Well, I hope you'll answer all the questions honestly. [Laughter.]

Yes, but this one particularly, because it’s based on a potential criticism of the Government, because the changes that they’ve brought about have reduced the confidence that farmers have in what they’re doing. And that is, I believe, underlying everything. And what isn’t realised by far too many people is that agriculture, and livestock production particularly, is a slow process. From the time you have a calf, for instance, to when that calf is turned into money and being processed, there are several years involved. A big investment. And there needs to be a proper understanding of what that actually means to a business. In other words, it’s a very, very slow turnover business, and as a slow turnover business, there has to be confidence at all the steps through. And we don’t have that at the moment.

Confidence, then.

Confidence—absolutely vital. And the amount of support that appears to be given to the Climate Change Committee—I would argue that that doesn’t do anyone any real benefit. And it’s a shame that the Government here couldn’t actually look at this and say, 'Is this an issue that we as a Government can identify differently from the UK?' I believe it could.

Thank you, John. José.

Yes, I think you pose a very interesting question. I think your question was: are we managing decline, or can we actually getting the value? I think we can choose to do either, and my fear is that we’re stumbling up and managing decline because we’re not choosing one or the other, which is even worse, in my view.

If you look at the fundamentals, the fundamentals are: if we focus on the red meat industry, which we're here to represent, fundamentally to add value to the red meat industry, you need to have the right facilities serving the right customers that are going to provide that end prize and get you that value. And to do that, you need three key things: you need access to capital, you need access to land and you need access to people—skills, in particular. And I think that, if you look at Wales, the great, beautiful thing about Wales is that, actually, 80 per cent of its land is grass based. And you could argue that, other than raising livestock, there are not a lot of other things that you can do with respect to actually getting value out of that land in a progressive manner. If you start with that premise, then you go, 'Well, okay, so how do we add value?' Well, we should actually try to encourage a more productive way of operating at farm level, followed by encouraging companies to actually invest inwards, to actually provide those facilities to add value. And at the moment, I think that we're not doing one or the other and we're stumbling into decline. 

Thank you. Nick.

Yes, it feels as though—and I don't know whether it's accidental or deliberate, but it feels as though we're just managing a decline here, really. I find it really frustrating. I see that the schemes that are being introduced to supposedly help farmers with their production systems are totally contrary to what you ought to be doing in Wales. Wales has got one of the best climates for producing ruminant livestock. It's one of the best grass-growing places in the world. And we should be exploiting that. Many of the schemes that have been come up with actually encourage farmers to do the wrong things in terms of their farming systems. Well-managed grassland is one of the best ways of lowering the carbon footprint of animal production—well-managed grassland—and yet so many of the schemes encourage them to be more extensive. If you grow grass longer, it's got more fibre in it, it produces more methane. It's quite simple, actually. Well-managed grassland is also one of the best sequesterers of carbon you will get. It matches tree growing, really. So, all of those opportunities are being missed. You have a great opportunity in Wales, here. You have one of the best climates in the world to produce ruminant livestock, and it seems as though, actually, we're just managing decline and wanting to get rid of it. 

And for what? To my mind, to be brutal about it, it's a form of Nimbyism. You're going to head towards net zero in Wales—wonderful, but you're going to be importing a load of meat from the rest of the world, produced in parts of the world that actually have got a far worse climate and carbon footprint than you have, really. So, this all seems to be going in the wrong direction at the moment. So, whether it's managed or deliberate, I'm in no doubt whatsoever that we're in decline.

Before I ask Rhun to ask his questions, a supplementary from Hefin.

Yes, just to come in, these are pretty strong comments. Surely, you've got a gateway to the Welsh Government to put these comments forward and say these things to them. What is the response when you say these things?

Very little, to be honest. I've probably written those words I've said to the Minister—successive Ministers, over the last two or three years, three or four times, I should think, really.

But do you have meetings with officials and talk these things through?

Yes, you get all of these kind words of, 'Yes, we're aware of what's happening in Wales and we need to bear it in mind', but the overriding driver in this country seems to be the environmental schemes, the nature targets, and that's over and above producing food, really. And I find that completely wrong. My estimate, actually, of Wales in terms of meat is actually that you're probably only 50 per cent self-sufficient.

I'll stop there. Thank you.

Rhun.

Yes, thank you, Chair. I have some questions around business support, but if I could just pick up on that theme of decline as it relates to abattoirs in particular, first of all. In my own constituency, we've lost two large abattoirs in the last couple of decades, plus smaller abattoirs. So, the question to you all: is enough being done by Welsh Government to protect and promote and support abattoirs, large and small, in Wales and ensure that they have a future? And would you sign up to the calls from a number of different quarters for making our abattoir network a critical piece of infrastructure and for it to be designated as such? I'll start with you, Nick.

It's absolutely critical. What's the point in having farmers producing livestock if you haven't got the processing sector to process them? And so, there are two parts of the supply chain. And the bigger ones, I think, where they would require support is actually with these training programmes. They need staff. They would get quite a bit of support from HCC in terms of exporting and things like that, but, actually, staff is probably the critical issue. But, most importantly, the thing that will keep them in Wales, if they're going to stay here, is actually livestock numbers. They're already importing, probably, about a third of what they process from outside Wales anyway.

When you come to the smaller abattoirs, the biggest problem they have is they don't make money, and the scale of them is just too small for them to be competitive. And I do believe there's value in having those small abattoirs and they're an opportunity for people to get a start in business and build their business, and, secondly, it gives an opportunity for farmers to get into selling their own meat. But, actually, if you're doing that, you're taking away the opportunity of that—. If the farmer is the person that takes the carcass away and adds value to it, then the abattoir can't do it. So, they're in a really low-profit situation. So, to my mind, the only way, going forward, if you want to keep that network of small abattoirs, is to find a way of supporting them directly.

Yes. So, there's a lack of focus currently. I'm going to jump to you, if I can, and come to John and then come back to you, if I can.  

First of all, can I say I would support everything that Nick's been saying on that? I would spread the load and say that we need more abattoirs, period. But we also need controls that are appropriate, and the controls that are there at the moment are over the top, far too expensive, and don't actually deliver what we believe they need to be delivering. And one of the main works that we do as an association is to keep people in business, and keep people in business by arguing on a fairly constant basis—it's almost a sort of war of attrition with the Food Standards Agency—and that is something that none of us wants, none of us likes, and we believe that some careful work in that area would get us to a much better position.

The other matter that is important is that of halal slaughter, and that is an important business, going forward. Some people don't like it; others won't have it any other way. As an organisation, we support halal because we see it as an important part of the future business.

And there's no no-stun halal slaughter in Wales anyway. 

No—absolutely, no. But we tend to be concerned about listening to some people and not others. And there was a question put somewhere: how are we going to get messages across? Well, some of us have been delivering messages for a hell of a long time and people tend not to listen, which is one of the reasons I asked if I could be absolutely honest. What I meant was, if I could be blunt, so I am blunt; I am a Welshman as well, and I look at it sometimes and I—'disgusted' is the wrong word—find myself feeling, 'What the hell is going on?' We wanted there to be a Government in Wales. It could do such a lot, but I don't see it—I don't see the evidence.

And a whole host of issues around the edges of what Government's doing now on regulation.

Huge, yes.

So to you, then: on critical infrastructure, is that support from Government suggesting that Government sees abattoirs, large and small, as being a viable and important part of our meat processing future? 

Yes, I think—. Your constituency, in 2008, slaughtered 3 million sheep between two abattoirs—Welsh Country Foods and Cig Môn—per year. And I know that because I ran one of them and I also know that I closed one of them in 2010, I think it was, for a single reason: not enough livestock. I'm raising that because, once again, that is the fundamental issue. And when you look at it, Wales slaughtered 2.5 million sheep last year. Compare that to 3 million just in Anglesey eight, nine, 10 years ago.

Now, you asked me whether there's enough in the infrastructure. I think you need to divide it into two. You need scale abattoirs in any red-meat economy to be able to be competitive, and those need to be supported, perhaps, in different ways to smaller abattoirs for different reasons. Large abattoirs need to be supported on access to capital grants, when required, because they do have to have big extensions every once in a while, to make that process as easy as possible. They need to be supported in access to skills, training and so on and so forth. Obviously, they need to be supported in having enough livestock to maintain their very hungry mouths, actually fully fledged.

When you look at small abattoirs, their importance, I think, is totally different, but as important. It's all about serving the more local communities, serving all the smaller communities that perhaps don't necessarily have the scale of farm and/or location to be able to access an outlet for their livestock. So, they are as important for different reasons, and those need to be supported in a different way, effectively because of their size. They're going to find it very difficult to be competitive, so they need to be supported with their costs, whether it's FSA costs or any other larger ones

And supporting co-operative working, for example, in having not many small ones, but a small one serving a large area. 

I'm just going to move on to the more general theme of business support and just ask you—again, we'll go in the same order—how you would you characterise the type, the kind and the level of business support available to meat processing in Wales at the moment. Nick.

To be honest, I don't see a lot of it now. Maybe at a local level those companies are actually having a bit of support that I'm not so aware of—

As would any other business.

That's right. But I don't hear any of my members saying they get a fantastic amount of support in Wales.

In fact, Kepak have said that when it comes to finding timely funding and support, they're finding it very, very difficult.

Yes. I should caveat that I'm targeting Wales here, actually. That comment would apply right across the whole country, but, as we're in Wales, we're talking about Wales.

I was going to ask that, so I'll just dig a little bit deeper into that. Looking around the rest of the UK, is it particularly bad here? You're suggesting not.

I think the UK is facing a very—. I'd certainly say the same things in England. Scotland's a little bit better and have got a little bit more willingness, I think, actually to help people in Scotland and the industry in Scotland—just marginally.

Looking outside the UK, Ireland would be a different matter again, I guess.

Yes, totally. Yes. 

Okay. John, to you again, the type of support, the level of it, how is it?

It starts off with planning permission. The difficulties in planning are massive, and that is because people don't see the importance of an abattoir to a local area. If people—I'm talking about local people now—. If that was seen as something that had a real part to play, and it has got a massive part to play, because without the processor and without the abattoir, so many people don't have a business—.

It's interesting that you—. We think of business support quite often as having, maybe, financial as the core of it, but, in relation to the Food Standards Agency, some attitudes towards the red-meat sector, and again, there, on planning, you think it's the facilitation that's as much of a problem as anything with the sector.

Yes, it is. It's very easy to shut them and put a new village up, but it's very difficult to start one. It's something that certainly causes us and our members some real trouble.

Again, the same question I asked Nick: is it fairly similar to what you see across the whole of the UK, or are there specific Welsh issues that worry you?

I would class England and Wales together. Scotland is a different thing again. There have been a couple of abattoirs shut recently, and that is because of a reduction in stock. Now, if that happened in Wales, frankly, there would be an absolute uproar.

Are they fair assessments?

I think they are, and I can't add much more about the detail that has been mentioned. All I would like to highlight is that you make a very good comparison, which is with Ireland, and they're a very good comparison because they're our competitors. When we go to the export market, they sell the same products that we do in the same markets that we do, particularly on export, as a highlight, and in the UK, because they import here. Why I think it's important is because if you compare at the very, very top level what Ireland does versus what the UK overall and not necessarily what Wales does, they have conviction, they have ambition and they put money behind it, and those are the three things that, if we wanted to take it more seriously, we would have to change.

Money, to you, would be the core of it. You were nodding to some of the issues on facilitation, as well, but money would be at the core. 

That's always the case, and I think, perhaps, the problem is when money is short, we end up, very often, as a society, trying to portray what is a small token as being important. Abattoirs are very hungry beasts, particularly large ones, and they do require a lot more money than people, perhaps, are aware of. In essence, what it means is that, if you really want to support them, you have to have a very significant budget behind them.

Can I just add something there? 

Yes, please.

Obviously, a lot of things come down to money in the end, but I would just make the point—and this might seem a bit harsh—that, in these other countries that are successful trading nations like Ireland and New Zealand, there's an attitude of industry and Government, and particularly Government officials, working closely together. And we just do not have that in this country, and that's not just in Wales here, it's right across the country. And we will never survive—and we just won't survive now, as Brexit has happened—if we don't alter that attitude, and, unfortunately, it seems to be endemic in civil servants that they don't really want to help industry and work with them; they seem to be almost there as a police force to stop us doing things, rather than actually thinking, 'This is what's good for the country.'

Yes. Government has to regulate, has to put rules down, but it also has to be a champion. 

Exactly, yes.

Just to drill down, with one last question, perhaps, on just finding out whether there are some specific gaps when you look at parts of the carcass, for example, and some specific elements of the processing chain. Are there some obvious missing elements in Wales that could be supported more, or is it more a general view that you take?

Do you want to go into—?

I don't think there's actually a specific, with respect. If you look at the process of rearing an animal all the way to retail packs and/or steaks that are going to go to restaurants, we have the capacity and the ability to do that in Wales—we have the facilities that can do that. I think it's about more general support to make sure that the ambition and drive is there to actually make it grow. I think one word I want to highlight all the time is 'scale'. If you want to be competitive, you have to have the right scale. The danger that we have is that we focus too much on the small bits, and we ask, 'How do we compete with that?' and, 'How do we compete with all those countries that are actually the ones that are bringing product in?'

Yes. You wanted to come in there.

Yes. I'll come back to the halal business for a second, because the one halal abattoir, which is very successful, brings something like 17 per cent of the Scottish lambs, so that gives you some idea of the draw that it has. You then have the other abattoir down in Cardigan, which has lambs from all over the country. So, there is something good that's happening, and I'd love to be able to study that, see what's good and then see if we can identify with that and learn something from the positivity associated with it. But there is a new thing happening at the moment, which is a discussion taking place on the movement of stock, and something that we went through, I suppose about 30 years ago, was where we went to enormous trouble to make sure that the vehicles were better and they became better and we've got better roads, so, as a consequence, everything does move better. So, it's a good argument against the small one, but the small one is absolutely vital where there are still strong elements of the small country road, because you can't take big lorries around the country. That is a job that has to be done by the farmer with his trailer. That makes good sense for welfare and moving stock around. Some of the big ones can do a very, very good job, without any doubt at all, but some of it is based on the work that was done to get the infrastructure working right, and that infrastructure now needs to be updated, not a hell of a lot, but it needs to be updated in a way that gives the smaller boys a better opportunity.

Thank you, John. I am going to have to move on, because time is going to beat us. Sam.

Thank you very much, Chair, and thank you, panel. We've touched quite a bit this morning so far on declining livestock numbers, and my colleague Hefin David raised the relationship with Welsh Government and the discussion. You paint a picture of this industry of the red meat sector being one of the best because of traceability, because of sustainability, the quality of the grass, the quality of our environment. Yet, it's quite a bleak picture you're painting in terms of the future of the sector, given the decline of livestock numbers. So, in terms of where we are in the process of designing a future agricultural support scheme, which is due to be announced later this month ahead of the Royal Welsh, how have you as an industry, as a sector, fed into that to ensure that the trend could be changed or at least mitigated? Because some of the figures of the decline in livestock numbers for the future are quite stark. Nick, in terms of building on Hefin's point, for the sustainable farming scheme, what has that been like?

We took part in this big pushback in Wales. You had the wellington boots on the Parliament here, and all the rest of it, and there was a reset by the Welsh Government, and everyone was called together and they were going to look at it again. My experience—I've partaken in those meetings, and what I've seen, quite frankly, is just a gradual move back to where we were in the first place. I really do not feel the dial has moved much at all over the last six to nine months, since whenever it was you had the wellington boots on the Parliament here. It gradually seems to have been eroded, and I'm not sure it's in a better place than it was originally.

Can I just ask, Nick, are you involved in those round-tables? Are you actually sitting there?

Yes, I'm invited to them. It gets quite difficult from my perspective, because they very quickly get sucked into the details of what goes on on farms, into real granular stuff about the farm, which is not my level of expertise, and I don't think it's for me. Certainly, the industry met together a little while back and we all shared that concern. We're almost back to square one again. The dial hasn't moved that much. Okay, yes, there's a little bit about forestry, but the fundamentals were there. This pattern that there's going to be a decline in livestock in Wales is still set by what's going to come out in that scheme, really.

I just feel—and I should say, I am a sort of farmer as well, so I do understand these things—there is a way of farming where you can do both. It's not one or the other. You can look after the environment and you can have good food production. You just need to actually make sure that the farmers actually understand and are encouraged to go down that route. At the moment, they are just encouraged to go less intensive, take livestock out of production. There's a decline because that's where the incentives are being put, really. I keep coming back to it, it's just missing such a great opportunity in Wales, when you've got so much going for you.

Thank you. John. Your bluntness, your honesty, please.

Well, I can agree in general with everything that we're saying. But when I look at Welsh Government, Welsh Government has a duty, as I understand it, to support the Welsh language. In supporting the Welsh language, they have to look at farming and agriculture and the rural scene. I honestly see that as very, very important. They forget it at their peril. I would be able to talk to you today in Welsh happily. I was brought up in Welsh and I passed the grammar school in Welsh. After that, it's been English all the way, and it's a bloody nuisance, frankly, because there is nothing like Welsh, in my book. I sing in a choir in Worcester, and half the time we sing in Welsh. So, it is important. When we ignore that, and we talk about planting the central belt of Wales with Sitka spruce—. I think just talking about it reduces the confidence of the people who are really committed to doing things with farming, and anything that takes away that confidence, frankly, doesn't do anyone any favours.

One of my other jobs is I chair the Henry Plumb Foundation, which helps youngsters get started in farming. And with all the negativity associated with farming that we've had in the last 12 months, the number of people coming to us have declined—the tap is almost turned off. Now, that I see as a huge own goal, frankly, because we need youngsters, and we need youngsters in farming. And we need them there because it's not a soppy job, it's a job that needs youth, it needs energy, it needs deep intelligence. And we've got it all here in Wales, for goodness' sake. We don't do enough with it in that sense.

Thank you, John. That's really helpful. José, just before I come to you, I've two points, really. Firstly, on the Climate Change Committee's—not the Senedd's, but the UK-wide body's—advice on the fourth carbon budget for Wales, assuming a cattle and sheep number decline by 19 per cent between 2022 and 2023: your views on that? And, secondly, is the red meat sector unfairly lumped in with a global red meat sector, so there's the perception that what Wales does is similar to the feedlots of Argentina and America, and we're not actually understanding the benefit of a Welsh grass-based system when we're looking at policy development, and the intricacies of a consumer, as well, in trying to put that message across of why Welsh produce is so good?

I'm going to try to dissect that question, because it's a very interesting question. I think, first of all, the CCC assumption that livestock numbers are going to reduce by 90 per cent may be right or wrong, we don't know, because it depends on a lot of factors. But I suppose underlying and behind that assumption they're making is the assumption that consumption is going to reduce by that level, and currently there are no indications that that's going to be the case, bearing in mind that, basically, we're talking between now and 2033. I believe that's the deadline they've put in. At the moment, basically, red meat consumption in the UK is relatively static. That's one issue.

So, if you accept that, and that's likely to be the case, that it will be relatively static in those years, then what you are effectively doing is substituting local produce, local products, for imported raw material. And to me, that's almost criminal, because there's an underlying error in the original premise, which is making Wales net zero, whether it's from livestock or planes. To a large degree, it's important because everybody has to do their bit, but if you do that at the expense, potentially, of an industry, what you're doing is basically exporting the problem and making no difference whatsoever to the global climate. I think that needs to be considered. And I highlight this; I'm not saying we cannot or should not do our bit. My point is that we should do our bit in a balanced way.

Let me start at the beginning. The first bit is that, if you look at the balanced way, as my colleagues have highlighted—just to re-emphasise—we're very fortunate in Wales that we can actually produce livestock in a very environmentally friendly manner. Our numbers would indicate some of the top in the world, because of our weather, because of our grass, and all those things that have been mentioned before. But, actually, what we should be doing, in my view, is actually say, 'We'll take that as a starting point and develop the industry forward by making sure that we're actually increasing the productivity of those farms.' Because the moment you increase the productivity of those farms, as defined by the number of kilos per hectare, effectively you are being more friendly to the planet, and you are going to be more friendly to the planet than perhaps other places that we'll be importing meat from are or will be. And I think that would be a much more responsible position to take. 

Lovely. Thank you, José.

Just very briefly to you, Nick, if I may, yesterday, the new restrictions came in here in Wales about livestock coming from England into Wales. From the processing sector's point of view, obviously cattle and sheep can move into Wales, but there's a restriction on the hours that they can move. It has been put to me that that's causing problems, and as we're on the subject matter of reduced numbers and potential throughput decline and hence profitability, is there a concern coming from the processing sector here in Wales that, actually, the restrictions are going to pose a difficult question about the viability of some plants?

Undoubtedly, and funnily enough, I've had two phone calls this morning from processors in Wales, and we're having a meeting with them this afternoon, actually, to try and understand the problems and point them out. We did point these problems out two weeks ago to the Minister, just before he made this decision about how he was going to treat bluetongue. But, yes, it's going to cause problems, and it's going to make your plants in Wales less competitive, because it's going to be harder to bring animals into Wales. They have to, a lot of the time. Typically, they bring on average about a third of their animals into Wales from outside to keep those sorts of plants up to full capacity. It's going to make it a lot harder for them, so they're going to be less competitive. Frankly, it's another nail in the coffin. So, yes, it's a serious concern, and, yes, it's going to make life very, very difficult, and just put them at a competitive disadvantage compared to other plants in England.

Could I ask what response you had when you put that scenario to the Minister and his officials two weeks ago?

Well, the whole farming industry, the National Farmers Union, the Farmers Union of Wales, ourselves, the Livestock Auctioneers Association Limited—everyone on the farming side said, 'Look, it's not ideal, but we really think you should move to one zone along with England.' But the industry wasn't listened to. Others were listened to, and the Minister went with this decision to carry on with the controls. But it's causing enormous problems. It's going to stop animals coming into Wales. It's going to make it very costly. So, it means, going forward, there are going to be fewer animals to source in Wales, so that our plants are going to have to bring them more from outside Wales because of what's happening, and then there are the time restrictions. So, yes, they're very concerned about it, and, as I say, I've had two phone calls this morning and I've got a call this afternoon with them all to try and understand and articulate just how much damage that's going to do.

The industry wasn't listened to. Thank you. Hefin.

Could I just ask José about the seasonal availability of lamb and some of the problems you talked about in your submission, just to expand, really, on the nature of that seasonal unavailability? What can be done to deal with that issue?

Yes, that's a good question. I think, just for clarity, that comment has been made in our paper against the background of it being a secondary challenge to the fact that we don't have the scale, so I think it's important to highlight that. And why I use that word again is because, if you're a retailer, you're in the business of basically selling square metres of sales and you have to have a reason why to put a particular product rather than another. If something is not available in large numbers, you're always going to be more doubtful to actually put it on the shelf, because you know you're going to have to chop and change, and that's not something retailers in general like.

Obviously, seasonality is an issue, particularly lamb. And if you look at typical seasons, you'll find that the peak availability of lamb in the UK and in Wales is round about October, and the bottom availability is round about—call it February, call it March, it depends on the year and the weather. But just to put it in perspective, that ratio is 2:1, i.e. we are exporting lambs in October because we have too many of them, and we're actually in a position that we need to import lambs into the UK and/or Wales in February. So, it is a big issue.

Are they not available? Yes, they are. They're just more difficult to find, more expensive, and in particular, the quality is lower because they're actually older hoggets that are not of the same quality as, say, spring lamb. How can you solve it? Well, it's a permanent conundrum. I mean, between the years 1998 and 2006, a particular retailer in the UK had, all year round, availability on shelf of lamb branded as Welsh. And I'm talking about, at the time, the third largest in the UK, so it was not a small retailer. And I know the chap who was supplying that, i.e. me, and it was a challenge, but you can. The problem is, if you actually were to try to expand that to all retailers, that would become a big problem. And then the only way you can really solve it is by finding ways to work with farmers in an organised manner to try to extend that season somehow.

And this is down to the nature of sheep breeding, and the fact that that's just how it works.

Yes. 

Okay. I'd really like to think of some really intelligent questions to ask, but not being a farmer myself, I'm struggling to dig deeper on that, other than: how do you deal with the breeding cycle? Are there any artificial means of changing these things?

Not realistically. 

John will be an expert on the topic.

I'm not an expert on any topic. [Laughter.] Just a few words on the bluetongue business, because that is desperately serious. As the UK, we move a lot of stock around, and we move them particularly from now to October as breeding stock. Wales used to have the biggest ram sale in the world. I ran it, and I was heavily involved in that, and it grew from absolutely nothing. That takes place in September—it's a huge affair—and that relies on stock coming from all over the UK. We had stock even from the Queen Mother's place up in the north of Scotland, because it was seen as something good to support. Now, that runs throughout livestock. And by having this differential—it's seen as an artificial boundary—we're creating trading difficulties that not only will produce very little benefit, but that will actually cause huge difficulty at a time when a huge amount of the money exchanged for stock is taking place.

Okay. We'll note those comments and possibly come back later.

Sorry, could you just give Hefin—? He touched on a very salient point there. He's not a farmer, but from a financial point of view, that sale—how much does that generate in September? Just a global figure.

Oh, God. I used to know it. I don't know it at the moment.

You can come back to us.

I can come back to you on it, yes, certainly.

Two and a half million pounds.

It's a lot of money, actually. The ram sale itself used to turn over £2.5 million—just the ram sale. So, on top of that, you then have the breeding stock, the female breeding stock, which go down country.

This is a whole world opening up to me here that I never even considered.

I'll come along and talk to you about it privately because—

Well, it'd be nice to see it in practice—to see these things.

Well, it is desperately important to understand it.

Okay. Hefin.

Of course. Sorry. Can I just come on to the nature of the scale, size and support for different kinds of businesses? We took an interesting bit of evidence from Huw Thomas of Puffin Produce and Pembrokeshire Creamery, and they told us in a previous session that the Welsh Government should back those businesses that can produce at scale. I suggest to you, what about those businesses that are developing and growing, and have the potential to become later businesses that produce at scale, but aren't currently? So, the question, then, is: is the balance right there? Should we be focusing on fast growth? And it's the same question for any business, really. Should we focus on fast growth, or is there some kind of incubation and support that can be given to those businesses that might have the potential, but might not?

Well, you're back on Henry Plumb Foundation territory. There is money available, but it's far better to grow, or appears to be better and more sensible, to grow from the bottom up. And I don't know if you've seen LinkedIn. There are some very good exchanges going on on LinkedIn at the moment.

Right, okay. Everybody's talking about LinkedIn at the moment. I haven't joined it.

Well, join it. It's interesting.

It's just another channel to receive abuse for politicians, I would think.

You'll find a hell of a lot about a chap who started with us two years ago in beekeeping, and beekeeping has developed capital. The capital has bought sheep, has bought cattle. He's over in Cambridge. He's determined, and it's that determination that is vital.

So, the question there is: should the Welsh Government be directing resources at that level, or is it more cost-effective to direct the resources to those who are already operating at scale?

I think the most effective thing that the Welsh Government could do is what we touched on right at the beginning, and that is to develop an idea of what would bring confidence back into the industry. I honestly believe that to be so fundamental that, if you devoted a new department to that alone, it would be something that would be beneficial, and you'd see a result for it. But it would have to be down-to-earth stuff.

Okay.

Could I just—? I think it's a very interesting question. Look, I think there's good stuff going on in Wales from the point of view of, let's call them the very, very early start-ups. If we wanted to actually start a little company between John and myself to develop Welsh tea or something of that ilk, there's plenty of accessibility to hubs where we can actually start a factory. There's plenty of accessibility to research and data from universities and so on, and that's fantastic. But fundamentally, if you want an economy that's successful, you need to get all those businesses into the next stage. And the next stage is the more challenging one, and I'm talking about anywhere between £10 million and £50 million turnover, to use a benchmark, because that's when you actually need a lot of capital investment to actually develop your facilities to the next stage. That's where you need cash that you're necessarily not going to have, particularly in an industry that is generally quite low in margin, and you need a turnover. To me, that existed, particularly when we were part of the European Union, because there were European funds that were actually particularly destined for that. And if you look—. You quoted Puffin Produce; I had the pleasure of working in that company for several years. I can tell you that they've done very well out of it. They've grown the company and done fantastic things because there was availability of that grant to be able to move from a small company to a medium company, which is where the big challenge is.

Okay. In the interest of time, I'm going to shift on to my last question, if that's okay. I can see that we're up against the clock.

It's fine with me, Hefin. You crack on. [Laughter.]

We've got to stick to time. The Chair's not good at that, so we've got to make sure we keep him to it.

You say, José, that we need more investment in research, which would enable the development of trading opportunities. You talked last time about future funding and the ability to generate that level of research. Have we made progress?

We're in discussions with the Welsh Government on that particular topic, and they're ongoing. I suppose I have two levels of hope: one is that I do get an answer, and the second one is that the answer is positive, but I can't tell you yet. We're basically in quite detailed discussions about what that would mean going forward, from the point of view of effectively supporting the industry to make sure that productivity, aligned with a better carbon footprint, is actually developed for the future.

So, at what point will you be able to give us that extra information that comes from those detailed discussions?

It's actually part of our Vision 2030 process that we're doing. Just to give some timelines, effectively, we're aiming to have that final document of what the strategy is going to be for the organisation, including those elements, by November this year.

November this year.

Yes.

So, as the different political parties are preparing their manifestos, there might be an opportunity to have an input there as well. But I think, as a committee, we might be interested in coming back and finding out more in November as well, as to what you have to say. Diolch, Cadeirydd.

Thank you, Hefin. Hannah.

Thanks, Chair. It falls to me to try and squeeze in the last set of questions in the limited time that we have remaining. I'm going to turn to issues around procurement. Perhaps you, José, first, because, in your paper, you cite some of the traditional challenges the Welsh red meat sector has faced in being part of that public procurement approach. So, put simply, what can Government and the sector do to overcome some of those barriers? What needs to change for Welsh red meat to benefit more from that?

Thank you. First of all, let's put public procurement into perspective, because it is obviously an important part of what we can do to help the red meat industry. But to put it in perspective, roughly speaking, the total amount that Wales spends in public procurement on food is approximately £90 million, which is a significant amount of money in general terms, but it is comparable to the total turnover of one superstore of one of the retailers. But within that, approximately speaking, 15 per cent is actually meat. The majority of that meat today is chicken and/or sausages, which actually does not have that much red meat content. This means that, in reality today, the opportunity for any processor to actually sell to public procurement, if you are in red meat, is relatively low. If you take that potential approximation of £5 million or so a year, there's not that much to go out. So, that's one to change.

We welcome the fact that the new initiatives are indicating that we're going to try to do two things: one is to encourage the consumption of red meat in children because it's part of a healthy diet, and that's good news, but, to me, if you want to do that effectively, you have to have the budget behind it. Because whether we like it or we don't, red meat is a premium product in its generic form, and Welsh meat in particular is a premium product. So, it would contradict itself if you're trying to encourage the consumption of red meat for societal purposes and, at the same time, you're still constraining the budgets not to be able to achieve that.

And last but not least, my experience in the past—so, this may be antiquated—of trying to interact with, generically speaking, all sorts of public procurement, is that it tends to be a bit clunky and very restricted. Very often, in my experience, the most successful interactions between businesses have been done by humans making decisions, rather than saying, 'The system says that you can't sell to me.' Perhaps it needs a bit more flexibility in the system.

Can I just add something? I'll keep it very short and simple, actually. As a business, when you're short of product, you chase the high-value markets, and public procurement is not a high-value market. As I say, it's driven by the shortage of product, really. Our members would be far more interested in, 'How do we access those higher value markets?'

Thanks. You touched on trying to get children to eat more red meat and eat healthily in schools, and on red meat being seen as high-value produce. Is there any opportunity, perhaps, for less valuable cuts to be served in schools or through the public sector supply chain?

I'm going to tie my last question into this one because I'm conscious we're over time as well. It's about public procurement—the tendency to be quite clunky and, perhaps, people say, bureaucratic. The focus has always been, traditionally, on the financial bottom line. There has been legislation passed in Wales—. I don't know whether I should declare an interest, Chair, because I did take through that legislation at the time? But there's the procurement side of that Social Partnership and Public Procurement (Wales) Act 2023. The procurement aspect of it, I think, has come into force this year. So, there is guidance being produced around that. I don't know whether you've had any involvement with what that might look like and how it could benefit your sector?

Not directly, but I would like to mirror Nick's point. At the end of the day, when you have limited product, the low-value products are going to look expensive compared to others. And fundamentally, when it comes to the lower price bits, in reality, it's already happening. The beef industry in particular uses that for mince. And more than likely, in public procurement, because of the ease of cooking and the versatility of it, people will end up buying mince, I suspect. So, it's really already happening.

I—[Interruption.] Sorry. Go on, John.

Go on.

I'll just make one comment. We were talking about getting meat into schools. I think it's far more of a priority to focus on, actually, how you educate children about cooking in schools and things like that, and food in schools. Personally, I'd sooner see that £90 million, or whatever it is, not spent on buying the food but actually educating the children.

One of the issues on promoting meat—red meat—is something that is associated with health. We all talk about it being healthy, but when—. There are a few in my family at the moment who are being looked after, and the first thing they say is, 'No red meat.' And it's—excuse the language—bloody murder to try and find something else. I actually quite like chicken, but it's not my favourite. I can't go and get a set of ribs anymore because I'd have to eat it on my own. I just wonder how true it is that red meat is seen as something that is not as healthy as we think it is.

Any other questions, anyone? Thank you very much, gentlemen, for your evidence this morning. The transcript will be sent to you for your perusal—have a look at it. If there are any issues with it, please raise them with the committee clerks, but otherwise that will be the official record of the meeting, and it will inform, obviously, our final report on this subject. Thank you very much.

Thank you.

Thank you.

I invite committee members to note the papers to note. Is everyone content with the papers to note? Any observations or questions from those papers to note? No.

Could I have a motion to move into private session? A seconder? Yes. Thank you very much. We'll move into private session. Thank you very much.