Rural Affairs and Environment Committee, 16 Apr 2008

Meeting date: Wednesday, April 16, 2008

Official Report 338KB pdf

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Pig Industry

Agenda item 3 is an evidence session on the pig industry. At our meeting on 6 February, we agreed to hold a one-off session, as suggested by Mike Rumbles, on the state of the Scottish pig industry. We have two panels of witnesses, starting with representatives of the pig industry. The Cabinet Secretary for Rural Affairs and the Environment will be here after 11:15, because he is speaking at a separate event.

I welcome Gordon McKen, the managing director of Scottish Pig Producers Ltd; Robin Traquair, the chairman of NFU Scotland's pig working group; and Stewart Ashworth, a senior business analyst with Quality Meat Scotland. Mike Rumbles will kick off the questioning, as the session was his suggestion.

There are two major issues, the first of which is the overall state of the pig industry. The second and more important issue is what the Government can do to assist the pig industry in its present travails. NFU Scotland has mentioned losses to the pig industry of £5.177 million resulting, directly and indirectly, from last year's foot-and-mouth disease outbreak. I am acutely conscious that the Government stepped in to help the sheep industry with about £19 million and that it provided £1 million for Quality Meat Scotland, although I understand from the latest figures that only a third of that has been spent. How could the Government help the pig industry directly?

People in the pig industry felt let down when we did not get help from the Scottish Government. We asked for a separate amount of money. When we found that the money that had been given to the sheep sector was not being used, we thought that there would be some spare budget left over—we did not even call for new money. Although the foot-and-mouth outbreak did not occur up here, it caused a lot of upheaval to our marketplace. Movements were stopped immediately. I sell pigs and I have a farm not that far from here, about 6 miles away. We run the place flat out, at 100 per cent capacity. We do not have spare room because empty buildings cost money. When the market stopped and we were left with no sales, pigs started backing up immediately.

When we have pigs that we cannot sell, they stop other pigs moving through—there is a dynamic system. Every week, 100 pigs are born and 100 are sold and they keep on coming through. The pigs that should be sold take up the room for their peers that are coming up behind. Those pigs also put on extra weight. When we sell to supermarkets, they want pieces of meat of a certain size. When the pig becomes bigger, the meat is bigger than the packets, so the supermarkets do not want it and they penalise us by taking 20 per cent off the market price. That is for the prime market, for bacon and pork.

Each year, we sell 10 per cent of our breeding herd abroad. About 99 per cent of the cull sow stock is exported, but that stopped overnight, so that backed-up product that we could not export came on to the British market. The bits and pieces of the pig such as ears, legs and offal that are exported to countries that appreciate them also backed up. Before we knew it, we had about 20 per cent extra meat on the market.

To complement that, the supermarkets became worried that they would run out of product quickly, so they got on the telephone to suppliers in other parts of Europe and ordered so many thousand tonnes of legs, bellies and shoulders. The people who were selling them are clever and said, "Ah, you must be a bit hard up, so we will give you a three-month contract only." That is what they did. Therefore, when the foot-and-mouth outbreak was cleared, we were left with an excess of meat in the country. The supermarkets were not ready to buy the excess, because they were tied into contracts with producers from elsewhere. Before we knew it, there was a market collapse at a time of year when we would expect it to rise. We suffered two losses as a result. It might be said that we were not affected directly because no foot-and-mouth outbreak occurred in our area, but the indirect cost has been a heck of a lot. Those are the ins and outs of it.

Because of somebody's cock-up in Pirbright, we were completely let down. Throughout the United Kingdom, the British pig industry has been let down because, for whatever reason, wranglings between various bodies meant that we received no compensation. That has cost us dearly. On top of that, we now face other price pressures. A lack of cash flow, belief and support from other sectors means that many people are going out of business before the banks close on them or that people have let their business go when the bank has said that it is time to give up.

That is a brief picture of what has happened.

I know that bigger issues exist, but I do not want to concentrate on the bigger market picture, because the Government can do nothing much practically or immediately to affect that. I am trying to get out of you what you think the Scottish Government can and should do. We will also ask the minister that directly.

The Government was able to produce £18.8 million for the ewe scheme and £3.7 million for the light lamb scheme, but nothing for pigs, although we have all read the evidence that the industry has suffered £5 million of losses. Something should be done at least to compensate for that. I understand that the argument is that Europe will not allow compensation to be paid. However, I also understand—from a letter by the minister, which we will pursue with him—that the Government did not propose a scheme to Europe. What do you want to hear the minister say and commit to when he appears?

Although the Scottish industry has had difficulties in the past 10 or 12 years and although sow numbers have reduced in the breeding herd, we have increased slaughterings by 65 per cent. The industry has been successful at consolidation with self-help—no subsidy was given. Until July, the industry was going well.

I would like the committee to consider the on-goers scheme that we had in 1991 and 1992, which was allowed to give assistance of 5 percentage points of interest payment for two years—it should have been for three years—for restructuring business. The implementation of the nitrate vulnerable zone proposals on farms, which will require investment, provides the ideal opportunity to reconsider that on-goers scheme. If that could be introduced, it would greatly help producers. We should definitely pursue that.

I suggest assistance in complying with the NVZ and broader thought on how we should handle slurry and so on, not only in storage facilities, but in other facilities that would make the product more valuable, especially in the light of the cost of fertiliser and the need to reduce carbon emissions because of the climate change situation. If slurry is treated differently, it can be used as a more valuable fertiliser, which reduces the use of granulated fertiliser, which causes a huge emissions problem.

Another imminent issue is an audit of imported product and of what it claims to be. In January 1999, we changed the welfare systems in the UK. We had no problem with that and we were for that—that was not an issue. However, retailers immediately invented a new purchasing category of European Union welfare, in addition to UK welfare, so that they could purchase at the cheapest price in Europe. An audit of imported product would be most helpful and the industry would wish to become involved in that. The industry might part fund such an audit, but it would need the clout of Government to ensure that it was done properly.

We fully appreciate the Government's stance on genetically modified organisms, but being allowed to take into the European Community some such product for animal feed would help at the moment.

It would be nice to sit here and say that the pig industry should receive a headage payment to cover its losses, but we probably need to recognise that the time for that has passed. Looking at the issue in a slightly different way, we can say that the consequences of foot-and-mouth disease have had an impact on the ability of the entire industry to move forward to address the challenges that it was facing. As Gordon McKen mentioned, those challenges include nitrate vulnerable zones, slurry control and feed prices. Undoubtedly, our guys will also now face higher overdraft rates.

To help the industry to move forward, the Government could consider establishing another on-goers scheme, as Gordon McKen described. Such a scheme would recognise that the industry faces challenges, which it would have faced up to were it not for the cash-flow problems and financial losses that were incurred as a result of foot-and-mouth disease. I support what Gordon McKen said about nitrate vulnerable zones and pollution control. In addition, people in the industry who want to restock face issues of capital.

The Government could do a couple of other things. Reference has been made to the importance of exports, particularly of breeding pigs but also of offals. We are still excluded from some markets because of the various arrangements that are in place. The Government could work on the industry's behalf at the political level to try to make progress on some of those trade certificates. Although we can trade within Europe, we cannot yet trade in some east European and Asian markets. Removing those hurdles would increase the market opportunities for our guys.

There has been a lot of discussion about foot-and-mouth disease. The cabinet secretary said in his letter that he was unable to construct a scheme that Europe would approve. How did France manage to construct such a scheme whereas we have been unable to do so?

Where would the pig industry have been today if we had not had a foot-and-mouth disease outbreak in 2007? That might require a bit of speculation.

France does things in the way that it does because, where there is a will, there is a way. It is as simple as that. France backs its agricultural community more than Scotland does. That is it in a nutshell, really. We have had various schemes, such as the on-goers scheme to which Gordon McKen referred. If money was made available, we have various proposals on how it could be directed. Where there is a will, there is a way and we can make it work.

What was the second part of your question?

Where would the industry be if we had not had foot-and-mouth? Obviously, cereal prices would still have increased.

We would have been four or five months further down the line. We would have had better cash flow, as we would have been left with more cash in the bank. Aside from foot-and-mouth, we are haemorrhaging cash at the moment.

For example, when I tried recently to buy soya to feed my pigs—GM was mentioned earlier—I could not buy it in Leith, Edinburgh. I had to buy it in from Glasgow. My previous contract, which I bought two years ago at £150 a tonne, ended last week when I had the last load delivered. To buy more soya, I had to pay £320 a tonne to have it delivered. That equates to an increase of £5,000 per month to my business. My business costs are perhaps £10,000, £15,000 or £20,000—I have given up counting the figures because, if I spent all the time looking after my bank balance, I would never get any work done.

Without foot-and-mouth, we would have been a few months ahead in cash flow. Instead of being backwards, we would have been further forward. That would have helped us an awful lot. There would probably have been more confidence in the industry. People might have invested in the industry instead of just battening down the hatches and stagnating. We would have been further ahead.

I will respond on Karen Gillon's second point. I agree with Robin Traquair on the first point regarding France. It was clear that in July we had an industry in balance in the UK in terms of supply and demand. In fact, demand was just outstripping supply and prices were increasing. The most damaging part of FMD was that it gave retailers and processors in this country the opportunity to create a backlog, which continued until Easter this year.

It may be argued that European prices fell come October and November and that our prices would have fallen too. History will show quite clearly that, as the euro strengthened in October and November, we got no benefit. However, as Stuart Ashworth can show, we operate anything from 8p to 20p-odd above European prices at any time. Our prices would not necessarily have fallen, had it not been for FMD. Yes, prices would have come back a bit, but they would have been nothing like what they have been driven back to and held to by the creation of a surplus. Hence my earlier point on an audit. An audit that was set up quickly would do more for us and apply more pressure to the retail trade than anything else.

I am extremely wary of supermarkets. I read in the newspapers this morning that profits are going up. We must remember that the supermarkets' primary objective is not to sell food; they do not worry what they sell as long as they make a profit at anybody's expense. If they are making a huge profit, someone else is making less. At the moment, we are making less. Retail prices have gone up in the supermarkets, but we have not seen all the benefit of that coming through.

What reasons did the cabinet secretary give you in July and August for there not being a scheme for pigs?

It was stated clearly that there was not a welfare issue. That was the main reason.

Do you accept that reason?

There was a welfare issue in terms of cull sows, particularly in Scotland. There is no market in Scotland for cull sows. We ship them all to England. Our market closed completely for weeks. In England, the figures will show that there was a cull sow market, albeit with an extremely poor price. The farmers there did not have to feed the animals, but we did, so there was a double whammy for us.

I had the opportunity to visit a pig unit at the back end of last year. I was given astronomical figures for the losses that were being incurred. I have not got a sense of the industry as a whole in Scotland from you. Do you have any estimate of the scale of the losses?

I suspect that any Government would be considering whether we could ride out the situation and whether we would recover quickly enough for it not to have to intervene. How parlous is the state of the industry? Are people leaving it? Are they on the verge of leaving? That is a consideration for the Government in choosing what options to pursue to support the industry.

A number of companies record profitability for the industry on an on-going basis. The information that we have is that in late 2006 the industry was probably making a net margin—after paying labour, as a return on investment—of £3 or £4 per pig. Since then, although the market price has moved on slightly, the cost squeeze that has come on and the hiccups in deliveries to market that FMD caused will have turned round that figure by about £25 per pig.

It has turned the figure into a negative.

Yes. It has turned it into a negative of at least £20, on the 650,000 pigs that are produced in Scotland. You can work out the figures for yourself quickly.

Is that directly attributable to FMD or is it partly the result of the price of grain, wheat and soya?

It is partly attributable to the price of grain, wheat and soya. However, we know that through autumn 2007 feed compounders increased the volume of pig feed that they were producing. As Gordon McKen and Robin Traquair have made clear, that had a double impact: at a time when the feed price was increasing, pigs were having to be held on farm and fed for up to a month or six weeks longer. The situation was further compounded by the fact that some of the industry that had forward-contracted feed supplies in 2007 at what might be described as a reasonable price drew them down more quickly than they would otherwise have done and, as Robin Traquair pointed out, had to go back into the spot market, where they got hit for the higher price.

Can you ride this out? Is the industry in a parlous state?

People have been phoning up the bank managers to change their bank accounts, overdraft limits, borrowing rates or whatever. Those who used to have 800 breeding sows now have 500; those who used to have 500 now have 200; and others are riding it out by, for example, supporting activity through the other parts of their business.

Of course we can ride it out. It is not only about having confidence and providing support, but about who is helping whom and where that help is going. The buildings might be empty now, but the industry can be turned round immediately. For pigs, the period from the point of conception to sale is only eight months. Things take much longer for cattle and sheep.

If we have the confidence, we can keep things going. The banks will support us; after all, the industry is very resilient. We have gone through periods of loss many times before. However, you would normally expect to have a period of profit so that you can put money away, and we do not know whether we will be allowed that. Will the supermarkets tinker too much to try to keep down prices? Will they keep bringing in inferior product—under UK law, our meat must be of a certain standard—that costs less than we can afford to produce it at? We want to be able to address all those issues. Our expectation is that if we lose a certain amount, we will get it back again on the roundabout. If we can get the right lead and have confidence in our ability to turn things round quite quickly, many people will push their businesses forward.

Between 4,000 and 4,500 sows have already gone or are committed to go, which means that the industry has contracted by about 10 to 15 per cent. That is a fact. We need some movement in price and a commitment from retailers in the short term to ensure that things do not get worse.

The audit that Mr McKen proposed, the on-goers scheme, the attempts to secure soya at a better price and so on are all part of the effort to build the industry's confidence. However, I am sure that the cabinet secretary will have been relieved to hear Mr Ashworth's comment that the time for getting compensation had perhaps passed. I would not write that off myself.

Mr Traquair said that where there was a will, there was a way. Do you accept that the Government has the discretion to offer a package if the will exists?

Yes. There are numerous examples of such packages. For example, south of the border, the British Pig Executive, which has probably found it difficult to decide where money should go, is paying for—or paying for a large percentage of—a nationwide trial of a vaccine for circovirus type 2. It has at least found a way of putting money into the farm.

We are not worried where the money comes from or what system it goes into, as long as it helps cash flow on the farms. That is the most important issue at the moment. For example, now that FMD has gone, an on-goers scheme could be introduced to help out farmers.

You get a good bang for your buck, as we keep many industries going. Like the majority of producers in Scotland, we supply Halls of Broxburn, which is the UK's biggest processor, employing 1,500 people. Last week it lost £100,000 because it was not killing to capacity. If the man running the plant wants to have it improved, he will be asked if he is due to get a delivery of pigs the next day, because that is the only way that Halls can justify spending money on doing up the plant. We keep hauliers going for 52 weeks of the year. If those hauliers disappear, they will not be there for sheep men and cattle men at their busy times of the year. We are a part of the agriculture industry that keeps everyone else going. There are only 100 or so pig farmers in Scotland, which may suggest that we are not a big audience to play to, but we branch out to cover a broad spectrum. We keep vets, hauliers, slaughterhouses and so on going all year round. Money comes through in a very flat triangle, so you get a big bang for your buck from us.

You referred to the industry as haemorrhaging money, for all the reasons that you have set out, but you are about to get an extra bill because of the legislation on NVZs and slurry storage, which will impose a capital cost. Forty per cent of that cost will be met through the rural development programme, but you will have to find the remaining 60 per cent. You have spoken about other aspects of NVZs, but is there more that Government could do on the cost side of the equation?

Certainly. If we engage properly with this opportunity, Scotland can lead on the NVZ issue and on handling and treating slurry, so that it is used as a valuable product. The industry in Scotland is different, because we grow the bulk of our grain, but unfortunately we do not grow our proteins, all of which are imported from abroad. That is a real cost at the moment. Most of our farmers are mixed farmers, so we have a far better base. That is why we have come through many difficult times in the past. However, through separation and better treatment of slurry, we can make far more use of it and lead on the issue.

What about capital costs?

It would be helpful if consideration could be given to assistance with capital costs.

We have talked a great deal about foot-and-mouth disease. I want to focus more on the market pressures that the industry faces. As Peter Peacock and Mr Traquair have said, the industry is haemorrhaging money. Last year's outbreak of foot-and-mouth represented a crisis point for you, but I am more concerned by the rising food prices and difficulties with food availability that you face, which seem to be a more sustained problem for the industry. How can the Scottish Government assist the industry in that regard? The submission by Scottish Pig Producers Ltd suggests that the problem is that retailers are not giving producers what they deem to be a fair price. I cannot see how the Scottish Government can intervene to ensure a fair price. Are you aware of what steps other Governments—the UK Government, the Welsh Government and other Governments in the European Union—have taken?

I doubt that we can stem the tide of high cereal prices. However, I repeat that the supermarkets should be audited to ensure that what they say is produced to Great Britain welfare standards is produced to those standards. Much produce that comes into this country is not produced to GB welfare standards, and the supermarkets are lying blatantly when they say that it is. An audit of the type that I suggest would go a long way towards narrowing the difference in price between those products and ours.

The Government can consider a number of measures that would assist producers of all red meat species. Clear identification on packages would enable the consumer to know whether they were buying a Scottish product, an English product, a Danish product or a Dutch product. The Government could also provide us with an increased opportunity to sell to the public sector—schools, hospitals and so on. Initiatives are taking place, but they need to be pushed through. There are also auditing issues, to which Robin Traquair referred, but they could be addressed by clear labelling.

We cannot force the retailers' hand, but there should be regular communication with them and recognition that they have a role to play. Repeated messages to retailers can have the effect of a dripping tap. We must be realistic and accept that foot-and-mouth has reduced profitability levels. If we do not get an improvement in returns to set against the higher grain and energy prices that we have talked about, the industry will not have the confidence to which Robin Traquair referred and it will turn off supply, which will mean that the market dynamics will change again. Those are two elements of the marketplace that would allow the Government to do something for us.

Another part to the question concerned other Governments and what support they have given. Jamie Hepburn specifically mentioned the United Kingdom Government and the Welsh Government.

There is no such support that we know of.

There has been discussion about France in that regard, but what about other European Governments? Is France the only country in which there has been state intervention?

Yes.

That helps us, because we now know that we must think about the French example.

Many of the matters that have been mentioned seem to me to be regulatory. Have you discussed them with the UK Government? If so, what was its response?

The NFU Scotland president, Jim McLaren, has made several trips to Downing Street to put across points on FMD and suchlike, but to no avail. You might be aware that there has been a bit of to-ing and fro-ing between the Scottish Government and the UK Government on the issue. I am not sure whether that has included the issue of costs. An attempt has also been made to sue the Department for Environment, Food and Rural Affairs for costs. NFU Scotland is—

I was talking not so much about foot-and-mouth, but about what you said regarding branding and packaging, and ensuring that every product that said that it was from Great Britain was from here.

Again, we have pushed for that for a long time, but it gets chewed up. The retailers might be slowing things down; I am not sure.

Stuart Ashworth is right to say that clear labelling would provide a far quicker hit to assist our producers. However, I know that labelling is a political issue that will take time to resolve—it will not be done quickly. If an overall audit of the products that come into the country showed clearly that the retailers' claims could not be held up, the retailers would get their house in order quickly, which would give us assistance quickly. We should by all means have clear labelling, but that step is a bit further on.

In essence, this discussion was about compensation for FMD—that was why Mike Rumbles instigated the inquiry. I would like you guys to put your case on the record once and for all. It seems to me that it boils down to the fact that there was a welfare issue around sows. Notwithstanding whether you wanted to kill sows or not, there was no way that you could kill them last summer because you could not get access to the abattoirs south of the border. That seems to me like a cast-iron case for compensation. The other point is the increase in the weight of the pigs. However, I would like you to say those things because much of the discussion—

You may feel that John Scott has already given your evidence for you.

Has not much of today's discussion been about where we are going with a national food policy? I want a different focus.

The facts are clear: we could not get sows off the farms, they took up extra space and feeding, and that created a problem. There were too many animals on the farms, and that overcrowding resulted in a downward trend in performance. We carried too many prime pork pigs and could not sell them off to the market because there was a backlog. That created an increase in pigs' weight and a consequent increase of penalisation. There was a downward spiral in performance because having too many animals on farms resulted in poorer feed conversion and suchlike. Overcrowding on farms created major problems and was a direct factor in costs increasing; it caused cash-flow problems and losses for every farm that was involved.

Can I clarify something? There was a period of four to six weeks in which you took a direct hit.

Yes.

Subsequently, there was an indirect hit because everything had ground to a halt for four to six weeks.

Yes.

So the first impact is a direct hit and the second is an indirect, knock-on effect.

There was a market imbalance.

That helps to clarify the situation. For the initial hit, you are talking about a period of four to six weeks.

Yes.

Looking at the future of the pig sector, is it about Government giving you confidence to go ahead, given that the pig sector and the poultry sector are probably the most vulnerable to the increased world grain prices? I would have thought that you, as businessmen, would have to examine the issue and that perhaps the Government would have to do so, too, in a responsible way.

We have been hit by many unilateral decisions that have been forced upon us, by Westminster or by Holyrood. It started in 1997 with the stalls and tethers ban. We were made to operate along those lines by a law, unique to Britain, which meant that we had to produce sows in that way. From that point onwards, the graph of British pig production has gone down steeply.

The Scottish Environment Protection Agency then enforced regulations on integrated pollution prevention and control, which were introduced to cover companies such as ICI at Grangemouth rather than me producing a small amount of pig meat on a farm not far from here. We have also had to deal with NVZs. If legislation is forced upon us—and much of it has been introduced unilaterally—it is up to the Government either to stop sub-standard product coming into the country or to help us out with the costs that have been forced upon us.

It is all very well saying that consumers will buy a more welfare-friendly product, but they will not. When people are asked on the way to the checkout they say that they will buy fair-trade products, but when they decide what to buy they choose the cheapest product that they can find because the cost of their mortgage is going up. Their conscience goes out the window when they have a family of three to feed. If regulations and costs are imposed on us by Government, we expect the Government to give us a quid pro quo. If that does not happen, there will be no business left because it will have been burdened by costs and regulation.

I am not a farmer or an expert on the matter, but the welfare issues that you outlined in relation to pigs and foot-and-mouth seem similar to the reasons that we were given for why there needed to be a scheme for sheep. Is that right? Do the same issues arise?

There is a difference. The argument for sheep was that they needed to be moved from the hills to lower ground to feed because the feed was disappearing, the weather was getting colder and there was no grass for them. The argument could be made that we, as farmers, could purchase grain, albeit at twice the previous price, which meant that we could probably not afford to do so. The argument was that there was not a welfare issue: we could either feed them or shoot them. That is what we were told. That is where we were with the cull sows.

Could—

No—we must bring questioning to a close.

You have made the argument for the direct subsidy in respect of FMD, and you have also talked about indirect subsidies that could possibly be put in place. You gave one example, which was the vaccine. The cabinet secretary is coming to give evidence after you. Are there any other examples of indirect subsidy that you would like us to put to him?

The on-goers scheme would be good. It has been used once before, it has been proven to work and the same mechanism could be used. It worked before, and doing it again would be a matter of putting in place a copycat system.

Last time, the scheme was put in place for the UK. In Scotland, with the help of Ian Strachan and others in the Government, we produced a document that is only five pages long. It is clear and simple and it focuses producers on looking forward.

Forgive me for saying so, but you have already mentioned the on-goers scheme, NVZs, better labelling, slurry control, audit, and GM issues such as importing GM-modified soya. The convener asked whether there was anything else.

You talked about the vaccine in England and Wales. Can you think of any other examples?

Zero tolerance of GM is a huge issue. Shipping costs have risen from £20 a tonne to £90 a tonne over the past few years, and no shipper will send a load of soya across the Atlantic when if even 1 per cent or less of GM product is found on the boat it will be sent back. As I said, I could not buy soya in Edinburgh to feed the pigs. Paying for it was not the problem—I could not get it. That is a huge issue. That is not to say that we want GM soya to be imported, but the minute tolerance of GM soya in soya that is shipped across here will be a major issue in the future.

Is it not fair to say that, in the context of what the pig industry needs right now in Scotland, opening up the GM issue is probably not something that, in respect of what you are asking for today, would make a difference now?

I would say that it would.

Fine. If we want to we can raise that issue with the cabinet secretary.

I thank the three of you for coming. You are welcome to stay and listen to our questioning of the cabinet secretary. I suspend the meeting briefly to allow the changeover of witnesses.

Meeting suspended.

On resuming—

I welcome Richard Lochhead, the Cabinet Secretary for Rural Affairs and the Environment, and his officials, who are David Henderson-Howat, deputy director, agriculture and rural development, and Aileen Bearhop, principal policy officer, agricultural commodities.

Cabinet secretary, you may make a brief opening statement after which we will move to questions.

Thank you for the opportunity to give evidence. I am pleased that you are discussing this important matter because I share your concerns about the future of Scotland's pig sector, which, I am sure we all agree, produces a first-class product.

Like many people, I am worried about the sector and keen to assist the industry where that is possible and I can justify doing so. Excess pig meat production in Europe has combined with rapidly increasing grain prices to create particular difficulties for the sector in recent months. Prices have held up fairly well, but production costs have risen almost 100 per cent in a year and incomes have, of course, fallen. The position for all livestock sectors in Scotland was made difficult by last year's outbreak of foot-and-mouth disease in England, which disrupted trade, prevented exports and put considerable additional stress on Scotland's industry.

Most of the difficulties that are currently faced by the pig sector are not unique to Scotland but are shared across Europe. Indeed, global economic factors are at the heart of the issue. The competitiveness of pig production in Europe is not a new problem and, of course, the sector has traditionally been unsupported by the common agricultural policy.

Recognising the European nature of the problem, I have taken the matter to Brussels and discussed the pressures on the pig sector in Scotland with the Commissioner for Agriculture and Rural Development, Mariann Fischer Boel. I urged the European Commission to explore possible ways of assisting the sector, but I am afraid that it is not inclined to intervene beyond the measures that are already in place.

We have supported the action taken by the Commission to assist the industry through, for example, export refunds and reduced zero import duties. Those measures were designed to improve the market position.

The falling value of sterling against the euro assists Scottish producers and helps all those who are involved in the export market. It also reduces the competitiveness of pig meat that is imported from the euro zone.

The Government cannot influence world markets, nor can we interfere with domestic markets and the prices that are paid to producers. We are also bound by EU-wide state aid rules. I am, however, anxious that we do all that we can to assist the sector in Scotland. We have been working closely with the industry to see how and where assistance can be given. I have met a number of industry representatives in recent weeks, including as recently as Monday this week, to discuss the state of the pig sector and possible actions to ease the situation. I visited a pig unit in my constituency to see at first hand the problems in the industry.

Although it has not been possible to introduce the post foot-and-mouth support scheme requested by the pig sector, not least because of state aid rules, the pig industry will benefit from the £1 million support package that I announced in October as part of the package for the industry post foot-and-mouth. The purpose of the £1 million is to enhance long-term sustainability of the red meat sector in Scotland.

Some £330,000 has already been allocated to Quality Meat Scotland for two projects. The first project is a strategic review of the pig sector to analyse it and provide recommendations on the future outlook for the industry, marketing opportunities and requirements for investment. The contract has recently been awarded to a consortium led by the Scottish Agricultural Organisation Society. The work should be getting under way by now and I will be very interested to see the outcome.

The second project is aimed at adding value to what is referred to as the fifth quarter of the carcase—the offal products. Both projects will benefit the pig sector. The remainder of the funding for the industry will be provided over the next few years or so.

We welcome new ideas for projects that meet the aim of enhancing the industry in the medium to longer term. We need to do all that we can to promote Scottish pork. The week before last, I took part in a promotional event at a supermarket in Glasgow that was linked to the recent QMS campaign to encourage consumers to buy and eat pork that is produced in Scotland. I reiterate that plea today to all consumers in Scotland.

It is essential that the whole food supply chain works together to ensure that there is a sustainable future for the pig sector. Although we cannot intervene in the market, I continue to encourage the supply chain to work together. We must ensure that good-quality fresh meat can continue to be sourced from local suppliers. I am in regular contact with retailers and wrote to them on 28 March to ask what they are doing to secure the long-term future of the industry. I hope that they feel able to respond positively in the very near future. Indeed I spoke to the British Retail Consortium last week. It has agreed to ask its members if they will join with caterers, processors, producers and wholesalers to consider further discussion on the sustainability of the sector.

In summary, the Scottish Government recognises and is very concerned about the difficulties that are facing the pig sector in Scotland, largely as a result of rising feed prices. We are working with the industry to identify things that we and the industry can do to help the sector. Following our meetings over the past two weeks, I am offering the sector the opportunity to form a short-life task force with the Government to take forward some of the emergent issues about which we will no doubt hear today and to do what we can to secure the long-term future of Scotland's vital pig sector.

Three members are waiting to ask questions. One of them is not Mike Rumbles, but I assume that he wants to go first.

Thank you, convener, and thank you, minister, for coming to the meeting. We have just had an interesting and helpful evidence session. I was taken with Robin Traquair's point, which he put across very succinctly and repeated several times, that where there is a will, there is a way to help. I should make it clear that I am talking about the reaction to the compensation process for foot-and-mouth; I am not talking about the major issue of dealing with the pig industry in general and the market conditions to which you referred. I was struck by your letter to committee members, which we received last night and in which you said:

"On the question of compensation for the pig sector in the form of headage payment, this is something I carefully considered in the autumn but concluded was not an option … I am afraid that we felt unable to construct a successful case for headage payments for the pig sector"

to take to Europe. I turn Robin Traquair's point over to you—where there is a will, there is a way—and ask you to consider what other Governments, such as the French, have done.

Are your civil servants and advisers saying to you, "Minister, these are the EU state aid regulations—we can't do this," or are they saying to you, "Minister, we need to help the pig industry in a practical way and we can do it in this way"? We heard about some welfare issues this morning when witnesses presented a whole host of issues that I am sure members will raise. I will mention just a couple of the practical issues, never mind the headage payment, which would come to only £573,000, although we heard witnesses say that that was a welfare issue. There are practical things that you in the Scottish Government could do, such as implementing an audit of imported product from abroad. Is it what it is claimed to be? Is it not the case that you are looking at the state aid rules and saying, "Well this is what we can't do," rather than, "Yes, we can do it this way"?

Mike Rumbles raises a number of issues, which I am happy to address. I will try to keep my comments relatively brief.

The Government has the will to help the pig sector in Scotland, which everyone in the room agrees is a vital sector. We will do whatever we can to help it through the difficult months and—who knows?—years ahead.

Mike Rumbles mentioned the assistance that the French are giving to their pig sector. To my knowledge, no European Union member state has made any headage payments to its industry. It is useful to clarify that.

There are two points to make about the foot-and-mouth outbreak and welfare. First, the advice that I received from the chief veterinary officer was that the pig sector did not face a welfare issue that would have justified payments during the foot-and-mouth crisis.

Secondly, during the foot-and-mouth crisis, quick decisions had to be taken in challenging and difficult circumstances. Our approach was to work in partnership with the industry. Members will be well aware that many sectors in Scotland—the lamb sector, the cattle sector, the pig sector, of course, the haulage sector, auctioneers, processors and abattoirs—suffered financial consequences as a result of the outbreak and virtually all of them asked the Scottish Government for support during it. We sat down with the industry and worked out where support should be targeted and where it would make the biggest difference in that difficult situation. The industry was involved at all stages of the decision-making process. Its view was that the lamb and sheep sectors should be the priority because they were facing market collapse, which was not the case with the other sectors. I do not dispute that the pig sector suffered financial consequences as a result of the foot-and-mouth outbreak, but the Government worked in partnership with the industry at a difficult time and asked it where the priority was and where we should help. If we could intervene, we did so.

There is another point that it is important to make. We thought that, given the circumstances, the market collapse in the lamb sector would mean that the aid package that we announced for it would fly through Europe under the state aid rules, but it did not. We had to battle with the Commission. As we did not have the same evidence to present for the pig sector, my position was—and remains—that there would have been no possibility of getting state aid clearance for it. I wish that we could have helped more but, unfortunately, that was the situation that we were in, which the industry signed up to at the time.

As a result of the first outbreak of foot-and-mouth, the previous Administration gave aid to the sheep industry and then claimed money back from Europe. It took action straight away. The current Administration went to Europe first, got things cleared and then produced the cash. It gave £18.8 million to the ewe scheme, £3.7 million to the light lamb scheme and nothing to pig producers. I do not dispute what you are saying—indeed, there is no doubt that the sheep sector was the priority, as your advisers and the industry told you—but making something a priority does not mean that only it should be focused on while the pig industry is excluded from consideration.

We all know about the dire straits that the pig industry is in. Many of its problems result from market forces. I understand what you said about not interfering with market forces, but there are things that you, as Cabinet Secretary for Rural Affairs and the Environment, have the power and authority to do. This morning, the industry produced a list for us. You could do one thing on that list, several things or all of them. That is within your gift and power. Leaving headage payments to one side, all imported food could be audited and there could be capital help for the industry in nitrate vulnerable zones. There are many practical measures that you could take. Even at this late stage for the pig industry, rather than simply saying that state aid rules prevent us from doing things, can you not consider ways of interpreting the rules positively to help the industry? Your letter from last night said that you thought that you could not produce a package to put to Europe. Rather than you being the judge, can you not put a package to Europe and let it judge?

There are two overlapping issues. The letter referred to the foot-and-mouth situation, but you are also talking about other ideas and proposals that have emerged over the past few weeks. I met the industry last week and I had a further meeting with producers in Oldmeldrum on Monday. Those producers represented 30 per cent of the Scottish herd and another substantial proportion of the Scottish herd was represented in the meeting the week before.

I have had many meetings with the industry, even over the past couple of weeks, during which many interesting ideas have emerged. I have offered to investigate all of them with the industry. I am hopeful that we will be able to deliver on some of them but, obviously, I cannot say at this point which ones as we have to investigate the feasibility and affordability of each of the proposals. That is why I am offering a short-life task force to take forward those ideas. I appreciate that other ideas have been around for longer, but some of the new ideas have sparked interest and I want to sit down with the industry and take them forward. We recognise that, as the price of cereals has continued to rise over the past few months, the pig sector faces an extremely desperate situation that is going from bad to worse, although, hopefully, there is some light on the horizon.

A last brief point—

I want to bring in some other committee members.

Can I ask just one question?

As long as it is a short question, not a speech.

Minister, I take it from your response that you think that you will be able to report back to the committee in the fairly near future that you will be able to implement a scheme to assist the pig industry in one form or another. Is that what you are saying to us?

I am saying to you, first of all, that we have already delivered support. Indeed, if you compare our track record with that of many other countries in Europe that are more dependent on the pig sector than we are and which are dealing with the same Europe-wide problem, you will find that our record stands up well.

I am also saying to you that we are offering the industry the opportunity to participate in a short-life task force to examine in detail the interesting proposals that have emerged in our meetings with the industry in the past fortnight. I am attracted to some of those proposals. As I said, however, we must consider the affordability and relative effectiveness of each of them. We are keen to sit down with the industry and build on our previous measures and previous meetings. We will report back to the committee on the situation.

I welcome the creation of the short-life task force. If this inquiry has done nothing else, it has at least produced that commitment from the Government.

Although I accept what you said about it not being possible to grant state aid in this case and I understand your position, I would like to move the argument on to the actual proposals.

Could you give us a steer on your thinking with regard to an on-goers scheme and help with NVZs, particularly slurry control? What do you think about the possibility of introducing in Scotland the post-weaning vaccination pilot that is taking place in England? I appreciate that this might relate to a reserved matter, but what is your view on zero tolerance of genetically modified imported soya? At the moment, if there is contamination of even 1 per cent of shipped-in soya, we are, apparently, not allowed to use it here. Is there anything that the Scottish Government can do about that? I think that I know the answer, but it would be interesting to hear your views.

In 2001, the Prime Minister announced an on-goers scheme for the pig sector across the United Kingdom. The industry has suggested a resumption of that scheme as one of the 10—at the latest count—ideas that have been put to me over the past couple of weeks. We have to be careful because one of the conditions that were attached to the previous scheme was that there should not be another such scheme within 10 years. Given that the last scheme was announced in 2001, it will be 2011 before Europe would accept a similar scheme. However, that might not be the case, depending on the definitions of restructuring and other elements of the proposal.

We have an open mind on the matter at this point. My main concern about the scheme is not only its acceptability to Europe but its affordability—we would have to consider the budget implications. However, we are happy for the task force to investigate that idea.

NVZs present an on-going issue, as you can imagine. We are setting up a joint industry-Government implementation group to take us through the implementation of the action programme, following clearance of the Scotland rural development programme—which was made partly conditional on our having a new action programme.

We want to investigate every possible avenue for helping sectors such as the pig sector to adapt. There are various opportunities that could bring benefits to pig producers and other producers—it is not just about the costs and the pain of trying to implement new regulations. That could involve renewable energy schemes, anaerobic digestion and the production of biogas from slurry, with farmers working together—whatever the options, we want to investigate them with the implementation group. Support of up to 40 per cent is available for slurry storage, and of up to 50 per cent in some circumstances—for new entrants and for farms in less favoured areas. We are keen to explore, through the group, how to help the industry to adapt to the new conditions in NVZs. We all agree that it is imperative to reduce the amount of nitrate going into the environment from the agricultural sector. That is the ultimate aim.

Vaccination is one of the 10 ideas that have been suggested to the Government. We are always keen on measures that promote animal health and reduce mortality. That is effectively the purpose of the proposal for a vaccination trial. I am interested in exploring what that might comprise, as well as the cost and other implications. We are keen for the task force to address that idea.

The Government's position on GM is that, given that the genie is out of the bottle as far as feed is concerned, with GM feed coming into Europe from the rest of the world, we must maintain a rigorous, precautionary approach. I recognise the frustration among all livestock producers, particularly in the pig sector, which is intensive in its feed usage, as to the length of time that authorisation takes. I have undertaken to obtain a report from Europe about the current state of play. Many member states have raised such issues with the European Union, and our Government's resolute position remains that we want a vigorous and precautionary approach to be taken.

If there was an accidental importation because we had not taken a rigorous approach with feed with a GM content, it could potentially lead to a suspension of imports. It is therefore in everyone's interests to maintain a rigorous approach to ensure that nothing slips through the net that might lead to a suspension, which would take place during any investigation of why the incident happened. I repeat: it is in all our interests to ensure that a rigorous approach is maintained.

I do not understand what you mean when you say:

"it could potentially lead to a suspension of imports."

Any GM feed that is imported to Europe must go through a rigorous authorisation process. Without that in place, things could backfire. Something could slip through the net and come into Europe. That could lead to a situation where we do not know where the feed in question has come from and we have to suspend the importation of certain feeds. That could happen—although I am not saying that it will. I am saying that it will work in everyone's favour to have a rigorous authorisation process to ensure that nothing that should not be coming into Europe slips through the net.

In relation to costs to the industry, is that your last word on bringing in GM wheat and grain for animal feeds? Are you determined that there will be no GM, now and in the future?

I am not saying that. I am saying that it is already being imported to Europe—much of the feed that comes into Europe is GM. The industry's frustration is about the length of time that the authorisation process is taking and about the speed at which feed from elsewhere can be brought into Europe. My point is that we must maintain a rigorous approach to that.

Four members are still waiting, so I ask for questions to be as concise as possible.

Mike Rumbles spoke earlier about the French Government and others taking action to mitigate market pressures and the increase in the cost of production that faces the pig sector. The previous panel could not name any other Government—including the UK and Welsh Assembly Governments—that had taken specific action. I think that you answered this question when you responded to Mike Rumbles, but I will ask it anyway: are you aware of what other EU countries are doing to help the pig sector? I am particularly interested in countries that might be more reliant on the pig sector, such as Denmark. What is your assessment of the action that previous ministers took when the pig industry was in trouble?

You asked about countries that are more dependent on the pig sector than we are. Although the pig sector is extremely important to us, given its decline in Scotland and the rest of the UK over the past 10 years there are other countries in Europe that have bigger pig sectors. To my knowledge and from our investigations, none of those countries has provided its pig sector with any support, even though they are more dependent on the sector than we are in Scotland.

The action of the French is being reviewed—I think that that is the official term for it. They have used two routes to offer support for their pig industry, the first of which is the provision of tax breaks. Even if we wanted to take such a measure, the Scottish Parliament does not have the power to do so because taxation is a UK issue. The second is the provision of soft loans. I am not alone in not finding it easy to find out about those measures. France is the only country in Europe that I am aware has taken action to support its pig industry.

If we decided to provide our pig sector with state aid and that decision could not be defended and was successfully challenged, on the basis that many pig producers across Europe are experiencing the same pain that our pig producers are experiencing, every pig producer that had received aid through our scheme would have to pay it back, with interest. In six months or a year, the committee would call me back to lambast me for allowing the implementation of a scheme that only inflicted much more pain on the pig sector. I must take that factor into account, as I suspect Governments across Europe have done.

As regards the action of previous ministers, I have mentioned the UK Government's position on the on-goers scheme and the restructuring that took place back in 2001. I am unaware that previous ministers have provided any other significant support for the industry. Indeed, previous ministers, both in the Scottish Administration and at UK level, have always made the point that it is for the market to rescue our livestock sectors in difficult times.

A practical measure that the UK Government has taken in England and Wales is the establishment of a vaccination scheme. Why is Scotland lagging behind on that? When do you envisage a vaccination programme being set up here?

The previous panel made a clear plea for an audit to be carried out of goods coming into Scotland for our supermarkets that it is claimed meet GB welfare standards. That would benefit not just the pig sector but Scottish agriculture across the board. You have the power to carry out such an audit. When will you do so?

To be fair, vaccination is an issue that has emerged in my discussions with the industry only in the past two or three weeks, and I have already expressed an interest in exploring it.

What is the timescale for that?

We have made an immediate offer to the industry to set up a short-life task force to look at vaccination, among other issues. As well as accepting every invitation that the pig sector has made to discuss the issue, I have been proactive in requesting meetings. There has been a great deal of dialogue and positive discussion, even as recently as Monday. It is only in the past fortnight that the industry has approached me directly on the issue, and I am keen to explore it. I hope that Karen Gillon will accept that in the positive tone in which it is meant.

I am extremely concerned about the fact that there might be produce that does not meet the same standards as Scottish produce sitting alongside it on supermarket shelves. That is partly why we want a national food policy in Scotland and why we want to involve retailers in that.

Coincidentally, yesterday I met the chair and lead officials of the Farm Animal Welfare Council and asked them to give me an opinion on whether the pig produce from abroad that sits next to Scottish produce on our supermarket shelves meets the same welfare standards. They have agreed to give me an official, short-term opinion in the next few weeks. If we want a proper opinion it will take up to a year. To my knowledge, that has not been done before. I am keen to pursue that avenue, and to ascertain whether produce that is the result of inferior welfare standards has a competitive advantage over Scottish produce, which is of the highest quality.

In opposition, you made various statements about inferior produce coming into Scotland. Yesterday, the NFUS sent us a press release about Brazilian beef and the standards in Brazil. Evidence is growing. There is probably unanimity in the committee and in the Government that we should just get on and do it, rather than prevaricating and setting up task forces and so on. For the sake not just of the pig sector but of agriculture throughout Scotland, it would be good if we could take that practical step and have an audit undertaken.

The Government has put a lot of effort into issues to do with beef and food produce generally in Scotland. I profoundly disagree with the suggestion that we have not acted. I emphasise the point that we have requested an opinion from the Farm Animal Welfare Council. To my knowledge, the previous Government, in its eight years in power, did not request such a report. After only a few months in power, I am doing so. It is easy to sit there and accuse the current Government of not acting, but the Scottish Parliament has been up and running for nine years.

The committee has had a specific request from the industry for an audit. You have been in power for a year. You receive a specific request and you say that it would take a year to carry it out. Surely we should just get on and do it rather than waiting for the outcome of a short-life task force.

You heard that request today. I have already made a request to the Farm Animal Welfare Council, which has offered a quick view in the coming weeks. It has a process called an official opinion, which can take up to a year. Are you saying that I should have delivered that within 11 months, when the previous Administration had eight years?

No. I am saying that we have been asked today for an audit of all produce that comes into Scotland. I am asking you not to prevaricate or to look for a short-term fix but to get on and do it.

I have given you evidence that I am doing that. The previous Administration had eight years and did not do it.

We heard that the pig industry is keen to acquire more opportunities for procurement from public bodies. I know that the Government is keen to increase local procurement by public bodies. We also heard evidence that the welfare of pigs in Scotland is generally higher than in Europe. Is it possible to tie the two together and to require public bodies—the national health service, schools, local councils and so on—to consider welfare issues in food procurement?

To give comfort to Bill Wilson—and to Karen Gillon—those are the kind of measures that we have been implementing over the past 11 months. There has been correspondence between the Scottish Government and public agencies about procurement contracts, which we hope will bear fruit. It tends to be when the contracts come up for renewal that the opportunity to revise them presents itself. The contractor for the Scottish Government's staff canteens has assured us that 100 per cent of the pork served in the canteens is sourced in Scotland.

It is worth mentioning that the Food Standards Agency Scotland is consulting on food labelling. We will be making a submission to that consultation and I would urge the committee and all livestock sectors to take an interest in that issue in order to ensure that we improve labelling.

We heard that it may be possible to adapt slurry to make it more effective as a fertiliser—we would presumably use that in preference to petrochemical fertilisers, which could have a follow-on effect with regard to climate change. Is it possible for the Government to assist that process, not just from the point of view of farmers but from the perspective of tackling climate change? I appreciate that that is a slightly speculative question, so I am not necessarily expecting a detailed answer.

We are actively considering that. If it has not been published yet, I will ensure that the committee receives a copy of the report on the relationship between agriculture and climate change that Henry Graham authored in the past few months.

The specific example that you raise is certainly one that we want to consider. Various funding streams are available in relation to the use of slurry as fertiliser or for renewable energy and I hope that the agricultural sector can tap into those to take forward such initiatives.

We have not heard a lot about the organic sector today. Do you have a comment to make on the organic sector and pig farming?

Yes. The organic sector also faces rising costs. Of course, it has to source organic feed. However, it commands a premium in the marketplace. Coincidentally, I spoke to an organic pig farmer in my constituency a couple of weeks ago. I do not think that there are that many of them in Scotland. He told me that he gets a significant premium over and above what non-organic farmers get. Hopefully, that is a major benefit to him, but of course organic pig farmers' costs are increasing as well.

I have two points. The first is a point that remains unreconciled following your evidence and the evidence that we took from the earlier panel. In paragraph 20 of NFU Scotland's written evidence, it states:

"We believe that the case for compensation remains strong and that it can be justified under Article 10 of Commission Regulation (EC) 1857 of 2006."

Is there simply a fundamental disagreement about that? Do you believe that the NFU is wrong and that there is not a strong case for compensation?

I do not believe that there is a strong case related to foot-and-mouth disease. The current edition of The Scottish Farmer contains two graphs that show the prices and trends for sheep and pigs. The graph for sheep plummets during foot-and-mouth. The graph for pigs is relatively steady. I am not saying that there was no impact, but the graph for pigs is relatively steady throughout last year compared with sheep.

To be frank and honest, the situation that I faced as a Government minister is that it was difficult to justify going to Europe and saying that the two cases were equal. It is not that I do not want to help the pig sector. I would love to be able to help the sector more than we can at present, but so much of the solution lies with the marketplace. Please bear in mind the evidence that I would have to take to Europe.

I am not trying to make a point of contention. I am just trying to establish that you think that the NFU has got it wrong when it says that there is a strong case.

Clearly there is a disagreement if that is its position, but it was part of the decision-making process during the foot-and-mouth outbreak.

This morning, the industry representatives emphasised the importance of the difficult-to-define concept of confidence in the industry. They said that more confidence is required and that it needs to be visible, so that the farmers who participate in the industry and are part of it will stick with it. It is important that they believe that the will exists to have a pig industry.

Also, the banks will be observing the conversation and saying, "Shall we foreclose on that business? There isn't a big future in the industry." What can you say to us and to the observers—the industry and the banks—that will give them the confidence to stick with the industry? What is your view on the size of the pig industry that you want Scotland to have in five years' time? Is it as it is today? Is it expanded from where it is today? Is it 10 per cent reduced? Is it 20 per cent reduced? What view can you give on that to help to give the sector confidence?

The biggest factor that should give the industry confidence is the fact that it produces a top-quality product. That is the message that we must get across to consumers, so that they buy more Scottish pork. The industry plays a vital role in food production in Scotland and it should be proud of its top-quality product. It should also have confidence that the Scottish Government, the Parliament and this committee support the sector in Scotland and believe that it should have a future. We will do whatever is in our power to help it to achieve that.

I thought that the best way in which to ensure that the banks maintain confidence in the sector was to meet them; therefore, when I met the clearing banks in Scotland the pig sector was on the agenda. I explained to the banks that we will do everything that we can to help the pig sector in Scotland. I told them that we recognise the European and global pressures and that we hope that they will take on board the vital role that the pig sector plays. Of course, the banks have commercial decisions to make, as do pig producers. I felt that the meeting with the clearing banks was very positive, but I cannot make their decisions for them; I can only use what influence I have as the cabinet secretary.

Do you have a view on what size the pig sector should be in five, six or seven years' time?

The size of the pig sector in Scotland will very much depend on the response from retailers and processors, who need to ensure that they get the income that they require to make a profit. It will also depend on the size of the pig sector elsewhere in Europe. I know many pig producers and have spoken to dozens of pig producers throughout Scotland over the past few months. They take the view that they are among the best in Europe; therefore, they want to survive. They are doing all that they can to do that.

So, you do not have a view on what size the industry should be?

I am not sure that it is my job, as the cabinet secretary, to write down a figure for the size of any particular commercial sector in Scotland.

You have emphasised the quality of the Scottish product, and I do not disagree with you about the importance of quality. However, a product of better quality could perhaps be produced by an industry of half the size. Quality alone is not an indicator of the size of the industry. Do you want the pig sector in five or 10 years' time to be every bit as large as it is today, or larger?

I want the pig sector in Scotland to be as large as is commercially possible. However, I am unable to determine what the future will be for any commercial sector in Scotland. All that I can do as the cabinet secretary is support the industries that we value and the Government's policy is that the livestock sector overall in Scotland is vital. It produces fantastic foods and sustains many jobs—in our rural communities in particular. That includes the pig sector.

Cabinet secretary, what is the timescale for the short-life working group? That will inform us with respect to what we will do next.

The proposal came out of a discussion that I had with the industry on Monday, and we are now going back to the industry to make the offer. It is the industry's decision whether it wants to participate in that group. I am sure that it will and that the group will be set up immediately.

When will the group report?

As soon as possible, once we have explored all the various issues. I will write to the committee with further details when we have had the first meeting of the group.

It would be helpful to us, in our deliberations, if you were to write to the committee within four weeks, letting us know what the position is, whether you have a clear idea of the timescale for the short-life working group and whether there are things that have already been ruled out or in—a kind of progress report. Would that be reasonable?

Yes. I am delighted to do so.

Thank you.

Given the fact that the timescale for some of the issues is quite pressing, it would be useful if the cabinet secretary came back to the committee before the summer recess to update us on what has been done.

Four weeks is obviously before the recess.

Yes, but that will be a letter.

Do you mean that the cabinet secretary himself should report to the committee?

Yes.

We will need to look at timetabling issues, but we can consider that. However, if we can have a progress report within four weeks, that will help us immensely.

Certainly.

Thank you. I thank you and your officials for coming to the committee.