Rural Affairs and Environment Committee, 22 Apr 2009

Meeting date: Wednesday, April 22, 2009

Official Report 256KB pdf

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Pig Industry

I welcome the second panel of witnesses: Richard Lochhead, Cabinet Secretary for Rural Affairs and the Environment; Martin Morgan, head of the livestock policy branch in the Scottish Government; and Gerry Smith, senior policy analyst in the livestock policy branch.

I invite the cabinet secretary to make a short statement.

Thank you, convener—it is a pleasure to be here for the first time with you as convener.

I thank you for the opportunity to address the committee again on this important matter. Almost exactly a year ago, I gave evidence to it on the future of the pig industry, and I am pleased that the committee continues to recognise the importance of the sector, which produces a top-quality product for our tables, plays an important economic role and produces to the highest welfare standards.

As the committee heard at first hand from the industry on 1 April, although some progress has been achieved in the past 12 months our pig industry—and the wider livestock sector—continues to face many challenges. On the positive side, however, market returns are higher thanks to a combination of a more positive exchange rate, a fall in production and increased consumer demand. In addition, the cost of feed cereals, which was one of the key issues that we discussed when we talked about the matter previously, has fallen. Producer margins are therefore much improved, and the sector has returned to profitability after a prolonged period of sustained losses. It was pleasing to note that, on 1 April, Philip Sleigh of the NFUS acknowledged—albeit with caveats—that the industry is now in a more confident mood.

Current challenges include a need for increased capital investment to deliver greater efficiencies in the production process and to meet environmental standards. Primary producers anxiously await news on the long-term future of our principal pig processing facility in Scotland, which, as members are aware, is at Broxburn in West Lothian. I reassure the committee and the pig industry that I fully realise the strategic importance of the Broxburn plant. Hall's kills and processes more than 80 per cent of pigs reared in Scotland, and its pivotal position in the pig supply chain cannot be overstated.

Officials from the Scottish Government and Scottish Enterprise are working closely with the parent company, Vion, to identify which mechanisms might be available to assist Vion in delivering a long-term, sustainable and viable future for that facility.

I assure the committee that, despite the industry's unhappiness that we were unable to deliver on many of the pig sector task force's recommendations, the Scottish Government is committed to the industry's future. Members may recall the £25 million post foot-and-mouth disease support package that I announced in October 2007. That investment was unprecedented in its scale, and it continues to bear fruit. The package included £1 million that was aimed at enhancing the resilience of the red meat sector—including the pig industry—in the longer term. In addition, we committed further support funding in August 2008 that was specifically targeted at the pig sector.

Although there will always be calls for us to do more, it is worth noting that the House of Commons Environment, Food and Rural Affairs Committee said some complimentary things in its recent report on the English pig industry about the approach that we have taken in Scotland to support the sector through difficult times.

The red meat sector, including our pig producers, has a significant part to play in the successful delivery of Scotland's first food and drink policy, so the committee might find it helpful if I outline some of the various ways in which the Scottish Government is working to help the pig industry.

First, we have invested both directly and indirectly in a variety of pig-related research and development projects that will enable the industry to make the most effective use of the latest scientific advances. Secondly, we set up two monitor farms that will enable pig producers to benchmark their performance, share best practice and increase the efficiency of their production processes to increase profitability.

Thirdly, we supplied bespoke funding to Quality Meat Scotland so that it could employ a specialist pig vet to work with all producers to build on the already excellent health and welfare standards that our industry achieves and should rightly be proud of. Fourthly, we are working with the processors to ensure that the full economic benefit is achieved from every pig slaughtered in Scotland by enhancing the potential for making the most of the lesser-value cuts. Only yesterday, QMS—as members may have read in today's press—used our funding to host an event in Gleneagles for chefs to witness the wonderful array of ways in which pork can be served to the consumer.

More generally, it is evident that the structural problems that our pig industry faces pre-date this Administration coming into office—indeed, I note that a witness who gave evidence to the committee on 1 April referred to 10 years of turbulence. A decade or more of relatively poor returns has provided little incentive for pig businesses to make meaningful capital investment, and that is now catching up with us. The pig industry restructuring scheme of 2000, with its out-goer and on-goer elements, helped to move the sector forward, but the conditions that were attached to European Union approval at that time deny us the opportunity to consider similar measures at present.

Greater understanding is needed throughout the industry about what the Government can and cannot do to influence the overall robustness of the pig sector, although I accept that we need to explain that better. As members know, competition law prevents us from intervening on matters of pricing and other market-determined issues. That, of course, is not unique to the pig industry, but it constrains what the Scottish Government can do.

I have finite resources at my disposal to ensure that the right support platform is in place to underpin our goal of achieving an economically and socially vibrant future for our rural communities. In addition, the current global economic situation has introduced a period of uncertainty and contraction to most parts of the livestock industry throughout Europe and elsewhere. However, the old adage that every cloud has a silver lining might appropriately be deployed, as current events have increased the competitiveness and consumer appeal of home-reared pigmeat produce.

In the longer term, it is fundamentally important to our pig producers that that there is a market for their produce. The rearing of stock to high standards of animal welfare comes at a cost, and producers need to know that their investment of time, effort and capital will command a worthwhile return that properly reflects their husbandry skills. Although such matters are mainly for the market, members will be aware that the First Minister hosted a summit with the major retailers last year to emphasise our desire for a more collaborative approach to supply decisions.

That message was well received, and we continue to engage with retailers at regular intervals to discuss how we can work towards ensuring that primary producers and processors can become more fully integrated into long-term supply contracts that provide security of return for the producer, continuity of throughput to the processor, regular supply to the retailer and provenance to the consumer.

I hope that the committee will accept that the Scottish ministers are committed to doing all that we can, using the levers available to us, to ensure that the Scottish pig industry can meet the many challenges that it faces. We are working with all parts of the supply chain to enable a long-term, viable future for the sector, and I hope that the committee, the industry, the Government and everyone else involved in the debate can work together to look to the future.

Thank you for the opportunity to make those opening remarks.

We now move to questions, which Liam McArthur will kick off.

We will consider in more detail where we are now and the more important issue of where we go in the future, but let us first just cast our minds back. Does the cabinet secretary now regret setting up the task force?

I do not regret setting up the task force, but I learned some hard lessons in that we were clearly unable to accept a number of its recommendations. If I were to establish such a task force again, I would take on board those lessons by making it much clearer to the participants what measures we could and could not implement. To be perfectly frank, I was taken aback that two of the six recommendations proposed headage payments. I knew that that would come up in discussions, so I should perhaps have made it clearer to the participants that the Government felt unable to go there.

We have taken forward two of the six recommendations. Although the industry was unhappy that we did not adopt all the recommendations, my discussions at the time with processors and others in the industry—in particular with Vion, whose takeover of Grampian Country Foods coincided with the task force's work—and the feedback that I received from most people suggested that we should look to the long-term viability of the sector. Therefore, we have proposed measures to deliver greater profitability, efficiency and stability in the longer term. Clearly, I felt that we could not go down the path of introducing measures on headage payments.

There seems to have been a problem with establishing the remit for the task force and providing it with on-going guidance. In evidence to our committee, Philip Sleigh of NFU Scotland made the remarkable statement that, if the task force had never been set up, the industry's confidence would not be so shaky. In a sense, establishing the task force worked almost entirely against furthering the industry's interest, which was the basis on which it was presumably set up.

I understand Philip Sleigh's disappointment, as I have spoken to him many times since then as well as during the days of the task force, but a balance had to be struck. Given the issues, it was agreed at the time that a task force was the best way to flesh out the short-term pressures on the industry from high feed costs and the market issues subsequent to the foot-and-mouth outbreak in Scotland. The task force's deliberations related very much to short-term measures, although I had hoped that it could consider some longer-term measures as well.

I understand Philip Sleigh's disappointment, but I think that we have introduced the right measures since then. As far as I am aware, those measures have the support of the industry and will, we hope, now move the industry forward.

The point about short-term measures is interesting. In other sectors—the lamb sector and even the fishing sector—the cabinet secretary has been on record as calling for short-term measures to tide an industry over until such time as things settle down and investments can be made. Why was short-term bridging finance seen as beyond the pale for the pig sector?

Let me explain myself more clearly. I am not saying that I was not expecting short-term measures, as that was the purpose of setting up the task force, but we agreed that we had to consider the long term, too. We were unable to support the short-term measures that the task force recommended, and we should have made that clearer at the beginning of the process. It would have saved a lot of grief and disappointment among the participants—I fully accept that. In offering the industry the opportunity to come up with ideas, a balance must be struck between intervening to predetermine the recommendations and giving people some freedom to suggest whatever they think best.

Again speaking frankly, I do not expect that those headage payments would have made any difference to the evidence that the committee heard on 1 April from the pig industry.

Looking further ahead, when it was put to the witnesses, including Philip Sleigh, that there might be a further task force to examine what measures could be introduced in the changing environment, the suggestion was met with fairly short shrift. To their credit, they set out a number of ways in which the industry could be supported, and central to that message was that the pig sector, in the situation that it faces, should be seen as a priority. When everything is a priority, nothing is a priority. Do you agree that, at present, the pig sector has a reasonable claim to be seen as more of a priority than the beef or lamb sectors?

I would hope that the steps taken by the Government so far show that we see the pig industry as a priority. If the value and extent of the support we have delivered to the pig sector in the past year or two is compared with that delivered to pig sectors throughout Europe that face similar challenges, we stand in good stead in terms of our commitment to the sector.

The UK minister asked me for advice on some of the measures that the UK Government might want to take to help its own pig sector south of the border. I refer to the report from the House of Commons committee, which felt that Scotland was leading the way in support for the pig sector.

Although there may not be full agreement on the measures we could have brought forward over the past two years, our track record speaks for itself and we have attached importance to the role of the pig sector.

Was one piece of advice to the UK minister not to establish a task force?

No, I did not give that advice. I gave the minister some hints as to how she may wish to do that.

You said that you were surprised at the task force's recommendations. Why were you surprised, given that the task force's recommendations are the very things that, in evidence to the committee, its members asked the committee to provide? I think that in part the task force was set up to stymie what was happening.

I was just making the point that two of the six recommendations related to headage payments. Perhaps I was not surprised, because I could predict that one of the proposals in the recommendations would be about headage payments. I was just making the point that two separate recommendations related to two separate headage payments.

You did not accept either recommendation; nor did you accept the recommendation on vaccination, which is an issue that was raised with the committee before the task force was set up. What was the point of setting up the task force if you were not going to accept what the industry was telling you before it was set up, during its work and, in part, since? What were your officials doing at the task force if they were not providing some guidance to those sitting around the table? I have been on task forces at which Scottish Executive officials gave us advice, telling us, for example, "That is not where the minister wants to go."

We can rake over old coals as much as you want. I have made the point already to Liam McArthur that we learned some hard lessons from the way in which the task force was handled. I fully accept that we should have offered more clarity on some of the legal and other issues relating to potential recommendations. However, I cannot start off by giving a pre-commitment that I will accept all of a task force's recommendations.

No, but you could start off by saying, "These are the parameters under which we operate and this is the budget that may be available." You could then have asked the task force to come up with some ideas about how that budget could be used to best effect to support the industry. That does not appear to be what happened.

I know you have a point to make and that you want to make it several times.

You are not answering the question.

I am trying to say that I have already accepted that there are hard lessons to learn from the task force. We have moved on with the industry since then, and we are looking to the future. Many of the subsequent measures that have been adopted following joint Government-industry discussions have been welcomed on both sides and are moving the industry forward.

You indicated that you have learned some hard lessons from that process, but so has the industry. It indicated to us, in pretty remarkable evidence, how much it regretted having taken part in it. It is becoming clear, from all the evidence that we heard from the industry, that its confidence in the future, and the extent to which it will or will not invest, underpins the entire industry.

The difficulties with the task force, to which you have referred, arose because it appeared that the Government was not listening to what the experts in the industry said through the task force and that it was not responding to the industry's thoughts on what was needed. What confidence can you give to those people that the process is not being repeated? What confidence can you give that the Government is listening to the industry fully and responding to the concerns that it is setting out? What are you doing to restore that fundamental confidence so that people in the industry will stick with it and make the necessary investment?

You are right that confidence is an underpinning factor that will help the industry to make progress. I read the Official Report of the evidence that was given to the committee on 1 April and saw many references to confidence. The points that we have heard today about the task force were made then, but many other points were made about confidence in the future. Gordon McKen said:

"A huge chunk of the current lack of confidence comes from the absence of a pricing structure that allows processors, producers and retailers to operate profitably. That is probably the biggest failing".—[Official Report, Rural Affairs and Environment Committee, 1 April 2009; c 1593.]

I accept that confidence is an underpinning factor. Many reasons were outlined at that meeting to explain the lack of confidence. I reiterate our track record on the measures that we have taken and the discussions that we have had following the task force process. The measures that are being funded are of great value to the sector and show that we are prioritising it—it is getting significant resources to fund initiatives. I hope that that will improve confidence in the sector in the future.

I want to develop the theme of confidence. It is not only the producers who are in a catch-22 situation. You will be aware of the dilemma that Vion Hall's faces in relation to where to place its strategic investments. That was highlighted in the evidence from the gentleman from Asda this morning. I have a real concern that, although pig prices have improved recently, the producers who are left in business might just take a couple of good years out of the industry and then pack up because of the costs, particularly in relation to slurry storage. Those are dead costs and do nothing to increase profitability, as they simply allow producers to remain in business, although I appreciate that that is a pan-European issue.

Sow levels have reached a critical level, which puts a question mark over future investment in the Hall's plant. We are at a sow level of 35,000. I appreciate that not all the events have happened on your watch, cabinet secretary, but, given the projected decrease in sow levels, there might not be an industry in five years, and that is happening on your watch. As a result of all those parameters, and notwithstanding the slightly improved price at present, nine recommendations were given by witnesses to the committee about how the Government might help the industry, and the NFUS has made, I think, 10 suggestions. The key suggestion among those 19 is probably the one that relates to Scottish rural development programme funding for slurry storage. Will you consider changing the scheme so that producers who apply for the 40 per cent grant for slurry storage will be guaranteed it, rather than having to go through a bid process?

You raise several issues. You refer to some of the historical structural problems with the sector in Scotland. Those are evident today, in that 80 per cent of slaughtering takes place at one facility in Broxburn. As I said in my opening remarks, we are in regular discussions with Vion over the future of the plant. One feature of the Scottish pig sector is that it is reliant on one processor, which brings its own challenges.

You rightly talk about the number of pigs in Scotland. It is interesting to consider the trend over the past few decades. In the 1980s, the numbers were broadly in line with the figures today. The numbers went up in the 1990s, back down in the 2000s, and they are now similar to what they were in the 1980s. I presume that that is because the short production cycle for pigs makes the pig industry relatively easy to get into or out of, although it is clear that a number of large producers have now invested a lot of money in their businesses and are therefore more likely to want a stable future.

We must address issues such as slurry storage. Of course, like any other businesses, including other livestock businesses, pig businesses must take on board their environmental obligations. The NVZ regulations must be taken on board. For pig farmers in NVZ areas, which make up 14 per cent of Scotland, we expect the regional committees, which decide the priority of applications, to prioritise under the rural development programme applications relating to slurry storage. I would be disappointed if that is not happening. Indeed, if the Rural Affairs and Environment Committee receives any evidence that that is not happening, I will look into it. There have been between 40 and 50 successful applications under the existing 40 per cent assistance arrangements for slurry storage. I do not have a breakdown of how many of those were from pig farmers, but we should certainly consider that. Assistance is therefore provided. Indeed, the 40 per cent assistance in Scotland is 100 per cent more than what is available in other countries, including, I understand, south of the border. Therefore, we are prioritising assistance and access to support for pig farmers in Scotland.

I am not sure how the regional project assessment committees work, but can you issue guidance to them on prioritising—

I can issue guidance. In that context, I am pleased that the committee will produce a report and perhaps make recommendations. I will pay close attention to that report.

Of course, a short review of the SRDP is taking place. I am sure that that review will focus on rural priorities, which have caused a lot of heat, the accessibility of assistance and how applications are prioritised. We have inherited a system of prioritisation with the regional committees. Peter Cook has the opportunity to review the operation of the programme in its first years. I must take into account how applications are prioritised and the extent to which the minister should intervene. However, issuing guidance is certainly an option.

Notwithstanding the better prices, this meeting provides another public opportunity for you to send a positive message to the pig industry. Are there other items on the NFUS's shopping list or that of the pig industry, which I am sure you are well aware of, that you think the Government will be able to help with?

There are several areas in which we can help. Work streams are already under way in our food and drink policy that I believe will benefit all Scottish food produce, including pigmeats and, in particular, pork. I have no doubt that the pig industry will benefit from that work in the future. Many of the work streams that are under way—on labelling, on working more closely with the supermarkets and retail chains and on bringing the supply chain together—will bring benefits for the pig sector in Scotland.

On other routes of support, I noticed a significant number of references in the evidence that was given on 1 April to the SRDP and how it could help. I am perfectly willing to investigate how that programme can better deliver the investments to which the industry referred in evidence. I do not believe that any obstacles exist at the moment. In the south of Scotland, for instance, pig producers have made a couple of successful applications to the SRDP for significant investment in their farms. Such things, which directly relate to suggestions that were made on 1 April, are already happening. However, if processes must be made easier, I will consider that.

The public procurement of pigmeat is an issue. Is there anything that you can do to help more in that area without disadvantaging other sectors of the industry? I appreciate that that question is difficult for you to answer.

I have seen improvements in the Scottish Parliament's and the Scottish Government's procurement policies lately in relation to their sourcing of Scottish pork. We want to spread such improvements across Scotland. In the past, I have written to local authorities and retailers about the sourcing of Scottish pork, and I continue to fulfil such a role at every opportunity.

Under the food and drink policy, we have under way a work stream that will report in the next few weeks and which is led by Robin Gourlay of East Ayrshire Council, who I am sure is familiar to many members. The work stream is on how we can encourage the sourcing through public procurement of Scottish food and drink, which includes pigmeat.

You described how pig numbers had varied from the 1980s—they rose in the 1990s and have come down again. The NFUS's supplementary submission says that the target size for the sow herd should be about 45,000. Is that target reasonable?

I take the industry's advice and I have heard that target mentioned several times. If that target is sensible, that is the sensible target to which we should refer. As for the Government adopting formal targets for livestock numbers, I would be reluctant to go down that road. It would not be sensible for any Government to pick a target for the number of livestock in any sector in Scotland. However, we want the pig industry to move in the right direction—we do not want it to move towards a decline that would jeopardise the sector's critical mass.

I return to your response to John Scott's points about the SRDP. As you said, some successful schemes have been introduced, but the rural priorities scheme has not been without difficulty. I understand that the next round of regional proposal assessment committee meetings has been postponed—

We have extended the deadline for the next round of applications because of the previous round's success.

I presume that that will increase the pressure on available resources. What commitment can you make to the pig sector that its interest will be recognised? As I said, the NFUS is calling for the pig sector to be considered a priority sector, but, as cabinet secretary, you might be reluctant to send that message to competing agricultural sectors.

As you might know, the SRDP funding is profiled over the whole seven years of the programme. In the next round this year, we will have to judge the extent to which we eat into next year's resources and bring forward the spending of those resources—we might not be able to do that, especially given what will happen in 35 minutes' time in the House of Commons.

The SRDP will certainly provide funding for which pig farmers and others can apply. The success of the previous round, which took place in the past few weeks, led us to extend the deadline for the next round of applications. Contrary to some misleading headlines in the press, that extension is perfectly sensible. We do not want to hold up the contracts for the 1,000 businesses that have just succeeded in the previous round because we are trying to meet a deadline for the next round of applications. We must pace such demand-led schemes, for which we cannot always predict the number of applications.

Whether it is this year's funding or next year's funding, funding will be available for the pig industry in the SRDP. The key issue is how that is delivered and to what extent pig producers come up with ideas that succeed in the application rounds.

You talked about misleading headlines. It has been suggested that the goalposts were moved after the rejection rate looked as if it would be unacceptably high. I appreciate that the Government might greet the scheme as a success, but it has created confusion among applicants. To provide certainty or the confidence to which John Scott referred, a signal from the Government about the availability of funds for pig farmers who are considering an investment would be desirable.

I am saying that significant funds are available in the rural development programme. The success or otherwise of any application will depend on its quality. There is no obstacle to the pig industry submitting good applications and acquiring funding. I will write to the committee about the examples that I cited of two successful applications from Dumfries and Galloway—one applicant received £213,000 and the other received £158,000; both are pig farmers who are developing their pig businesses. Funding will be available in the future for similar applications. Clearly, the extent to which people are successful will depend on the quality of their applications. We have the review by Peter Cook to take into account, which might influence the application process.

I saw some misleading headlines in press releases. Those who said that the scheme had closed have fed more uncertainty into the agricultural community. I know that politics is politics, but press releases from Opposition politicians said that the SRDP had closed. I put on record the fact that the programme has hundreds of millions of pounds left to be applied for over the next few years. It is not closed; it is very much open for business.

Do you think that the new entrants scheme should be expanded to include entrants who have outdoor sows?

At the moment, there are premiums and extra support for new entrants in many of the programmes. I read the evidence of your previous meeting, in which an interesting point was raised. I would like to explore further what we can deliver. I would have to know whether there is a problem at the moment. There is general extra support for new entrants, no matter what they are doing, whether in the pig sector or any other sector. I would have to understand what the industry thinks would have to be done to target the pig sector further. At the moment, new entrants can get extra support from some of the schemes—usually 10 per cent extra grant. I would have to understand why the industry does not think that what it is suggesting is not possible at the moment.

We have to review the whole issue of support in the programme for new entrants, given the changing economic situation. At the moment, we have one specific new-entrant proposal, which is to subsidise interest on loans for new entrants. However, given that interest rates are coming down significantly, that has less value than it had before, so there have not been a huge number of applications, for obvious reasons.

You have given a lot of equivocal answers; you seem sympathetic to what is being suggested, but the industry is concerned to ensure that action is taken relatively quickly. We are a year on from our original inquiry. If all was well with the pig industry, its representatives would not have been here on 1 April. What is the timescale for you to make some decisions and to give the sector confidence in relation to some of its suggestions?

Given some of the ideas that were expressed in evidence to the committee, I am keen to speak to the sector soon. You said that some of my answers have been equivocal. Someone in the livestock sector or a farmer might have a specific idea, but because the SRDP is open to all ideas that meet the national outcomes, there might be no obstacle to the suggestions at the moment; there might not have to be a specific scheme for sows or for X, Y and Z. People simply have to make their proposal, take advice on how to present it and say what they want the outcomes for their business to be. Although the industry might suggest specific schemes, such measures might already be possible under the existing SRDP. I am happy to speak to the industry soon to explain what is available at the moment and to get its ideas about what should be available. Of course, the committee is producing a report, which I am looking forward to reading.

I accept what you say, but, from the industry's perspective, there appears to be a problem around accessing schemes; otherwise, the industry would not be coming forward with such a range of suggestions. There is a problem somewhere, whether it is to do with communication or people's understanding of the scheme. The evidence to the committee shows that there is a problem from the industry's perspective; it is saying that the scheme is not working, and it needs you to intervene to make it work. What are you going to do?

I have given a commitment to explore the concerns and to speak to the industry about them. Of course, I will await your report, which I presume is imminent. I was surprised to read in the evidence that was given on 1 April that there was some obstacle to accessing the 40 per cent support for slurry storage. The reference was to a lack of clarity about how to apply for the support, rather than to the question whether the support was there. I want to investigate that.

I think that the view was that because there was a bid process, applications for storage in an NVZ were not guaranteed to be successful. We are seeking confirmation that a bona fide application for slurry storage in an NVZ is guaranteed to be successful. As you are well aware, unsuccessful applications cost a lot of money to produce. That is why it is important to prioritise—if you are prepared to consider that.

We are funding a £50,000 slurry management project with the industry so that we understand how it can address such issues, particularly in NVZ areas. I hope that the concerns that members raise will come out during the work of that project, which will involve face-to-face meetings with the farmers concerned so that they can be given guidance on what is available and how to access it and so that work can be done with the industry to find solutions. Slurry management can be a commercial opportunity. Sometimes, we automatically think that there are big problems as a result of European regulations, but many farmers can make money and save costs through the way in which they manage their slurry. The project is about that kind of issue, too.

I confess that I am surprised by your evidence this morning. Notwithstanding your acknowledgement that the industry needs more confidence, I have heard little from you to give it that confidence. Where is your statement that you want the industry to succeed, that you are in charge of the Scottish rural development programme and that you want everyone who is involved in the administration of the programme to understand that you want the pig industry to be supported to the maximum? Where are the specifics of your strategy to help the industry? Where is the urgency in the strategy, given what the industry is saying? All those matters, which I have I touched on, seem to be absent from your evidence this morning, although the industry is crying out for an unequivocal statement from you that the Government wholly backs it and that you will take 10, nine, six or eight actions—or whatever—within a specific timescale. The industry wants to hear that you are gearing up the whole of your office and the system to make sure that such actions are taken. Can you give us that commitment?

I think that you and I must be attending different committee meetings this morning, given that in my opening remarks I listed several measures to support the pig sector in Scotland that are under way as we speak. I emphasised the importance of the sector to Scotland—it produces a top-quality product that meets the highest welfare standards and plays an important role in the Scottish economy. I also said that the Scottish Government is right behind the sector and is committed to it. You might want to make political points, but I do not think that anyone could interpret what I have said today as anything other than a commitment to the sector, a vote of confidence in the industry's future and an indication that we want it to succeed.

With respect, we are hearing that the SRDP exists, that it has always existed, that people can apply to it and that the chances are that they might get something out of it. You are talking in generalities and saying that you have some confidence in the industry and would like it to succeed. However, you are the minister, so where is your strategy? When will you say, "I've got this X-point plan that will be delivered over the next few months," so that you can ensure that we have an industry that has the confidence in itself to make the investments that it needs to make if it is to supply the Asdas and consumers of this world? I do not get a sense of that from what you are saying.

Even today, the press has a story about an event held yesterday—which the Scottish Government paid for—that involved Scotland's chefs promoting Scottish pork. Then I come to the committee, where a Labour Party member accuses me of doing nothing for the pig sector in Scotland—despite the list of things that I have given you.

You are not doing enough.

I do not deny for a second that we cannot do more; of course we can. I am pleased that the committee is undertaking its short investigation into the sector and that it will issue a report containing recommendations. As the minister, I have given a commitment to take on board those recommendations, and I have no doubt that you will make some points to me about how you think the sector can be helped. I will do what I can with the levers and funds that I have at my disposal. Of course I wish that I had more resources. In 21 minutes' time, there will be an announcement in the House of Commons that might make it more difficult for me to support Scotland's livestock sectors in the next few years, but we will do what we can.

You mention events that are taking place south of the border. One of the industry's recommendations was about writing off capital allowances against tax. Have you made representations to the chancellor about that on behalf of the industry?

I made representations to Hilary Benn, and I know that the industry has done so, too. We have raised many issues—not just those that affect the pig industry, but wider issues around capital allowances that affect agriculture—in bilateral discussions with the UK Government. I will continue to pursue those issues.

I have another question on the same issue. We heard interesting evidence earlier from Asda. You probably have not had a chance to catch up on it, because you were elsewhere. One of the interesting points in that evidence was that a Scottish pig is basically the same as any other pig in the UK. There is nothing distinctive about a Scottish pig, apart from the fact that it gets rained on more. Therefore, if we want to give the Scottish industry an advantage and a future, it seems to me that a good part of the effort must go into marketing, because marketing leads consumers to believe that something is different or better than it might be. What is your view of marketing in the pig sector? What more could Government do to support the industry in that regard?

Marketing is primarily Quality Meat Scotland's role, with our support. A £1 million fund was given to QMS post foot-and-mouth disease. As part of our most recent package for the pig sector, we asked QMS to dedicate £200,000 of the fund to the promotion of pork from Scotland. QMS has carried out much good work, as the committee may have heard in evidence from it. I agree with you that marketing is very important. When we announced that we were putting money into marketing Scottish pork, some people in Scotland attacked us, saying that the money should be used in other ways to help the industry. However, I tend to agree that marketing is a valuable tool.

Given that we produce a top-quality product that meets the highest welfare standards, the big question is why it does not command the same premium in the marketplace as other meat products from Scotland. Historically, of course, much more effort has been put into promoting Scotch beef and lamb. Pigmeat is catching up in relation to the amount of support that has been given to other red meat sectors. The industry very much takes the lead in determining the extent to which red meat should be marketed.

Do you have a question on this issue, Elaine?

No, I have a question on the labelling side of marketing. It is about how the product is identified. Chris Brown told us earlier that in Scotland there is a strong identification with Scottish products, but that south of the border there is no particular benefit for Scottish products as opposed to UK products. Of course, welfare standards are the same throughout the UK.

The labelling issue has arisen because of European regulation. The Scottish Government and the Department for Environment, Food and Rural Affairs have indicated that they support mandatory country-of-origin labelling under the new draft European Union food information regulation. Can you tell the committee, minister, where that is going and what progress has been made on labelling?

That is a good question, because improving labelling and making it less complicated has been a high-profile issue for many years in Scotland. The current European consultation offers Scotland an opportunity in that regard. I am confident that we now have UK Government support to give Scotland the option of being a country of origin for labelling purposes. We need UK support to apply the regulation to Scotland, otherwise it will apply just to the member state.

The UK Government is much more sympathetic now to country-of-origin labelling and allowing member states to take it up. We are hopeful that we will have UK Government support to allow country-of-origin labelling to apply to Scotland under the European regulations. That is where we are at, but there is some way to go on the food quality regulations, of which country-of-origin labelling is a part. I am happy to write to the committee to provide a better idea of the timescales, if that would be helpful.

The issue of voluntary labelling has also been raised with us. Witnesses have given us slightly contradictory evidence on that at different meetings. Professor Wathes suggested last week that, over a 20-year period, the voluntary labelling scheme on eggs had vastly changed the public's perception of free-range or non-battery eggs, so that about 50 per cent of eggs were now from non-battery production. Chris Brown suggested that that might not be so, and referred to the ill publicity that Jamie Oliver gave to eggs and chickens, which resulted in a blip in public perception, although the marketing profile returned to what it had been. Perhaps that was simply an issue of the timeframe.

Given that welfare is a major cost in the pig industry, are we really doing enough to make people aware of the differences between pork that is produced in the UK—it is not a Scottish issue; it is a UK one—and pork that is produced in the EU? Can we do more to improve the profile, for example by encouraging voluntary labelling?

No, we are not doing enough, and yes, we can do more. That is the short answer. When I met the Farm Animal Welfare Council last year, because those issues were current in the pig industry, I used the opportunity to ask the council whether it would be willing to investigate the extent to which the requirement on the Scottish pork sector to achieve high welfare standards impacted on price and costs. You will be familiar with its report, which illustrated that there are higher costs for UK producers. I sent a copy of that report to all retailers, asking them to take into account what it had to say on the value of Scottish pork produce. However, we can do more, and I would welcome ideas from the committee on that. Voluntary labelling is largely in the hands of the retailers, but we have asked the Food Standards Agency to issue to the Scottish supply chain country-of-origin labelling guidance on all foods, not only pork.

It already does that, does it not?

It does, but we have asked it to refresh the guidance and send it out again to all local authority trading standards offices to ensure that it is being adhered to and that labelling is not misleading.

Trading standards issues give us one hook—not perhaps the strongest—for the debate. We have also developed a toolkit for the food service sector. As part of our food and drink policy, we are trying to develop a new relationship with that sector. It has not been involved in food policy before, but we are trying to involve all caterers and supply companies because, of course, a large percentage of food is eaten outside the home. The toolkit is about how they can voluntarily apply better labelling and understand where they source their products. We hope that that will help pork. It should also ensure that animal welfare aspects are taken into account.

One initiative that was suggested to us on 1 April was public education from childhood on consumer choice. Has the Government considered how that could be promoted and tied in with the health agenda, for example, by encouraging people to eat less but higher-quality meat? For a number of different reasons—for health reasons as much as for the industry—we need a change in consumption in Scotland. Is the Government taking an holistic approach to that?

We are keen to pursue that under the food and drink policy. There are many issues to pursue through that policy, and there is a lot more to be done on education. We have worked with organisations in Scotland that go into schools to link up food production with education and enable pupils to understand where their food comes from. That is connected to what you are talking about, and there is a lot more scope to pursue that in the future. I was interested to read the evidence that you took about what happens in, I think, Austria. I am sure that we can learn from that.

Do you agree that more needs to be done on food labelling, animal welfare and traceability in the processed meat sector, particularly in light of the recent experience with processed Irish pork, which unfortunately was contaminated? Does the Government see a way of developing traceability in the processed sector?

That will be built into many of the initiatives that we have already taken on processed meats. One of the challenges and big opportunities for the Scottish pig industry is to ensure that processed meats in Scotland use Scottish pigmeat in the first place. It is not being used for all the off-cuts. If you go to the supermarket to buy pre-packed, sliced, processed meat, you will find it difficult to get Scottish meat, whereas it is a lot easier to obtain fresh pork from Scotland. Work is being done to capitalise on that opportunity by trying to ensure that the whole carcase is used and that retailers source more Scottish meat. I have had productive conversations with some retailers, who have accepted that they have to use a lot more Scottish rather than imported pork for processed meat products.

Labelling is also important. As you say, it is difficult to ascertain where a lot of processed meat comes from.

Welfare standards are going to become ever more important. What is your thinking on welfare legislation in the period after 2012 or 2013, when new European welfare standards will be introduced? How do you see the Scottish Government reacting to the proposals?

We will certainly ensure that Scotland's voice is heard. We are doing our best to understand what the proposals mean for Scotland, so that we can influence the regulations at an early stage.

Some of the higher welfare standards that were adopted by Scotland and the United Kingdom in 1999 will not be adopted by some other countries until 2012. That indicates how far ahead Scottish pig producers are in terms of welfare standards.

You are saying that the new welfare regulations will, in all probability, reintroduce the concept of a level playing field for pig producers in Scotland and the UK, who have not been operating on a level playing field since the current welfare regulations were introduced. Is that correct?

I am happy to write to the committee on the timescale of the regulations. My point is that the measures that our sector adopted in 1999 will not be adopted by many countries in Europe until 2012. At that point, there will be a more level playing field.

Does that give us grounds for optimism?

I hope so. I am happy to write to the committee with more details, as the issue is quite complex.

On labelling that is on supermarket shelves rather than on packaging, some witnesses have told us that some produce that is displayed on shelves carrying a saltire symbol is clearly not Scottish. There is a suggestion that current trading standards legislation should be more rigorously enforced, as consumers are effectively being misled into thinking that something is Scottish when it is not. As councils are responsible for policing trading standards legislation through trading standards officers, would you be prepared to discuss that matter with the Convention of Scottish Local Authorities, under your historic concordat with local government? It might be useful if councils considered ways of using their powers to ensure that consumers are clearer about what they are buying.

I would be happy to do that, if the committee thought that it would be worth while.

The wider issue that you raise—the question of what is Scottish—is important. As you will be aware, a big debate is taking place around that question. On one hand, we are a victim of our own success. We wanted to display Scottish food and drink on supermarket shelves in Scotland and, if possible, beyond, but that has led to a proliferation of the saltire in supermarkets. Many in the industry are asking whether that might jeopardise our reputation for quality produce and be misleading, as there are questions around how we define what is Scottish. Because the last place of processing often determines what is on the packet, you can end up with a packet that has a saltire over the words "Made in Northern Ireland", which is confusing. QMS is working on how we can work with retailers to address the use of the saltire.

Have you any thoughts on how this saltirisation of food in supermarkets has come about? Did the Government suggest that it would be a good idea, or is it a supermarket initiative?

I think that it is the product of a campaign that has involved the industry and all parties in the Parliament over many years. Of course, as consumers are now more interested in where their food comes from, supermarkets are capitalising on that by using the saltire.

I am unaware of Government having specifically asked supermarkets to display the saltire in connection with certain products. Like all parties, the Scottish Government has been urging retailers to source more Scottish produce and make the consumer aware of which produce is Scottish. What we are seeing is the result of a natural progression from that point, as retailers try to do that.

However, you would not be in favour of the practice if it were thought to be misleading. You would not want consumers to be misled into buying something that they thought was Scottish but which was not.

My difficulty is not so much with the use of the saltire in supermarkets as with what is on the label. There will always be a debate around how you determine what is Scottish and what is made in Scotland. The consumer should have as much information as possible to help them to make up their own mind about what is Scottish. Using the saltire in supermarkets is, overall, a very good thing.

I would like to go back up the garden path in a supplementary question on animal welfare. Can you guarantee that the next time that regulations on animal welfare—or anything else—are implemented we will not be years ahead of other countries and will not impose costs on our industry that are not being imposed on competitor industries, which is what happened under the previous Administration?

My inclination is to avoid creating a playing field that is not level for our sector. Of course, if there is a premium to be gained from the markets, being ahead of other nations in terms of quality or welfare standards might be to the advantage of producers. However, if there is no obvious premium, we do not want our producers to be at a disadvantage.

The evidence that we heard this morning suggested that, in relation to pork, there is an extremely limited market premium to be had from the regulations.

That is my point. A playing field that is not level imposes extra costs on producers without giving them a return from the market. However, if producers would get a return from the market as a result of certain regulations being implemented, they might take the view that implementing them would be a good idea.

We also heard this morning that it was questionable whether there was a qualitative difference between the Scottish product and product south of the border. Do you believe that there is a demonstrable qualitative difference?

All I can say is that whenever I have Specially Selected pork, it is absolutely delicious and succulent and I thoroughly enjoy it.

"Joyously so" is how it was put this morning.

However, the serious point is that there is a lack of research on which assertions about quality can be made. Have you discussed with producers or the supermarkets ways of coming up with an evidential base to back up what we have all been happily saying for many years?

QMS is engaged in a project that is considering those very issues. I am not sure when it is due to report, but I hope that it will be in the not-too-distant future. I can offer you the comfort that the issues that you raise are on QMS's agenda. It is conducting work that is funded by the Government, and we should give it time to complete it.

One of the interested observers in the gallery—a representative of Asda—will have taken note of that. I take it that Asda will be welcome to contribute any findings that it has developed from work that has been undertaken elsewhere.

Yes, and I am sure that when the research comes to the conclusion that Scotland's produce is of the highest quality we will want to broadcast that message to all retailers.

At our meeting on 1 April, we discussed the report on labelling, which was a task force recommendation that you accepted. There was some concern that the report had not been published, and that there was no indication of when it might be. Can you clarify the situation?

I am happy to write to the committee with more information on the timescale for that report when I follow up some of the issues that have been raised this morning.

You will be pleased to hear that I am not going to go on about pork chops again. However, I am a bit confused. I believe that at the Scottish National Party conference on Friday you discussed and possibly passed a motion on introducing a saltire scheme similar to the shamrock scheme in Ireland. In other words, Scottish products would have a saltire mark and when you purchased them your till receipt, too, would be marked with a saltire and you would receive loyalty points.

Given the problems with labelling, ensuring quality and so on that you have just described, and given that, as you have said, Scotland could simply be the last place of processing and not in fact where the original animal came from, how on earth would the saltire scheme work? How would it guarantee to the consumer that a Scottish pig had gone into the product and that it was quality meat? Surely, under the current circumstances, such a scheme would mislead the public.

The public would be misled only if the product did not meet the definition of Scottish that we—by which I mean the industry, the Government and whoever else might be involved in the conversations with the retailers—had agreed. I believe that the principle of putting a saltire on a supermarket receipt is a good one. The Irish certainly believe that with regard to their shamrock scheme, which is why I think the idea is worth exploring. The whole point is to encourage consumers to buy Scottish food and drink and inform them of the provenance of that produce. While we are not in a position to introduce the scheme tomorrow, even if the retailers are supportive, we can begin to define what could have a saltire on till receipts. The scheme is a good idea.

But as Ireland is part of the EU, it must be subject to the same EU competition legislation. How would a Scottish scheme work in that respect?

The legalities of the scheme obviously would have to be investigated before it was introduced, and I am sure that that would be the first thing that the retailers would do. The point, however, is that if other countries can do it, Scotland might be able to do it. It might be a good idea to explore.

Presumably, if the Irish have a scheme they have working definitions. Can you give us an idea of those definitions and the competition law rules?

You are right that the Irish must be using a definition, from which we in Scotland might be able to learn. I do not believe that the Irish Government is directly involved in the initiative, so discussions might be required between the retailers, the industry and whoever else in Scotland might be involved. We might play a role in that, but we are happy to explore the possibilities under the current legislation.

Would a 25p pizza that was made in my constituency get a thistle mark and get whoever bought it loyalty points?

I cannot answer that question, as there is no thistle mark scheme.

Would this thistle, saltire or whatever you are going to call it scheme be for everything that was made in Scotland or would it be only for quality produce?

That is exactly why we would need to put together rules of engagement. We would need to define what would be classed as Scottish, because that is vague at the moment. For instance, a food item might be made with Scottish ingredients, but if the last place of processing—for example, where it was packaged—was, for example, Northern Ireland, its code on the shop shelf would say that it came from Northern Ireland. You and I might consider the item to be Scottish, because it contained Scottish milk, dairy or other products, but it would still be classed as coming from Northern Ireland. We would need to clarify what could be defined as Scottish before we introduced any scheme to promote Scottish food and drink.

So if I was able to clarify that a pizza of the lowest quality had been made in my constituency and was therefore Scottish, it would get a saltire mark and consumers would get loyalty points for buying it.

You are asking me to comment on a hypothetical scheme—

But you have passed the policy.

Sorry?

Your party has passed the policy, so I am interested in what—

Do you not think that it is a good policy to promote Scottish food and drink and to signal—

I want to be clear whether we are trying to promote quality Scottish produce. You pointed out that the problem with blanket saltirisation of Scottish produce is that it might include the kind of cheap and nasty produce that we do not want to promote. However, with your proposed scheme you might simply have to accept that situation.

I have already acknowledged that that problem is part of the current debate and, indeed, has been highlighted and is being worked on by QMS. You are stating the obvious with regard to the complicated nature of the debate.

I think that with Karen Gillon producing low-quality pizzas in her constituency we are getting off the point.

I should make it clear, convener, that we in Clydesdale do not produce anything of low quality.

Have other rural trades such as road haulage companies, local abattoirs and others involved in the wider pig industry raised concerns with you about the state of the industry?

I have received representations about the livestock sector in Scotland. I am not saying that they have been specifically about the pig sector, but I take the view that any representations on the livestock sector from hauliers and other sectors of the rural economy also include the pig industry.

As members have no further questions, I thank the cabinet secretary for his evidence this morning.

That ends the public part of the meeting. I thank everyone for their attendance.

Meeting continued in private until 12:26.