Official Report 155KB pdf
Good morning. I welcome colleagues, witnesses, the press and members of the public, if we have any this morning. We have no apologies for absence but a couple of our colleagues will be late—we will see them shortly. I give colleagues my usual reminder about mobile phones, before anyone gets caught out.
I am a member of the Scottish Crofting Foundation.
As no one else wishes to declare an interest, I invite the minister to make a brief opening statement on the background to the work that the Executive is doing on the organic action plan.
Thank you for this opportunity to update the committee on developments since the publication of our action plan. Our support for organics is based on the belief that organic farming has an important contribution to make to the protection and enhancement of our rural environment, as well as to animal welfare and the provision of good food that the consumer wants. All those things obviously contribute to our wider rural development measures and to securing and retaining vital rural employment. The organic plan is very important in that context.
Thank you. It is good to hear of progress. I suppose that the purpose of this morning's discussion is to talk about the nature of that progress and ideas for the future. Can we kick off by looking at funding? That is a big issue, on which we can ask a lot of questions. You mentioned it briefly in passing, but it is a core issue for the farming community in engaging in the organics movement. Who wishes to kick off on that one?
The issue is extremely important, because there has been a shift in the way in which funds are delivered. Under the old scheme, people had only to apply and they would get some funding through the organic aid scheme. Now, the funding is discretionary. Although there is some funding for conversion and for increased advisory aid, as well as some capital-cost support, that is all allocated on a discretionary basis. People are not sure how to access the funds. There is a lack of transparency about the criteria for accessing them. There is a fear that we are lagging behind other countries in the United Kingdom and in Europe in our support for organics.
I am not familiar with that particular criticism. One of the aims of the action plan was to bring Scotland more into line with other parts of the United Kingdom and the European Union. I think that we have been wholly successful in that regard. The application form makes explicit reference to the criteria. We have funded advisory services for producers as part of the process, to ensure that producers are aware of the opportunities that are available to them. In addition, we have quadrupled the money going into the sector over the past four years—since the Parliament was set up. By any standards, that is a fairly substantive record.
My next question is about your engagement with the organics sector on CAP reform. Concerns have been raised that the organics sector has not been involved in any meaningful way in the concept of land management contracts. Producers feel that they could have a role in that.
They undoubtedly do.
Last year, the organic stakeholders group received a presentation from an official about the impacts of the mid-term review of the common agricultural policy. We revisited the issue at the most recent meeting of the stakeholders group. We recognised that there is an issue around the relationship of the organics sector both with the new arrangements following CAP reform and with the new concept of land management contracts, which the Executive is on record as saying that it would like to develop. In recognition of that, a special meeting of the organic stakeholders group is scheduled for mid-June. We are also considering the organic sector's representation on the land management contract working group and on the technical group that is dealing with the development of cross-compliance. Moreover, there are possibilities in relation to the entry-level scheme. The organics sector will be involved in those discussions. We have heard what its representatives have said and we understand their concerns.
A special meeting is being convened in June precisely to get producers' views on some of those issues.
That is good news.
As the minister may be aware, I am very supportive of the angle that the Executive has taken on organics support, particularly where it continues to promote the concept of a market-led development of organic produce.
I suppose that the bottom line on that is that we are constantly open to reviewing the organic aid scheme to identify where concentrating payments has the most effect. I agree with what you say. Part of our response to the problem to which you refer relates to the fact that, historically, the growth of the organic sector has been due in large part to factors that, as you know, are peculiar to Scotland's upland and hill-farming traditions. In retrospect, that might not have been the way in which we would have wished to develop the industry. That is why we are now concentrating on the more market-led approach to which Maureen Macmillan referred, by having a business plan for organic production that will merit the public aid that goes into that process. Getting a greater market share for Scottish organic production is probably the key to the issue that you raise—certainly in the short term—and I think that the studies that we have commissioned will produce evidence of that.
The issues that you raise are well recognised by the organic stakeholders group and they have been addressed in the SQW/ADAS report that examined the entire organic sector from the farm gate to the consumer. As the minister said, we have received that report—it is being evaluated by the organic stakeholders group—and we will inform the committee of the group's deliberations on the way forward. As the points that you make are bound to be covered in that report, they will be considered by the stakeholders group.
As I think I mentioned in my introductory remarks, since May 2001 about £5.3 million has been spent on support for the processing and marketing of organic produce. In fact, there has been a greater contribution to the marketing side than there has been to production subsidy.
Of course, the Scottish Agricultural College runs an advice line for organic farmers. The advice line is funded by the Executive and enables farmers to get information about market prices and opportunities, for example.
I am trying to put matters in perspective. The European action plan has been in existence for three years. I am aware that countries such as Finland, which has made major changes in the kind of food that it offers its population, have given whole-hearted support to organic conversion—support that does not just have a time limit of five or 10 years, for example. I would like to obtain some figures that show how Scotland is shaping up in comparison with similar nations and—to follow up a question that Alex Johnstone asked—to find out how they support their population by getting the food to them.
I thought that we were ahead of the European Union in publishing our action plan. We are still awaiting the publication of the European action plan. We are involved in a number of those issues, because we want a Europe-wide approach and common standards of organic practice, so that when we are importing and exporting within the European Union we can evaluate equitably across the borders. As the report says, there is an equivalency between our system and the systems in force in other countries in terms of production standards and inspection, so we are feeding into the European action plan and our organic plan precedes the European Union's.
Well, that plan is based on a conference held in Denmark in May 2001. As a layman, I received information through the press about other organic schemes. It would be interesting to know how Scotland is progressing compared to other countries, so as to get some perspective on how well our action plan is meeting the demand that is out there. What specific objectives were behind the decision to provide an extra five years of support for organic farmers?
We wanted to ensure that farmers do not get support only for converting. What we saw historically in hill and upland areas—less favoured areas—was, I would argue, not the best use of public funds in promoting the growth of organics. What we are now doing is focusing more generally on improving the Scottish market share, which is critical, but also on extending organic production as a percentage of the whole. In doing that, we cannot look only at conversion rates. We must look at retaining production in the organic sector.
We say in the report, on pages 10 and 11:
Thank you for the information. My final point is that a comparison of what is going on in different countries would be useful. Most of the organic produce that is consumed here is imported, and it would be good to know in the report how we are substituting such produce for some of the things that we can grow here. I welcome the information on fruit and vegetables, but perhaps we could see the information that I mentioned in the next report.
In my preamble, I said that we are producing two reports. The first report, which is imminent, specifically considers the penetration of Scottish organic produce in the domestic market and I am hopeful that it will show good news in that regard.
That report will be useful. One of your key objectives is to increase people's ability to buy Scottish organic produce.
I am interested in what has happened since the OAS changed from being non-discretionary to being selective. You might not have precise figures, but it would be interesting to know whether more farmers are applying than are getting money, along with roughly what the percentage of knock-backs is and what the criteria are. How are decisions made about who gets money under the scheme? I am also particularly interested in fruit and vegetable production. It is something of an irony that the area in which I suspect the biggest demand lies was not specifically headlined in the scheme. Can you say anything about that, or is it too early?
It is a bit of both. It is a bit premature for this year. I understand that in terms of the applications for assistance last year, there was a very small amount of excess demand over supply. We are in the middle of this year's application round and we are encouraged by the process. As you say, the move to a discretionary scheme with a ranking system in which points are awarded could lead to a situation in which there are winners and losers. However, we are directing support to meet our priorities in the plan and there may well be winners and losers, as with any other state-aid system. At the moment, there is no evidence that that is a problem and we hope to avoid it.
As the minister says, since the ranking system was introduced, only a handful of applications—
Is the system transparent? Do farmers understand what they are supposed to do to get the money?
We believe that the farmers understand. We have talked to private sector bodies about the matter, and they have been involved in the technical working group that has looked anew this year at the factors that contribute to an individual scoring enough points to get into the scheme. Those bodies are happy with that; the focus is on understanding and identifying the market for one's produce so that there is demand at the end.
That goes back to the more specific issue of conversion to fruit and vegetable production.
This is the first year that we have introduced a payment rate for conversion to fruit and vegetable production, as you know, and it is too early for us to say. However, as the minister said, we hope that it will help.
It certainly provides an incentive and I hope that fruit and vegetable producers will take up the opportunity.
I have some questions about the supply-chain and marketing aspects. I should say, as an unofficial declaration of interests, that I am a subscriber to one of the net schemes. As Alex Johnstone mentioned, the biggest success for organic produce is at farm shops, farmers' markets and the net schemes or box schemes to which people can sign up. One of the reasons for that is difficulties with the supermarkets' policies on organics. In Tesco, the organic beef comes from Argentina and the organic chicken comes from France, and that is not untypical.
I expect that some of those issues, if not all of them, will be focused on in the market presentation study that I referred to earlier. Through Scottish food and drink, Scottish Enterprise is working closely with the industry to provide advice and information. As I say, that has been augmented by the creation of an organic industry development officer, whose job it is to develop those markets.
The matter is not about choice. There are a lot of organic products in our supermarkets and the consumer can choose to buy organic produce, but the point that Roseanna Cunningham was making was to do with the extent to which those products are Scottish.
I was not saying that consumer discretion is the only element, but it is an element that the retailers would tell you influences their procurement practices.
Yes, but that is a circular argument. If supermarkets do not stock organic produce, people will not buy it, which means that there is no demand for it and that, therefore, supermarkets will not stock it.
Arbroath, for example.
It is not just Arbroath.
Arbroath was in the news this week.
Yes, but there are huge parts of Scotland where people have no option but to go to one supermarket chain unless they want to travel 30 or 40 miles. Those consumers are left with a no-win situation.
No. You have described a market opportunity. One of the reasons why I support farmers' markets is that they can exploit that market opportunity. If consumers feel that they are being short-changed by the major stores and there is a demand for that type of product, there is obviously an opportunity in the market for farmers' markets and small organic producers.
As the minister said, information about supermarkets and the different ways in which organic produce finds its way to the consumer will be included in the work on market share that is being done by the SAC, which will report to the minister. Also, the SQW/ADAS scoping study considered all elements of the organic sector, from the farm gate to the consumer, and the choices that consumers had when they sought to buy organic produce. Both the reports are being evaluated by the organic stakeholders group and there will be further work to do. We acknowledge that there is a commitment to take action and we will need to tackle the issue if we are going to meet the target of having at least 70 per cent of overall consumer demand for organic produce sourced from Scottish produce.
The various major retailers operate distinctive practices. Some of their policies and procedures favour locally sourced organic produce over produce sourced from abroad.
It would be interesting to see the follow-up on that research. The next name on my list is Alasdair Morrison. Has the moment passed, Alasdair? You stuck your hand up when we were talking about crofting and beef.
I did indeed, but I would prefer to let other members continue the discussion on supermarkets, if they would like, and return to the other points later.
I have a question on marketing and procurement, although it is not specifically to do with supermarkets. There are several pages in the annual report on marketing and procurement, most of which are not specifically about organic produce. It is hoped that the organic sector will benefit on the back of healthy eating initiatives and so on. To what extent is the Executive committed to promoting organic food per se, as opposed to healthy eating overall? The report states:
What I said to the Soil Association at the conference at Heriot-Watt University, which it welcomed, was that the challenge was for the organic sector to prove to the consumer that the health benefits were evident through a process of peer review of its produce compared with alternative produce. That is fair, because it is not for me or the Government to promote one form of produce over another. I am challenging the organic sector to engage with us in the necessary research and peer review to establish the health benefits to which you refer. You might be convinced of the benefits, but it is up to the organic sector to convince others. It is not true to say that we promote healthy eating without reference to organic produce. As I said, £5.3 million was specifically for organic marketing. Much larger sums are being spent, such as the £63.5 million over the next three years for the hungry for success school meals campaign, which was widely welcomed at the Soil Association conference, to help to implement the report. I challenged the organic sector in that context. I said that £63.5 million was up for grabs and that it was up to the sector to show that it should have a bigger slice of that and to achieve that it should demonstrate the health benefits of its products.
I have other questions, but they are not on that aspect.
Two things strike me. Eleanor Scott said that organic food production uses fewer pesticides and that that could have wider health benefits. However, the minister suggests that the organic sector should commission research into the specific health benefits of organics. If the sector was to put in bids—
We are commissioning joint research into developing organic standards to ensure that there is EU-wide acceptance of what constitutes an organic standard.
But you would draw a distinction between such standards and the health benefits per se of organic food, which you are waiting to see proved. Is that the correct way to interpret your comment?
As I said, where organic producers who compete with other producers for the same product want to maintain a competitive edge on health grounds, then, as with any producer, retailer or processor, the onus is on them to substantiate their health claims.
Can I pick up on Eleanor Scott's other point about procurement, healthy eating and the Scottish diet action plan? Is there anything in the annual report—it is not transparent that there is—about targets for organic production? I notice that one of the points in Unison's 10-point plan for health is that the Executive should have a specific target and that it should flag up organic produce as one of the options that should be considered. Will that be in the procurement guidelines that you are bringing out at the end of the month?
Not specifically, but there will be an announcement on that at the end of May.
A sense is certainly coming through that, by not being explicitly in with the bricks as a core issue, organic produce is not regarded as a key Executive priority. However, you are telling us that it is a priority and that you are spending more money on it. Perhaps there is an issue about how organic produce is viewed by the outside world—for example, the people who do the daily procurement for hospitals or schools. Perhaps the availability of organic produce needs to be underlined for them a bit more effectively.
It is a branding question, is it not? Discussions are under way on the best options for a branding programme to make Scottish organic produce more easily recognisable to the consumer. That is a priority for the organic sector and we are working with it on that. Branding is important in helping to bring people together so that the procurement people know what is available to be bought and who is selling what.
The officials responsible for "Hungry for Success" and the Scottish diet action plan are members of the organic stakeholders group. Members may have noticed that its logo—"healthyliving"—is on the front of our annual report. We are working closely with the organic sector in meeting the challenges that the committee has identified.
Nora Radcliffe is the other member who has not been involved in the discussion yet.
I will pick up a wee bit on what has been discussed and then move the discussion on.
I am sorry, but I think that Maureen Macmillan wants to ask about branding. You can finish off that issue, Maureen, before we move on to Nora.
The minister said that branding of organic produce has not happened yet. When can we expect Scottish organic produce to carry a Scottish brand?
Decisions on branding issues are up to the private sector bodies. There has been discussion through Scottish food and drink and the organic sector bodies with various branding authorities in Scotland. The conclusion that they recently came to is that it would not necessarily serve the interests of the organic sector to be linked up with another campaign, such as a good food for Scotland campaign. However, as I said, branding is an issue for the private sector bodies and we continue to work on it with Scottish food and drink.
Branding is presumably a consumer confidence issue, as well as being about what the consumer is buying.
That is tied in with added value for niche marketing as well. People are moving out of organic lamb production partly because there is no premium for organic lamb in the market. As ever, producers are conscious of the bottom line, whereas we obviously have different objectives for promoting healthy eating more generally, whether through organic produce or non-organic produce.
I want to raise a specific issue about branding in farmers' markets. I have found very few farmers at such markets, and quite often organic vegetables are being sold that everyone assumes are Scottish but which in fact probably come from Holland. There should be some way of ensuring that people know what they are buying, not just in supermarkets but in other places.
I am familiar with that criticism of farmers' markets. However, that is what free enterprise is all about. The market is simply exercising its right to sell niche products, and if people get a premium for those products, surely that is fair enough from their point of view.
Nora, you are the only member who has not yet asked a question.
Farmers' markets are based on the efforts of local co-operatives, and it is up to them to set their own criteria about what should or should not be sold. For example, the market that was recently established in Inverurie stringently requires that at least a percentage of what is sold must be produced locally.
The scoping study, which will be published at the end of the month, sets out our current position, the position that we want to get to and how we can get there.
But where do the estimates on which the targets for increasing market penetration have been based come from?
The Soil Association.
Okay. You have also commissioned a study to evaluate organic farming research needs for Scotland. Obviously, one of the research topics will be the nutritional value of organics and the effect of pesticide residues. However, you said that the sector itself should pick up the responsibility for carrying out such research. Will we be replicating research that is already being undertaken?
In response, I should point out that we and the sector are jointly funding research into aquaculture to establish standards for fish.
Is that not at an earlier stage of development?
That is right.
In paragraph 2.21 of the annual report, you mention "demonstration farms" and refer specifically to
We have asked the SAC to come up with a business plan. As you know, the future structure and organisation of the college have been discussed a lot in Parliament, with the college and between ministers, and the college has been charged with the responsibility of coming up with a revised plan. I am not exactly sure when ministers will receive that plan, but I think that it will be over the summer.
I presume that, given that you are making good progress on establishing that open farm, you would not pick up Craibstone if it was under threat.
The open farm network that we are hoping to develop is different from the demonstration farm network, of which Craibstone is a part. Although they have some farm walks and so on, demonstration farms are focused more on farmers and concentrate on subjects such as farming practices. The open farm network that we are developing with private sector bodies—in this case, the Soil Association—is focused more on the wider public and, as the minister said, will seek to advise kids about farming issues and methods, particularly organic farming. The funding will go towards producing leaflets and so on. The open farm is more public facing than farmer facing.
I will take us back to where we began. The Co-operative superstore in Stornoway should be commended because it has a progressive policy of accessing locally produced and locally branded meat. In fact, that superstore has the largest turnover in Scotland. With crofters' markets, we have not experienced the problems that Maureen Macmillan spoke about earlier. Crofters' markets have been hugely successful, not only for crofters but for fishermen, and have resulted in the ploughing of more crofting land, which is being used more productively than in previous years.
As I said, I am pleased that there are three Scots on the UK Advisory Committee on Organic Standards, because that will give us the regional dimension that we hope will be developed in a European context.
On that last point, I would like to hear from the official about the way in which the pilots will be driven in the crofting communities.
Are you asking about the grazing committees?
Yes.
We are at an early stage. The first step is to go up and engage with crofters who are in the organic aid scheme and with individuals who might want to convert to organic production. Work will start in Shetland in early June, and I will speak to the Crofters Commission about how we can roll that out. It will not be a pilot as such; there will be discussions to try to dispel the myths about some of the challenges that organic farming faces. We have taken what steps we can to operate the standards flexibly, within the flexibility that we have from the European directive.
I have a couple of quick questions about the two reports that have been discussed, which we await with interest. First, the organic sector has expressed concerns to me that the SAC study into market penetration is more of a desk-top study and that the figures might not be quite up to date, because the supermarkets have not been examined directly. I ask the minister to comment on that. What plans are there to monitor progress in market penetration in future?
It is a new one on me for a committee to criticise a report even before it is published. We will consider those criticisms when the report is published. Robin McKendrick may have something to say about the future.
The aim is to reach the target by 2007. We will have to have another look at the area—the report was a first look—and, no doubt, we will learn some lessons from that. It is our intention to have another market penetration report next year. We will see where we go after that.
I have a short follow-up question on the supermarket issue, which may be relevant, given the Government's market-led approach. There are good international comparisons in France and in other places where small shops are included in the planning arrangements for large superstore developments, so that niche marketing can be located under the same roof. Will the minister consider inputting into the planning controls and regulations that are being looked at by other arms of Government with a view to getting a more level playing field for niche marketing in supermarket complexes?
We are currently engaging with planning colleagues on our wide range of rural development interests.
I am conscious of the fact that we have interrogated our witnesses for an hour. It is a year since the organic action plan was produced, and the committee was keen to see what was happening and to offer the constructive criticism that had floated in our direction. It has been an extremely useful session.
Thanks, convener. It has been my pleasure, as usual.
Meeting suspended.
On resuming—