Official Report: Minutes of Evidence

The Chairperson (Ms Ferguson): I welcome Elaine McCrory, head of supply chain transition branch in the Department of Agriculture, Environment and Rural Affairs; and Samantha Stewart, head of food security, beef, pig and sheep policy in the Department of Agriculture, Environment and Rural Affairs. You are very welcome, ladies. Please brief the Committee. Thank you.

Ms Elaine McCrory (Department of Agriculture, Environment and Rural Affairs): Chair, thank you for the opportunity to once again brief the Committee on this regulation to support the Committee's inquiry into the anticipated impact of the regulation on the everyday life of communities in Northern Ireland.

The Committee will recall that the regulation's purpose is to strengthen the position of farmers in the agri-food supply chain. However, most of the wider provisions, such as contracts, producer organisations and crisis funding, do not apply here under the Windsor framework. There are three main areas of relevance, the first of which is country-of-origin labelling. There are new Commission powers to introduce rules on the place of farming and/or origin for poultry meat or spreadable fats, but there is no immediate change to labelling obligations. The second area is optional reserve terms. These are new rules on the use of these voluntary terms — "fair", "equitable", and "short supply chain" — to describe production arrangements for a range of agricultural products. I say again that those are optional. The final area is that the use of the term "meat" is restricted to edible parts of animals. In addition, 31 terms, including "beef", "pork", "lamb", "steak" and "bacon", will be reserved for products derived from meat. Application of those rules is deferred until August 2029, and there is an additional three-year sell-through period until August 2032 for stocks already lawfully produced and placed on the market.

Chair, you asked us to provide further information on questions that came up previously. We appreciate the Committee's concerns about the limited information available to inform the assessment of the regulation's impact. DAERA does not hold comprehensive, robust data on the number of Northern Ireland businesses that produce vegan or vegetarian meat alternatives, meat-flavoured snack products or cell-cultured or other products that may potentially fall within the scope of the meat-related restrictions. That is because many of those products are not agricultural products. Furthermore, they are not recorded under a specific commodity code or any regulatory dataset held by DAERA. We have engaged with a range of Government stakeholders, including the DEFRA, the Food Standards Agency in Northern Ireland (FSA), Invest NI and the College of Agriculture, Food and Rural Enterprise (CAFRE) to try to establish detailed information on the likely numbers of stakeholders potentially impacted and the nature of those impacts. However, as you have noted, Chair, there are limitations to the data currently held by those organisations. Ultimately, which businesses are affected will depend on the final interpretation of the scope of the regulation, including whether products such as meat-flavoured snacks are within scope. The UK Government are seeking further information from the Commission, and DAERA will be in a better position to assess the potential number of local businesses affected and the likely scale of the impact once that clarification is available.

Another point that the Committee had picked up on was engagement. As we have indicated in previous briefings, DAERA is engaging with local stakeholders in the farming and food sectors to establish their feedback on the regulation. We also flagged the Committee inquiry to stakeholders and encouraged them to respond to the Citizen Space survey. We have received no responses as yet, but we anticipate that, given the predominance of livestock farms here, the farming sector will support the regulation and the new meat designations. As I said, we have no feedback from any stakeholders yet. Similarly, the FSA in Northern Ireland is engaging with district councils to better understand the potential local impacts of the regulation for food businesses in their areas.

Another point that we picked up on before is the sanitary and phytosanitary (SPS) agreement and the Northern Ireland retail movement scheme. As the Committee is aware, key agri-food marketing standards are expected to fall within the scope of the proposed UK/EU SPS agreement. If they are included as anticipated, similar labelling rules would apply in Great Britain, Northern Ireland and Ireland, although the scope and timing remain subject to negotiation. In the meantime, Northern Ireland goods continue to have unfettered access to GB markets. Any GB goods that do not meet the requirements when they come into force could continue to move from GB to Northern Ireland under the Northern Ireland retail movement scheme.

Turning to impact, on the information currently available, any compliance costs for optional terms or meat-related terms are expected to be limited and manageable through normal packaging and labelling update cycles. Furthermore, it could be argued that the new rules simply solidify the existing prohibition on the use of misleading, ambiguous or confusing information on food product labelling for consumers.

Finally, on the assumption that the same rules will ultimately be applicable in GB, Northern Ireland and Ireland, any potential frictions would be mitigated.

In conclusion, DAERA's view remains that the relevant provisions are unlikely to have a significant or persistent impact on everyday life in Northern Ireland. Conversely, if a UK/EU SPS agreement is concluded and marketing standards are included as expected, non-application in Northern Ireland could create future frictions for Northern Ireland-produced goods moving to the EU and GB after implementation. I am happy to take questions.

The Chairperson (Ms Ferguson): Thank you, Elaine. Do members have any questions?

Mr Buckley: Thank you, Chair, and thank you, Elaine, for your presentation. When I look through some of this, I am interested in trying to find out the scale of those affected. You said that it is incredibly hard to gain the overall picture. I want to talk about the meat and meat-related terms issue. I see it in the UK explanatory memorandum, but, for clarity, the words "burger" and "sausage" are not included on that list. Is there a particular reason for that? Is that common, or is that a huge change? I want to understand a bit more about that.

Ms McCrory: As far as I understand — and Samantha will know this — when the terms were introduced via a different regulation, there was a lot of debate and discussion around the inclusion of the terms, and they were subsequently dropped when the meat-related terms moved to the regulation that we are considering today.

Dr Samantha Stewart (Department of Agriculture, Environment and Rural Affairs): Yes, this regulation is the result of a political agreement in the EU.

Mr Buckley: There is a lot of language in the explanatory memorandums and even in the departmental evidence such that, if you were to assume that there was an SPS agreement, you would not have a difficulty with any of those terms, but I have learnt to assume nothing when this matter come before us. If there were no SPS agreement — GB, obviously, is not in the same place — what would that differential mean for meat and meat-related terms?

Ms McCrory: As I said in my speaking note, at the moment, we have unfettered access, and I imagine that we will continue to have unfettered access to GB markets, so any Northern Ireland-produced goods could continue to move. Any GB-produced goods that do not comply with the new terms by the time that they come into operation, which is almost six years down the road, can continue to move under the Northern Ireland retail movement scheme. Therefore, we do not anticipate any real change to the existing arrangements.

Mr Buckley: OK. Goods moving from GB to NI outside the Northern Ireland retail movement scheme and internally in Northern Ireland could still be sold as well. Is that your understanding?

Ms McCrory: Those that are outside the retail movement scheme would need to be compliant.

Dr Stewart: They would need to be compliant, but my understanding is that the vast majority of those goods are finished retail products, so they would move under the retail movement scheme.

Mr Buckley: Do we know the percentage differential between movements from GB to NI that fall within the Northern Ireland retail movement scheme and those that do not?

Ms McCrory: No. As I said, there is no specific commodity code for some of those goods. They are incredibly hard to trace.

Mr Buckley: That is a key piece of information, I assume, that will allow us to ascertain the impact of that differential. That is one thing.

The other is meat-flavoured crisps and snacks. That brings us into my heartland, which includes Tayto. Have you engaged with Tayto or other crisp providers to get clarity on how this will impact their lines of business in Northern Ireland?

Ms McCrory: We have not engaged with them yet because we would rather be clear on the scope. It is not clear whether those snacks fall within the requirements. That is why DEFRA is seeking clarification from the Commission on that.

Mr Buckley: I can understand that in one sense, but I am extremely frustrated in another. As Paul mentioned, we have the words of the text. We are now into an inquiry, and we are going to have to make a decision on this item. The UK Government's explanatory memorandum says that:

and that they are "engaging". That does not really help me. How quickly do you anticipate that you will hear back on those points of clarity and on whether engagement with Tayto and others would be preferential?

Ms McCrory: Obviously, DEFRA leads on the engagement with the Commission. I assume that, during August, there will not be too many people about in the European Commission, so I do not know how quickly DEFRA will get a response on that. Maybe there will be further clarity on it in the next few weeks. We have reached out, as I said, to a number of representative organisations, including the Northern Ireland Food and Drink Association (NIFDA), to get their initial views. The FSA in Northern Ireland has reached out to councils. Those organisations will have a better feel for who is likely to be in those areas that may produce items that fall within scope. Depending on the feedback that we receive in the next week or so, we may have a clearer picture, but, at present, we do not have that information.

Mr Buckley: Last week, the Committee indicated that it was moving to an inquiry on this matter. Following that decision, did DAERA make contact with DEFRA to make it aware that that is key information that we will need in order to make an informed decision?

Ms McCrory: We have had ongoing contact with DEFRA on this regulation. We talk to DEFRA regularly about it, and we have flagged the Committee's concerns.

Mr Buckley: Finally from me, my fear is that we will still be sitting in no man's land when we have to make a formal decision on this matter. I ask of DAERA that it engages proactively with the likes of Tayto and others to ascertain, if this were to impact in a particular way, what that impact would be on their business models, so that I can at least determine what that might look like.

Ms McCrory: We can certainly take that away. As I said, I am hopeful that we will get some initial feedback from those with whom we have engaged. I reiterate that there is almost six years to comply with that aspect of the regulation if, indeed, those products are within scope.

Mr Buckley: OK. Thank you very much for your time and your candidness in your presentation.

Mr Frew: Reading through the material, I see that it states that:

My question is similar to Jonathan's. Basically, 31 meat-related terms have been used. Some of the omissions are really puzzling, however. It refers to all the types of animal meat:

and it then goes into the types of meat or joints that we eat:

and so on. There are 31 of those, but many popular meat products are missing. For instance, tongue is missing, as too are burgers, nuggets, fillets and goujons. I cannot, for the life of me, understand why, even in a European sense, the EU would leave those out. If it has left them out, why has it done so and what impact could that have on producers?

Dr Stewart: It is fair to say that the proposal has made its way through a number of legislative vehicles through which the EU has tried to come to a compromise on a list of terms. As I said, that is the political agreement that it came to in order to get the member states to agree to the proposal.

Mr Frew: Does that mean, in real terms, that a burger producer is treated differently from someone who produces a thigh, or is it just about language?

Dr Stewart: Yes. A vegan burger would not be within scope, but a vegan brisket or vegan flank, if such products existed, would be.

Mr Frew: Right. What about goujons and nuggets? It is the same thing really, basically.

Dr Stewart: It is anything that is on that list of 31 terms for "meat" where meat is not in the product.

Mr Frew: Right, OK. Given modern society and the way in which we eat, it just seems strange that those terms have been left out, and, if there has been political negotiation up to this point, we sort of need to know what that means for daily living and eating and for producers.

Dr Stewart: As I say, the intention of the regulation is to strengthen farmers' position in the food supply chain. It is seen as protecting those terms for farmers who raise livestock.

Mr Frew: OK. Thank you.

Mr Brooks: I have one more general point. I am grateful that DAERA has undertaken consultation with other agencies and organisations, which has not happened in the past. The Committee asked for that to be better, and I think that it has improved. However, you said that, in doing that, you had engaged with the FSA — it is not within your purview — and that the FSA then went to councils to see what they knew about their local businesses. It may just be that I am ignorant of how that chain works, but I am slightly concerned about some industries or businesses falling between stools and nobody really knowing who exactly is responsible for them. Do you get a sense of that? We have a very established chain of oversight and communication for agriculture businesses, but, for some other food producers — in this case, particularly, vegan producers — there are not those established chains of communication, and nobody really knows who exactly is responsible for identifying them.

Dr Stewart: They are food business organisations, so they will be registered with their local councils, which is why the FSA is engaging with councils to ascertain whether they hold data in that granularity. It is also fair to say that a lot of the bigger businesses are part of bigger networks and will be watching these developments too. The SMEs — the ones that we do not know about — are the ones that we would be —.

Mr Brooks: Are you comfortable and confident that, where issues arise that relate to those businesses, there is an established means to get messages to them to make sure that their views are heard as stakeholders?

Dr Stewart: To clarify, that is the case within my sectors. I appreciate the point that you are making.

Mr Brooks: I appreciate that.

Ms McCrory: The FSA also has its own mechanisms for engaging, through food bulletins and so on.

Mr Brooks: Towards the end of your contribution, you said that the SPS — in much of what we do, this mythical SPS is doing a lot of heavy lifting for something that the UK Government in particular want us to take as read. They seem to be taking an awful long time to agree it. You talked about the downside of deciding not to take this regulation and how the non-implementation would have the effect of stopping trade on the basis of the SPS agreement. I suspect that that would not impact the retail movement scheme and the ability of goods going from Northern Ireland to GB regardless. Do you perceive that the SPS agreement would also have implications for that?

Ms McCrory: It is very hard for us to know that, because obviously it is all driven by the UK Government. All we can do is look at the current position. At present, we have unfettered market access for Northern Ireland goods, and GB goods come under the Northern Ireland retail movement scheme.

Mr Brooks: I am just asking for consideration. If we decide not to implement something on any given issue, we understand the implications of that in terms of not having market access to the EU for that product. We understand that. What I am trying to delve into is —. We have the allowance from Northern Ireland to GB that, if things do not match up, those products will still be allowed to be put into the GB market. I am trying to understand what the SPS —. We have not seen it. It is unclear for all of us, but it is something that we constantly have brought to us and we are asked to take it as read that the SPS agreement is coming. If we are going to consider what the non-implementation of a regulation would do, is there anything additional to having no access to the EU, which is priced in for any decision on that? Is it likely to impact on our access to the rest of our home market as well?

Dr Stewart: I do not think that we have the details around how that scenario would work post SPS. However, as per the impact assessment, the UK Government have seen that it would create friction between ourselves and GB.

Mr Brooks: You highlighted the six years to comply as being a positive thing. Jonathan talked about Tayto, but taking six years or 10 years or whatever it is to comply would not do an awful lot for iconic products. For instance, if people are used to eating roast chicken crisps, and they start to see the impact of the EU being so petty as to remove the names from those meat-flavoured products —. Ultimately, they would have to change the name. I know that that is not the comment that you were making, but all I will say is that the timeline that you are given to comply does not remedy the issue in some of those cases.

Ms McCrory: We need to be clear on what kind of change they would need to make to the labelling. Maybe they could say that they were chicken-flavoured crisps.

Dr Stewart: The Commission also has powers to list exemptions to this —.

Ms McCrory: Derogations.

Dr Stewart: Derogations, sorry. It has powers to list those further down the line, so it could be that there will be a list of commonly known vegan and vegetarian meat-flavoured products that are in scope.

Mr Brooks: I hope and trust that it falls outside scope anyway, but I am just illustrating the point that, in some cases, I do not think that the timeline is necessarily a remedy to the issue, because the issue is that you might have to change the name of the product. That is the impact in and of itself, and it will be an impact that will probably be felt more greatly on the psyche than on the product.

Dr Stewart: One final point is that, presumably, some of those companies are selling their products in the EU and further afield, so they will need to comply to sell them in the EU.

Mr Brooks: That is a consideration that any company will make when selling into a foreign market regardless. It is just the context of that. It goes back to the point that we were making about the SPS and how that will affect our home market.

The Chairperson (Ms Ferguson): No other members have questions, so on behalf of the Committee, I thank Samantha and Elaine for their briefing this morning.