Cynulliad Cenedlaethol Cymru

Can I start my opening remarks by welcoming Members to the meeting? There are two Members not currently present—Andrew Davies and John Griffiths—but we're expecting them to join us shortly. 

Any declarations of interest? No. And there are no apologies or substitutions.

So, it comes to me to welcome Gwyn Howells to the meeting, the first of several evidence sessions to inform the committee's work on food branding and food processing. This is the latest strand of the committee's ongoing inquiry into rethinking food in Wales, which has been going on for some time, but it is something we think is very important, and it is important to cover everything before we eventually provide a final report. So, again, croeso cynnnes iawn to Gwyn Howells. And if I can start with some questions—.

By all means.

Diolch. What are your views on the provision in the UK Government’s Agriculture Bill that will allow for the redistribution of the red meat levy?

Very positive. In fact, it's probably been, for me certainly—. When I first raised this inequity was in 2005, when there was a review of the levy boards in GB undertaken by Rosemary Radcliffe, and, at the time, I raised this discrepancy and inequality that Wales was losing out. It's probably been 15 years of frustration since then—or 14 years. And now, at last, I'm really pleased to see the Agriculture Bill has the correction device within the Bill. But, obviously, the Bill has yet to receive Royal Assent, but we are very, very hopeful that that will correct the inaccuracy and inequality that Wales has suffered for far too long.

Thank you very much. Were you consulted on the proposals either by the UK or Welsh Government ahead of the amendments to the UK Bill?

Certainly, we had a very close working relationship with Welsh Government on the Bill and with the Minister, who has been very, very helpful and tried to push the cause of the repatriation of these levies, which are lost to largely England, and some to Scotland as well, over the years. And, in fact, also I must say that not only this committee has played its part in raising the issue over many years, but also the Welsh select committee in Westminster has been helpful in actually achieving the collective ambition of having a Government amendment to the Agriculture Bill, which, hopefully, will make it through the passage through Parliament.

Thank you very much. Llyr.

Dai Lloyd.

Gareth Bennett.

Thanks, Chair. What level of involvement would you expect to have in the development of the scheme under the provisions in the UK Bill?

We would hope to have absolute involvement in it, because, at the end of the day, what I think the Bill will say is that the levy boards, the statutory levy boards, working together would collegiately agree a scheme that is workable, doesn't cost any more money in terms of administration than the present levy collection system costs now. And that is extremely efficient, and it costs less than probably 1 per cent of the gross levy to actually collect the levy, and therefore why would you move away to a more bureaucratic and cumbersome approach? Therefore, it would be a tripartite approach, so our statutory sister companies in Quality Meat Scotland, the AHDB in England and ourselves have worked out and will continue to work out a workable scheme that will meet the needs of the Bill and ensure that there is equity in terms of the repatriation of levies.

Jenny Rathbone.

.I just want to focus a little bit on what we're going to do with this extra levy. Obviously, one of the witnesses we're seeing at a later date is arguing that we need to be producing sustainable higher quality red meat—'sustainable' meaning less use of imported grain, more natural pasture—and also shortening the food supply chains so that the cheaper cuts that aren't going to be sold as joints, some of them will get processed into ready meals. And not enough of that sort of thing is going on in Wales; it's being sent elsewhere to be processed.

Absolutely. I think sustainability is really important on all sorts of fronts going forward. And I think we have a good case to present, and a very good story to tell in that respect as well. I think we are predominantly a grass-based system in terms of Welsh lamb and Welsh beef. Whilst we're aware that there is a contribution from livestock in terms of its carbon effect on climate change, also, equally important, there is mitigation there as well in that the green grass and the hedges and trees that grow in the Welsh countryside also capture carbon as well, and therefore that is a terrific basis on which to predicate any product that we have going forward. And that's largely what we have done and will continue to do in terms of accentuating those values that we have.

And your point regarding how we can capture more of that production and the value of that production in Wales in processing, whatever the processing might be in terms of added value—because we capture wealth and jobs in Wales—I think that's very true of, probably, the sheep industry at the moment, where we have the infrastructure where we're able to capitalise on primary production and turn them into products that have added value and command a premium in the marketplace. And that's very much part of our strategy: 'premiumisation' of the Welsh lamb and Welsh beef brands. But I think, perhaps, beef is probably less of a story in that respect, and I think there's probably more work to do for the beef industry to capture some of the potential and the opportunities. And probably there is a need for us, with Government, and hopefully industry as well, to look at how we can get more processing facilities to add that value to our beef production going forward. I think that's crucially important. 

So you'd expect the levy to potentially be used to target that.

Sorry, in terms of the levy, I think, probably, we will need to look at our—when the levy does become available—. Our strategy of 'premiumisation' and spending 72 per cent or thereabouts of our levy on promotion and marketing, both at home and internationally—I suspect we will continue with that strategy. There is no reason why that strategy wouldn't continue. But, obviously, we will be able to probably use that money to continue to outperform other brands in the marketplace and therefore it's a welcome additional revenue to us in that respect. So, I don't see—. I think the infrastructure needs of the industry will need to be, probably, looked at on a Welsh Government and grant development basis, as opposed to levy per se. I don't think that's what the levy's designed for. 

Thank you. How is Hybu Cig Cymru feeding into the development of the new Welsh food and drink strategy, and what would you like the new strategy to say in terms of the branding and promotion of Welsh food products?

Well, I think we welcome the fact that the strategy is going to be looked at in the round and certainly it's timely in terms of Brexit. I think the food strategy that we have now has been successful, but I think we need to build on that success and, from a Welsh lamb, Welsh beef and pork from Wales perspective, we want to be part of that strategy. We want to be part of that vision. We want to feed into the strategy of Wales's food and drink so that we can deliver, or help the industry deliver and deliver in terms of Wales's economy what the strategy might need to. So, I think we've got to be confident on going forward in terms of strategy. We have to have this vision that we have a fabulous place to grow food. This is where food should be grown: Wales. And therefore, we must capitalise on that. And going back to the point from Jenny, I think we must aspire to turn more of our primary production into processed products and value-added products so that we can capture that wealth in any strategy going forward.

I agree with you entirely. I've actually said very similar things in other places about that. But don't you think one of the weaknesses is—if you look at Denmark, for example, you buy Danish bacon, you buy Arla milk, you buy Lurpak butter, you buy Castello cheese; we don't seem to have the Welsh equivalents. 

Well, I would probably argue differently. I think, whilst our brand is not a company brand—and you're talking about company brands there—I think our brands, for example Welsh lamb—. Obviously we benchmark the awareness in the marketplace all of the time, and 65 per cent of all the shoppers and consumers in the UK think of Wales when they talk about lamb. And a third of that 65 per cent would prefer to buy lamb from Wales as opposed to any other lamb.

That's because it follows along those lines that they're trying to buy Welsh products. But I'm going on holiday to Spain in the summer—if I go into a supermarket there, which Welsh brands will I see? I know I'll see the ones I named in Denmark. Which Welsh ones will I see? 

You will see in Eroski and their subsidiary stores Welsh lamb in those stores, primarily in north Spain but also in the southern part of Spain. I'm not sure which part you're going to, but you will see Welsh lamb in stores from July onwards.

It will be Costa del Sol, actually, but my holidays are probably not of interest to anybody else apart from me. [Laughter.] 

Chair, you can come back with a sample. 

Yes, for research. [Laughter.]

I will certainly see if I can purchase those goods, because I know I can purchase Lurpak butter and I know I can purchase Castello cheese there. Okay, moving on—Andrew.  

Thank you, Chair, and apologies for being late this morning. Just on what Mike was talking about—processing—and you talked about adding value. I mean, we've been singularly unsuccessful in doing that, really, when you think of it. We're one large abattoir away from losing our beef capacity—Merthyr—if the problem hits there. The lamb sector is relatively robust, it is, but have you any suggestions of how we might be able to increase the ability to add value in the red meat sector? 

I think it's working with Government, and ourselves and the industry working together, because I think I would agree with you in terms of the lamb proposition, I think we have a very robust supply chain and robust processing sector at the moment. With beef, we are more vulnerable. We are reliant on other processing plants beyond Offa's Dyke, where we would license to use the Welsh beef brand, and it would be so nice to have the competition and the infrastructure in Wales to not only slaughter, but to further process beef. And therefore I would agree there's some work to be done in order to have that portfolio of lamb and beef—  

You said about working together, and amen to that, and most probably if I'd sat here 10 years ago I would have got the same answer—'We need to work together to build the brand, we do'. Where do we need to work differently to make a more resilient offer that we do get more of that processing capacity back here in Wales, whereas all we've seen over the years is a diminution of it, whether it be small abattoirs or the larger abattoirs, and that production moved over the other side of Offa's Dyke? In particular, ownership of a lot of red meat plants is in the hands of the internationals now, especially the Irish.  

And what you're touching on there is in the marketplace—and, obviously, it's a commercial marketplace—a lot of the larger players choose, unfortunately, now to locate their abattoirs and processing facilities near the big population hotspots in England. And that is a challenge for us, in that it would be so much better if we had those facilities near where the production base is, as opposed to where the consumer points are and the retail supply chain distributions are. Therefore, that is a challenge, and I'm not sure how we approach that in terms of incentivising plants to actually reinvest in more rural parts, as opposed to the urban parts. But that is an issue for us going forward. It's not an issue for sheep at the moment, but certainly it has been with beef with consolidation in the number of processing plants, as we've seen with consolidation in multiple retail operators as well. So, you'll see them decline in number over the years, and we have seen a faster acceleration in the number of processing companies where you have probably not even a couple of handfuls of high-throughput plants in similar ownership.     

That leads into my next question: if you haven't got the plants, then it's difficult, obviously, to continue expanding the protected status of Welsh red meat as such, because, obviously, a lot of that processing is going over the border into other parts of the UK—indeed, into Europe. But that said, we want to try and protect that status. What conversations have you had with Government about that protection going forward post Brexit, and are you confident that the discussions you might have had will lead to the protection of the Welsh lamb PGI status, for example? 

First of all, we've had lots of discussions, both with Welsh Government and, indeed, the Department for Environment, Food and Rural Affairs, on the future of protected food name schemes and, obviously, PGI is really instrumental to the Welsh lamb and Welsh beef offering, and has yielded us tremendous returns since 2002 and 2003, and we want to protect that going forward. If it's not broken, why would we want to fix it? But it is very fluid. We have no guarantees on what the future might hold. If we have a 'no deal', obviously I think we will end up with a new scheme. There has been consultation on a new scheme—it is yet to be agreed what that might look like. But I think the important thing for us is to actually understand the clarity, and not throw away the scheme that we currently have, and the recognition it has in Europe, where 95 per cent of our international trade is. And the offering of protection—legal protection—that it offers now, both in this country and indeed the international market, is something that we need to replicate going forward. It would be nice to think that we could, as a UK scheme, be part of the PFN scheme that exists now in the future, but that's a political decision, which obviously will be taken at some point, and will be part of, no doubt, some negotiation.

But we really, really cannot emphasise enough the importance of keeping that status that we have. It's not only in Europe and the UK that it gives us traction in the marketplace, but also worldwide—people know about Welsh lamb in all corners of the earth, because of the work that has been done on the back of this very exclusive club. And I think we need to build on it, as opposed to just put it to one side and then start new, because if you're starting a new scheme, you're starting from zero. Brand awareness of any PFN scheme in the UK, going forward, will be at zero. And therefore that is a challenge to us. And it remains to be seen whether we can still be registered with the PFN scheme in Europe going forward and be part of the UK scheme, but that will be confusing. And therefore, I don't have an answer for you, but what I'm hoping will happen in the very near future is some clarity on what happens.

I appreciate that there needs to be clarity, but you're confident that in the discussions you've had with both Welsh Government and DEFRA, there is an understanding of the importance of your points, and you couldn't wish for a better dialogue, shall we say?

We have had dialogue. I think any new scheme—and we have had consultations and visuals of how the scheme might look in terms of the consumer-facing logo. And I think what we're saying is that we need the scheme, if there is going to be one, to have a protected food name feel that is similar to the current European scheme, and not for it to be assumed into just a 'This is a UK badge', which then leaves us vulnerable in terms of us telling the Welsh story being diluted. And we know, and evidence suggests—we have both actual evidence and empirical evidence—that we have a very, very strong proposition, not only in Wales and the UK market, but internationally as well. And we want to keep that identity and that ability to tell our own story, which is really important for our levy payers, because that's the story they want us to tell—'Wales is here, we can produce great food, we have these fantastic brands that you know about.' We need to close that gap, and say, 'And this is how visually it's going to look on the pack', with the Welsh lamb and Welsh beef logos, but also either the PFN Europe logo that we use now, or whatever comes in its stead.

Thank you.

Thank you. Jenny Rathbone.

We know that the United States is putting pressure on the UK to drop the geographically indicated protected food schemes, which seems to be one of the hallmarks of many of our products. I just wondered what your view is on that particular threat.

My view is pretty negative on that, I must admit. I think that would be a very retrograde step for us as an industry. As I mentioned, since we've had the GIs afforded to Welsh lamb and Welsh beef, the international market alone has grown to £200 million-worth of business—mostly with Europe. And I think we wouldn't want to drop that affiliation or the scheme. Obviously, the politics of it between the US and the UK Governments will mean that that would be the stance. But I think, it's not so much a protectionist stance that we would take, but that is part of our story; that is part of our brand messaging to the consuming public. We are part of this wider family of great quality foods in Europe and we want to keep that. We don't want that to be traded in any deal with the US going forward.

Okay, but from what the US ambassador in this country is saying, the threat to Welsh meat producers is far greater than that because they're insisting that their much lower standards of animal welfare and environmental standards, that we should allow them to have access to our markets. So, things like hormone-induced growth products for beef would surely have a huge impact in terms of cost on Welsh producers of beef.

Well, absolutely. I think that would be, from an animal health and an animal welfare point of view, and indeed in terms of food safety, a very negative move if we were to allow standards to drop. We pride ourselves in terms of our offering that we do have very, very high standards of production, high traceability; we have an environmental credential that is second to none and that is part of our proposition—that is our brand proposition—so why would we seek to undermine that by allowing inferior goods to compete in the marketplace, not only putting the industry in a vulnerable situation, but also putting the consuming public in a vulnerable position as well? I think we need to stand fast on that and make sure that there is equivalence in terms of our production methods on imported goods as well.

Some elements within the UK Government seem determined to enter into a free trade deal with the United States regardless of what's actually in the deal.

Well, I think that would be not, certainly, my advice. I think it's great; I think we have done market research in North America where we have found that there is a very good market, potentially, for Welsh lamb in North America—probably circa £20 million-worth of business very, very quickly within the first few years—but we wouldn't want to enter into a free trade agreement with America on the basis of just generalities. We want it to be specific in terms of making sure that we are not disadvantaged in terms of quality and standards in the future.

Okay, so what conversations, if any, has your trade association had with the UK Government on these matters?

We have had conversations with both officials and with Ministers in Government regarding this and on the wider one in terms of tariffs coming into this country in the future were there a 'no deal', and how that would have a negative impact on Welsh farming in general.

Okay, but is there any indication that the UK Government is going to kick back at what the United States is demanding?

I think that Secretary of State Gove mentioned a couple of weeks ago that he was minded to look at it on a granular basis and not look at it as one tariff fits all coming in, in a 'no deal' scenario. I think he was minded, and the noises are still that he is minded, to protect lamb, beef and the dairy sector on tariffs of imported products were there a 'no deal'. Obviously, that is conjecture at the moment, but we expect that the Government, in the event of a 'no deal' vote next week, would publish those schedules of tariffs, but we remain hopeful that Secretary of State Gove will keep his part of the bargain that he mentioned a couple of weeks ago.

Well, we hope so too.

Thank you. Llyr Gruffydd.

Andrew, you wanted to come in on this point. 

Yes. If I could just ask about that brand awareness, because the one thing that I saw in the research that I thought was interesting was, yes, there was an identification with the union branding or the Welsh branding, but the biggest category in that research was 'don't know or don't care'. How do we penetrate that side of it? I'm just, from memory, remembering the graph, and in France, in Germany, in Spain, the largest part was 'don't know or don't care'. Is there scope to penetrate more in the branding by reformulating it or is that virtually at saturation point now and that's as good as it gets? 

No, I don't think so, Andrew. I think there's certainly more to be done all the time in these markets and I think it's a case of 'keep on pursuing with the messaging'. For example, in Italy, in our last survey last year, 63 per cent of consumers thought Welsh lamb was the best lamb that was available on the marketplace. In Germany similarly, it was just over 50 per cent. In the German situation, that's come from pretty much zero in the last five years to where it is now. So, we've got traction in the marketplace. Once we're in, we can outperform other brands with our messaging and with our 'premiumisation' message, but we've got to do more all the time and we've got to make sure that the offering—and the offering has changed dramatically over the past 10 years—. Where we were exporting 20 years ago just carcasses to all of these countries predominantly, that's flipped into—we're actually selling cuts now, and that's been a massive change. And that gives us obviously wealth creation in Wales in the factories, but also it gives us an ability to serve a diverse marketplace, be it retail or food service in these markets. Germany's a case in point where that has grown like a mushroom. And it haven't finished yet—there's some still—

There is potential to capture more, then. I appreciate, in marketing, you never stop, but you most probably reformulate your marketing offer. But, as I said, from that information that the levy boards put out there, by far the largest part was 'Don't care' or 'Don't know', so there is scope to capture more of that market rather than just consolidate what we've got.

Yes. I look at the 'Don't knows' or even the 'Don't cares' as an opportunity. That's the glass half full, isn't it? If we can turn a few of those also into buying our product, fantastic. And the other thing that we're keeping on doing—and there are two things that you need to be aware of that we're doing now—. We have a great story that is provenance-based and quality-based and tradition and all these things that resonate fantastically with the consuming public wherever they are, but we are also building a quality end to our proposition now where we're looking at, 'How can we get some protocols for lamb and beef that'll ensure reputability of the product when purchased at point of sale?' So, that'll be an extra string to our bow, and we are also working—and Jenny touched on it earlier on—in terms of how we can push the sustainability message of what we are producing—you know, the green credentials, how we are mitigating carbon, what our air quality contribution is. All of those things add to the brand proposition, if you like, and those are two strands of work that we are pushing now that have just started in the last 12 months so that we can reinforce—. If you look at the brand as a triangle and a pyramid, that stuff all goes in the bottom of that and substantiates that pyramid, so that our proposition in the brand in the marketplace, then, is so much stronger and more robust, and we can then compete in a better way. So, I think, yes, let's convert those people to customers. I think we can.

Okay. Joyce Watson.

Moving on: we've got all the customers we need but now we need a workforce to produce it in Wales. So, how is your sector preparing for the potential for reduced access to the labour that you will need from the EU after Brexit? I've heard this week that the European workforce in Llanybydder are already thinning out and are already returning. There was a very large Polish contingent there.

It's a very, very good question and a very worrying one at the same time. It remains to be seen what schemes are introduced by the UK Government, but certainly the effect of the labour position could be quite a significant one, given that, in some of the large throughput plants in Wales we have probably over 50 per cent of the workforce who are migrant workers, mainly from the EU. There is obviously the possibility—. It has stabilised a bit in the past. When the referendum result came out in June 2016 and there was a devaluation in the pound, we saw quite a few wanting to leave because Germany offered better wages and, therefore, there was a bit of a haemorrhage at that point.

We are still not out of the woods. We have, at key times of the year—in the autumn, when seasonality of supply is very high—pinch points where we are short of labour. Hopefully—and we do hope and all the processing plants hope that there will be some clarity on a scheme, which will mean that people feel happy to stay and to work and feel wanted, because a lot of these plants need these people; they are very, very good in terms of the work that they do and they contribute to society as well. And therefore, we wouldn't want a decrease or a limitation on workforce to limit our ability to supply the marketplace, because the processing plants are the route to market and if we don't have a workforce, we can't supply the market. So, it probably doesn't give you an absolute answer, but we absolutely hope that there will be a scheme that'll be based on an ability to find work and will cover not only the skilled workforce but the non-skilled workforce, because I would argue that a lot of the workforce in these plants are very skilled at whatever they do. So, I think to say 'skilled' and 'non-skilled' is probably generalising too much; we need all of the people that we can get to make these plants efficient.

But we haven't got very many plants in Wales—

Sorry?

In Wales, there aren't huge numbers of plants and abattoirs in any case, because they've reduced. So, if what I've heard is right—and I know it is—in places like Llanybydder where there is already a challenge going on, then it is concerning. So, in terms of that, what sort of conversations have you had with the UK Government, which will control whether people can stay or whether they've got to go, and representations that you've made? Do you think they're being listened to?

Well, I would very much hope that the representations that we've made, both through consultations and in meetings with officials and Ministers, will be heard and acted upon. And I know that the processing sector itself and its representative trade bodies are making those points and those cases to Government, because it's imperative that we have this ability to attract people into the workplace. It's going to be very, very, very difficult to replace those migrant workers with the workforce available here, the indigenous British population, who seem, unfortunately, to not want to work in the processing facilities that we have, in the abattoir and meat-cutting plants. Therefore, we have to rely on access to European, in the main—. I see that Ireland now, because they face the same problems in Ireland, have actually got a scheme going with South American countries now to attract workers to their processing plants in Ireland, and that might be something that the UK Government might need to look at, because plants can't run without people.

Llyr.

Andrew. 

You mentioned, Gwyn, that Ireland are having the same problem, and they're looking to South America to try and bring workers to fill the gap. I have to say I'm unfamiliar with that. In a relatively succinct way, are you able to summarise what exactly they're doing, other than promoting, I presume, visas of some shape or form in the South American market?  

Without knowing the—. I spoke to a processor yesterday, in fact, about this, from Ireland, where they have plants in Ireland and, indeed, in Wales, and they were saying, because they face the same problems, they were thinking, 'Where else in the world would we be able to attract—?'

We're talking about the Republic of Ireland. 

The Republic of Ireland, yes: 'Where could we attract migrant workers to fill the space and to be valued, and we would make sure that they are looked after?' And I think that is a scheme that is on a time-based basis, and that as long as they have work they are allowed to come. I don't know what the timeliness of the scheme is—is it a year or two, or to be reviewed on annual basis. It's early days, but it's something that the UK Government might wish to look at and see what the success in Ireland is. The plants, wherever they are—Wales is not unique to this—have the same problem. Very often, where they are based, the local people do not wish to work there for a variety of reasons, and therefore the plants seek migrant workers from wherever they are. South America is one such area that Ireland is looking at now. 

Jenny Rathbone. 

The new Government of Mark Drakeford has got an increasing focus on the foundational economy, so I just wondered what the opportunities are for developing the meat processing industry in order to supply our schools, for example? At the moment, most schools rely on Brakes who produce their meat goodness knows where. We just don't have the food chains that we need to ensure that our children are eating the food produced by their parents. 

I would agree with you. I think there needs to work on more localised procurement, and how that might happen is probably something that needs to be looked at in terms of the structure of the contracts that are offered, and what the conditions and criteria might be. And once you have that framework in place to actually encourage local businesses to apply so that the money circulates and the multiplication factor stays within, for example, Wales's economy—. I know on a small scale, Preston have done some work similarly. Okay, it's on a very small scale, but it shows what might be able to be achieved in terms of using public services and public moneys to stimulate the economy locally, and I think—

That is the Government's intention, so how do you think the organisations that you represent are going to capitalise on that? 

I think there's a communication and an engagement that needs to happen, because hitherto that's probably not been high on the agenda of a lot of the high-throughput plants, because they will prioritise where they can get the best return for their products, and it's usually retail, both internationally and UK market, followed by the food service sector internationally and UK market. And then at the lower end of their league table would be the cost sector, which is the public procurement. So, I think there needs to be an engagement on what the opportunities are, how that can help them achieve carcass balance for their products, which is I think probably a very good selling point. So, I think it can be done, but it needs to be an engagement process of what the policy is, how it might work and what the benefits might be. Obviously, we would be keen to help the Welsh Government achieve that in terms of our offering—lamb and beef. 

My other point I just want to raise is the issue of pay, because, surely, anybody will go and in an industry if the pay is right. Isn't it the low pay that the processing industry currently offers that forces businesses to go to foreign workers?

I would probably agree. Some of the jobs would be minimum pay, but similarly there would be people earning large salaries in the processing sector because, obviously, it's a hierarchical system within any plant and there would be some very, very good jobs as well. So, I think there's a selling job to be undertaken in terms of—. People's perceptions are probably the one that you've just outlined now: 'Oh well, it's low-paid, it's cold, it's noisy; it's not very nice and therefore I don't want to go and work there.' But I think there's probably a need to actually refresh that view. It is part of the food economy. There are some very nice jobs in there. There are different jobs, and I think we must sell that as being more attractive than it actually is. And that's an engagement, again, with the potential workforce—

And with higher and further education as well.

Certainly with that. I think there are some messages there to be crafted to actually explain that it's not all very dull and not very nice. There are some very, very good jobs there. The abattoirs, for example, would have international teams of sellers, for example, either based in some countries or based here and flying in and out. So, there are jobs from that end and everything in between, and I think we need to convey that to our future generations in a much more positive way.

And finally, John Griffiths.

Yes, I was just going to come back to the issue of availability of necessary labour after Brexit, because you said, Gwyn, that the Republic of Ireland are looking to South America. Obviously, they're staying in the European Union, so to what extent will we face additional problems because we're leaving, compared to the problems we would have had anyway?

I think it's a good point. I think if we are to leave, we would need to, I think, leave with a deal—with an agreement—which would hopefully render us in a stand-on position in terms of an ability to trade. I think that would, in itself, send a signal to our European workforce to say, 'Well, yes, this is workable; we can stay with a bit of confidence now.' It's all about confidence and feeling, 'Am I doing this and how long is it going to last for?', because a lot of those migrant workers have come and have settled here now and they contribute to society like the rest of us. And I think it's about that confidence and feeling assured that they are doing that and that there is a long-term future for them and their families. I think if we stay with a deal and are able to continue largely as we are now, I think that would be a positive message and I think that would probably make the situation very much easier going forward. 

Okay. Can I thank Gwyn Howells for coming along and sharing his thoughts with us and for answering our questions fully? Thank you very much. I've got to tell you, but I know you're aware, that you'll get sent a transcript of what happens today. What I say to everybody is, check it, because if you're anything like me, when you move around when you're talking to people, sometimes the microphone doesn't catch all the words, so it's probably best to check to make sure that some words haven't been missed or haven't come through indistinctly. But, again, thank you very much for coming along and we're very grateful. 

Thank you, Chairman; thank you, all. Diolch yn fawr.

Item 3 is papers to note. Are we prepared to note them en bloc? Yes, okay. 

Therefore, I move that, under Standing Order 17.42, we resolve to exclude the public from items 5, 6 and 8 of today's meeting. Yes.

Good morning. Can I welcome Andy Richardson and Huw Thomas to the meeting? Andy Richardson is chair of the Food and Drink Wales Industry Board, and Huw Thomas is managing director of Puffin Produce. Thank you very much for coming along. Are you happy to start off with a few questions? If I can go first, how is work progressing on the new Welsh food and drink strategy? This is really aimed at Andy Richardson.

So, you're aware of the old strategy; it's aiming to grow from £5 billion to £7 billion, and the target, we're doing very well on achieving that. So, about a year ago, we decided it was time to actually look at developing a new strategy. So, it was approximately a year ago that we started looking and consulting with a wide range of stakeholders. So, we've got to a stage now where we've pulled it into a draft strategy. It's about growing business, which is going to be quite a tangible target, a financial target; it's about developing the brand for Wales's food and drink; and it's about helping society and communities grow. So, where we've got to is that there's a draft strategy in place, but my understanding is that the Welsh Government met recently and has put the consultation and the development of that strategy on hold pending the outcomes of Brexit. So, it's ready for consultation.

Yes, the word 'Brexit' appears quite often when we discuss issues and what's going to happen and when. Could you provide an early indication of what the strategy might say or what you think it should say about branding and promoting Welsh food products?

Branding is critical. There's actually a meeting this afternoon that is looking at sustainable brand values for the food and drinks sector. Branding is essential, but I think the key question is: it's not just about logos. It's about what the values are of Wales, and those values have got to really resonate and make a difference globally. They can't just be fluffy values. They have to be ones that really resonate with what global markets want. So, branding is a core part of it.

Okay. Jenny Rathbone.

My question wasn't so much on branding; it's really about the focus that the policy's going to have on ensuring that we have a healthy Wales and a healthy diet for all people. There's been quite a lot in the press about what children are not getting in school, as well as the fact that we are the most obese nation in Europe. So, how is the policy as far as you're concerned going to tackle some of the food deficits and food security issues that we suffer here in Wales?

Okay, so as I said a second ago, the third pillar is about focusing on how it affects society and consumers. So, that's hopefully to reassure you that that's there. I can't go into great detail at the moment about the details, but I can reassure you that the board are passionate about making sure that it encompasses those areas. I know the Welsh Government is as well. And, ultimately, it all fits under the Well-being of Future Generations (Wales) Act 2015. So, our intention is that it does cover those. There are some massive issues. You mention sustainability, and we need to be really careful, but we also need to be careful [correction: delete ', but we also need to be careful'] about some of the unintended consequences. So, I think it's all about understanding the broad picture and making sure we come from a position of insight.

I know that England is coming up with a food strategy over the coming months. I know Wales is probably about a year ahead, and I think we should use that time to reflect and make sure that we do a really good job.

Thank you.

Llyr.

Yes, just coming back to branding, and you mentioned the core values—I'm just wondering, in this new iteration of the strategy, whether there's an evolution in those core values, or are we sticking to what we know has been good for us in the past?

My view is that we have to look and just have a refreshed look at everything. I think the danger is that, as they say, if you always do what you've always done, you'll always get what you always got. So, I don't think we should throw out the past. My view is that Wales will never lead a cost leadership strategy. We will win if it comes to an added value strategy, and added value means you need to understand what your customers want, and that needs to be resonated in the brand. So I don't see these brand values as being fluffy brand values. They're ones that are really authentic that we can prove. It's about provenance.

We all make decisions all the time, don't we, balancing quality against price, in our daily lives, on a whole range of things, from buying cars to buying food and buying electrical goods. So that really is, I think, one of the keys: you can't be too far off the quality-price line. If you go a lot above it, then you're not going to do very well. If you get slightly below it, you're going to do very well.

Yes. Can I make a comment, please, in response? You may be aware of the work that was done by the Welsh Government in terms of the value of Welshness. So, what we looked at was: how was Welsh food and drink perceived within Wales? And the good news is that 80 per cent of consumers said they prefer to buy Welsh, but on the point about price, 44 per cent said they would be prepared to pay more if they knew it was Welsh. But what does 'more' mean in the context of your question? We also looked at actually what the rest of the UK would do, because 90 per cent of our product in Wales goes to the UK. Fifty-six per cent regarded Wales as being known for producing great food and drink. So, the question I can't answer is: what's the premium? I think it's a fair challenge.

I'll pass this question back on to Huw Thomas, if he will, but can I just give an example of whisky? Now, there are premium brands of whisky and people are prepared to pay substantial amounts for premiums, depending on which premium brand you're talking about. So, there is that price versus quality, and there are people who are prepared to pay at the top end, and there are people who only buy at the bottom end. Sorry.

I come right back to the customer and the supply chain for this question, because, let's face it, 85 per cent of food is sold through the major retailers, and if you look at their strategies, they very much compete on price. So, if you're going to sell a volume of product through those retailers, you've got to be at the right price for the retailers to make the right margin, et cetera, et cetera. They then have their own tiers within their offer as well. If you look at someone like Tesco's, for example, they'll have their Value lines, and then they'll have their standard lines, and then their Finest lines, and a supplier, then, a food industry supplying through a retailer like that, has to hit the necessary price points for each of those. So, I come back to your original point, Chair, which is: we have to be very careful not to gold-plate everything we do too much. We want to keep ourselves ahead of the market. Our environmental standards need to be good, at least as good as everybody else's, if not better, and our environmental footprint—those sorts of things. We have to be careful. We have to be competitive in the increasingly globalised market, especially the market of the rest of the UK, and whether we've got a market in Europe we'll wait and see, but we have to be competitive within those markets as well. I think legislation has to reflect that as well. But we do want to do our best job on branding Wales, and talk about our positive attributes. We've got high rainfall, so we don't have to irrigate a lot. We've got lots of positive things that we can talk about in environmental footprint as well. People's perception of Wales is green rolling hills, which is a great start as well. So we've got to play on that and sell that, the naturalness of our products, and play to our strengths, but be competitive.

Thank you. Just one final point from me, or question from me. Are we doing enough, or do you think the strategy will do enough, to support the processing sector? Because one of our great weaknesses is that we produce a lot of food and then we send it into England and other places to process it and add the value.

This is my pet subject. We do really under-trade on the processing sector in Wales. There are a number of reasons behind that: the value gap and being able to—. I'll go right to the beginning on this, which is, say Puffin builds a shed in Haverfordwest to store potatoes, it will cost £2 million to build that shed, but it's valued, immediately when it's finished, because of where it is in west Wales, at say £0.75 million, and the banks will only lend you x amount of money against that. They'll lend you 80 per cent of that money. So, because of where we are and the values of our properties, it's hard for food businesses in rural areas to expand, because of the value of their assets. So we've got some structural difficulties in Wales because of that, but we do need the processing capacity near the supply, because if you're working in commodity markets and you're a long way from those processes, you're always going to be the product that gets the worst deal. You're always going to get dropped first—when there's lots of product around, the furthest product away will always get dropped first or will be the lowest priced. So we have to invest, as a Government, in processing to solve these structural issues that we have got in Wales, to get the industry going and to add as much value to those products in Wales as we can. 

Thank you. Andrew. 

In our earlier evidence session—and apologies for being late for this session—we heard from Gwyn Howells that, actually, the model now is to move the processing sector closer to the population. So, the point that you were making there, Huw, was almost running contrary to the market, based on the evidence we heard this morning, or isn't that the case in your—

It depends on what product it is, I would say. Something like meat, per kilo, the cost of moving it is very cheap, because it has so much value per kilo. But when you come to something like milk or fresh produce, something like potatoes only cost £100 per tonne, and they will cost £40 per tonne to get them from here to the middle of England. So, you're losing half the value by moving them, whereas if you've got a meat carcass that's worth £10 per kilo, it's not the same effect, really. And it's also to do with waste as well, really. If you've got, with fresh produce, a product—. So, say you were making a french fry, a chip, half of that potato is lost in peeling, so it's better then to move the finished product, if you know what I mean, because you're moving half of it. So, it varies from product to product where the best place to add the value is.

So, it's wrong to look at it as food per se, then; you need to look at it product to product and at the value that that product has.

Absolutely. And milk would be a prime one of those, which is the sector that Andy's in as well, as well as fresh produce.

Definitely. Can I make a comment, Andrew? For me, I've heard that as well, your comment about processing, that it tends to be out of Wales. But I think the question is not whether we have processing, the question is are we adding value. So, you could say, is it better to have a plant in Wales that produces a commodity, or is it better to supply product from Wales to a plant in, let's say, England, that actually adds value, because the bottom line should be adding value to Welsh produce, and I think that's the theme that probably should drive—. But, intuitively, it feels, if we haven't got processing in Wales, that's not good, and, of course, Brexit, depending on how it goes, if we have a hard Brexit with zero tariffs coming in and high tariffs going out, then that's not going to encourage processing in any way. 

Anything else? Jenny.

We can agree on that. I just wonder, though, what is the argument against having processing facilities closer to the vast majority of the Welsh population, which is obviously in south-east Wales—so, having a processing plant in Merthyr or Pontypool, or wherever. 

Yes, it's very simple to do the maths on this. It's about what's being brought into the factory, what's being taken out of it and the labour resource near the factory. So, it's a balance of all of those things, I think. So, it's no argument against any of them, really, as long as the finances make sense and you're not moving a heap of raw material at a low value to then highly process it, and the other half of your logistics, which is distribution to, say, supermarket depots—. You've got to balance them all up together, really. 

Okay. Llyr.

I just want to go on a little bit further on the dairy processing stuff, because it has been—. I'm originally from Carmarthen and I saw how Whitland stood dormant—for how many years, I can't remember—when Dairy Crest vacated the site but they sat on it so that no competitors could move in. And we've seen the number of processing plants dwindle ever since, really. Now, there was a feasibility study, wasn't there, a few years ago, commissioned by the Government, which basically said that it ain't going to work. But that was looking at one of the biggest milk fields in Europe. And to come to the conclusion that, actually, this isn't going to work in a place like that—. Has anything changed since then? Because I really find it, as a comparative layman, difficult to understand that we can't come up with some way of adding that value through processing in west Wales, let's say, and reap the benefits and the jobs from that. 

I don't think a lot has changed since doing that review, but I would come back to my earlier comment that what we don't want to do is to set up a processing plant in Wales that just makes powders that are sold on the world market as commodities. That would be a disaster. What we should be doing is having a conversation about how can we set up added-value processing capacity. So, in the context of milk, milk, you can fractionate. You can break it down into its constituents, which actually, individually, are worth more than the sum total. So, I think I'd like to have a conversation about how we can do smart processing and how we can focus on added value. Fundamentally, that's what the food strategy is about; it's about added value.  

And scale doesn't necessarily dictate that smart processing, then—it could be small scale, actually, could it? Or is there—

I would say probably too small is not good. There are definitely economies of scale but, actually, probably the smarter thing will be to look at ideas for collaboration. So, there are a lot of joint ventures being formed now where, actually, you pool expertise, resources, et cetera. So, I would like to have a conversations about that. And you hear that Saputo have just invested in Dairy Crest in the south-west of England, and they are a massive foreign investor. So, I think it's about collaboration, added value. 

John Griffiths. Sorry. Joyce wants to come in first. 

Just on the question of processing and, of course, the new emerging markets here are high-end technological innovations, so not necessarily lots of people being involved in the process, but lots of different hi-tech machinery being involved in that process. On another committee, we went to look at some of that in Swansea University, where we're at the sharp end, really, of innovation in Wales. So, my question is this: if we look at food processing and Puffin opening something in Haverfordwest, which is where I live, and I noticed you put 500 jobs down, are we really going to produce that number of jobs, particularly in the area, or are those jobs necessarily going to be further back in the chain where the innovation happens? Do we need a different conversation is what I'm trying to get at?   

Again, I think the answer is half and half, really. The business plans of Puffin has got are to add value to the products of Pembrokeshire. We can talk about those job numbers. That's underpinning a number of farming businesses and expanding farming businesses, but all the food processing industries are still relatively labour intensive. Now, that is moving slowly as automation increases. By the time we've finished the current investment we're doing now, Puffin will probably have the most automated potato factory in Europe sitting in Haverfordwest. But that still needs a couple of hundred people to keep that factory going. It's still very efficient per tonne, but it still needs lots of people. But what happens then is that those jobs get to higher value jobs; they become technical engineers and planners and robot technicians, and these types of things. So, it's adding better value jobs is what I would say. What's happening with automation is it's cutting off the low-value jobs. 

So, the conversation needs to be different in focus. 

Are you asking whether we should invest more in Wales in automated technologies? Was that—

I'm not asking it. It seems to be a fact that that is where everything's moving wherever you look. So, I suppose my question is: when we're talking about supporting the processing sector, it's much wider than adding value to the food, so what supports those processes and what ought we be thinking about within that market?

And that's academia and the whole wider picture. 

Now John Griffiths. Sorry, John. 

Diolch yn fawr, Chair. I wonder how you would characterise where Wales is at the moment in terms of these matters, because we're 20 years on now from the beginning of devolution, and throughout that  period we've been talking about Wales being a largely rural country, the need to add value within Wales in terms of processing, the need to produce quality products that command a premium price, the need to market more effectively and build that Wales brand. So, we've been going over and over these matters for some two decades now. How would you characterise where we are at the moment? How much progress have we made over that period of time?  

In the limited time that both I and Huw have been on the food and drink board, I've seen a big step change in terms of the discussion we're having on branding and on innovation, particularly. So, on the branding, I think two or three years ago it was more about logos, look and feel, whereas we've now moved that conversation to the real values behind it, which is the thing we talked about earlier on.

You're aware of the food innovation centres that we have in Wales, and, with Project Helix announced I think a year or two ago, there's some serious money there about leveraging innovative resource to add value to Welsh produce. At the end of the day, food and drink in Wales is growing. It's growing faster in Wales than it is in the rest of the UK. It's very difficult to put your finger on exactly what it is—it's a collaborative effort—but I do think those things. So, I think things are changing. The other thing I would say, John, is that I think we shouldn't underestimate the collaborative spirit between Welsh Government and industry. It's the best I've seen in the UK. It's very good, and it's a good environment to go forward.

I would agree with that. I think we've got lots of good assets in Wales now. If we talk about something like the First Milk cheese factory in Haverfordwest, that's recently picked up a lot of Tesco cheese business. We are doing well. We are growing as a sector faster than the rest of the UK, so I think that's the acid test, isn't it? I think we've had lots of good support from the Welsh Government, as you said—the food innovation centres, Project Helix. There are lots of good things, lots of good programmes, going on, and I think the industry does feel supported.

Okay. Just in terms of the seafood sector specifically, are there any particular issues and considerations around processing and branding as far as seafood in Wales is concerned?

So, for me, firstly to acknowledge that seafood is a massive issue, particularly—sorry to bring the word up again—within a hard Brexit. I think about 90 per cent of the produce goes to the EU. So, yes, seafood is an issue. For me, intuitively, it feels like Wales has got one of the best coastlines in the country, in the UK. It feels that the seafood sector should be a big part of that. But ultimately, within context, I think seafood exports are around £32 million whereas the total, I think, is about £527 million. So, it could be more. It's very much characterised by shellfish. 

And on your point on branding, at the moment, I would want the seafood to come under the Welsh branding that we're talking about, because I think we've got to get that Welsh branding really strong and very consistently resonated across all our produce. Sure, different products will have different features that they can sell in a different way, but we've got to make sure that branding is right, and we've got to make sure it's really strongly delivered across all sectors. 

Okay, thank you. Joyce Watson.

So, this is for Huw again: are you able to talk us through your experience of the increase in sales when the flag on your product labelling was changed? And have you undertaken any work to understand what that meant?

The best piece of work is monitoring sales. So, yes, why Puffin has grown as a business is because what we do is replace, as we call it, union jack flag potatoes on the shelves in Wales for the Welsh flag. So, if you go into an Aldi, an Asda, a Tesco, a Sainsbury's in Wales and see 16 types of potatoes in front of you, they all come from Puffin Produce. When we've swapped that flag, we have had between 20 per cent like-for-like uplift to what we achieved most recently with Aldi—18 months ago when we started with Aldi—which was a 33 per cent uplift. So, it's something that really shook the retailing teams within the retailers. They never expected that kind of uplift. We said we'd achieve 20 per cent, and when we achieved 33 per cent, the total sales in Welsh Aldi stores went up within two weeks. So, what that's doing is drawing customers away from other carbohydrates. They're walking past the fresh produce aisles as they enter Aldi and seeing the Welsh flags and wanting to support Welsh businesses. I think there are a number of drivers. People think it's fresh and good quality because it's got the Welsh flag on it. They also think, 'Okay, I'll be supporting the Welsh farming industry by buying that product.' So, there are a number of drivers behind it, but that's something that we can really build on as an industry. We mustn't ignore exports and the English market, but let's produce food to feed Wales to start with.

Thank you. John Griffiths.

So, that's within Wales, Huw. Have you got any figures for the position in England?

It's less important in England. It's very hard to measure—it's negligible, I would say. There is some sort of premium that people pay in Wales—if you're talking about Welsh lamb, and the brand of the uplands, and I think the dairy industry is a bit the same. It's less driven across the border. But we've got a very passionate Welsh population to start with. This is the work on the branding that we're talking about within the board; it's making sure the branding is right, so we're sending the right messages to the rest of the UK, and to other global export markets—we get the brand right.

Thank you. Jenny.

Very difficult to speculate what the landscape is going to look like regarding Brexit. What are the opportunities and threats for new geographically protected brands? Wales has been very successful in getting 16 so far.

Yes. Pembrokeshire early potatoes, which is the one that we're closest to as Puffin, has been a great success. The premium retailers recognise the brand itself, and also the more educated customer as well. I don't think the whole population of the UK really understand protected food name status yet, but the foodies definitely do. So I think we've got to be careful not to lose those kinds of leading markets. It's been a great help for us, but I think it's probably a lot more important for things like Welsh lamb and Welsh beef—it allows them to market more strongly within Europe. So we've got to keep something similar to that going. I would never like to see the attributes watered down, to have a much broader UK one—it needs to keep the premium level as it is; it doesn't want to be a kind of one-size-fits-all. That's my one concern on it.

Is there a risk that people will have to reapply for this status, once we leave—if we leave the European Union?

I'm not close to the very detailed Westminster conversations on that, but there are lots of conversations around that. That may have to happen—reapply, or it would be very difficult to apply for new products in the future, and these sorts of things.

Okay.

Can I pick up? I know that there is discussion going on between, obviously, the Welsh Government and the British Government about those protected names. It's clearly important—speaking to the people who have got the 15 protected names in Wales—they get added value, they get extra value, from doing that. So it's clearly very important. And, of course, the other side is the safety, security. I know there were discussions going on with the EU about replacing that system, and you would hope that it would roll over, but—

Because there are lots of other—lots of countries outside the EU, who have these protected status—.

Yes, definitely. So they are important, defintitely.

But when you hear about the threats coming from the United States, who want us to abolish all these geographically protected quality assurance mechanisms, if that happens, then it's the end, really, isn't it?

And certainly, listening to the National Farmers Union conference a few weeks ago, and Michael Gove was on the stage, he assured the audience that there will be no drop in standards. And that is critical. And so I see these GIs as being a big part of that—they are the authentication point of it.

Okay. But if there's a deal signed with the United States based on price, and nothing else, then we're all dead, yes?

Yes.

Okay. So, you're relying very much on Michael Gove's assurances. How deep does that go into the UK Government's commitments?

The honest answer, Jenny—I don't know, because that's way above my pay grade, as it were. All the conversations that I've had with the Department for Environment, Food and Rural Affairs, and the Government in Westminster, and indeed in the Welsh Government, are that we know we have to protect standards, because that's a route to not just protecting our consumers or export markets, but the whole value of British food and drink. It's critical.

So what is the value in having a much greater focus on quality, and reduced food miles, and sustainability, in terms of public procurement, for example, as a way of assuring consumers in Wales that they're going to get a quality produce rather than something where corners have been cut?

So, perhaps referring back to the value of Welshness work that was done by the Welsh Government recently, where nearly half of consumers in Wales were paying [correction: would pay] more for Welsh produce—that's just Wales, I know. That isn't actually public procurement, but I think it's a really good question that I haven't got the answer to today: what value does public procurement put on that strong brand and brand values? I'm not aware that we've answered that.

Okay, but clearly in terms of—. If we're entering a global market where the standards aren't protected as they are at the moment under the EU—

It's a big risk.

—then, we could, nevertheless, still use public procurement to maintain standards.

Yes.

Of course, you've got—let's take sparkling wines as an example. People are prepared to pay a substantial premium for protected status items as opposed to sparkling wine. Moving on. Andrew.

Thanks for your evidence so far. We've been focused very much on Wales and the brand of Wales, but under that, there's lots of other branding that can potentially go on—regional branding within Wales—and the consumer reflects that, very often, in their purchasing power. Have you got any evidence that can show that there needs to be greater support for this regional branding within Wales or species-specific branding, like promotions around the Welsh Black breed, for example, in the beef sector and certain breeds of sheep in the sheep sector as well? I think it would be interesting for us to hear some evidence, if you have it, that that regional level of branding can either be enhanced or is at a sufficient level.

I haven't got a wide range of knowledge on that. I can talk about our brand—the Blas y Tir brand that is the Puffin brand. You just try and take every opportunity you can. You've got to get a sales team out there who try and push it into different markets of restaurants and Ocado in London and these types of things. How the Welsh Government will support that, I don't know; I think it's more of the brand values that sit behind that and the overarching brand that we've talked about earlier. It's then up to individual companies or individual commercial ventures to really push their products and have a sales team with the right skills. Perhaps there's a role there with training and some of the programmes that the Welsh Government already offer, through the contractors, of helping companies get into supermarkets and these type of things that already exist. It's that range of support that's already there.

Llyr.

I'm just intrigued, really, in terms of the use of the Welsh language as well in terms of branding, and giving that distinctiveness to the Welsh brand. Because, clearly, you have Blas y Tir; we have Llaeth y Llan, which I think became Village Dairy, but then went back to Llaeth y Llan. So, you'd see that very much as part of that package.

Yes, you try and communicate with your customers and add that level of authenticity of what stands behind the business.

Yes, but not just in terms of actually being bilingual, but as a brand—having the Welsh language on it gives it that sort of distinctiveness as well, I think.

It does, definitely.

It does. You see the way that the brand was refreshed a year or two ago. Even the typeface that's used for food and drink is very much tipping a hat to what you're saying—the culture. It's a really deliberate typeface that obviously shows that—. But also the challenge is that people outside of Wales don't understand Welsh [correction: the Welsh brand], but there was something in it that actually differentiates it. So, there was a balance, and the culture is really important.

Yes, thank you.

I'm not sure—and I appreciate that I used the meat sector as an example, but I have to say that I didn't hear much about what potential there is for greater regional identity within Wales itself. It might be that neither of you have got evidence to put on the table for that—fine, but I think it's an area that does need to be explored. I think that the produce that goes off our farm—very often, we have to tick various boxes to say that it came from the Vale of Glamorgan, for example, because there's a south Wales/Vale of Glamorgan angle to it, there is, then.

So, I don't have any evidence on the regional benefit of branding, other than GIs being important. So, you could argue that GIs are partly that. But where I would come from, Andrew, is that I feel absolutely passionate about making sure that we get this Welsh food and drink brand right to make sure that that's resonated across the whole of Wales and is well recognised. I think we need to do that first and then we can do the regional branding on the back of it, because then people understand the context within which it sits. The danger is, and I know that you wouldn't suggest it, that we've got bits of Wales doing different things—it doesn't look coherent to an export market. So, it's important, what you're saying, but I think—

I'm just putting a committee's point to try and explore has that been developed yet, and I take your point, you don't want to be too fragmented, but if you take it down to the micro level, on the supermarket shelf, you've even got pictures of the producers themselves on certain products now—back to that individual farm. I presume the consumer is saying, 'That's the level of knowledge we want to understand: who's produced our potatoes, who's produced our meat, who's produced our cheeses, and such.'

I do know, and this is anecdotal evidence, so we need to check, but I was speaking to one of the retailers a few months ago and they were saying, as you move from the west of the UK to the east, people value local more. So, in other words, in East Anglia, they actually value and will buy more local. So, if you go to Co-op, a lot of Co-op stores will have a lot of Welsh [correction: East Anglian] produce, and it will be, as you say, very localised, probably within a 20-mile radius of a store. I'm intrigued by that. I haven't got the answer for it, but I'm intrigued by it. So, I think that will be an area that we could explore more.

I'll just make a comment and perhaps you'll agree with it: a lot of high-end restaurants actually promote themselves by saying, 'This product has come from very close to where we are. All products are within a 10-mile radius.'

Volac—the business I worked for—we had an open day in our factory about a year ago, maybe two years ago, and the catering that we had, everything was labelled up with exactly where it came from. The level of interest that we actually had was phenomenal. I don't think that's done. I think that's just an example of how you can do more of those things. Actually, to your point, Andrew, a lot of it actually was quite local. 

Dai—sorry.

Sorry, I was just going to say that actually technology is going to help this as well. Andrew asked—radio-frequency identification and sensors are running through supermarket chains, so you can push things through depots in different ways, and traceability comes through factories, all linked via computer. It makes it very easy to increase traceability and do bespoke—

You say technology, of course, the other thing as well—and I appreciate it's a very small part of the market—but, these days, walking around with an iPhone, you can take that reading off the produce and actually get the background story to that produce.

And picture the fields and whatever, yes. Technology is making that very much easier. 

Are you saying, 'Andrew's farm'? [Laughter.] 

Dai.

The first thing I would say is the relationship with the British Government, I think, is good. It's a very good working relationship. It's an intriguing question, because across the UK we have the Britain is Great campaign, and for me that actually is really good for opening up overseas markets that Wales is not well known in. I think where Wales is well known—certainly in the European market, but not particularly in the middle east where the market is developing—I think that brand is stronger. I think British Government are helping to open the door to markets that Wales is not known by, but we can probably do our own thing when it comes to markets where we're already well known.

Llyr Gruffydd.

How sufficient is the budget for international marketing? Gwyn Howells was here earlier and he mentioned the £1.5 million contribution from the Welsh Government. Clearly, we're in a context  now of needing to up our game in terms of international marketing of Welsh produce. I'm just wondering—it's how long is a piece of string, I suppose. But, would you say that the current budget is sufficient to do a decent job of it, or are we woefully short of what we really should be investing on this front?

Well, I'm not in a position to answer that sort of thing. I think the food and drink Wales team do go to a dozen trade fairs—the key trade fairs throughout the world. I know that that's quite accessible to Welsh companies that do want to take part in that and go under that umbrella, which lots of good companies do, but I've got no idea. You'd have to probably speak to those companies about whether there's shows they don't want, or is there more we can do. So, I can't really answer the question about the budget, but I know that there is a mechanism there already that—

Because I'm just thinking—relative to other countries, potentially, where do we sit?

Yes. I don't know the answer.

There's no doubt that we'd like to have more money. [Interruption.] It's always the obvious answer, yes, but I think the key thing is that what Wales does is use the money very smartly. So, I'll cite the example of—I probably shouldn't get on to the rugby, but—

Yes, of course, it's a good example.

The Japan World Cup's coming up. So, there is promotion going on at the moment in Japan in advance of that, and to me that's really smart thinking, and that's where I think Wales is really good.

Especially when we win.

Yes. That's taken. [Laughter.]

Okay. I want to discuss more explicitly the implications of Brexit. We've heard regular concerns about access to labour from the EU, post Brexit, potentially being affected, and I'm just wondering what your view is about what the impact will be on the processing sector, particularly here in Wales.

Yes. As the Puffin Produce board, we reflected for a while, and then we made an immediate—. We could see labour tightening—it's really tightened the last eight to nine months—so, we made a decision: we've moved forward with a £12 million investment to automate our factory as much as we can. We had Andrew as a visitor down there a couple of months ago—you could start to see it coming together, and it's a very automated factory. So, we do—

So, that was clearly one of the drivers for you to do that.

One hundred per cent. The future of being able to source good labour was one of the drivers. I think the many negatives of Brexit are known to everybody around this table, but, in our sector, it's a bit unusual—there are some opportunities as well. There are 1 million tonnes-worth of potatoes imported into the UK from, primarily, Belgium and Holland in the form of frozen chips, so £1 billion-worth. So, the weak pound over the last couple of years has made that market more interesting, really. There are a lot of highly automated processes on the continent that are going to be hard to compete with, but there may be import substitution opportunities with a weak pound, and, if there are any kind of tariffs, then that makes it even more of an opportunity. But let's not forget all of the threats that we've got as well, which are the movement of seed and labour and all of these other things that are negative factors.

Jenny wants to come in on this.

I agree there are lots of threats, but I also wanted focus on the opportunities, because we're going to be taking evidence at a later session from Professor Terry Marsden from Cardiff University, who, in the report he's written with others, is talking about the need to expand horticulture. Because, obviously, if tariffs are put on all the—you know, the vast majority—. Puffin Produce excepted, nearly all our fruit and veg is imported, and are there not opportunities for us here?

I'll tell you the answer honestly. There are opportunities already because of that, because, obviously, the first people who will move most quickly are the retailers. The big supermarkets are well ahead of this game and, for example, probably 50 per cent of the cauliflower programmes on shelves for January, February, March, on the UK shelves, are from southern Spain or southern France, but those cauliflowers can be grown in Pembrokeshire and Cornwall, where you get protection from the frost, because of—. So, the retailers are looking to increase their programmes. So, there are opportunities, this is already happening, but the worry is having the labour to harvest those crops. So, there's still this commerciality about how commercial and how good that will be—

Okay, but, once again, there's automation as an option. Llyr Gruffydd and I were in Israel looking at grabbers that were picking the apples.

They're not really commercialising something like brassicas yet. We're probably 10 years away from that, so we've got 10 years of—. Everybody on the globe still hand-harvests cauliflowers.

But we've all got to eat, and we need to eat more vegetables rather than meat, so—.

We're increasing our programmes already as a business because supermarkets are looking to spread their risk already. 

Okay. Well, yours is an excellent business, but what about expanding it to other parts of Wales, whether it's close to Cardiff and Newport—

Or even Swansea.

Or even Swansea, or in north Wales, because they are very different markets.

Our potatoes come from all over Wales now. We've got a couple of big growers in the Vale of Glamorgan. So, we'll be looking as a business or competitor businesses—. There are suitable patches of Wales for horticultural production: the Usk and Wye valleys, Vale of Glamorgan, the Gower—all of these places, there are loads of opportunities to increase horticultural production.

So, is this something that is actively being looked at now? Because, obviously, the growing season has started and armageddon could just be around the corner. We just don't know.

There's got to be—. The commercial businesses have got to lead it as well. It's one of these things that—Welsh Government can support it, but then there's got to be a deal laid off with a major retailer or something like that for somebody to be able to step into this sector. There's still a lot of uncertainty and people are—everybody takes a little bit of time to move. But I think, if there's some clarity in Brexit, there may be some clarity in strategy, you know.

Okay. Back to you, Llyr.

Yes, just staying with the reduced or potentially reduced access to labour, we've discussed the vegetable sector. I'm just thinking that we discussed quite extensively with Hybu Cig Cymru earlier the impact on abattoirs for example, in Wales and concerns around the vets, all of whom, more or less, in Wales, come from other EU countries. There has been talk of maybe reducing requirements in terms of qualifications of some of these vets, et cetera. How does that play out in terms of the core values of the brand and the potentially increased risk in terms of safety and some of the values that we want to reflect in our branding? 

So, I think the thing you're referring to is—let me get it the right way—I think it's the CSV or the CVS; in other words, the people who are being recruited to support the vets. So, my understanding is that the work that the vets do, some of it can only be done by vets, and some of it, actually, doesn't have to be done by vets, but is under the control of the vets. I'm entirely comfortable with that and I think that's a very smart solution. 

Okay. Right, okay. So, you don't see that as a potential issue in terms of lower standards, potentially.

I don't think in terms of lower standards. The question is: do we have enough of them to manage the workload? And, if we have a hard Brexit, the question would be: do we? If we have a soft, then it's a smarter thing to be doing anyway.

Sure. And if we don't have enough people, then, obviously, that's not good in terms of supply, and that'll damage our market.

Yes. And it's also the cost of paperwork. So, the business I work for, Volac—we've mapped out the other day that, if we sell exactly the same products to the EU as we did last year, the cost of paperwork will be £1 million, and that is purely health certificates, vet inspections, and that's adding a massive cost. So (a) it's reducing it as much as possible, and, secondly, each health certificate costs, I think, £150 or £250. Well, it would be great if they were £50 rather than that. But I just want to make the point that it's a very significant cost. Hopefully, if we don't—. If we don't have a hard Brexit, it's not relevant.

Okay. Thank you.

Any other questions?

Can I just ask—? Sorry, can I just ask—

Certainly.

On the basis that this is a marketing session, but, obviously, to have a market, you need all those people behind it making the produce happen and arriving in an edible form, how integrated are you to the discussions around skilling up the industry and giving market information back to the training providers to say, 'This is where we're going to be in two, three, four, five years' time'? Because, as Huw's pointed out with his business in particular, you might reformulate the production lines, but you most probably need better skilled and higher skilled workers on those lines, you do, and the whole thing doesn't happen overnight; it takes time, it does.

For the vets, for example, I've seen Nottingham vet school have just come out now—instead of taking one intake a year, they're going to take two intakes a year, every six months. That's taken the number that are eligible to go in up by 100 per cent—from 150 to 300 now they have, then. And that's market information feeding back to say that this is where the industry's going, is it not?

So, you're probably aware that we launched a skills strategy about a year ago. That's absolutely critical, because it does a number of things. Firstly, we want to make food and drink and agriculture an attractive career, because, at the moment it's not enough. So, it starts there. Secondly, it's about things such as apprenticeships. So, we want to see apprenticeships really, really leveraging. But I think perhaps the biggest answer to your question is: it is just making people feel that the industry that we're working in is a good industry, that it's an exciting industry, because it is an exciting industry. I think, Jenny, you said the point: people have to eat and people like variety. We know it's right in front of our faces that actually people want Welsh food to be different, to be exciting, so that's what we're hoping to address in the skills strategy, and we will pick up again in the second food action plan that we're doing.

I think there's some excellent stuff going on in that area already. For example, at Puffin, we are working with Pembrokeshire College on automation technology. They're using the skills and the lecturers they've got that have worked with Valero on automation and those sorts of things and now they're starting an apprenticeship for the food sector. So, there are things happening. There's also—. We've got a great resource in Cardiff Met in the food centre; Cardiff Met produce Master's level graduates.

So, to sum it up, then, that intelligence back to the learning providers—whether it be Cardiff Met, whether it be Pembrokeshire College—in your opinion is robust, is good and is market led, and so, really, as a committee, we don't need to show any concerns in that area.

No, and there's a good resource of funding behind the food innovation centres now, Cardiff Met and this Project Helix, you know. So, there's resource there now to keep that moving forward.

The honest answer to your question is: it could be better. But what I feel is that the trajectory that we're actually on is going to get us to the place that we need to be in a year or two. To me, the question is: are there any interventions that are needed? I think the answer is 'no'. We're not in the place we want to be yet. And the other thing to add is that Glyndŵr University now do a food degree. I think that was launched a year or two ago. Again, that's great to see.

Thank you. Thank you, Chair.

Well, if there are no more questions, can I thank you both very much for coming along and talking to us? I was going to say 'this morning', but it's this morning and this afternoon now. So, thank you very much. You'll get sent a copy of the transcript. I would urge you to go through it. If you're anything like me and you turn to people when you're talking, sometimes the microphone misses some of the words, so it's well worth checking it. Thank you very much.

Thank you.

Thank you.

Can we go back into private session?