Environment, Food and Rural Affairs Committee

We will now move on to questions on fairness in the food supply chain. I have completely lost control of this session, so I will require everybody else to make up for my shortcomings with short questions and short answers. Sarah, you are going to lead us on supply chain resilience, growth and assurance.

Very quickly, Minister, I just want to take you back to one point. You mentioned having healthy food and farming production a moment ago. You said that your aim is basically to steady the ship. To reiterate, the best way that you can steady the ship for our farmers is to reverse the family farm tax. That would immediately give a calm to our production and to our farmers and give them confidence for the future. Very quickly—we have not asked you so far—how do you define food security?

It is the World Food Summit definition of food security. I have it written down here. It is the 1996 World Food Summit definition, which the Secretary of State read out for you as well. I will not waste your time by reading it into the record again.

The key point is that you have to have diversity of supply, resilience to shocks and access to affordable food. That is why we are coming on to this. Back in January 2025, the National Preparedness Commission said that a new food resilience framework is needed, based on just-in-case logistics rather than relying on just-in-time. What is the Government’s response to those findings?

We published on 11 December the first UK food security digest, which is intended to update the public on a selected range of priority indicators that are of a high interest or highly variable in the years when the main UK food security report is not published. We are keeping an eye on all this. We have to maintain our vigilance to make certain that we have supply when we need it, where we need it.

They are suggesting that there is a need for stockpiling. I hope you will be looking at that.

If we think that there are issues that might cause that kind of disjunction and that cannot be corrected by our very sophisticated supply chains, yes. Generally, stockpiling is not a very good use of food supplies. If the political situation were to change or there were some disjunction in world supply, that would be different. It would not happen overnight.

The UK food security report highlighted that there are numerous different potential points of failure. We are perhaps too reliant on big retailers and distributors, because apparently the top 10 supermarkets account for 96.7% of grocery sales. At this moment one of the big providers is doing a sale of vegetables for 8p, which is completely undermining our farmers and our farming industry. Are we too reliant on these big distributors? Can you give any more support to our smaller producers?

We are in the middle of developing a whole string of fair supply chain regulations to try to ensure, without controlling prices, which we have not done in this country for a very long time, that there is supply chain fairness. We have that for dairy. We have it coming in for pigs. We are looking at eggs. I have just announced that we are developing one for cereals. We have the Groceries Code Adjudicator and the Agricultural Supply Chain Adjudicator to keep an eye on what is going on in terms of the connections between very large, almost monopsony suppliers and the farmers that supply them, and to ensure that there is fairness there without controlling prices.

Moving on to the supply chain and skills, about five out of six farmers surveyed by Arla struggle to fill vacancies due to lack of qualifications. We are seeing increasing automation, robotics and digitisation. What are your plans to tackle these inhibitors to growth?

I was up at Harper Adams the other day looking at what it is doing in terms of education and skills training. There is some very impressive work going on in our agricultural colleges. There are some gaps with onward skills training for people who are out there farming. With the march of agritech and some of the new techniques, there is some higher-end skills training that needs to be done. I am looking to see what we can do in terms of creating more of an ongoing presence for skills training for this sector that is less fragmented than it is at the moment. There are probably some gains to be made, if we could make some reforms there. Overall, I was extremely impressed with the work that Harper Adams is doing in this area. It has also moved a campus into town so it can attract people who might not traditionally think about farming. It is quite interesting. Some of the skills that one learns in high-tech production are transferable from one industry to another. That includes, by the way, food production and farming. There is an integration going on there that might get some new people into this sector.

I just hope that with the Government’s policies there are still jobs for them to go into at the end of this. The Government also want to design nature-positive pathways for the agrifood supply chain. What are these? Will they include mandatory reporting and targets for resilience?

Can you repeat your question? Sorry, I was still raising my eyes to the ceiling at your political comment and I forgot to concentrate on the actual question. Perhaps you could try me again.

I will try you again. The shock of the Budget was a shock to us all. The Government want to design nature-positive pathways for the agrifood supply chain. What are these? Will they include mandatory reporting and targets for resilience?

It is not a phrase that I recognise—I am really sorry. As part of the work on the food strategy, we are thinking about sustainability of food, food resilience, growth for the food industry and healthy food. There is a target for healthy sales, which was announced in the summer as part of the NHS 10-year plan. The Minister has some further thinking to do about the other matters.

I do think, by the way, that there is an issue if we are talking about access to healthy food, particularly in very obvious areas of food deserts and deprivation. There is a real issue that we all have to think about around the positive correlation between poverty and obesity, which has come about as a result of the way that some food is produced and particularly manufactured. We can make an enormous difference there, if we focus on particular areas of food deserts, where the food banks are particularly active. There is a lot of work going on with FareShare and the Trussell Trust to try to get healthier food to those who are food-poor at the moment and cannot afford access to healthy food. There is also a great deal of transformation that we can do with the industry, which is why the Food Strategy Advisory Board, which I chair, is considering this at the moment. There are some really serious, important issues there, which are not really about anything other than the effects of poverty.

I want to touch on grant funding in the context of growth. Are you looking at reform of grant funding, particularly in terms of the subscription-based models that lots of farmers will use? That is not the way in which you are set up, as a Department, in respect of access to grants. If you are purchasing technology on a subscription-based model, as lots of people in the industry do, that is not the way in which the grant funding from the Department operates.

If there are things that you want to draw to my attention that would make it easier for farmers who access technology in that way to interact with our grants, I am more than happy to hear what you have to say about it.

Sarah, you are going to lead us on the GC and supply chain adjudicators.

I am very pleased that you went up to Harper Adams, Minister. It is my alma mater. I am not sure the residents of Newport will be terribly keen on a campus being brought into town, given some of the shenanigans that I remember from my days at Harper.

They were all very well behaved when I was there.

Thirty years have passed since I was there. The Groceries Code Adjudicator’s neutrality is valued by both retailers and suppliers. However, some concerns have been widely expressed around limitations in its effectiveness. Many farmers remain reluctant to report malpractice due to fear of retaliation, including being delisted in some cases. Stakeholders have felt that this has perhaps contributed to an enforcement model that is overly reactive and compliance-based rather than deterrence-based. How effectively is the food supply chain regulated and how could it be improved?

There is—and there is no getting away from it—a power imbalance between those who are buying food and those who are selling it. The smaller the farm, the larger the power imbalance. If one looks at dairy, the statutory instrument took two years to co-develop with the industry, including with dairy farmers and their representatives. In that sector we found a situation where there were verbal contracts; nothing was written down, and there were no rights at all that one could have proved in any sort of court. The Groceries Code Adjudicator has changed that, but it is coming from a very low base. I suppose my initial answer to your question is that we have to see how it works. It is relatively new. We have to acknowledge that there will always be power imbalances with respect to some of this, unless farmers can organise themselves more effectively in co-operatives to try to accrue more power as sellers rather than buyers.

Just on that, if you are a small family farm, it is very difficult to run the business and then also manage all sorts of other things when larger farm businesses are going to have access to accountants, advisers and various things. That is where the imbalance is. That is perhaps where we need to ensure appropriate grant funding that is achievable for small family farms.

To do what, though?

To be able to farm and not be distracted by trying to advance their business by developing applications for various other sources of funding. At the end of the day, farmers want to produce food. That is what they want to do. Is there merit in the Groceries Code Adjudicator and the Agricultural Supply Chain Adjudicator merging so that they have proper teeth to give fairness in the supply chain? Do they have suitable resources and proper power to regulate and investigate those power imbalances that you have spoken about in the supply chain? The Groceries Code Adjudicator’s resources have been questioned. It has a £2 million annual budget, which has remained static despite inflation and the addition of new retailers to its scope. Is there room to increase the budget so that it does give that fairness?

Money is tight everywhere. I am not just going to sit here and say, “Yes, we have lots of money that we can throw at this.” On your point about whether the Groceries Code Adjudicator should move to DEFRA or merge, we would be open to that. That is a machinery of government change. It currently sits in the Department for Business and Trade. It is involved very much in Competition and Markets Authority investigations into power in that sort of market. There is a paradox in your question. You started off by saying that people were too intimidated to make a complaint, but you are also asking me what can be done to make the complaints process easier. The power imbalance is an issue and we just have to keep an eye on how it is working to see whether we need to change it, tweak it or make it different.

May I add a couple of points? Correct me if I am wrong, but I think the Groceries Code Adjudicator is funded through charges. It does have some scope to change that funding if it chooses to, and it has chosen not to. Alan Laidlaw, who has just started as the Agricultural Supply Chain Adjudicator—he started in September, so he is very new—is implementing these new fairness and supply chain regulations. He would be very keen to make sure that there is a confidential route for people to raise issues with him. We would expect him to tell us if there were resourcing issues or any issues with trust in him. He has made it clear that trust in him is a key part of his job.

Going back to the power imbalances, there has been quite an extensive debate on whether the scope of the Agricultural Supply Chain Adjudicator should be expanded. Farmers in many sectors, such as pigs and dairy, do not deal with retailers. That is where some of the imbalance comes from, is it not? Farmers deal with the processors rather than the retailers. The power imbalance there is effectively unregulated. If we are widening the code to include those large wholesalers, alongside retailers and food service operators, perhaps it would bring better working relationships into that field and disincentivise some of that power imbalance. Have you thought about that as an option?

We are very open to seeing how we can improve the way that those structures, which are reasonably new, work going forward.

The Agricultural Supply Chain Adjudicator applies particularly to the primary production end of things where it is going into a processor. The Groceries Code Adjudicator applies where it is going into the retailer. That is the difference in their remits. They are working as closely as they can together to make sure that they can join up. I am sure there would be improvements we could make as well.

What assessment have you made of the effectiveness of the fair dealing obligations for milk? As we know, a lot of dairy farmers have been left reeling by a couple of quite significant farm-gate milk price drops over the last couple of months. There is potential for the milk price to go down even further. Farmers are already producing under the cost of production. It is going to hit the industry significantly.

It is never ideal when the price drops, and it is even less ideal if it drops under the cost of production. Our understanding is that this is due to a glut of milk in the market rather than any other reason. This system was not invented to give a guaranteed price for a commodity that was produced. We just think a glut of production has caused the price to drop. It is the market operating.

To give you an example, 13,000 tonnes of butter was dropped into Rotterdam in the summer. It had no point-of-origin labelling on it, so it went into the UK market, undercutting some of our farmers. That is one of the key problems here. We go back to the labelling issue. With the trade deals that are coming through, there is a need for labelling regulation. It was of USA origin; it came in through Rotterdam and went into the UK. If we do not have that kind of regulation in place, it will not just be a glut. Traders will continue to navigate through cheaper products that are going to undercut and undermine British farming.

I am unaware of that particular case, but, given that we are doing trade deals, we are doing our best to protect our domestic producers in the best ways that we can. I cannot really comment on the Rotterdam butter until I know more about it, but I am happy to find out.

Yes, I am happy to discuss that with you. Thank you.

Minister, might we be able to detain you for another 10 or 15 minutes beyond 12 o’clock?

Yes, let’s see how it goes.

We will crack on and cover as much as we can.

I know you are keen to get on to fishing, Chairman.

I am looking at the agenda and there is nothing that I can easily cut, because it is all important stuff.

Thank you, Minister. I want to talk a little bit about access to affordable and healthy food. According to DWP statistics, 11% of households in 2023-24 have experienced food insecurity or food poverty. That is an increase from 7% in 2021-22. Food inflation continues to track above overall inflation. What steps are you taking to reduce food price inflation? Will any of the Government’s policies support that or make a difference?

Food price inflation is caused by a range of things. It is tracking above overall levels of inflation. We know that the bottom 20% of the income distribution spend much more as a percentage—I think it is nearly 15%—of their income on food compared with the top 20%, who spend 8.6% or something like that. Therefore, there is an issue about that. Some of this issue is also about what we can do to make healthy and nutritious food available to those who have lower means. As I was saying earlier, there is a positive correlation between poverty and obesity, which is something that I never thought I would see. It is important that we try to create a circumstance where we can have healthy and nutritious food at affordable prices going to the most deprived areas. I am working with the food production industry to see what we can do to deal with food deserts. We have things like Healthy Start vouchers that are available, which we want to add some money on to. We have the free school meals issue, which I hope will have some effect. A lot of food price increases are caused by global circumstances rather than home-grown circumstances. It is quite a difficult thing to control.

The challenge that we have had for a very long time is that poor diets are cheaper than healthier diets. While we have things like Sure Start and free school meals, those only happen in the education sector. Much more needs to be done even at school around cooking and making meals from scratch, which is significantly cheaper. It has been an upward trend for a very long time that really unhealthy food is very cheap. Not necessarily veg so much, but fruit can be pretty expensive. How do we get people in those areas of deprivation to eat that food when it is so expensive?

Some of it is about access in poorer areas to food that is affordable. Some of it is about education, as you were talking about, and teaching people how they can cook from scratch. There is often not much time to cook from scratch. Breaking the junk food cycle is also important. Some of that is about incentivising food producers to recalibrate what they are producing to make it healthier. The sugar tax is having a bearing on some of that. There are a whole range of cross-Government things that we have to do. For my part, I am trying to work with the food industry itself to see what it can do to help us focus particularly in on those areas where the need is the greatest.

Will there be more levies like the sugar tax to come?

That is an issue for the Chancellor. The thing about things like the sugar tax is that they incentivise the food industry to recalibrate the way it makes and produces particular foods to reduce sugar, in this case, and reformulate what it does. There are also issues with salt and other unhealthy ingredients. Working closely with the industry is quite important to understand what can sensibly be done so that the food it produces is still nice to eat but not quite as heavy in empty calories, if I can put it that way. A similar thing has been done with the alcohol content of wine and beer. I am a fan of a lot of the zero-alcohol things that are coming on the market, for which we have to thank Generation Z or whatever you call them. They do not drink so much. They have kicked off the production of a lot of really quite nice zero-alcohol products as opposed to the previous ones, which were not.

Farmers may need to receive more for their produce in order to improve their profitability, which in turn will increase our food prices. How are the Government going to balance that tension?

It is about price, but it is also about production, productivity and producing food that is nutritious without having to spend as much to do it. Some of that is about input prices. Some of it is about energy prices. It is a very complex issue, but it is certainly one that we have eyes on across Government.

Finally, the good food cycle is vague about how it will achieve its goals on diets, sustainable food production and household food security. It is reported that the plans to publish a White Paper for this strategy in 2026 have been pulled. How accurate are those reports? Would a failure to legislate diminish the strategy’s ambitions?

That is the first I have heard of it. I do not know who is putting that rumour around. The intention is to have a food strategy. If somebody is saying that, it is the first I have heard of it. That does not mean it is not true.

I am aware, Minister, that you chair the Food Strategy Advisory Board. We have heard today how farmers are integral to food security and that animal welfare is very much in people’s minds. Neither farmers nor animal welfare organisations are represented on the Food Strategy Advisory Board. You have the power to appoint people to it. Is that something that you would consider?

They are represented.

Which ones?

There is farming representation.

Yes, they are appointed as individuals rather than as representatives of trade bodies. There has been a farmer on it since it was started in March time. There is a new farmer who has just come on. We have just appointed some additional people. I am not sure that we have announced that yet. I can’t remember.

I can’t either.

We can write to the Committee about it.

Yes, I am happy to write to you with the latest iteration of the membership.

If it has improved, that is welcome.

I think you will find that it has improved.

It is not a representative body, though.

If we could have details of that, that would be welcome. Is there an animal welfare organisation represented?

I don’t think so, no. We have improved representation on sustainability. We already had good representation from a healthy food point of view.

That might be something that the Minister wants to reflect on.

We do separately have the Animal Welfare Committee, which we rely on very heavily, so it is not the only body that we talk to.

Also, those representations are not done in a vacuum that excludes animal welfare.

Right. We are going to move on to questions on animal and plant health.