Economy, Trade, and Rural Affairs Committee

We'll go straight into our witness session, then, if that's okay. Thank you very much, Prys, for your evidence paper. That has greatly informed the evidence that we're taking, and also Paul's paper, who, sadly, can't be with us today, but the paper will inform our evidence gathering, it will. I'll ask you to introduce yourself for the record and the representative role you're fulfilling today in coming before the committee to give evidence.

Good morning. Thank you for inviting me. I work for Kepak, but also farm as well, and I've had involvement with HCC since it was started in 2003, so that gives a bit of an overview, I think.

You've got a good understanding of its organisation, set-up and continuing role. So, that's my first question to you, Prys: is HCC fit for purpose?

HCC's remit is quite wide. I think there is a need for a levy body, but I think, at the moment, there are questions in terms of the number of people, senior people, that have left, the funding as well, and, in terms of fit for purpose, there's a lot of work to do. So, there are questions around that, if I can frame it in that way.

But it would be your view that, obviously, a levy board does have a role going forward, given it's nearly 10 years since, obviously, any comprehensive work was done on HCC from an independent point of view, and, obviously, the role it could fulfil going forward.

Yes, I think it's the first time that the Senedd has reviewed HCC. I think it was Government that reviewed it before. I think there is definitely market failure generally. Although we have very high prices at the moment for livestock, there are a lot of challenges for the industry, and there is a significant role, I think, for a body, because it's a disparate industry, with a number of small businesses, small farms. In order to market and promote and develop the industry, they need to pool their resources together, and that's true although there are a lot fewer abattoirs now than there were. That still is the same, I would say, that there needs to be somebody pulling together to promote and develop and ensure that we have still got a product to promote, which is very worrying in terms of a critical mass.

I'm sure that might get touched on in later questions from Members, but, in your paper, you refer the committee to, obviously, the turnover of staff and, obviously, the lack of staff that might be filling some of the key roles now. As a marketing and promotional organisation, obviously its value is in having key staff positions filled to fulfil its remit. How troubling has that been and how disturbing from its remit has that been, that loss of staff? Going forward, how much confidence have you got that that's going to be rectified so that the levy board can be in the match-fit state it needs to be to promote Welsh livestock?

There is a new chief exec in place. I've known José for nearly 20 years, but it shouldn't be on one person, really, to try and turn things around. I think the challenge really is that we need a levy body that's got active levy payers steering the ship in terms of the board. Significantly less than half of the board members pay levy at the moment.

Do you think that's a key deficiency in the structure it currently has, and that there needs to be a greater emphasis on those board appointments having that stake, if you like—no pun intended—in, obviously, the remit from a director level of HCC?

If you've got a stake in it, it's more personal, I think. It's better. And even in the terms of reference of HCC, it states that the board should have levy payers represented—in a majority, I would say—with expertise coming in as well.

The committee is clearly trying to map out a future for HCC and you're highlighting a deficiency, as you see it, in the board and the representation on the board. What would you say would be the right balance to create enough external expertise to come on that's impartial and objective, with industry-led knowledge and understanding and having skin in the game?

I think, with all due respect to Welsh Government, they appoint the chair and the board members at the moment. We've got a mature industry that could appoint directors themselves, rather than—. They could follow a similar process, but that would then come from and empower the industry, and the industry would be more behind it as well.

And do you think that the role that HCC has fulfilled of late has the right balance between promotion and research and development that genuinely does support the red meat sector in Wales?

I think it comes to a fundamental question: if you haven't got the product, there's no point promoting it. So, we've had a significant reduction in suckler cows in the last 20 years—a 33 per cent reduction in the number of suckler cows in Wales. If you look at lamb, lowest numbers since 2011—if you go back, they're significantly less. So, it brings into question, really—. You know, if you haven't got the product, there's no point promoting. And I think when we look at the wider issues in terms of food security, affordability of food as well, if there's less, the price goes up. There's also a risk of bringing in inferior products from other countries that don't meet the same standards as we have, be that in animal welfare or also in sustainability, which is really important. We have a moral, I would say, responsibility to produce in Wales, not just for Wales but for others, be that in Europe or other parts of the world that cannot produce high-quality product, which there is a demand for.

And my final point to you: you gave us a statistic there of a third of a reduction in the suckler cow herd in Wales. Can you give us an indication of what that is compared to other parts of the UK? Are we out of kilter in that we've seen a bigger contraction in Wales, so that potentially threatens—?

I haven't got the figures off the top of my head for that one, but there has been contraction in other areas, but there's also been a recognition of that, for example, in Scotland, when Government have supported the suckler calf, in particular, with support, financial support, from Government. So, it's been recognised. I think we're going in a way, with decreasing numbers, that will affect the critical mass of the industry, be that in processing, the infrastructure as well that goes behind that.

And that has been a positive in Scotland, has it? I haven't seen any figures on it, but—

I haven't got the figures to hand, Andrew, but I can get back to you on that.

That will be helpful if you could do that.

Yes, I'll do that.

Sam.

Thank you very much, Chair. Bore da, Prys.

Bore da.

Just looking at the evidence we had from the farming unions previously on this, the Farmers Union of Wales, in terms of the levy, argued that they weren't in favour of the previous levy increase. I'm just wondering: with that in mind—and the levy increase went ahead—is it delivering value for money for levy payers, HCC, at the moment?

I would say that an organisation that's lost a lot of its senior staff and has significantly less money, in that it now can't claim the value added tax back, for example, has considerable challenges in providing a service for the industry. And that's not a slight on any of the staff that are there, but it's a fact that it is very difficult to sail a ship without a captain, if you see what I mean.

Yes. And, obviously, in your written evidence you talk about the impact of what's happened publicly with HCC has had an impact on the relationship between HCC and the levy payers. Is that relationship being rebuilt now under new leadership?

It'll take time. We've met with José, yes. I know him; I've worked with him previously. There is a significant challenge, I would say, to rebuild reputation and also engagement, which has been missing for the last 12 to 18 months.

So, on that engagement point, what is it that they haven't been doing that you would expect, in your role with Kepak, to have HCC doing that is better engagement with levy payers, and the industry more broadly, as a promotion body?

Well, if you start with the processors in Wales, there are probably—. It depends on your definition of 'large', but there are about four large abattoirs in Wales, processors, which also debone and pack as well—some do and some don't. You know, regular visits to those sites wouldn't be too much to ask, I think.

So, it's as simple as that: just being on the ground, meeting with the processors.

Yes. Engagement like today. I've come down to meet you, and there's nothing better than having a meeting, is there?

So, was that missing previously, or was it the case that it started and, as HCC developed over the years, that engagement fell off? Or was there a conscious decision that, 'We are moving HCC away from doing this to promoting over here', or was it lack of resource, not being able to do everything at the same time?

I think, with the staff leaving over the last 18 months, that's had a major impact, I would say, on that. You need people who understand the sector, who understand—. I was going to say 'have a stake in the sector' again. But you have to have somebody that's involved in it day to day. It's a very fast-moving sector as well, very volatile, and you need people who understand and can, dare I say it, talk the language of red meat, if you see what I mean.

Yes. So, one thing, then, that you would like to see: what would be that one thing, going forward, from HCC, to help rebuild that relationship with not just levy payers, but processors, everyone in the industry? What could one thing HCC be doing from tomorrow that would be like, 'Look, they're serious about rebuilding'?

It's not a—. I haven't got that magic wand. However, if we learn from the past, we can see that HCC delivered a lot of activity on the ground, and seeing is believing. And that activity has dwindled, as European funds dwindled, effectively, and it hasn't been replaced by any funding—no significant other funding—from other sources. So, that's made it very difficult, you know. I used to work with HCC, and we had many programmes: the beef improvement project, £2.2 million over three years; the woodchip project; the electronic identification project. All these projects, you could see activity, and that gives you an opportunity to discuss other things on the farm as well, like promoting and what's happening.

Ocê, diolch yn fawr i ti.

Thank you, Chair.

Can I just ask about that relationship that you pointed to? And you highlighted a lack of interaction with just the four processors, for example, the four large processors. Obviously, there are levy bodies in Scotland and in England as well, so there are comparisons that you can make to those, and you're part of a processing company that operates in those areas as well. Is that relationship as stretched in those areas, or can you pinpoint it at that the difficulties that obviously HCC has gone through—so, the loss of personnel—has created a pressure point that obviously those visits and that connectivity—?

I think you're right there. It's the lack of people in the post that, you know—.

So, that would be fair to say. It's that turbulence that has created that dislocation, and, actually, there is an ability, if it so wished to, to recapitalise itself and restart that?

Yes. And that needs strong leadership to ensure that that happens, all the way through, really. It's not down to one individual, is it? It's culture as well: to be working with industry, on behalf of industry. Do you understand what I'm trying to get at? It's not that HCC sits there, industry sits there, and Government sits there; it should be much more joined up, which probably brings me on to the model in Ireland.

The gold standard.

Well, from outside, it definitely looks like that.

Hannah.

Thanks, Chair. Welcome, and good morning. The committee understands that HCC is reviewing its strategic vision, which is set out in the vision 2025 document. Have you had an opportunity to meet with the new chief executive, and has that been discussed as part of that?

I've met, as I said, with the chief executive, but I think that should be a proper consultation, rather than just a chat over coffee; it's a significant piece of work, and if you bear in mind that the remit HCC has is very wide, and if you compare that with the resources available at this point in time, and the funding available, I would question whether that's possible to deliver.

The vision, or the consultation, or both?

Well, in terms of what it can deliver going forward. So, when you have the consultation, you need to take on board, really, what resources you have in order to deliver that vision. There's no point having a gold-plated vision if there's no hope of ever delivering it.

You just mentioned a consultation. How would they best do that, and reach the right audiences?

There have been consultations previously, so you can look at before. Obviously, the farming unions, the processing sector, they've all got representative organisations, but it's as easy as holding a meeting and engaging and talking to people, and quite often, those golden nuggets come from people that you don't think of, really, that would bring those things up.

Thanks for that. In your evidence, you talk about how a key role for HCC is to generate respect for the sector but help Government better understand it as well, and you touched on how it's been more successful for lamb but less so for beef. What more do you think HCC could do in that area?

I think, if you judge what's happened over the last 20 years, probably, in fairness, Welsh lamb is recognised as a brand across the world, but Welsh beef isn't, so more work needs to be done on that. A lot of beef is sold out of Wales for finishing in England. There could well be an opportunity to look at the protected geographical indication itself, which has now changed since we left the EU. I can't remember the term off the top of my head now, but it could be born, reared and slaughtered in Wales, which would benefit Welsh jobs, because that would keep the animals in Wales. It would be a challenge, but I'm sure the agriculture sector would be up for that challenge.

Just to add as well on that, previously, there was only one processor in Wales killing at volume, but there's more now, so that argument wouldn't be—. It wouldn't just be for the benefit of Kepak, if you see what I mean.

Thanks. Just one more point from me. You say in your evidence that HCC hasn't been fighting the corner, perhaps, for red meat producers, in the way that it might have done in the past. Can you expand on why you feel that is, and have you got any examples that will help give that bit of context for us?

I think the relationship is really important. We've discussed the relationship with processors and levy payers, but it's just as important to have that relationship with politicians and Government as well, and civil servants. I think, in the past, if I use my own experience, we delivered schemes on behalf of the Welsh Government and worked jointly together. Perhaps those opportunities should be looked at again, and especially if there was any crisis; Government would turn immediately to the levy board to help that, whatever the issue was. And it's not about HCC lobbying Government—that's not what I mean; that's the jobs of the unions. But it's to provide facts, advice—and sometimes it's difficult, because one thing doesn't benefit the whole industry; you need to have a balance—and I think that's probably an area where you need people to do that, and at the moment, we probably haven't got the people to do that in numbers.

Jenny.

Thank you. I wanted to look at governance. The basis of good governance is independent scrutiny by people who have neither fear nor favour in their minds when they put their points forward. So, you've been on the board since 2003, and you're arguing that HCC should be industry owned and under industry control. Could you just elaborate on how such a structure could possibly work, if you only have internal people on it?

I think, perhaps, that's not quite been interpreted in the way I wished it to be. I recognise that you need experts in different fields, be that marketing or legal experts or financial experts, but I think the majority of the board should be active stakeholders, active levy payers, effectively. If my memory serves me right, in 2003, it was owned, effectively, by industry, and it changed later on to facilitate the Welsh Government providing funds for HCC. And those funds were significant. They ranged from about 35 per cent to 47 per cent of total income that came from either EU or Government money—and it wasn't just EU, but there was also 'clean money', if you see what I mean, coming in as well. That's not the case now. Perhaps it is time now for industry to go back to that. It needs to be clear and transparent in terms of ownership, in terms of who is on the board, who is leading it, so that it really has buy-in from the industry as well.

Looking at more recent events, what level of advice have you had on the outcome of the Brexit referendum and the inevitable loss of EU funds; the need to respond to the climate emergency and commit to net zero by 2040; and indeed the trade wars that are breaking out all over the world? How do you get this level of advice? It's easy to see that you are experts in your industry, but unless you look at the impact of other issues, you're not going to be able to make good decisions, are you?

No, I understand that, and that's why what I'm saying is that it's important that the governance provides strategy and scrutiny, but it also should depend on the executive to provide a lot of the advice that you're mentioning, in terms of evidence of what's happening around the world, in terms of if you look at the climate. Farmers are the first to recognise that the climate is changing, and I think they have been misrepresented significantly at the moment, on all the good work that they are doing, and it is significant. It does surprise me, often—and I'm not pointing at just politicians, but the general public—the lack of understanding and knowledge out there.

It's quite easy to look at global statistics, but there isn't enough evidence based on UK production systems, or Welsh production systems, that in effect are more sustainable than a lot of people think. A lot of the modelling that's been done is being revised as well. I won't go into the detail, but cattle have always been here, and probably people don't want to look at the elephant in the room, which is the number of flights, transport and everything else that is producing gases that are harmful to the industry. So, there isn't that balance, really, and again that's why HCC should exist, to defend those individual businesses that aren't the big corporates that can defend themselves.

You're absolutely right to count the emissions involved in transporting product to market, and hopefully that's what HCC is doing. How good has the advice been about the more recent upheavals arising out of the re-election of Donald Trump? Because clearly, he started yesterday with car tariffs, but don't let us be surprised if he's going to put tariffs on food.

If you put it in context, we produce a very small amount in global terms of both beef and lamb, although we produce very high-quality product. The amount of product that’s being exported to America—it’s an important market, yes, and we need to have access to that market—is not huge volumes. Our biggest market is in England, in terms of Welsh product, and in Europe. That’s the biggest. That’s where most—

So, you think you have a strategy for that eventuality.

But I think the risk is that, if beef that is now going into the US changes direction and comes into this country, and because we don’t produce enough, the price goes up, it’s a very attractive market for people to, effectively, dump on us. So, we’ve got to look at it in several different ways. Not producing to meet climate change targets is not the answer, because the climate is a global climate, and we could end up with product that is inferiorly produced in terms of its carbon footprint.

Absolutely. We obviously can’t—

No, but you see what I mean.

We can continue this discussion elsewhere, but you’re right to point those things out. Specifically, how good is the advice you’re getting to make decisions—

When you say, 'the advice you’re getting', I assume you mean from HCC.

Well, from anywhere, but the board has to make decisions based on the information it has in front of it.

That is quite true, and having a board that is—. I think you’ve got to give credit to industry, and industry understands the challenges and has a lot of the answers as well, given some support to change, because agriculture takes a long time. A calf today won’t be producing meat for another 18 months. With a cow, it’s a three-year cycle—

I understand that.

—and it takes time. And to change things is risk, and that’s financial risk. And if you look at the incomes for farms in Wales in 2023-24, they were very low. And I would question whether they were reaching minimum wage.

Okay. I’m looking for an answer on the quality of the advice that you’re getting. And if it’s not good enough, does the board have the power to sack its chief executive?

I’m not quite sure what you’re getting at there, because—

I’m trying to understand the governance.

Right, okay. So, in terms of governance, the board doesn’t need to have the expertise in all of those areas, I would say, but the board does need to satisfy itself that it gets the advice it requires, be that on climate change or trade, or anything else. So, that would come from, well, the Government, to be honest with you. If it’s on trade, that will come from Westminster, because it’s not a devolved matter. And on other policies that are devolved, it will come from the Senedd. But I think it’s important that we look at it from across—. Things move very quickly, don’t they, and the advice today might not be the advice you want tomorrow. So, it needs somebody who understands the markets as well.

People disagree as well, so you’ve got to bear that in mind.

Well, that’s true as well.

I want to understand what are the benefits and disbenefits of HCC being wholly owned by the Welsh Government.

I think the benefit, allegedly—no, not allegedly—was that it could receive funds, but at the moment it’s not receiving any funds that I know of from the Welsh Government. So, that’s not much of a benefit. And probably the disadvantage is that there could be a perception, true or not, that it’s not fully representative of the industry.

Okay, but I’m trying to understand—. You see, it doesn't need to be representative of the industry. If we’re talking about governance in universities, in schools or anywhere else, you need people who are both number-crunchers as well as those who understand the broader climate in which you’re trading. So, if you don’t have—. The people who the Welsh Government appoint I would expect to be people who provide added value to, obviously, the expertise that people like yourself have in the specifics of the business—

But there are no processors on the board at the moment.

Okay, so that's something we might want to follow up.

There is no livestock market representation on the board at the moment.

Okay, thank you for that. But what about economists or human resources experts?

I'm sure you could do your own research on that one, but from my recollection, there is—. I'm going through the board members in my head, I'll try to think in terms of economists—

Okay, but you, as a board, should be doing this all the time.

Well, I'm not on the board, I resigned from the board.

Oh, okay, I beg your pardon, because you said that—

So, that's why I was a bit confused.

—you were on the board since 2003. Okay.

Prys resigned in 2020.

No, no, I resigned last May.

Sorry.

Okay. I wasn't listening carefully enough. I heard that you'd been on the board since 2003.

No, no, I was there in 2003 when HCC was started. I was an employee then. And then I worked in the private sector, and then I went back on the board. I was employed again by HCC and then after going back to the private sector, I went on the board, but I resigned in—I think it was May or June 2024.

Okay. Thank you. You've obviously behaved entirely appropriately in terms of avoiding conflicts of interest.

Well, I've tried my best.

Without going into the events of last year, and we have our legal adviser here, and looking ahead to the future, what specific changes would you want to see within the current governance model to make sure that HCC is fit for purpose?

I think it's really, really important that a non-executive board do not become a hands-on executive. And that is really important in any board, be that in universities or anything else—that you have that difference. It's up to the executive to deliver and to provide information for the board to make informed decisions.

I absolutely understand that; I think that's a really good principle. But how on earth are you going to get these excellent non-executives who are not going to have fear or favour about whether they're going to be excluded from the next foreign trip or whatever it might be?

I think the industry needs to be given this due respect, really, because whilst we are fiercely competitive as companies, we recognise that when it comes to opening new markets, there is a need to work together. And when it comes to farmer representation, with my farmer hat on, there are several thousand farmers in Wales who need to be represented on that board because they pay a levy, I would say. And there are a lot of farmers as well with expertise in different areas as well, which you highlighted. I think that the issue as well is, if you think that somebody else is going to come in and govern HCC, then you lose engagement from the industry as well. It needs to come from within the industry, I would argue.

And to answer your point as well, so that we're clear, there needs to be a cross-section of people on that board. I think I did mention earlier that you get majority stakeholders that are active levy payers, but also have that legal, financial, economist and marketing input into it as well. At the moment, there are 10 members of the board and a chair. There is scope there to have at least five, and I would argue more, active levy payers, because there are levy payers who have also expertise in marketing or accounting as well, and sustainability more generally.

Okay. Thank you.

Just for the record, Prys joined the board in 2020 and left in 2024. I think I'm correct in saying that—

Yes.

—just for the record.

Or rejoined, yes.

Yes, I've joined twice.

You came back for more. [Laughter.] Luke—

Well, it's in my blood, to be honest with you, and it really hurts when you see something that is not working as it should.

Luke—

But you weren't able to feel that you could resolve whatever your concerns were within the board.

No, that's why I resigned on principle.

Fine. Thank you.

Diolch, Cadeirydd. If I could focus in on the funding element of HCC, we received evidence from a number of a sources saying that HCC may not be sustainable if it were to rely on levy payers alone. What's your view on this?

Costs across the board have increased for several reasons. If you look at HCC with £4 million or so levy income, £1 million would go on overheads—rough figures—then there's £3 million left of that; £600,000 would go on value added tax. You're down to a—. Although £1 million sounds like a lot of money, but when you come to marketing, buying, be it on social media or whatever media or tv, it is not a lot of money, and with the wide remit that HCC has in order to fulfil it, that is not enough money. It doesn't matter how good you are, you can't pull that rabbit out of the hat, I would say.

When I was working for HCC as well, the income, if I recall, was over £6 million, and the buying power of that was significantly more because of the VAT issue, and also with that value 10 years ago, you could buy a lot more for that money.

So, what other sources of funding should be considered?

Well, I think if we're looking at providing food, looking at the climate change, looking at the environment, biodiversity, I'm sure that it would be a good investment for Welsh Government to provide support for that, as happens in other examples—if you look at Bord Bia, for example—and whilst we think that other countries are not subsidised, they are in one way or another, when you dig below the surface.

Yes, so I suppose, is it a matter, then, if we were to say Welsh Government should provide funding, that they're providing funding for a certain activity of HCC? So, for example, the NFU mentioned that funding for research and development should be provided externally. Is that where you would see the role of Welsh Government slotting in?

The fundamental issue at the moment is to look at and get industry, Government and HCC to work together to produce livestock. And I'm not talking about maintaining numbers or declining numbers, but we're the most sustainable, or one of the most sustainable production systems in the world. It rains in Wales—I don't know if you've noticed—[Laughter.]—but other areas are short of water, so we need to use the resources that we have as efficiently as possible, and by working together, I think, that brings everything together in a good way.

So, the way of resolving the funding issue there is to really get to the fundamentals before we start expanding horizons.

Yes, obviously, we need to make sure that, in terms of marketing and promotion, brand awareness—all that has to be maintained, but there's no point going to a far country to promote and open—. Yes, having access is good, but when you spend a lot of money and you haven't got the product to go there, well, you do question, then— why go, isn't it? You need the product, don't you?

And I think just for information, perhaps, if I may, when we talk about exporting, it's probably different parts of the carcasses to different parts of the world. It's not that the whole animal goes to one place; it's different parts—tails to America, perhaps, or tongues to Japan—so it's not like a carcass. So, you need those open across the world, and industry, HCC and Government need to work very closely together on that.

Good, diolch.

Just on the funding part, you highlighted there, Prys, that obviously £4 million or thereabouts is the budget. You take out the fixed costs and the VAT—

That's £1.5 million gone.

—given your board experience, where do you see the critical line is on the budget for HCC going forward to be a viable proposition, rather than it just being a proposition that exists and functions day to day? Given your experience as a processor, a farmer, with board experience, and looking at other similar bodies that are charged with doing the same thing across the UK, and indeed, Europe, where would you say a sustainable budget line is?

I would look for increasing efficiency to start off with, before answering that question, really. Because if you just answer it as a status quo, you're talking about more or less doubling it, I would say, okay? But if you look at efficiencies—. I mentioned in my written evidence that I'm sure there are opportunities to work on non-competitive areas with the Agriculture and Horticulture Development Board, for example—it could be finance, human resources, the red meat industry reputational protection. So, there are areas where that could be done, and, undoubtedly, cost savings. And in the short term, I think that could well be a resource available to the current chief executive so that he could have more resource available to meet the challenge that he has.

Hannah's going to ask on collaboration in the final set of questions now, but with your experience and what you've just said there, a budget of £8 million or £9 million is roughly where HCC, to deliver a meaningful package of marketing, research and development and having value to the levy payers, needs to be pitching itself.

I think the wide remit of HCC at the moment and the number of areas it has to cover—. Attending the meetings is one thing, but contributing to the meetings and delivering different aspects is a different thing and you need capacity for that. So, I hope I've explained myself okay there, if you can understand what I mean. I could be here today and if I didn't say anything, it's no good me being here, is it? And I think you need people to engage and go away and deliver as well—it's not just about attending different things, you know? It's got to deliver as well, and delivering is effectively looking at the outcomes and the outcomes are really important here, I would say, in terms of brand recognition for beef and lamb and understanding that people are prepared to buy it as well, be that at a premium.

Before I ask Hannah to ask the final question, Sam indicated a supplementary.

Yes. Just on that, Prys, do you feel, then, that there was an air of comfortability around it, in that there wasn't the right challenge to make sure that HCC was operating at 100 per cent for levy payers in promoting the red meat sector? Did things become a little bit comfortable and sort of steady?

I would say that there would—. There was some frustration, I would say, and I don't want to be critical, in that there were several things pushing against the availability of Welsh stock, PGI Welsh lamb and PGI Welsh beef, for various reasons; a number of them being policy driven—TB, nitrate vulnerable zones, lack of security in terms of support with the changes to the support mechanism with the sustainable farming scheme. All those affect the production, so people don't want to invest either, because they don't know what they're going to get. I think the market price is very high at the moment and if it wasn't for that, I think we'd be having a lot more conversations.

Okay. Diolch. Thank you, Chair.

Hannah.

Diolch. The Chair just touched on, in the previous set of questions, you having the challenges and what needs to be put in place but also what needs to actually be delivered and make a difference. Your paper alludes to consideration of some shorter term measures that could help HCC to deliver those priorities against its remit. Is there any further information that you can provide to us today about what specific areas and what sort of measures you think they are?

Yes, if you look at—. We've got to look at it in a wider context, really, rather than just, 'We're in Wales and we can do it ourselves', and quite often, if you merge two businesses, the back office doesn't double in size. So, that is something that could well help in the short term and it could be going forward as a solution as well, because asking for more and more levy isn't going to be sustainable either in terms of the costs. So, if you compare it with Bord Bia, they're €1.90, I think. The farmer pays, per head, €1.90, which is basically twice as much the farmer pays in the UK—in Wales, then, I should say. So, you need to look at efficiencies. And I think HCC, then, has a statutory duty, really, to provide for developing the industry. There are funds at the moment that are available, but they're not going to HCC. It just needs joining up, I think, in terms of a strategy, going forward, to look at efficiencies and also to see where those funds can be bolstered as well; it's dual.

And if you look at—. I think, Sam, you mentioned research and development, but research is really, really expensive, and there are a lot of things that can be done. If you look at AgNav, what they have in Ireland, looking at the way that they're increasing sustainability activity, and measuring it and baselining it and stuff, we're way behind. If you process an animal in Ireland, you know the carbon footprint. Now, we don't have that ability. We need to get ahead of the game, really, and that's something that has been lacking. That's a recent development in the last 18 months or so, but we really need to get going. At the moment, individual processors are doing their own thing, and that's not going to be sustainable, and probably Government needs to come in. And what you have in Ireland is Teagasc and Bord Bia working together with Government to deliver these projects, which is missing at the moment. And probably those kinds of things needs to be done across England and Wales, not just in Wales, because it's not competitive when it comes to climate change and sustainability.

And potentially, you'd need collaboration with academic institutions as well.

Potentially, yes. I'm sure there is scope for that, yes. In fairness, that did happen in the past as well.

One final point from me, Prys, if possible: the previous Government set up international agricultural envoys in their embassies across the world. Obviously, you're part of an international processing company, in Kepak, across many countries. You might not have this to hand, but I'm just wondering, because we're talking about marketing, we're talking about trying to save duplication, saving costs and what might be the role in the future: have you, with your processing hat on, and bearing in mind that you deal in international markets, got anything to say on the ability to promote Welsh produce through those agricultural attachés that have been put in, as is my understanding, to specifically promote beef, lamb and farm produce in international markets?

I haven't got it to hand, exactly our involvement with it, because we operate quite widely across several different markets. But I do know that it's really important that, whilst we have a British sort of brand, which is promoted, we should make sure that we also have Welsh beef and Welsh lamb also included in that; it's not just 'British'. So, it is a challenge, I would say, on that, to maintain the 'Welsh' on that brand, if you see what I mean.

Is it possible, if the company do have any information on that, that they could provide it to the committee? Because, again, we've talked about budgets, we've talked about pressures, we want to try and avoid duplication and, obviously, squandering valuable resources, and, if those resources exist, we want to make best use of them, then. So, as a company, if you have any information that would be helpful—

Yes, I'll come back to you on that.

—that would be good. Prys, thank you for your evidence. I haven't seen an indication from anyone else with supplementaries or follow-up questions. Thank you for taking the stage on your own today and fielding the questions. I appreciate that Paul was due to be with you as well. But you've given us much food for thought, and in particular the papers that were submitted, obviously, will be very helpful in us formulating our report. The record will be sent to you, so you can have a look at that, and if there are any anomalies in that record please do liaise with the clerking team, but thank you very much. And now we'll move to the next session, once we sort out the IT and all the other bits and pieces.

Thank you for the opportunity. As somebody who has got his roots firmly in agriculture and the red meat sector, we want to see a thriving sector that has that critical mass, going forward, really. Thank you.

Thank you. Cheers, Prys.

Diolch.

Welcome, everyone, to the second evidence session for this morning's committee meeting. It's a pleasure to welcome the chief executive and chair of HCC to present their evidence. Thank you very much, both, for the paper that you presented to the committee, and the background information, which have greatly enhanced the abilities of Members to ask their questions. I will, for the record, ask you to introduce yourselves, the roles that you occupy within HCC, and then we'll go straight into questions, if that's all right. Catherine, if I start with you as chair.

Diolch. Thank you, Chair. I'm Catherine Smith, chair of Hybu Cig Cymru, Meat Promotion Wales. I'm currently in my second term of office as chair, and a board member since 2017. Just also for information, I farm in Monmouthshire with my husband and worked, for my career, largely in the red meat sector.

Good morning, and thank you. My name's José Peralta. Since 20 January, I'm the new chief executive of HCC. My background, just for the record, is I started in the red meat industry in Wales in 1995, and, largely, for about 15 years, I was the managing director of the second largest processor of red meat in England, in the UK, and the largest one in Wales.

Thank you. Obviously, there has been quite a bit of turmoil in the organisation over the last 12 months. How has that turmoil affected the outputs of HCC?

I can only comment on my observations since I've been in place for two months, so my comments will always be caveated by that. My observations are the following: it would be naive to say that it has not affected morale, because, obviously, of the turmoil created, actually, for all those hard-working people that may or may not understand the actual events that happened, or what they meant. And, particularly, the external scrutiny and particularly the negative narrative around it, has affected morale. However, I have to say, if I look—. And I had the pleasure—it was one of the things that this process helped me with—to work with all those staff quite heavily in preparing this paper, to understand what they had been doing, and I think it's remarkable that, under the circumstances, they actually had the output they had.

Catherine, as chair of some four years now, and, obviously, a board member before that, I'm going to put the same question to yourself.

Thank you for that. I'd echo José's comments that the work creating output of the staff has been tremendous. Just for context, HCC has a business plan that it delivers for the programme for government, and it operates then a one-year cut as an operational plan, and, over the last 18 months, HCC has delivered on all of its key performance indicators and outputs. Naturally, we'll talk in the fullness of time around budgets and budget challenges, and, when budgets change, outwardly, there may appear to be some changes in delivery, but, actually, in terms of that strategic delivery against the vision, and how that has been implemented in the business plan, in its operational planning, those KPIs have been met.

May I add, in addition to that, that this year's accounts will show a balanced set of accounts?

On the head count of staff, how many vacancies currently exist at HCC? Because, obviously, the capital that any marketing, promotion and research organisation has is its human capital, isn't it? And, obviously, the continuity of the delivery is affected if you have vacancies, especially a large amount of vacancies. So, as we sit here today, how many positions are vacant?

I would like to differentiate between vacancies and head count, and I'll explain why. If I look at head count, based on historical data, basically, at peak, about three years ago, the head count was 34 people working for HCC; today, we're at 29. So, the head count reduction has not perhaps been as big as the perception is. I'm trying to separate the head count reduction from vacancies. It would be wrong for me to say at this stage whether there are any vacancies or not, because one of the things that I have to do as the new chief executive is understand what we have delivered, what we need to deliver, understand whether the people that I'm getting to know and understand how they operate can deliver, and, if not, then there may be vacancies. But, at this stage, officially, we don't have any vacancies; we just have a lower head count.

So, how many staff have you got?

Twenty nine.

There are 29 staff at the moment. Sorry, I thought that was positions, that was. That's helpful to—

And, as I said before, at peak—I'm talking three years ago—we were 34.

That's helpful to understand, thank you. What is staff morale like, looking to the future?

Getting better. One of the first priorities that I had—. I mean, I knew that I was coming into an organisation that had come through some trouble, so I was not naive to it. Obviously, I didn't understand the depth or the breadth of it; I do now, to a much better extent. But the first thing that I did when I arrived in place, actually, was to meet with all staff and to implement a set of monthly meetings that involves all of the people that work, those 29. The last one, by the way, was on Monday, so they are happening regularly—it was the second one in two months—to try to understand what was bothering them, what they were worried about, and hence the question of morale.

The other thing that I am doing as well to try to make sure morale is better is, every time I'm in the office, I actually randomly pick an individual from the staff, and I mean totally randomly, and I ask them to come to my office, and I always start the conversation with, ‘What's worrying you?’, because I think that's the best way to actually get to know what's happening. Is the morale low? Yes. Is it getting better? Absolutely. It is my determination to make sure that it gets better every day. But I believe that the best way to make sure that morale gets better is by two things: having a clarity of purpose, and the second thing is engaging with individuals.

Okay. Thank you. Catherine, do you want to add anything to that?

I think the only thing I would add to that is to just reaffirm the incredible output of the staff over the last 12, 18 months, and I think some of that has been lost in the narrative, and that affects their morale, because they work so tirelessly. If you look at the make-up of the HCC staff, they are a cross-thread of the entirety of the Welsh farming sector. They're intrinsically linked to the farming sector. They love it, they're passionate about it, and they work incredibly hard every day on behalf of it, and I think it's really, really important. What I'd really wish to emphasise today is the tremendous work that the HCC team and its staff have delivered, and that that should be recognised, because, when it's lost in the narrative, that's incredibly damaging to morale. I think it's really, really important to recognise the work that's been going on.

Could I add to that, if I may, direct feedback from the staff from the session on Monday? Because it is relevant. When I asked that question, the response I got was, ‘Well, the biggest worry that the staff have today, it's waking up in the morning to find out publicly more bad news about our organisation’, particularly when they believe, correctly in my view, that they're delivering a lot with very little.

Okay. Thank you. Sam.

Thank you very much, Chair, and thank you both for joining us today on this. You're right, it's been a difficult period for HCC. Publicly and internally as well it will have been quite difficult. But in some of the evidence from processors we've heard phrases like HCC 'appears rudderless' in terms of its direction of travel. There's a lot of rebuilding to be done. This, obviously, with your appointment, is a de facto reset moment for HCC. So, what is your vision for the future of HCC going forward?

My vision for HCC is that of an organisation that is relevant, engaging, and, basically, focuses on environment in the widest sense of the word—I'm talking the environment of red meat and I'm referring to economic, earth and societal—and actually focuses on three key areas: one is trade development, the other one is the marketing of the product, and the third one is research and development, which underpins the brand, but also underpins the further development of the organisation. Now, that's a vision. Obviously, over the next months, we are going to embark, or we are embarking, in a more formal way to actually extract or understand from the levy payers in particular what their view of the vision is, because we can't create a vision in isolation. The most important people in delivering that vision are the people who I now call my customers, i.e. the people that pay the levy and actually pay our wages. We're going to embark on a formal consultation with them, having spent the last couple of months getting to know them personally by interacting with them, by having a coffee with them. The next stage is more formal and that will create a much more comprehensive vision around the work that I mentioned before.

So, just on that, that more formal consultation that you're looking at doing, some of the feedback we've had is that—you mentioned that coffee—it's got to be properly structured as feedback is going in.

Correct.

So, what work are you doing to ensure that that future consultation that you highlight in your paper as well for the new 2026-2030 vision really does give levy payers and stakeholders the opportunity to properly feed into the vision of HCC?

So, I think the key elements of any consultation normally are what questions are you asking, and we're preparing that. One of the—. Let's call it a questionnaire, that is there, but that's one way to describe it. And the second most important thing is who are the people that you're going to consult with. The people we are going to consult with, we're going to use the organisations that basically group the different types of levy payer to actually engage with them, because the nature of this industry is very dispersed, so it's very difficult in a consultation process to talk to every single levy payer. We're going to use the farming unions, the National Sheep Association, obviously the processors, we're going to do the large ones individually, and so on and so forth. So, yes, we're preparing it that way: what are the questions and who are the people?

There we are. Thank you. Catherine, anything to add so far?

Just that it's a really, really important exercise. The world's a very different place from when the previous vision was written. HCC recognises that, the board recognises that, and it is that reset moment, but it's an absolutely necessary reset moment because we're heading for very different times. We've got very different challenges. When I joined the board back in 2017, the biggest challenge on the horizon for the sector was Brexit. We've dealt with the war in Ukraine, the cost-of-living crisis, significant challenges in the sector beyond that, and they are going to continue. So, we need to look at what the industry needs and requires, and the resources it requires to do it, but we've also got to look at that wider challenging outlook.

So, it is absolutely necessary. It's a really key piece of work, and I think we have to be really blue-sky thinking and challenge ourselves to say, 'What we've done is what we've done, but what is needed in the future?' And that's got to be the leading question: what is required in the future and then how do we deliver it, and how does it need to be resourced?

Okay, that's interesting. So, looking to the future and how you deliver in the future, one piece of feedback we've had as well is HCC at the beginning was 'fighting the corner', was the phrase used, of the red meat sector, less so in recent years. Is that something that's core in your vision, José, for the future—fighting the corner of the Welsh red meat sector?

I'll answer that on a personal basis. I have been part of the red meat processing sector for 25 years of my life. I don't come from let's call it a Government background. I don't come from any organisation of this type; it's a new experience for me. I'm a firm believer in and defender of the red meat industry, and I actually think I understand it and can interact with, particularly, the practical side of processing quite well and the practical side of farming quite well by definition. So, absolutely. My vision of HCC is one that actually works on behalf of the industry, and I'm talking about it in the wider sense, as a conduit to not only help develop the industry and promote the product, but also to influence the powers that be and inform the powers that be what the effect of potential policies could be. So, I'm a very strong defender of the industry.

Okay, thank you. Moving on then, you've mentioned the research and development as well. What research is HCC currently undertaking to understand the evolving needs of consumers, motivations of consumers in buying red meat, potential growth markets? What work is it undertaking because, obviously, you're new in position, so there will have been some things where you will have gone, 'This is a priority for month 1, this is a priority for month 6, the first year'? Where does that future vision of where those emerging markets are come into it?

We do undertake research on two areas, in particular. One is: what is the consumer profile of people that do buy red meat, which is always key and important, obviously, to understand who is your consumer. And I can tell you, for example, that our research shows that the consumer is basically, 55 per cent of the products—of Welsh lamb in particular, and beef as well—are bought by households with no children, ABC1 in demographics, and basically living in the south-east of England is probably the best way to describe it. And actually, it changes by cut. So, if you actually look at mince, for example, it tends to be people with children. If you look at areas without children, it tends to be the more traditional cuts. We're also trying to understand the shopping occasions, so when do people shop, and in that case, for example, what happens is lamb tends to be bought in festivities, whether they're actually ethnic in nature, whether they're religious in nature, whether it's Easter, whether it's Christmas.

The second bit that we're trying to understand is where our markets are. The simple answer is our biggest market and the closest one is England. That's where people are shopping for our products. The second and quite important to us is the European Union, simply because of proximity. And then, normally, I tend to characterise markets in three areas. We tend to look at what is a discovery market, what is a growth market and what is a maintained market. So, if you look at the global market on export, for example, a discovery market would be, today, the USA, moving into growth, because we only started in 2021. Those markets, you have to invest in them for the long term, because you don't see a change in a discovery market overnight. Then you have growth markets, which are places like, today already, Saudi Arabia, because of what it needs and so on. And maintenance is the EU. When it comes to research, we commission it; we commission it with companies like Kantar. We actually spend about £100,000 a year in trying to understand what those markets are and how they operate.

That's interesting. So, obviously, we know the quality of Welsh red meat—I'm a big advocate for it—and the levy payers know the quality; they're the ones rearing the produce and understanding the value of it. How is HCC, then, conveying its research analysis to its levy payers, showing what the value for money to the levy payers is, of saying, 'Look, this is why you pay your levy; this is what you're getting in return for this. These markets, this is the benefit of having HCC'?

So, I'll first tackle how we measure it, and then I'll tackle how we try to communicate it. I think, first of all, how do we measure the effect, if I take, for example, our marketing campaigns, which is a typical example, we don't directly sell anything. So, I don't have in my accounts anything that says I've sold so much. So, we have to use more proxy measures to actually understand what effect it has. We measure, for example—and we don't measure it, we actually commission an external party to measure it for us—what, basically, the brand awareness is, and whether it's increasing over the year. And I can tell you that the effect, amongst other things, of our marketing campaigns over the last five years have actually moved the dial significantly on brand awareness across the UK, as Welsh. I can also tell you, quite significantly, that when we compare it to our peers, our competitors—in this case, for example, New Zealand lamb, in the case of lamb—we actually rank quite a bit higher. And actually the difference is increasing not only in brand awareness, but also in perception of quality and, similarly, in the propensity to buy. So, those are the measures that we use to say, 'Is our marketing campaign having an effect?'

And I forgot to mention something that is important—back to the previous question for a second. The other way that we find that we actually do more and more of understanding the consumer profile is by using social media. We have 130,000 people who actually follow our social media on a continuous basis, so we can use that to understand who are they, where are they, what do they show, what do they actually click on, and that gives a lot of information as well. But, fundamentally, that's how we measure the effect of our marketing campaign by proxy. And incidentally, it's third party, not ours.

Yes. Thank you, Chair.

Do you want to just cover off the 'how do we communicate'?

Yes. I think Hannah is going to come in on that point around the relationship with levy payers, so I didn't want to step on her toes too much, on how the market—

That's fine. I just didn't want to leave the question unanswered.

Sorry.

Just before I ask Jenny to come in on the question, in our previous evidence session, a very simple analogy was given over the lack of engagement with HCC and the processing sector, as an example, and Prys, who was in here from Kepak, said just dropping in at the plant would be welcome, talking of HCC staff. José, you talked about going for a coffee. Catherine, as the chair for the last four years or five years, is that a fair reflection, that there has been a gap opened up in that relationship, and something as simple as seeing HCC staff at a plant, a key part of the supply chain, has not been at the forefront of HCC's engagement?

So, I think one of the ways—. So, I think that engagement is critical, so we'll start there, in agreement: it's absolutely critical. And the staff work in a variety of ways. And again, bearing in mind that there's a team—and let's take it as of today—of 29, we do have to be careful with resources and time and placement. But engagement with levy bodies—levy payers, sorry—is absolutely critical. So, things like live-to-dead awareness days with our farming levy payers are delivered through our processors, and so that is a key example of engagement, and those meetings have gone on. I think they need to be accelerated. I was in a meeting with Kepak in October, at one of the trade events, and that conversation was one of the ones that we were having. And I think it's something that José will lead on in terms of what happens here, going forward. So, I think it is absolutely critical. So, it's about, where possible, being in the livestock markets; it's about, where possible, engaging directly with farmers. And if that can be a joint activity where, actually, it's helping the processors to get the right quality and specification of animals through their door by educating levy payers as to what that is through live-to-dead days, that's exactly the way to do it. And, yes, going forward, José will lead on that piece of work of dropping in and having the coffee, and that's what part of this reset is all about.

Just for clarity, my day 1 was meeting the staff; my day 2 was having calls on corporate governance on the basis of how the Welsh Government operates; my day 3 was phoning all the different stakeholders and people that participate, including processors, to try to line up meetings. And since then, I've been trying everything I can to actually meet with them, and I've met with a lot of them.

But it is a fair point that we did hear from the witness just before you came in that you accept that that relationship has become a little tighter, shall we say, in tension, because obviously those visits haven't been undertaken, and that interaction with processors has been lacking, and it's something that, as the new chief executive is now in post, will be rectified in future plans.

Correct.

Yes. I mean, I can't comment about what the wider staff have been doing. At a chief executive level, obviously you'll be aware that there's been two interims in the last 18-month period, and those roles have been holding positions, holding roles, and actually Prys was involved in the recruitment process of the previous interim, so would have been aware of that. It was a holding role; it was about stability; it was about dealing with internal matters, stability, returning to a balanced budget, and in the latter part of the year, preparing the organisation for change when it was evident that a new chief executive needed to be recruited to prepare the organisation for change. So, that wasn't that outward-facing role. And for an interim role it would be very, very difficult, actually, and possibly inappropriate under the circumstances, for that engagement to have been going on in that way. But the board absolutely recognised that the new CEO recruitment process absolutely had to align in a different way going forward. It was one of the reasons why José, with his experience in the processing sector, made him such an ideal candidate in the interview process, and it is about a reset relationship, and that's a relationship that can be reset with a permanent CEO in post. It would have been very difficult on an interim basis to talk about visions and strategy because the interim wouldn't have known how long they were there to be in post for. So, actually—

I'm grateful for the answer. I think the point being made was more about general staff rather than the CEO, accepting the difficulties that have gone on in the last 18 months. Jenny.

Thank you. Mr Peralta, you've made a big pitch for your previous experience in the red meat industry, which is great, but I'm also very interested in the experience you bring from Puffin Produce, because it seems that there's a danger of the red meat industry only seeing its activities and challenges in a very narrow focus when there are so many global challenges going on. So, I wondered, this paper that your organisation has submitted has such a huge list of a selection of activities going on in the last three years, I'm struggling to understand how your organisation analyses its value for money and the impact of the activities that it carries out. So, I wondered if you, for example—. You interestingly talk about a relationship with a large, UK-wide retailer, a digital campaign within a 1-mile radius of all English stores, and it secured a 10 per cent increase in visits to those stores, but did it lead to any increase in the sales of Welsh meat?

We don't know.

So, why did you do it, then?

Well, because—this is what I referred to before—the difficulty we have is we don't sell things, so I don't have a ledger to actually compare one to the other, which is one of my frustrations, but it is what it is. The reality is that the activity that we undertake is always to increase the perception of the brand, and it's always to increase the propensity to purchase. Now, having more foothold, i.e. more people walking through the stores, is by definition going to effectively have more people buying. If you ask me how many, I can't tell you.

However, the more important example that we quoted there, I think, from the point of view of how we're going to take things in the future, because it's quite efficient, is we actually invested money with Sky to identify households in a particular area, as we knew we had more ABC1 purchases in the south-east of England, so 54 stores over eight weeks, and in those households around those stores, basically they were getting ads that were targeted at them, and in that one, we do know the effect—perhaps not in pound notes, but we do know that 20 per cent more sales happened. We also know the effect that, not only that, but of that 20 per cent increase, 50 per cent of them were previously buying competitors' products. So, that, to me, is a much more efficient way to target it, going forward, considering our limited funds.

Okay. So, limited funding. Obviously the loss of the EU top-up to the levy. How are you going to shape your strategy to the size of the pot of money that you've got, both in terms of a dwindling budget, but also in terms of the other things going on in the world that you can't do much about? I was interested to hear you say that there's a growth market in the United States, when yesterday Trump imposed tariffs on the car industry, and I'm sure it won't be long before he imposes it on other industries.

I'm not sure what the question is, but I'll try to answer your comments in an organised manner. I will just say, first of all, I didn't refer—. The USA is a growth market in concept, because it started from zero, and we are selling some product. Whether that market is going to be tremendously growing or not, I don't know yet, because it is the nature of what happens with policies, the nature of whether the consumer accepts it or not, but it had nothing and now we are selling something. We'll see how it develops. So, as a growth market, you just have to invest.

On the tariff question, amongst other things, we actually have directly participated in giving evidence to the TPAG committee on what the potential effect of a tariff being imposed in the UK for meat products would be in the USA, and that's another one of the activities that we do. We prepare those papers. We do the analysis. We understand it. And we actually put it forward to try to make sure that, in this case, it doesn't happen.

I think with respect to how we're going to actually identify the funding, well, in reality, to develop the vision properly, we need, in my view, three key things. One is the input of the levy payers, as I've mentioned before. The second one is an understanding of whether more funding can be available or not. And the third one is that once we understand whether there is more funding available or not, then we can come up with a strategy, which is going to look very different if there is more funding than if there isn't.

In an ideal world, there should be sufficient funding for us to undertake all the areas that are relevant for the development of the red meat industry in Wales, and the marketing of the product of the red meat industry in Wales. If more funding is not available, we're going to have to make a choice, hence why it has to be done in that order, which is to understand what the customer wants, then understand what funds you have available, from whatever sources we can identify, and once we know that, we can decide whether we go for an all-encompassing remit, which, by the way, with today's budget would be very difficult to achieve, or do we actually find a way to limit our remit to what we can do, based on the input from those levy payers.

Okay. We've received written evidence from Dunbia. He wasn't able to come and give evidence in person today. But what the written evidence said is that there is that

'considerable duplication of tasks previously performed by other levy boards or major processors',

and also that

'marketing budgets have often been allocated to events that have made little or no impact on red meat sales'.

I wondered what analysis you've done of impact of, particularly, expensive international trade fairs et cetera.

There are two things I would like to respond to that with. No. 1 is that I welcome having the discussion with Dunbia or any other processor or any other levy payer, to understand the detail behind that sentence, and obviously if the detail is relevant and valid, we will act accordingly. The second thing I would like to say is, if I look at international events, which you have mentioned, the measure that we follow to understand international events is the number of contacts achieved and the potential of those contacts. Potential is based on asking those people that contact us in those events, 'How much meat do you buy?' and that will give you a sense of the scale of what we have.

For example, in the most recent event that we attended, which was the Gulfood exposition in one of the Gulf countries, we did achieve about 49 contacts, and more importantly, in this example in particular, which is good news, one of those contacts has resulted in business right away, i.e. we’re now actually one of the processors who is listed with an online retailer in the United Arab Emirates, which is something that had not happened previously. So, we measure the effect of it by the number of contacts. Those contacts are obviously passed on to the processors for them to take on. And in the countries that we can support or the processors think that we need to support, we also have agents in place to make sure that we can support those accounts.

Can I just add in to that? At those international events, it isn’t just about creating new opportunities. In those markets there are existing clients, and client maintenance is incredibly important, and you can’t do that unless you’re there and present and having those conversations. We’ve talked about communication and how important it is. So, there are two facets to those events: it’s about creating the opportunities that translate into sales, but it’s also about key account maintenance, and both of those things are really important.

On collaboration, it is really important to highlight—and José can talk more about it than I can—actually there’s a significant work stream on collaboration with other levy bodies, UK-wide and GB-wide, on non-competitive areas. The organisations meet across the year in all four nations, and we talk about what are the priorities for the sector in that context, how do we work together, what are the non-competitive areas—so, advocacy, defence, nutrition, environment, policy and data for trying to shape policy in a productive way that keeps farmers farming. Those meetings happen, those activities happen, and that happens at a chair level—less frequently, because obviously we’re non-operational—but at a CEO level and a senior leadership team level, and across all four nations. I think that’s really important to highlight.

Could I add some colour to that? First, there are quarterly meetings that happen between CEOs and chairs on those levy bodies, and I’m including all of them, including Northern Ireland. We’re now going to start to move into monthly meetings of let’s call it less senior staff, including me, to make sure that we have that alignment to actually be more constant, rather than just waiting for a quarterly meeting. Second, I can give you some examples, but I’ll use one that is very active today. We’re about to embark on a baselining of the carbon footprint of farms across the UK, basically studying the carbon footprint of 68 farms across the UK, of which we in Wales, HCC, wanted to support and do eight. And that’s done in collaboration with the Agriculture and Horticulture Development Board. So, absolutely everywhere that we can we work with them, as long as it’s not competitive in the sense of selling the product, because we still have to sell Welsh products.

Jenny, just before you continue, Sam had a supplementary on that particular point.

Just very quickly on this. How does the decrease in stock numbers impact this? Because aren’t you trying to sell less because less is being produced in Wales? You’re in all of these new markets, but you’ve got less produce coming through the supply lines in Wales.

Thanks for the question. It’s the most fundamental problem that the industry faces by far, and I’ll try to explain. This came as a bit of a surprise to me, because when I started in the meat industry in Wales, there were 35 abattoirs in Wales; today, there are 16. If you look at the concentration of those abattoirs in particular, basically four of them, whether it’s in beef or lamb, they’re going to do about 80 per cent of the total throughput. So, that’s the description of it, whereas in the past it was more diluted.

The second important thing is the scale issue. The most important or the most challenging part of scale is not necessarily whether there’s going to be enough or there are too many abattoirs for the throughput today—that’s important, but the most important thing is what it does for the consumer, and I’ll try to explain.

About 80 per cent of the red meat in the UK, beef or lamb, give or take the odd percentage, is sold via retailers. I’m talking about the large retailers, starting from Tesco all the way down to the Co-op or even M&S. That’s not a choice that we make, that’s a choice that the consumer makes, based on the proposition that they see and where they choose to buy. Once you establish that, you go, 'Okay, so what entices a retailer to put a product on the shelf?', and the retail industry in the UK is probably one of the most advanced in the world in how efficient it is as a supply chain. So, the primary effect is one of scale.

They think about the shelves as a square metre of value, and basically you’re always facing competition between, in the same space, that a leg of lamb is going to be sold at £30, but you can sell seven chickens at £6.50. So, the return that they’re going to get for the equivalent protein content is much bigger in chicken. That situation gets worse and worse as the scale diminishes. As a result of that, and this is a challenge that we need to face up to as an industry, effectively, it becomes more and more difficult to translate marketing activity into true sales, simply because the product is not listed. And if you ask me what you need to do to list the product, well, what you need to do to list a product is you have to utilise money to make sure that you can demonstrate to those retailers that putting that product on that shelf is going to be good value for money for them.

There's lots of complexity to what you're saying, because about two thirds of all households never cook from scratch, so this is the challenge. You're reliant on the processors dishing up things that people who have lost the skill to cook can put in the oven. So, it's really complicated—

It is very complicated.

It's complicated. And on top of that, we've got our net-zero obligations. So, growth isn't necessarily the right target when we're being told to eat less but better quality meat.

If I may, could I tackle the net-zero question, which is very interesting and quite relevant? First of all, analysis that we have demonstrates that the production of lamb and beef in Wales is one of the lowest carbon footprints that actually exists in the world, and logically you would think so, but the data supports that concept. Work that we did in 2020 shows that—'The Welsh Way'—and further work that we’re actually doing and finalising now on life cycle assessment also hopefully will demonstrate the same.

The problem with carbon neutrality and carbon zero is that if you take the local view—and I’m talking the Welsh view alone—you run a very strong risk of, if you assume that red meat demand is going to be static to up—and at the moment, it’s slightly up, by the way—effectively what happens is that you end up with carbon leakage, i.e. you end up importing more. And you run the risk of importing more red meat products that actually, effectively, are worse for the planet. So, indirectly, by trying to achieve carbon neutrality at the local level, what you could be doing is essentially increasing carbon numbers across the world. And that’s something that I think needs to be considered as part of that discussion.

Absolutely, because that's why we had the Well-being of Future Generations (Wales) Act 2015. But I was very interested—

Catherine, did you want to address Jenny's point?

Yes, please, if I could. It comes to the point of also advocacy and defence, because this is really key critical, I think. José outlined exactly the case for Wales, for Welsh red meat—PGI Welsh beef and lamb being some of the most sustainable in the world. On that advocacy piece and defence piece, HCC has, since June of last year, been engaged in the sustainable farming scheme ministerial round-table, with the executive on the officials group, myself on the actual round-table, and also taking part in the carbon sequestration review panel. And the work of that panel is key critical.

The recommendations are public and they've been fully accepted and the executive summary is published. The full report will be published, I understand, in the next months or so. That is a key area where HCC has spent days and days and days in meetings, in consultation, to actually demonstrate both the worth of our industry, the value of our industry, but also the really difficult and complex environment that will materialise if we don't get this balance right going forward.

And so, I would highlight to this committee the recommendations of the carbon sequestration review panel, and to stakeholders that full report, because it really, really is important, because we cannot have a buoyant farming economy in Wales without livestock on the ground and without our incredibly important processing sector. So, it's about maintenance of that sector and it is really, really key critical that that is recognised and that, actually, through shaping the sustainable farming scheme, we do actually keep farmers farming and our supply chain moving—

I accept all of that. I accept that grass-fed meat is definitely going to be much more carbon neutral than stuff fed on soya by tearing down the Brazilian Amazon.

We heard from our previous witness that AgNav in Ireland now has the capacity to capture the carbon emissions of the carcass A that's slaughtered on a Monday morning. Obviously, we are well behind that curve in this country. Because we understand what you're saying, but the point is how are we going to get that message out to consumers. And unless we can demonstrate that that's the fact, how are we going to do that? So, what would your strategy be, José Peralta, for—if you like—modernising our abattoirs?

It's been brought to my attention before and I think it's key and paramount. The reality is that for the last number of decades, UK meat is being bought on the basis of conformation and fat level, and we need to get to a state at some point over the next coming years in which we also then have a number that allocates what is the cost and the price of, say, carbon footprint of that production of that animal.

To me, the most important thing—. There are two factors. One is that, at the end of the day, we have to have a very strong debate across all the levy-paying bodies, and across England and Scotland and so on, because it's important that it is the same for the UK, on what is the right measure, what is the right calculator to use, agreeing one—and by the way, there's no perfect calculator; they all have their inefficacies and doubt—but we have to agree on one quite quickly.

And then following that, we need to agree how is that going to be translated into what goes on the label. It's a priority, and the first step is let's agree on a calculator, then let's disseminate what calculator needs to be used, and then actually embed that in the industry.

Okay, but given they've devised a message in Ireland that's going to obviously get marketed, how quickly are you going to be able to either agree that that methodology is the correct one, or that another one—?

I don't know.

Okay, but you can see that consumers are wanting to see traffic lights on their product.

I recognise it's urgent, but I cannot answer the question how long it's going to take.

Okay. All right, can I just move on now to the governance arrangements? Obviously, Catherine, you've been on the board since 2017. Your paper says that the current governance arrangements strike the right balance between freedom of execution and accountability oversight. How independent are the board members—because that is the fundamental of good governance—in being able to challenge the executive and ultimately get rid of the chief executive if they're not doing the right thing?

Well, leaving the latter point to one side, the board is completely independent. Obviously, we're ministerial appointments, so chair and all board members are ministerial appointments, and you'll see the appointment process was set out and accepted from the HCC review back in 2016 by Kevin Roberts. So, whilst it's a ministerial appointment, HCC is involved in that recruitment process, as is an independent member of the industry.

On how the board interacts, we're completely independent. We have the governance framework set out in the document. We have a framework agreement and delegation agreement that we have to operate within, which is in all good governance structures; that's the structure of HCC. We meet quarterly, so José and I would meet quarterly with the Welsh Government in governance meetings, and we also meet on a monthly basis.

In terms of independence and objectivity as board members, we're completely independent. It's a board that is currently made up of a real cross-section of the industry, so farmer levy payers, supply chain, sustainability, marketing, really strong governance experience, somebody from a plc background with significant commercial experience.

So, we've got a real cross-sector of industry expertise to be able to represent the industry, and we act in the best interests of the levy payers within a framework of governance that surrounds us. That framework of governance is there to support the board, but it's also to ensure that the right codes of conduct are followed, but we're absolutely independent and able to act in the best interests of the organisation. The board's remit is strategic oversight, so that vision of the future, which is why this exercise is so important.

It's also about governance and it's also about delivering fiscal responsibility, which is why it's incredibly important to highlight there are financial challenges, but we're coming to the end of this financial year and HCC is delivering a balanced budget. And that's taking on board and into account the change in VAT status that happened on 1 April 2024, as the same happened with Quality Meat Scotland and AHDB.

Okay, so where do you get your external challenge from on some of the really chunky challenges around what happened as a result of Brexit, which obviously led to the loss of both markets and financial resources, as well as how the red meat industry faces up to the climate challenge? Plus I could throw in the trade wars that are likely to hugely disrupt everything that's going on—

So, how do we take on those challenges, effectively? Is that the question?

Yes, certainly.

It's a good question and a fair one. As you would imagine, if you go through our corporate documents, and if you have time, they're all on the website, so whether it's the vision, the business plan—

You're the chair, so I want to hear how you ensure that you're fit for purpose in light of a rapidly changing and uncertain environment.

It's about being agile, it's about being informed, and it's about being fleet of foot. Some of that is about board members having accountability for their roles and ensuring that they are abreast of all the issues. The majority work in the sector and the industries that surround it, so that is by its very nature going to happen. It's about the quality of the information that comes in from the executive to the board, as well, but it's also about being outward looking. We have to be completely agile and fleet of foot at the moment, and the board is really sighted on a tremendous amount of challenges, and has been for some time. If we take critical mass alone, that's been something that's been a significant challenge and taken up much conversation in the boardroom over a significant period of time, and it's great to be able to be involved in the ministerial round-table to try and shape policy, as one way around—

Okay, don't let's drift back to that, let's focus on HCC.

So, it's about being agile and fleet of foot, being informed and quality board members. It's about having that breadth of expertise, as well. You mentioned a whole range of things there. We've got to be representative of the industry we serve, so it's really important that there are levy payers present, that we've got the supply chain present. We haven't even touched on animal health, but we've got two new board numbers joining. One has got significant expertise in animal health, that's key critical for both our trade perspective, internally, but externally with exports, but also from a perspective of that journey to net zero. Animal health and productivity is a key part of that.

So, it's about the right mix on the board, sufficiently challenging ourselves internally, but also challenging the executive to deliver the right things at the right time, and horizon scanning. The importance of data to drive that strategy for the future is really key critical. You can't foresee what the challenge and vision should be if it's not informed by data. So, a really important piece of work that the team internally do is on data and horizon scanning, what's coming next. Some of it comes out of the blue, like the news yesterday, so we have to be agile and fleet of foot.

What conversations have you had with the Welsh Government around strengthening HR within the board?

In terms of any board recruitment process, we always look for a wide breadth of expertise, and it's always about marketing that role well, but you've got the pool that you've got to come in. So, we've got, I would highlight, some incredibly experienced board members when it comes to corporate governance, and that incorporates dealing with complex matters that sometimes are linked into HR. Obviously, as an organisation, we're supported by external HR functions, and we take advice when we need it—

External HR functions—you mean from your executive team.

There's a senior HR member in the executive team, but from a board perspective, we also seek external HR support when we need to.

Okay, because the purpose of the non-execs is to provide that independent challenge, is it not? So, this is what I was—. Because clearly you want to make sure that the organisation as a whole is as effective as it needs to be. I'm bearing in mind that the previous witness we had, Prys Morgan, was clearly very unhappy about the governance arrangements, which led to him feeling that he needed to stand down from the organisation. So, I think there is an issue that I want to ask you about, which is around how you're strengthening the governance to ensure that the non-executive role is fit for purpose.

There are a couple of things in there, so let's unpick them and let's deal with—at a high level, because there are things I can't say—the last 12 to 18 months. Fundamentally, the governance of the organisation is the responsibility of the organisation, and if challenging issues occur, then they have to be dealt with, and it is absolutely right that, in those circumstances, the right advice is sought to enable the organisation to deal with that in the correct way. That is exactly what happened in HCC. Issues became apparent, they were dealt with immediately; independent legal, HR—

I just want to say that we're not necessarily looking at the issues that have affected HCC in the last 18 months. In fact, we're not looking at that. But I think Jenny's point—and correct me if I'm wrong, Jenny—is having confidence that the non-executives, going forward, because that's what this committee's looking at is the future, have the skill sets and the ability to hold the executives, on a day-to-day basis, to account and seek best value for levy payers and best value for the remit that you're offered. Am I correct there, Jenny?

Yes. It's the role of good governance to be the critical friend of the organisation.

Yes, absolutely. The board does that well, and the board does that well because it has incredible strength of experience on corporate governance matters, and that's a wide description for experience of dealing with complex matters of a governance kind. So, again, it has a very broad approach. If we only had corporate governance on the board, we wouldn't have dynamism and insight and sustainability; we wouldn't have the understanding of marketeering. So, it's really important, when you look at HCC's statutory remit, that the board is a broad church that covers all of those things. We are currently a board, as of 1 April, of 10, and across that breadth of experience we have that covered.

If you ask me have we got a specific HR professional on the board, no, we don't, but when we don't have that, we seek that independent advice in, as and when it's required, which is exactly the right thing to do. Because if you were to ask to have industry expertise plus HR—. You've got to be able to pull from the pool of people who apply. We always put out an incredibly broad call to ensure that there's that broad structure of who we require. But that board is strong. It's incredibly strong on corporate governance, it's incredibly strong on its delivery across all of the remit, and when it's required, external advice is sought.

So, you don't analyse the strengths and weaknesses of the board before you go out to recruit to a vacancy.

Absolutely we do. If you look at the last recruitment process, there were particular areas of expertise that we were seeking, and they were finance, legal and HR and supply chain and governance. So, those were the core areas that we were looking at in the last intake. In the previous intake before that, we were looking for marketeers and sustainability. So, the requirements of the board in every recruitment process are based on how many vacancies there are, what are those vacancies, what are the core skills in those vacancies that are exiting the organisation, and how do we ensure that, across the breadth of the board, we've got what we need. So, absolutely, Jenny, that happens, and every time there is a different focus on what we need to bring back into the organisation.

And how do you—

I'm just conscious that time is tight. This is a very important area and I think we might want to follow up with some written questions. But I'm just conscious that we're at nearly 11:30.

Okay. I saw that José wanted to just—

José, if you'd like to just add, briefly.

I just wanted to add something as an executive on the board. I have extensive experience in belonging to boards of very large organisations—at peak, a board with 27,000 employees in it—in the UK. There's always this tension on the board about the composition of the board. In our case, the tension is actually determined by three factors. One is cost—it's not the most important one, but it's one. The second one is the functional composition of the board, whether there is enough HR or not. And the third one is the representation on the board from the point of view of levy payers. And those three factors are always under tension. So, inevitably, what happens in boards is that you end up compromising in some areas. So, if you take your example of HR, it's absolutely fundamental to have HR expertise in the organisation, but when it comes to compromise, there are 29 of us.

Okay. That brings you to the management of conflicts of interest, because a lot of people bring their own interests, their desire to go on the international trips—these sorts of things can play a role. So, how do you manage that?

So, as with any board, you’d expect that there is a declaration of interests register.

Yes, but that’s the basic.

Well, I think, given your very particular example of who goes on the trade trips, no, this is a really prudent board, and it delivers on the governance and business activities of HCC, and additional board activity is only on a needs basis. And the majority of that and the expectation for that is, actually, engaging with our levy payers and stakeholders—and that’s a conversation we’d still need to get to—at events, but they are always GB based. Even as chair, my travel is incredibly limited, and quite rightly so, because, actually, operationally, that is the delivery of the executive.

Thank you.

Hannah.

Thank you, Chair. Thanks. We touched on, quite a while ago now, the relationship with levy payers and, I think, Catherine, you wanted to come on to how you communicate with them a little bit more. So, perhaps, if I first touch on that, in terms of anything you might want to say in terms of engagement with levy payers, but also how you would perhaps both view the relationship now, and obviously, as with anything, there always can be improvements to be made. How would you reflect on how that could be improved, moving forward?

I'll start by describing how the organisation currently engages with levy payers. I'll focus on the farming communities, simply because they are the largest by number, and by their nature the most difficult to communicate with, simply because how dispersed they are. We usually have one-to-one meetings, and I have already had two with the farming unions, as a conduit to communicate with them. I also have, incidentally, agreed with the farming unions, and am quite happy to actually do so with the other farming unions, to present in the quarterly regional meetings myself, so they understand how and what we're doing. The second thing is, we obviously present also in one-to-many meetings. Members of our staff go and present in the relevant meetings with farmers to discuss what we're doing and how we're developing. We also write in their monthly magazines—the farming unions, both of them. There's actually an article that comes from us in particular key areas of interest. For example, I believe, in the last month, it was one about sustainability. And the other key event that we actually interact with them is, obviously, the conference that we have, which is an opportunity for our levy payers to come, and in particular there is one section that is 'Ask the board', in which they can ask any question they want. It was attended by about 130 or 140 people last time, and we would like more to attend this year. The second key event in which we actually engage with people is, obviously, the Royal Welsh Show, and the winter fair. Can we do more? Absolutely. Will we do more? Yes.

And I think, adding to that, on a practical basis, and I think this comes back into the role of collaboration and the importance of collaboration as well, usually, we have a roadshow event every year, and the focus of that is slightly different. So, in 2024, we had a roadshow of farmer forums. The purpose of that was about engaging in what we are delivering and for farmers and levy payers to be able to engage with HCC on what we’re delivering and ask any questions that they wanted to. So, that’s an example from 2024. In 2025, one of José’s first jobs was to engage on part of a processors and butchers clubs roadshow, which, again, was exactly the same. And the focus was on what HCC is delivering, the ability to ask any questions and also feed into what those stakeholders and levy payers needed, going forward. That’s a really key way in which we try and do things. Obviously, it’s a small team—29—so you can’t be everywhere at all times. From September of last year, we also had an agreement with the Livestock Auctioneers Association that, in key markets, at key times of the year, HCC staff would be present. It isn’t possible to be at every livestock market every week, across Wales, but in key markets and key times, HCC staff will be there.

And more fundamentally still, I think a really important thing to highlight is the collaboration and relationship with Farming Connect. And so, Farming Connect, again, they have a roadshow of events put on every year, and, in 2024, HCC went along to those as speakers and as supporters. And it was an opportunity to engage through the Farming Connect programme, through their wide network, to talk about the work that HCC does—not duplication, not additionality of events, not duplication of levy spend, which is really important, but using those keynote events, working in collaboration, but talking about HCC delivery. So, we’re trying to really, really work smarter with a diminishing budget and a tight budget, but to try and communicate in a variety of ways and in a variety of methodologies with all of the levy payers as best as we can. And I know, in the document, you've got further details on newsletters, bulletins and what we do on social media as well. So, that gives a flavour of just the last couple of years.

Thanks. You said that the balance is between the levy payers wanting to know they've got value for money but also how they can influence too. The role and the voice—. We've used the word 'stake' several times today, but it is about having a say and a stake in the organisation that they provide funding for and how it represents them.

Yes, and that 'Ask the board' question-and-answer in the conference is always a really, really eventful session, with lots of really, really good-quality questions, and questions that HCC relishes the opportunity to be able to answer. I suppose it leads naturally into the segue of, 'The world is very different from when the last vision was written; we're now on the precipice of what does the next vision look like.' That engagement, HCC utterly recognises, is key critical.

You've touched on collaboration as well. You were talking about working with other organisations, like Farming Connect, and things like that, and the role you play in trying to get around livestock markets, but also the Royal Welsh Show and the winter fair. I know you do quite a bit when the fairs are on, but have you given any consideration—if we're talking about collaboration and having the visibility—to where the organisation perhaps should be permanently located, on that site of the Royal Welsh Show, or anything else you can do to actually build that presence?

I have given it some thought, yes. Whether my opinion is the right one or not, I don't know. When it comes to location, you always have to consider three or four things. One is what is the right location for the levy payers, two is whether or not it's the right location for the staff, and three is what are the cost implications of that. And there are arguments that say—. Some of the arguments around those questions say that perhaps we should consider moving to other locations, but you always come back to, 'Your staff are based where they are based today.'

What we have done for the sake of efficiency is the building that we're actually currently located in in Aberystwyth we own—that's on our balance sheet—but we were actually renting some facilities for storage of stuff. And one of my first actions as a new executive, once it was identified—we had a short window—was to actually cancel those rentals, at a tremendous saving for the levy payer, and we did a similar situation with EIDCymru, who are actually moving offices. It's not directly relevant to the levy payer, but it's relevant to the Welsh Government savings.

Chair, do you want me to just touch on the one question on collaboration now—

Please.

—because I'm conscious of time? A lot of it has been covered already, but it was just on something in earlier evidence today on that, around the relationships not just with the industry and levy payers, but the wider sector and then other stakeholders, decision makers, whether that's civil servants and politicians. I don't know what thought you've given to how that can be built on, moving forward, as well.

Sorry, could you repeat the question? I'm not sure—

Yes, sorry. We heard evidence earlier talking about that relationship not just with the levy payers and the industry itself, but actually how, perhaps, that relationship and communication could be strengthened with wider stakeholders, whether that's civil servants, politicians, people that you want to seek to influence or levy payers want you to influence.

I understand. I'll answer that as the new person in the room, if I may, because the one area that I have little experience of is that actual relationship with the Government—I'll make that quite open.

That's why you look so young.

That's why I look so young. You don't want to guess my age. The reality is that it's been refreshing to me, because I perhaps came into the organisation with a particular bias view of what the relationship would be, based on what you see around the world, around, 'You're nothing to do with HCC.' And the reality is that I've found the Welsh Government very engaging. I've found our relationship with the Welsh Government—the one I've had so far—incredibly helpful, co-operative and listening. And that's the truth, as an external observer until now, from the point of relationship. Can we do more? Of course we can, and we're working—. I'm still in the process of trying to learn who's who, how and who influences, but the relationship so far, I've found it very healthy.

And I'd add to that actually, as I think the relationship with civil servants is very good, very strong. There's a lot of work to do at the moment on behalf of the industry, and it's in the spirit of collaboration, and that collaboration is very strong. I think an interesting thing that we are considering as part of the vision is what engagement we can do politically in that sphere, and maybe there is a sponsored event that is required so that we can get that wider engagement with all politicians and all parties to ensure that you get the opportunity to share your views and have those wider conversations. And, more broadly than that, the HCC door is open, the phone is always on and we always welcome having those conversations.

Thank you, Hannah. Luke.

Diolch, Cadeirydd. I'll focus in on funding in the time that we have left. We hear quite regularly that the funding situation at HCC is challenging. So, what, in an ideal world, would your preferred funding model be?

I'll give you my opinion, based on what I've looked at so far. I'll start with, if you look at what are the advantages of the Welsh Government owning us, effectively there are two, in my view. One is it gives it the ability to actually support the organisation, and, two, it acts as a funnel to try to co-ordinate as a third party what could be a very different set of views and opinions, whether you're a processor as part of the industry or whether you are a farmer as part of the industry. On the funding aspect, I don't know if you had a chance to look at the graph that we published in the paper, but, in very simplistic terms, what it shows is that, for the last 10 years until last year, in today's money, corrected for inflation, this organisation had double the income that it has today.

In a perfect world, I think if you go and compare with other organisations, and let's take, for example, Bord Bia, which has been mentioned recently by other people, if you look at Bord Bia's accounts—. And it's relevant because we compete with Bord Bia. We go to the same markets. In the UK, they sell Irish beef—in the export market, Irish beef and Irish lamb. And if you look at comparators, basically, Ireland kills 1.8 million cattle a year and 3 million sheep—more than Wales, by the way—and their model is they have a total income in 2023 of €100 million, of which €6 million was levy, €10 million was actually their own activities, and the rest was effectively Government funding in whatever colour, guise or shape. That has advantages and, to me, the biggest advantage is that it demonstrates the Government support with money in developing the industry, whereas if you just put it down to levy, effectively it is the industry who has to pay—an industry that, traditionally, no matter what the prices are, has not made a lot of money. Whether you're a processor or a farmer, effectively you always end up shortfalling. So, if you ask me the question, ideally this organisation needs double the amount of money that it has to even have a chance to be relevant in tackling the scope that it has. Now, that is not possible. In an ideal world, I would advocate that it would say, ‘Well, if you want a model that could operate, basically, whatever the levy payer money, it should be compensated with funding from external sources in a similar quantum.'

Okay. So, the Government should be signalling its intent—

If you look at the potential sources of where you could get the extra funding, they're very limited. You could borrow from a bank, and we can't do that. We can do our own activities, but we don't have the scale to actually make the income from those activities to be enough to actually put enough money in the kitty, as it were, or we can try to get funding from the Government. So, you end up quickly going down that avenue.

So, thinking about those alternative sources of funding, then, you pointed to Bord Bia’s activities. You addressed that just now in your response. What is HCC doing at the moment to look at some alternative sources of funding? For example, research and development—are there conversations happening with the university sector?

Yes, we work with universities constantly. We also, for example, actually pay for scholars to actually do a PhD thesis on topics that matter. But I think we need to differentiate between that activity, to try to give background research and development and commission research and development, and having an income from that. I'll put things in perspective. Going back to Bord Bia, yes, they get €10 million, but, as an organisation, they’re 10 to 15 times our size. So, if you try to then compare it, even if we were to attempt to try to get income that way, it would mean that we have to get additional resource, because we don't necessarily have the expertise to go out there and, say, become consultants, and once you bring the resource and you take the income, you end up with a very little gain, which, yes, will create a stable organisation, but not one that actually changes the dial as it should do.

Can I just add to that? It's absolutely fundamental and right that HCC looks for alternative funding sources, and it has been doing that, and it's got a dedicated team that is looking towards alternative funding sources. The reality is that, in the current climate, those pots are finite, and they're difficult to achieve. So, I think, again, in the paper there are examples of the Arfor challenge fund, there's the catalyst fund that was looking at lamb eating quality, and there are others in the pipeline, but they're so small in comparison. They are awards of £100,000, or they're small-scale awards. They're not those overhead-supporting costs that enable scale development and those groundbreaking changes. We've been very fortunate in the past to benefit from things like the red meat development programme. Those sorts of scales of funding and activity drive change and drive outcomes that can support the industry going forward.

It's really important just to highlight that that work is going on and that search for external funding. It's got to be the right funding—it can't just be 'It's money'; it's got to fit the remit. So, that work is going on, but it's not available out there at the moment at the same size and scale that we've seen in the past, and that's a challenge.

I'm looking at the time, Chair.

Thank you, Luke. Just one brief supplementary and then the session will come to an end.

Thank you. When we took evidence from the FUW previously they said they weren't supportive of the previous levy increase, and my understanding is that the roadshow wasn't very well attended on this and the online briefing had a handful of attendees. Why did the board recommend to the Welsh Government the increase to the levy previously when the feeling was against, or there was a lack of positivity around an increase in that levy?

Are you talking about the recent one that happened last week or the previous one?

The previous one.

I couldn't comment on that.

No. Cath.

Thank you. The board signed off on a really robust consultation process, No. 1—really, really important. It was a process that board members supported. I was at the roadshow in Carmarthen, I was at the roadshow in Crickhowell. So, the process happened and the information was brought back to the board, and on the basis of the information that was brought into the boardroom, the recommendation was made to support that levy increase that went up to the Minister. Sat here today, could we have done things differently if we did that consultation again in 2025? Would I like to see it done differently? Yes, I would, but the board signed off on a really robust consultation process, and that was the process that was followed.

Because it's often the case that you can lead a horse to water, but you can't make it drink. You can try and be as engaging and thorough in a consultation process as possible, but if people don't attend the roadshow events and don't attend online, then the evidence is quite weak in that sense. So, that's helpful if future ones would look to be done differently, Cath.

I think it's always really important to learn the lessons and to do things better going forward.

Thank you, Chair.

Thank you. Thank you both for your evidence and in particular your written paper as well, which has informed the evidence gathering we've undertaken this morning. A record will be sent to you of the proceedings if you would like to have a look at that, and if there are any anomalies that you feel misrepresent the position that you've put over to the committee, please engage with the committee clerks. But, other than that, I'd just like to place on record the committee's sincere thanks for you coming along today and wish you well in your endeavours in the future. Thank you very much.

Thank you for your time.

Diolch. Thank you for the opportunity.

Could I draw committee members' attention to the papers to note? Are there any questions on those papers? Okay.

Could I have a proposer to move into private session?

Proposed.

Second?

Second.