Select Committee on Agriculture Second Special Report


APPENDIX (continued)

AGRICULTURE SELECT COMMITTEE: IMPLEMENTATION OF THE COMMITTEE'S RECOMMENDATIONS

Third and Fourth Reports

(1998-99 Session): The UK Pig Industry

General Update

1. The Government welcomed the Select Committee Report as valuable contribution to the necessary debate on the future of the British pig industry. While it did not agree with all the comments and recommendations, its stated wish was to build a constructive relationship with the Committee as both are striving to achieve the same thing, an efficient and effective UK pig industry.

2. Progress has been made in a number of areas covered in the Committee's Reports and comments on each individual conclusion and recommendation are set out below. The Government fully recognises the exceptionally difficult circumstances the pig industry went through during 1998-99. While pig producers were used to dealing with the cyclical nature of the pig market, this downturn had been the longest and deepest in living memory. However, in March 2000 the average market price went above the accepted break even point for the first time since June 1998.

3. Since the end of June this year the UK average market price has remained relatively stable at around 101p/kg. For the generality of producers, this would give a return over total cost of about £5.00 per pig. This is a reasonable return, but unless it continues at or above this level for a year or more, it will not allow many producers to repay much of the debt they incurred during the crisis. Furthermore producers in East Anglia are still facing difficulties because of the outbreak of Classical Swine Fever in early August.

Specific Action

Harmonisation of animal welfare standards

Recommendation a): The current disparity in legislation on stalls and tethers between the UK and the EU is acceptable only if the UK is leading the way to higher standards across the Union. The Government should redouble its efforts to secure an early and positive review of EC Directive 91/630. While retaining the right to introduce national measures on animal welfare and consumer standards, we feel that when such measures weaken the competitive position of the UK industry MAFF should consider appropriate and limited compensation for the essential change. We regret the fact that the EU standards have been allowed to lag so far behind the UK's and want to see any future changes in animal welfare legislation imposed and implemented on a uniform basis throughout the EU.

4. The Government supported the Committee's view that, wherever possible, future changes to farm animal welfare legislation should apply on an EU wide basis. It is for this reason that, while retaining the more stringent provisions in UK legislation, we have continued to press for the completion of the long overdue review of the EU Pig Welfare Directive. Following requests from the European Commission, officials have provided information on implementing higher welfare standards to the Commission. The Government remains committed to the need to review the Directive and will keep on making its view known. A Commission proposal to implement the Directive should be issued shortly.

Producer costs and UK agricultural competitiveness

Recommendation b): While we recognise that farmers in other countries often face particular burdens not encountered by UK farmers, higher costs for UK pig producers confirm the Committee's frequently expressed view that successive Governments have been too quick to impose costs and burdens on UK agriculture without adequate consideration of the impact on competitiveness. We repeat our call to MAFF to be more aware of the financial implications flowing from unilateral actions in the UK.

5. The Government recognises the importance of minimising burdens on producers. That is why in September 1999 the Minister of Agriculture, Fisheries and Food launched a review of red tape affecting agriculture. Three industry-led working groups reported in December 1999 on three priority areas identified by the industry: IACS and Inspections, Intervention and Meat Hygiene and Slaughterhouse Rules. Government accepted 98 of the 107 recommendations made. In addition a number of other issues identified for review have been considered in bilateral discussions between MAFF and industry. Implementation of the recommendations is a priority under the Strategy for Agriculture. Updated action plans showing progress to date were published in July to contribute to the Industry Forum and were published prior to the Forum's meeting on 23 November. Simplification of regulations is also being pursued in Brussels.

Farm gate and retail prices for pigmeat

Recommendation c): The onus is upon the downstream processors, manufacturers and retailers to ensure that their profit margins are not at the producer's expense, thereby undermining the long term viability of the UK industry. We remain unconvinced that the majority of the industry after the farm gate - abattoirs, processors, manufacturers and retailers - either understands this or is ready to act on it. On the basis of the evidence provided to us during this investigation it is difficult to make detailed judgements about the specific concerns expressed to us by pig farmers about retailers. However, the Office of Fair Trading is currently investigating pricing practices of retailers and will be reporting its findings soon. We eagerly await the OFT's findings and, depending on the results of this study, may return in future to the issue of retail margins made on pork and other fresh meats and to the ability of supermarkets to dictate contractual arrangements to their suppliers. We also consider that the retailers and manufacturers should support government efforts to provide for higher standards of animal welfare by not directing their purchases to cheaper producers elsewhere and by insisting that European suppliers maintain the same standards. It is also probable that some parts of the UK supply chain are less efficient than their EU counterparts. This too deserves further study.

6. The Minister of Agriculture, Fisheries and Food expressed its view that the whole industry needed to recognise its common interest and work together in the interests of the consumer and the wider economy. To that end, the Minister set up the Food Chain Group and asked it to review the opportunities for joint working and increasing understanding amongst the players in the food chain, including consumers. The Food Chain Group's Report set out the challenges that all parts of the chain need to address if UK agriculture and food businesses are to survive and thrive. The Minister welcomed the Report, stating that the Group rightly stress the need for action by both businesses and Government, leading to results.

7. The Government followed this work up in May 2000 by launching Foresight - a National Debate on the Future of the Food Chain. Over the next ten to 20 years the UK food chain will face complex opportunities and challenges. Many issues will be sensitive and there will not always be easy answers. For example, pursuit of low prices should not be an excuse to undermine traditional farming methods. But failure of the food chain to understand, harness and above all communicate the issues and the choices they imply for the future of the sector could affect the health of the nation and our countryside, and lead to a loss of global competitiveness and a reduction in GDP.

8. The Government recognises the existence of weaknesses in the pigmeat supply chain. Three pig sector projects addressing related issues were given grants under the Agriculture Development Scheme 1999, including an industry-sponsored producer training programme, and seven more have been approved under the Agriculture Development Scheme 2000.

EU action to support the pig industry

Recommendation d): To help UK pig producers survive the slump until pig numbers in the rest of Europe begin to fall, the Government should encourage the European Commission to bring forward further proposals on food aid, export restitutions and aids for private storage.

9. The EU market has shown a marked recovery this year. As the market has returned to profitability, the European Commission has withdrawn or reduced most market support measures.

Recommendation e): The EU Agricultural Council should make an early decision on its restructuring package without breaching the principles of the current light regime.

10. The European Commission produced a proposal for an amendment to the Council regulation on the common organisation of the market in pigmeat, creating a Regulatory Fund for the pigmeat sector. The government is not convinced that this Regulatory Fund is the right way forward. Interfering in a relatively free market poses problems and by apparently bringing quotas into the pigmeat regime, the fund would run counter to the thrust of AGENDA 2000. Introducing a fund may also work to delay the essential restructuring which is necessary if the EU pig industry is to compete effectively on the global market. To aid that restructuring, the Government hopes to obtain clearance from the Commission for the introduction of the Pig Industry Restructuring Scheme.

UK action to support the pig industry

Recommendation f): In the months ahead, the Ministry must continue to encourage caterers and food manufacturers to use more UK pigmeat and should aim to extract meaningful pledges from these sectors on their procurement of UK pigmeat in the same way it has from retailers. The Government should also amend the procurement contracts of Ministries, Departments and other public bodies to ensure that all pigmeat is sourced to welfare standards no lower than the UK specification. MAFF must also urge all caterers to provide the public with more details on the sourcing of pigmeat used in restaurants, canteens and other catering outlets so that consumers can make more informed decisions regarding the provenance of the pork, bacon and ham they eat.

11. The Minister of Agriculture, Fisheries and Food has:

  • held meetings with retailers and caterers to encourage them to source to independently audited British standards;

  • no powers to insist on a change to contracts, but the Department has drawn the work of the MLC on procurement contracts to the attention of interested parties. He has also written to all MPs and public purchasing organisations such as education authorities, hospitals and the prison service stressing the high standards of British pigmeat;

  • backed up a campaign run by the MLC to encourage caterers to use pork-mark product and to indicate this on the menu;

  • extended the role of the verification officer to cover caterers.


Monitoring of sourcing policies of retailers and caterers

Recommendation g): The Government should monitor all commitments made by the BRC's membership on welfare, sourcing, origin and labelling of UK pigmeat in the near future. Such monitoring should also apply to those branded manufacturers supplying retailers with welfare friendly pigmeat products, as such arrangements as currently exist appear to us to be self-regulatory.

12. The Minister of Agriculture, Fisheries and Food appointed a "Verification Officer"; part of whose remit is to work with industry bodies to identify cases where product is being sold at retail or catering level which misleads the consumer into believing it contains pork of British origin when in fact it is imported. The Verification Officer's role also includes checking progress on the commitment given some time ago by major retailers that all their own label fresh pork and certain processed products such as bacon would come from stall and tether and MBM free production systems. A number of misleading labels have been changed as a result of these efforts. The interpretation of the Food Labelling Regulations 1996 in respect of origin marking has also been tightened up. New guidelines have been issued to Trading Standard Authorities and to the industry.

Welfare standards of branded pigmeat products

Recommendation h): We regret that discussions between the BRC and the manufacturers of leading brands on welfare procurement standards have not got underway before now, and that, consequently, brands may not reach the same exemplary standards as that of the BRC membership's own-label products. This is an issue in which MAFF should be taking a keen interest.

13. A further element in the remit of the Verification Officer is to check progress on extending the retailers' commitment on sourcing and labelling to branded products.

Sourcing policies of retailers for pigmeat products

Recommendation i): We look to all retailers to ensure that, as soon as possible, all bacon, pork, ham and processed pigmeat products sold from their stores originate from livestock systems matching or exceeding the current UK specification, and to exhort manufacturers of the branded products they stock to change their pigmeat procurement policies to support this aim.

14. See paragraphs 12 and 13 above.

Labelling  

Recommendation j): It is clear that more effective marketing strategies must be developed to raise consumer awareness of the quality of pigmeat products now available to the UK consumer, but equally that any such strategy faces considerable difficulties  in terms of satisfying consumer requirements. We expect the MLC and the leading supermarket chains to take the lead on this issue and over the coming months to develop new and more effective means of product differentiation. The Government should ensure that labels accurately describe the food and the production method.

15. The Government has helped fund a £4.6 million MLC welfare linked pork promotion campaign that aims to promote the British Quality Standard Mark for pigmeat as a clear statement about the higher standards that apply to products which display the mark.

Role Of the Meat and Livestock Commission

Recommendation k): We welcome the MLC's introduction of a differentiation campaign for British pigmeat, and hope that it substantially raises the profile of a domestic farmed product of which we can be justifiably proud. Our view is that British pigmeat has animal welfare and traceability standards second to none. However, for many of the country's ailing pig farmers, we regret that this action will come too late in the day to be of benefit. We also consider the MLC's £2.5 million campaign budget to be inadequate for a promotion that should be laying foundations for the industry not just for 1999 but for years to come and urge the Commission to make more funds available. We recommend that the results of the MLC's 1999 campaign for British pigmeat be subjected by MAFF to an independent analysis of the quality and effectiveness of the campaign, with the conclusions of such analysis made available to all sections of the industry.

16. The Government's five-year policy review of the MLC recommended that a regular independent analysis of MLC's promotional effort should be fed into the Strategy Councils deliberations. As a result, this has already happened for pigs and is being implemented for beef and lamb.

Dedicated pigmeat promotional body

Recommendation j) While recognising the strength of feeling behind the BPISG's demand, on balance we agree with the NFU and, indeed, the Minister's implicit remarks that the MLC should retain its responsibilities for pigmeat promotion, at least in the short term. But the Commission will have much to do to restore its credibility with the UK pig industry. Producers, processors and, following the MLC's publication of its supermarket study, retailers alike appear to have lost faith in its activities, which for any representative trade group is profoundly worrying. Despite the hostility of what appears to be a majority of the industry, we have decided to give the MLC the benefit of the doubt. But it is our hope that the structure of the industry will change in the future. If this happens, then the industry's promotional and administrative functions may well be better discharged by another more specialised organisation. However, given the fragmented nature of the industry at present, which compares most unfavourably with its Danish competitors, we believe it is preferable to keep the promotional activities for pork and pigmeat products with the MLC. With this in mind, we believe MAFF should conduct and subsequently publish a fundamental review of MLC's activities as they relate to pigmeat early in 2001 to assess whether the Pig Strategy Council is delivering industry objectives effectively.

17. The Government's five-year policy review of the MLC agreed in general terms with the view of the Select Committee; pigs should stay within the ambit of MLC and a thorough review of the performance of the Pig Strategy Council (name now changed to BPEX) should take place in 2001-2002.

MLC statutory levy

Recommendation m): We recommend that the MLC publish an annual account of how the statutory levy from the UK pig industry is spent and what precisely has been achieved for the UK industry with this investment. This information should be subjected to independent analysis commissioned and published by MAFF.

18. As was stated in the Government's original response to the Third Report, the MLC's annual accounts, prepared in accordance with standards set by the Accounting Standards Board, are published as part of its annual report. This is laid before Parliament in accordance with the Agriculture Act 1967. The accounts are audited by reputable Chartered Accountants and subject to examination by the National Audit Office. The Government did not consider any further investigation or analysis in respect of the accounts is necessary.

Pig offal market

Recommendation n): The development of new value added markets for offals, which are unconnected with feedstuffs, should be given greater priority. The MLC's cross- industry working party has already made some advances in this area and we urge the Ministry to look into developing this work further.

19. This is a matter for the industry (but see paragraph 20 below).

Offal disposal charges and Mammalian Meat and Bonemeal (MMBM) ban

Recommendation o): We believe that any relaxation of the ban on MMBM, whatever the short-term advantages for UK pig farmers, would reduce consumer confidence in UK pigmeat and should therefore be opposed. At the same time, MAFF must work with the European Commission and its partners in the Agriculture Council to standardise the exclusion of MMBM from animal feedstuffs across the EU.

20. At the request of the industry, the Government put an industry paper to the Spongiform Encephalopathy Advisory Committee (SEAC) asking whether it was possible to relax the feed ban by allowing porcine MBM, produced in dedicated plants, to be used in poultry feed. Following consideration at its June meeting, SEAC advised that the feed ban should not be relaxed in the way requested.

21. However, subsequent to the Government receiving and accepting that advice, the European Union's Scientific Steering Committee (SSC) issued a Report which did not include a proposal to ban intra species recycling or feeding pig MBM to poultry. In the light of this Report and recognising the importance of this issue to pig producers, the Minister asked SEAC to look again at its advice. This it did at its November meeting and on 22 December announced that its advice remains unchanged; i.e. the feed ban should continue in place. The Government accepts this advice as its priority remains to remove BSE from the British cattle herd.

22. EU wide measures to combat TSEs are still under discussion in Council. They would carry forward the existing ban on MMBM in ruminant feed (with extra exemptions) and provide a new ban on MMBM in all farmed livestock feed and ruminant protein in all animal feed except dog food, but only in countries at highest risk - so called category 4 countries.

National aids to pig sectors in other EU member states

Recommendation p): MAFF must urgently gather comparative information on costs, charges and subsidies relevant to the pig industry in other member states, rather than leaving these matters to the industry. The Ministry must be especially assiduous in challenging through the European Commission any national aid scheme which might appear to infringe EU competitiveness of trade legislation. Our view is that market stabilisation schemes should be available in all member states or none at all. We cannot accept that it is an impossible challenge for our embassies in other EU states to gain proper intelligence on the issues. In the light of the disparities arising from the unique burden on the UK industry and the significant subsidies paid to some EU competitors, we urge MAFF to direct its efforts to ensuring fair competition.

23. In line with its comments in its original response, the Government continues to be assiduous in bringing possible illegal state aids to the attention of the European Commission. Following requests from the UK, the EC have been examining several possible illegal state aids announced by the French Government.

Amendment of taxation regulations

Recommendation q): We consider amendment of the tax system to take into account fluctuation in earnings of UK pig farm businesses to be impractical.

24. The Government agreed with the Committee.

New market strategies for UK pigmeat

Recommendation r): Greater domestic demand for the less popular cuts of pigmeat would be beneficial to the whole industry. The MLC, retailers and manufacturers must work together to encourage and promote product development and processing with the aim of reducing the current dependence on export markets for low value cuts. Value added within the UK would increase. The more marketable products that result would increase the total volume of pigmeat consumed nationally, as well as substituting for imported pigmeat, and creating new export opportunities.

25. With the development of pork mince and shoulder steaks, for example, the industry has recognised the importance of increasing demand for less popular cuts in the domestic market.

Pigmeat marketing co-ops

Recommendation s): We support the recent initiative by the National Farmers' Union to persuade producers to forge new co-operative alliances among themselves and across the industry for marketing purposes and commend this action to the UK pig sector.

26. The Government agreed with the Committee's view. The Minister of Agriculture, Fisheries and Food announced his intention that pig producers should benefit significantly from the extra £5 million earmarked to help farmers improve their marketing, collaboration and competitiveness. Discussions with the industry took place on how to make best use of these funds. Some funds were transferred to the devolved authorities. The Government provided £2.3 million to support the MLC's British Quality Standard Mark for pigmeat promotional campaign (see paragraph 15).

Closer linkages in the UK pigmeat supply chain

Recommendation t): If pig producers are in future to obtain larger proportion of domestic market share and increase margins of profitability for their product, they must strive to forge stronger links with retailers, abattoirs, processors and each other. A greater appreciation by farmers, processors and retailers alike of the economic constraints and motives of all the other elements of the supply chain will in our opinion lead to greater efficiencies of production, benefiting the whole of the UK industry.

27. The Government agreed with the Committee's view - see paragraphs 6-8 on action taken by the Minister of Agriculture, Fisheries and Food.

Long-term strategy for the UK pig industry

Recommendation u): Our view is that the compartmentalisation of the UK industry has raised unnecessary barriers to its becoming truly cost and price competitive. Ultimately, this could threaten its survival. We recommend that MAFF, the MLC and leading representatives from among producers, abattoirs, processors, manufacturers and retailers meet to define a long-term strategy for the industry, addressing both supply-side and demand-side issues. Such a strategy should set clear and unambiguous targets for each element of the industry which are easily verifiable, open to review on a regular basis, and which could be co-ordinated centrally by the MLC's Pig Strategy Council. The strategy should address producers and procurement policies, marketing and co-ordination, and regulation and the European dimension.

28. The Government believes that the strategy drawn up by BPEX provides the means to meet the Committee's stated objective.

Fourth Report

General Update

1. The Select Committee's Fourth Report took the form of a letter of 21 April 1999 from the Clerk to the Committee. In the letter, the Clerk spelt out five criticisms of the Department's Response to the Third Report:

    (i)  The Government's attitude towards the pig sector had been complacent;

    (ii)  The Government had failed to address the issues in Recommendation (a);

    (iii)  The Government's response to Recommendation (b) was inadequate:

    (iv)  The Government should have provided information on relative production costs in other EU member states, in line with Recommendation (p); and

    (v)  The Government should monitor all commitments made by the BRC on welfare, sourcing and labelling as set out in Recommendation (g).

2. The Report also maintained that as it was an NDPB, the Government should have responded on behalf of the MLC.

3. The Minister of Agriculture, Fisheries and Food's letter of 9 June 1999 to the Chairman of the Select Committee set out in some detail why the charges made in the Fourth Report were invalid and there is little more to add. The one exception, in respect of Recommendation (g) (see paragraph 11 of the Government's Implementation of the Committee's Third Report), is that the Minister of Agriculture, Fisheries and Food has now appointed a "verification officer", whose remit includes identifying cases where product is being sold at retail or catering level which misleads the consumer into believing it contains pork of British origin when in fact it is imported; and checking progress on the commitment by major retailers that all their own label fresh pork and certain processed products such as bacon would come from stall and tether and MBM free production systems.

Ministry of Agriculture, Fisheries and Food

November 2000


Recommendation b: We recommend that MAFF ensure that a thorough and well designed sampling procedure of wildlife species other than the badger be put in place in the badger removal areas to determine if M. bovis can persist in other species when badgers are removed ...

20. The two research projects in place, one run by Oxford University and one by the Central Science Laboratory, are continuing and will last till 2002/2003 respectively. Results will be published in full when they become available. The CSL project looking at the contribution of other wildlife involves collecting wildlife carcases. By 31 August 570 carcases from 25 species of wild mammals other than badgers had been collected and are being analysed in the laboratory. Results are not yet available. The Oxford University project is examining clinical samples for M.bovis from live trapped wild mammals in order to determine the risk to cattle. Nearly 1000 samples have been examined so far and several mycobacterium isolates are undergoing final confirmatory tests to establish if they are M. bovis.

Research into transmission

Recommendation c: We recommend that further research be undertaken into the relative importance of cattle to cattle transmission of bovine TB and means of controlling it.

Recommendation t: We disagree with the suggestion that it is unnecessary to prove how a disease is spread in order to deal with it successfully, as it would answer much of the debate if the transmission routes were to be identified.

Recommendation u: We recommend that MAFF provide more funding for research modeling spatial distribution of transmission patterns and routes commissioned from the best scientists in the field.

21. During 2000, on the advice of the Independent Scientific Group, the Government initiated a research programme to investigate the pathogenesis and transmission of tuberculosis in cattle. This programme includes laboratory experiments and field studies. The aim is to obtain a clearer understanding of how and at what stage of infection transmission of M.bovis occurs between cattle, and to improve knowledge of the immune responses detected by diagnostic tests so that testing procedures can be improved. In addition to the modeling studies already in place, part of the new cattle pathogenesis work includes development of a mathematical model for TB in cattle. This work is of fundamental importance in advancing control of the disease. Results from this research, which started in July 2000 and finishes in December 2003, will be published when available. MAFF has also advertised for new approaches on molecular epidemiology to address this area. research proposals submitted in response to the open competition launched in May 2000 are currently undergoing appraisal by independent expert referees.

22. The recently started projects investigating pathogenesis and transmission of TB in cattle will help to answer some questions on the importance of cattle to cattle spread. Molecular epidemiology studies on the different strain types of M. bovis will help to link sources to outbreaks of infection. A study at the University of Bristol is investigating potential routes of infection to cattle from grass contaminated by infected badgers.


 
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