Select Committee on Agriculture Uncorrected Evidence



  1.  This Memorandum of Evidence, submitted by the Ministry of Agriculture, Fisheries and Food, sets out the background to the restructuring of the pig industry announced by the Government as part of its Action Plan for Farming and provides information on the recent outbreak of classical swine fever, including action taken and the current status.


  2.  The Government recognises the exceptionally difficult circumstances the pig industry went through during 1998-99. However, the situation finally began to improve in March 2000, when the average market price went above the generally accepted break even point for the first time since June 1998. 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.

  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 per pig. The Government recognises that although this is a reasonable return, unless it continues at or above this level for a year or more, it will not allow producers to repay the debt they incurred during the crisis. Producers in East Anglia are particularly facing difficulties because of the outbreak of Classical Swine Fever in early August.


  4.  On 30 March 2000 the Prime Minister launched the Government's Action Plan for Farming. One element in that strategy was the Pig Industry Restructuring Scheme (PIRS). The scheme was notified to the European Commission on 30 March 2000, with further information being provided on 10 May, 26 June, 1 September 2000, 26 October and 17 November in response to various concerns raised by the European Commission.

  5.  The scheme has two elements, Outgoers—aimed at reducing pig breeding capacity; and Ongoers—which offers a 5 percentage point interest rate reduction on commercial loans (linked to acceptable business plans) to secure the long-term viability of the remaining UK pig production sector.

  6.  As the Commission had expressed its satisfaction with Outgoers, this element was opened for applications on 4 December. The Outgoers element of PIRS is aimed at reducing pig breeding capacity in the UK by 16 per cent compared to what was available in June 1998. It will achieve this by providing aid to successful applicants who can show they were engaged in breeding pigs in June 1998 and are prepared to end their involvement in all pig production activities for a period of ten years from the date of approval of an application. Pig breeders who have ceased pig production since June 1998 but can prove they were operating at that time and have facilities to decommission or render unusable as pig breeding units, are eligible to apply. In some circumstances, this eligibility will extend to those who have left the business and have already decommissioned their facilities. Such applicants will have to demonstrate that in June 1998 there was a specified number of sows on the holding(s).

  7.  There is no fixed rate of aid for the outgoers part of the scheme. It will operate using a sealed bid system and applicants will be invited to submit a tender for the amount of aid per sow place required for decommissioning or rendering unusable all the pig breeding housing, covering a specified number of sows and/or signing an undertaking not to re-enter pig production for 10 years. All sealed bids will be opened at the same time and will be compared with other eligible bids. A ranking system will operate and those judged to represent the best value for money, in terms of cost per sow place, will be accepted. This tender will be adjudicated centrally and bids will be in direct competition with those from applicants all over the UK. The aim is to reduce capacity by 120,000 sow places.

  8.  Discussion over the deetaiils of the Ongoers part of the scheme continues with the European Commission. The objective is to help those pig producers who wish to modernise and restructure their business in order to make it more efficient and effective. The scheme has been developed on the understanding that the pig sector in the UK can overcome its difficulties, exploit its strengths, and restore its long-term viability by:

    —  reducing costs of primary pig production;

    —  reducing costs across the pork supply chain;

    —  adding value to its product; and

    —  enhancing its response to consumer demands.


  9.  Classical swine fever (CSF) is a highly infectious and contagious viral disease of pigs, which can result in high mortality rates. It occurs worldwide, but until this year there had been no outbreaks in Great Britain since 1986. The disease cannot spread to humans and the Food Standards Agency has advised that Classical swine fever poses no risk to consumers.

  10.  Procedures for controlling CSF are set out in European Union legislation. All pigs on holdings where the disease is confirmed must be killed and destroyed. Movement controls must be imposed within a minimum of a 10 km radius of each infected holding to prevent the spread of the disease. The source of the infection must be investigated and where possible identified, and the extent of spread must be established. Controls cannot be lifted until the competent authority has satisfied itself that infection is no longer present in the zone.

The outbreak

  11.  The current outbreak started on 8 August with a confirmed case of CSF on a holding in Suffolk. The first priority of the State Veterinary Service, and of Ministers, has been and remains to eradicate the disease.

  12.  At 29 November, Classical Swine Fever had been confirmed on 16 premises. Over 73,000 pigs had been slaughtered as infected or dangerous contacts. Only two Infected Areas now remain. One is on the border between Norfolk and Suffolk. The other smaller area is in Suffolk. It contains no pigs but must remain in place until final cleansing and disinfection of infected premises has been completed.


  13.  Information is provided on the MAFF website and by Ceefax. At the beginning of the outbreak farmers experienced problems in contacting the Animal Health Office at Bury St Edmunds and a helpline was set up. We have made great efforts to provide as much information as possible to farmers to help them through the difficulties caused by the outbreak.

Resources deployed by MAFF

  14.  The State Veterinary Service (SVS) and Ministry as a whole have devoted very significant resources to eradicating the outbreak.

    —  Emergency Disease Control Centres were set up in Bury St Edmunds and London immediately the disease was confirmed and have operated seven days a week since then.

    —  Over 500 SVS staff have done spells of duty in these centres on secondment from elsewhere in the country.

  15.  Additional help has been provided by private vets in the area appointed as local or temporary veterinary inspectors for MAFF. Vets have also been brought in from the Netherlands, Ireland, the USA and elsewhere to help out. Local Authority staff have also been heavily involved, for example in the enforcement of movement controls.

  16.  SVS staff have made about 5,600 farm visits, investigated over 240 cases of suspect disease, and traced over 2,300 movements of pigs, vehicles, and people.


  17.  The Pig Welfare Disposal Scheme (PW(D)S) opened for applications on 29 August. PW(D)S is a unique measure which recognises that the normal expectation that producers would fulfil their legal obligations to resolve animal welfare problems needed to be mitigated in this instance due to the previous two years of negative returns experienced by British pig producers. Where the existence of a welfare problem was confirmed by a vet, farmers could have pigs removed and slaughtered, with MAFF covering the cost of transport, slaughter and disposal.

  18.  On 31 August, the Minister announced the addition of a producer payments structure to PW(D)S. Following discussions with the pig industry, a two tier payment system of £10 for pigs weighing less than 60 kgs and £35 for pigs above that weight was introduced. These payments were unique in respect of animal health measures in the UK and in part reflected the exceptionally difficult circumstances the pig industry went through during 1998-99. However, the payments were not provided as an alternative market nor did they constitute compensation for business losses of producers. Payments under the scheme were and are linked strictly to dealing with animal welfare problems.

  19.  Following these measures being taken there were a number of developments. The most relevant of these was the emergence of secondary cases. As a result of these developments the Minister therefore accepted industry proposals for a variation in the terms of the payments scheme, including an industry top-up of the amount paid in the heaviest category.

  20.  On 8 September, the following changes to the PW(D)S payment structure were announced:

Weight range (kgs)
over 100
Payment rate (£/pig)
  For the heaviest category, the Government paid £50 per pig, with industry contributing the balance of £15.

  21.  On 1 November, following advice from the Chief Veterinary Officer that the current arrangements were not preventing the unacceptably high build up of pigs in temporary, outside accommodation, thereby adding to the risk of disease, the Minister announced a further revision of the payment structure of PW(D)S, in line with an industry request. The new base formula is £12/pig+£0.55p per kilo liveweight; subject to a cap on total payments per pig of £75 until 30 November and £67 thereafter. The payment to the producer will be 80 per cent from Government, subject to a cap of £50/pig, with the remainder from industry; and will be backdated to the start of PWDS. Previous users of the scheme will not suffer any reduction in monies paid or due. The new structure includes enhanced payments from the industry.


  22.  As part of the agreement with the industry on the payment structure for the PW(D)S was that the industry would provide top-up funding to the Government's contribution. The funding for the top-up would be collected in the form of an industry levy of 20p per pig slaughtered. The only vehicle available to introduce a compulsory levy on pig producers was an MLC originated Development Scheme under the 1967 Agriculture Act. However, the nature of the procedures for introducing a scheme are very complex and time consuming and include a 56 day consultation period followed by independent arbitration if required and affirmative procedure SIs in both Houses of Paliament. The scheme will also require clearance from the European Commission as a state aid. The formal consultation period on a development scheme began on 24 November.

  23.  The UK pig industry has requested that MAFF provide a bridging loan to enable early funding of the industry top-up payments under the Pig Welfare (Disposal) Scheme. The Government is unable to provide any such funding, as this would pre-empt Parliament's decision on the forthcoming SI. Discussions are underway with industry to assist them in seeking alternate solutions to their funding difficulties.


  24.  A derogation from European Union restrictions has been obtained, enabling pigs from within surveillance zones to go on to the UK market as fresh pork if specific control measures are met. Discussions are underway with industry to try to establish a workable use of the derogation. The costs of the rigorous control measures required under the derogation will be met by MAFF.

5 December 2000

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