I. INTRODUCTION
1. The beef industry in the UK is in a critical condition,
because of the BSE crisis, the strength of sterling and the long-term
decline in consumer demand. Since March 1996 it has been sustained
with large sums of public money committed to offset the impact
of measures imposed to safeguard public health and accelerate
the eradication of bovine spongiform encephalopathy (BSE). As
the crisis nears the end of its second full year, with few signs
that any relaxation of public health controls can be contemplated
in the near future, and with the European Union's world-wide ban
on exports of British beef still fully in place, the industry's
prospects remain grim. On top of this, market prices for cattle
sank to new lows at the end of 1997 and the beginning of 1998.
What is needed is a long-term policy for the future of the industry,
including after the lifting of the export ban, and to this end
we set out some strategic objectives in our conclusions and recommendations
at the end of this Report.
2. On 9 December 1997 we announced an inquiry into
the UK beef industry, focusing on "the current financial
viability of the industry, including beef producers, abattoir
operators, wholesalers and retailers". We said that we would
particularly welcome written evidence on:
- the continuing effects of the BSE affair, including
the effects of the export ban on British beef and the range of
BSE control measures, actual and proposed; the effectiveness of
the Government's policies designed to bring about a lifting of
the export ban, in part and as a whole; and the appropriateness
of the levels of compensation and market support provided by the
Government and the European Union to the beef industry under the
various BSE schemes;
- past, current and forecast levels of beef prices
and trends in consumption of beef in the UK, with particular reference
to levels of consumer confidence in beef;
- other factors affecting the financial viability
of the beef industry, including revaluations of sterling, levels
of beef imports into the UK, levels of Hill Livestock Compensatory
Allowances for cattle, levels of charges for cattle passports
and the levels of the Meat Hygiene Service's inspection charges."[1]
3. We have received over 40 written submissions,
generally of a very high quality considering the relative brevity
of the period available for their preparation. From the outset
of our inquiry we made it clear that, given the urgency of the
problems facing the beef industry and our desire to produce a
Report as swiftly as possible, we would severely restrict the
number of oral evidence sessions which we held. In the event,
we held one evidence session with the National Farmers' Union
of England and Wales (NFU), the National Farmers' Union of Scotland
(NFUS), the Farmers Union of Wales (FUW), the Ulster Farmers'
Union (UFU), and five individual beef farmers, and a second session
with the Minister of Agriculture, Fisheries and Food, Rt Hon Dr
John Cunningham MP. We are most grateful to all those who submitted
written and oral evidence to us in this inquiry.
4. Our work was considerably assisted by the expertise
of our specialist adviser, Dr Martin Palmer, Industry Strategy
Manager at the Meat and Livestock Commission (MLC). We are very
grateful to Dr Palmer, and to the MLC for permitting him to act
as our adviser.
5. In the next section of this Report we provide
an objective assessment of the current state of the UK beef industry,
and a description of the main reasons for the current difficulties
of all sectors of the industry. In Section III we examine the
main policy instruments inherited by the present Government to
deal with the BSE crisis, the decisions taken by the new Government
and its policy stance towards the beef industry in the short and
long terms. Our main conclusions and recommendations are set out
in Section IV.
1
Agriculture Committee Press Notice No. 7, Session 1997/98,
9 December 1997 Back
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