SECOND SPECIAL REPORT
The Agriculture Committee has agreed to
the following Special Report:
The Committee has received the following memorandum
from the Ministry of Agriculture, Fisheries and Food, constituting
the Government's Reply to the First Report from the Committee
of this Session, The Current Crisis in the Livestock Industry,
made to the House on 7 December 1999.
* * *
Introduction
The Government notes that the Select Committee's
inquiry into the current crisis in the livestock sector was conducted
against the background of continuing debate in both Houses of
Parliament (and within the UK's devolved administrations) on measures
which might be taken to alleviate that crisis, and of continuing
discussions within Government on the consequences for UK agriculture
generally of the reforms of the CAP agreed in Berlin in March
1999. The Government recognises that the full extent of its strategy
for agriculture (announced by the Rt. Hon. Mr Nick Brown MP, Minister
of Agriculture, Fisheries and Food, on 7 December) was not available
to the Committee at the time when its report was written.
The Government's response to the specific
recommendations made in the report is set out below.
The September Aid Package
Recommendation:
We recommend that in future MAFF agree a form of
presentation to be used in presenting all such packages that makes
them readily comprehensible in terms of new money, actual payments
made to farmers and dates upon which assistance will be made available,
thereby indicating the total cost to the Exchequer in each financial
year in which they apply. (Paragraph 4)
Response:
The Government notes that the presentation of the
aid package was not raised by the Committee when the Minister
of Agriculture, Fisheries and Food appeared before it on 9 November.
The Government does not accept the distinction drawn by the
Committee in its report as between "new money" - money
to be paid to farmers - and other benefits accruing to farmers
from the deferment of charges which Government was minded to make
but chose not to. Moneys for both have to be agreed by the Treasury
and both types of response to the industry result in its being
better off than it would have been prior to the announcement of
the aid package. To regard one type of aid as "unreal"
- effectively worthless - because it does not result in actual
payments to producers is akin to asserting that money grows on
trees and is thus a denial of the traditional responsibility of
Parliament to hold Government accountable for the moneys voted
to it and the way in which they are spent. The Government contends
that the entire package was worth some £537 million to the
industry, that all but the agrimonetary compensation already agreed
for beef and sheep farmers in the current scheme year (£94
million) had not been previously announced and should therefore
be regarded as real money, and that the whole package was a very
significant response to the crisis facing the industry.
As regards presentation of the package, the Government
took considerable care to make all relevant information available
to the Press. The table attached to this report (which clearly
identifies the way in which monies will fall across Financial
Year boundaries) was given to the Press on the day of the announcement.
The Government regrets that this information was not more widely
studied at the time and continues to believe that this gives a
full and fair statement of the aid involved. It is, of course,
open to critics to argue that other measures should have been
adopted or more money allocated but those lines of argument address
issues quite separate from the clarity with which the package
was presented.
Recommendation:
We recommend that MAFF set out a clear statement
of its policy towards aid to the livestock industry in order that
the sector might best prepare for its future. We also recommend
that any future aid package be in keeping with the objectives
of enhancing the competitiveness of the sector rather than emergency
measures to manage a crisis. (Paragraph 9)
The one message we emphasise to MAFF is the need
to set out a strategy for Government involvement in and responsibility
for the industry which concentrates on enhancing the long-term
competitiveness of the whole UK livestock sector to the benefit
of producers and consumers alike. (Paragraph 17)
Response:
The September package (and the measures which were
subsequently announced in October and November) have to be seen
in the context in which they were made. The Government was conducting
a lengthy and detailed consultation exercise with all industry
interests in the light of the outcome of negotiations on the reform
of the CAP and, in particular, the EU's Rural Development Regulation.
The September package was designed within the constraints of EU
law to provide emergency relief to sectors in crisis by such means
as were immediately available.
As to MAFF's policy towards the livestock sector,
Nick Brown made a major announcement on 7 December about a "new
direction for agriculture". It covered the UK's approach
to implementation of the Agenda 2000 reforms agreed at Berlin
in March. As one result, flat rate headage payments to the cattle
sector will rise significantly (by 25-60% in Euros over 3 years).
(The other livestock sectors were not directly covered by these
negotiations.) In particular, Nick Brown signalled a radical new
approach towards rural development policy. It will mean a total
of £1.6bn in expenditure in England on rural development
measures over seven years. This is a 60% increase over the period.
A major feature of the announcement was the introduction of "recycling"
under which a small but rising percentage of direct payments to
producers will be redirected towards a range of rural development
measures and be fully matched by new Treasury money. This will
involve some £300m of additional Government funding in England
(£470m in the UK) for rural development measures over seven
years, over and above existing expenditure.
Cattle farms will gain far more, on average, from
the Agenda 2000 commodity reforms than they will lose from recycling
reductions in production-linked payments. Some of the negative
impacts will be offset by restructuring. The rural development
measures will help facilitate this by supporting diversification
or more effective product marketing. MAFF is also promoting a
range of other initiatives which aim to improve the competitive
position of UK agriculture, including the livestock sector, by
improving competitiveness and by encouraging all links in the
food chain to work together.
The details of the plans for use of monies made available
under the Rural Development Regulation (and the moneys raised
by "recycling") have yet to be put to the European Commission.
Separate programmes will apply for each of the four countries
of the UK and the devolved administrations will lead on those
for their areas. Once the plans have been agreed, the basic framework
for support to the industry will have been set.
Taken as a whole, Nick Brown said that the package
presents: "a significant opportunity for improving the
rural environment and the countryside landscape. It demonstrates
the Government's commitment to rural communities and will set
the agenda for further reform of the CAP in years to come".
Review Of Regulations And Charges
Recommendation:
We expect that proper consideration will be given
to all recommendations [arising from the regulatory reviews announced
on 20 September] and that where any suggestion is not accepted,
a detailed explanation of the reason for the refusal will be provided.
We also strongly urge the Minister to take note of two crucial
factors when responding to these reviews or in making any new
regulations. First, it is essential that the regulatory burden
be looked at in toto. When additional burdens are to be
introduced, the Ministry must take full account of the overall
weight of regulation pressing on an industry and consider the
new proposals in this context. This applies equally to new charges.
While the September aid package lifted the threat of some new
financial burdens, others are still threatening, for example in
connection with the integrated pollution prevention and control
directive, which together with the climate change levy is now
the subject of an inquiry by the Committee. Secondly, the Ministry
must recognise that steps taken in the UK for public health or
other reasons, while justified in themselves, might have an adverse
impact on the competitiveness of our industries in relation to
their foreign counterparts. If the livestock industry is to market
its way out of this crisis as we all hope, it can only do so if
it is not disadvantaged by extra burdens unilaterally imposed
by the UK, whether financial or regulatory, caused by the imposition
of charges here or by Governmental assistance to competitors elsewhere.
We would welcome a firm commitment from the Ministry to these
two principles. (Paragraph 11)
Response:
The Government fully appreciates the Committee's
concerns about regulatory burdens. That is why Nick Brown initiated
the review of regulatory burdens on the agricultural industry
because of our concern about the build-up of regulations. The
three industry-led working groups have been tasked with rooting
out unnecessary burdens and finding ways of doing things better,
within the context of maintaining essential safeguards for the
consumer, taxpayer and the environment. We shall therefore consider
very carefully, with our colleagues in the devolved administrations,
all the recommendations and, if it is necessary to reject any,
we shall give detailed and reasoned explanations as to why this
is so. The Government fully accepts the need to look at the regulatory
burden in toto. That is why we asked the industry to tell us of
all their concerns so that the review met their needs. Further,
all new or revised regulations, which MAFF and other Agriculture
Departments propose, are examined for their costs and benefits
and the industry is consulted about them. We aim to achieve simple
and proportionate implementation. We are aware of the need to
have regard to the impact on competitiveness on our industries
and this is one of the reasons for consulting them.
Abattoirs
Recommendation:
We recommend that the Government bring its review
of small slaughterhouses to a swift conclusion and bring forward
proposals for encouraging rural abattoirs across the country.
(Paragraph 13)
Response:
The report of the regulatory review of the meat industry
(the Meat Industry Red Tape Working Group, chaired by Mr Robin
Pooley) has just been published (WA 13 December 1999, col 89W).
The economic assessment of the impact of meat charges has been
published as an appendix to the report, as has the efficiency
review of the Meat Hygiene Service by Mr Archie Pugh. It will
be considered in the context of the recommendations made in the
Pooley Group's report. The Government expects to respond in the
New Year.
The Government fully recognises the continuing contribution
made to the rural economy by small abattoirs. We nevertheless
have to face the fact that there is considerable over-capacity
in the industry and that competition is driving the slaughterhouse
sector into larger heavily capitalised units whose future depends
on high levels of throughput. Nevertheless, the Government is
actively considering the veterinary supervision requirements for
low throughput slaughterhouses and cutting plants in the light
of the European Commission's earlier advice on this subject. The
Government is keen to secure an inspection regime that is both
justifiable on public health grounds and meets the UK's legal
obligations under EU meat hygiene rules. The Government expects
to make an announcement on this in the New Year.
Pigs
Recommendation:
We support his [the Minister's] efforts to find ways
to relieve the burdens on an industry which is still in crisis
and urge him to make an early announcement on positive measures
to this effect. (Paragraph 14)
Response:
The Government understands why pig producers feel
as they do, given the present crisis and, within the constraints
imposed by the light nature of the EU regime and the need to respect
the law, will continue to do all it can to help. The Government
believes there is a common understanding of the European Commission's
attitude towards the possible payment of a state aid to UK pig
farmers. In principle, Community rules might permit the payment
of a state aid but it would be difficult to frame a sensible and
worthwhile scheme which satisfies the strict EU guidelines. The
Commission will certainly not sanction any scheme which fails
to meet the rules; and we could not contemplate paying an illegal
aid.
As acknowledged by the Committee, the Minister of
Agriculture, Fisheries and Food has announced his intention that
pig producers should benefit significantly from the extra £6m
earmarked to help farmers improve their marketing, collaboration
and competitiveness. £2 million of this money has been put
into the Agriculture Development Scheme 1999, which closed for
applications on 30 November and discussions are taking place with
the industry on how best to use some of the remaining funds.
In giving evidence to the Committee, Nick Brown referred
to his action programme, announced following his meetings with
the pig industry in October. All points in the programme have
been carried out.
In order to follow up some of those points, he instructed
his Meat Trade Adviser to take a front line role in checking what
is actually happening in the supermarkets. His role includes:
a. exploring the current sourcing
and labelling practices of supermarkets and caterers;
b. raising with them any anomalies or
possible misleading labelling or promotional activity in relation
to country of origin or animal welfare/MBM status;
c. liaising with MAFF's Food Labelling
division over the tightening of Government guidelines to Trading
Standards Officers on pigmeat products.
Sheep
Recommendation:
We are encouraged by his [the Minister's] willingness
to take "a hard look at whether it [the requirement to split
sheep carcases] is justifiable or not" and once
again urge him to bring forward early proposals to relieve the
sheep industry of the disproportionate cost of this requirement.
(Paragraph 15)
Response:
Recommendations that the Government reconsiders the
need for specified risk material controls in sheep and looks for
other ways to remove spinal cord effectively without the need
for the carcase to be split have been made in the report of the
Meat Industry Red Tape Working Group. These recommendations will
be thoroughly explored as part of the consideration of that report.
The beef ban
Recommendation:
We welcome the Prime Minister's recent announcement
that the planned £7m increase in MHS charges, will not be
imposed on the industry next year and the announcement of the
Minister of Agriculture, Fisheries and Food that the ban on beef
on the bone is finally to be lifted. In this context, we urge
the Minister to make great efforts to persuade those local authorities
still imposing a ban on beef in schools that there can be no justification
for such action, given the public health and other safety measures
now in place.
Response:
The Government is pleased to be able to maintain
MHS charges at their current level (despite rising real costs)
and that agreement has now been reached with the devolved administrations
on lifting the ban on beef on the bone. It shares the Committee's
view that there is no justification for local authorities to maintain
any ban on the use of beef in school meals and Nick Brown has
urged all those authorities which still impose partial or total
bans to reconsider their position. MAFF will be following this
up in the new year if action is not forthcoming.
20 SEPTEMBER PACKAGE SUMMARISED
| | |
£ million
|
| | |
|
| HLCA funding maintained
| | | 60
|
| | |
|
| SRM charges waived |
| 2000/2001:
| 22 |
| | 2001/2002:
| 22 |
| | |
|
| Cattle passport charges waived
| | 1999/2000:
| 9 |
| | 2000/2001:
| 18 |
| | 2001/2002:
| 18 |
| | |
|
| Marketing support |
| 1999/2000:
| 1 |
| | |
|
| | |
|
| | New Money
| 150
|
| Agrimoney aid | - already confirmed:
| sheep - already paid
| 32 |
| | beef - payments to start
| |
| | in November
| 62
|
| | Agrimoney aid already announced
| 94
|
| | |
|
| Agrimoney aid | - expected:
| arable - in February
| 164 |
| | |
|
| Future agrimoney aid |
| | 129
|
| | Agrimoney aid not previously announced
| 293
|
| | |
|
| | GRAND TOTAL
| 537
|
Also announced:
- priority areas for regulatory
review
- efficiency study of slaughterhouse inspection
- inspections in low throughput slaughterhouses reduced
- advice on beef-on-the-bone to be published in a
few days
| 
