MEMORANDUM SUBMITTED BY THE BRITISH POULTRY
MEAT FEDERATION LTD (V14)
SUMMARY
— (a) The difficulty in interpreting
IPPC industrial definitions in the agricultural context will lead
to differing approaches between Member States.
— (b) The exclusion of whole sectors
of livestock and crop production, which are major contributors
to the total emissions of concern to the IPPC Directive, is highly
discriminatory against poultry and pig production.
— (c) IPPC thresholds place regulatory
and cost burdens on UK poultry producers not borne by competing
poultry producers in some other countries who are excluded.
— (d) We strongly urge that poultry
and pig farming be brought into the IPPC no earlier than 2007,
the EC deadline for inclusion.
— (e) The IPPC Directive makes
no requirement for any charge to be levied and it does not provide
for Member States to levy any charges. We are firmly opposed to
any UK-only charges for implementing the IPPC Directive.
— (f) The Environment Agency's
proposed interim charges would be wholly disproportionate to the
risk posed by poultry farming and grossly excessive in relation
to any benefits gained.
— (g) If these proposed charges
were to apply to permits for existing farms in 2003 the permit
cost alone to UK poultry farmers would be between £15 million
and £22 million, equivalent to between 2 pence and 3 pence
per bird. Permit charges applied to poultry feedmills and processing
plants would add to this cost.
— (h) The Climate Change Levy approach
is very complex and bureaucratic and will place a heavy ongoing
administrative burden on Trade Associations and companies.
— (i) All energy users which are
subject to the Levy should have the option to enter into participation
agreements with the Secretary of State to meet energy reduction
targets.
— (j) The objective of reducing
energy use can be counter to objectives of bird health and welfare.
We are firmly of the view that livestock farming should be exempt
from the CCL for precisely these reasons and we urge the Agriculture
Committee to strongly recommend this in its Report.
INTRODUCTION
1. We welcome this inquiry into the impact
of the Integrated Pollution Prevention and Control Directive (IPPC)
and the UK Climate Change Levy (CCL) on farming. Most of our comments
on the IPPC have been made to the Department of the Environment,
Transport and the Regions, and to the Environment Agency in response
to formal consultations last year by those bodies.
2. Environmental regulation imposes various
requirements and costs on poultry farming in the UK, but in this
submission we have limited our comments to the IPPC and the CCL.
It is not clear to what extent implementation of the IPPC will
supersede existing requirements relating to Local Authority planning
applications, or that compliance with the IPPC will be deemed
as compliance with other environmental regulatory requirements.
IPPC—GENERAL
3. The Directive is essentially aimed at
industrial installations. The last minute inclusion of "intensive"
pig and poultry farming was misguided, highly discriminatory,
and attempts to force livestock farming to conform to a framework
of inappropriate industrial definitions. Despite the derogatory
epithet used by some groups, indoor poultry rearing is not a factory
operation and we object to the inference given by its inclusion
in this industrial Directive. The difficulty in interpreting some
of these definitions in the agricultural context will lead to
differing approaches between Member States in applying the Directive.
4. It is therefore important to know how
other affected Member States are intending to implement the requirements
in their pig and poultry operations and in other sectors newly
brought into scope. It is also important that the UK Statutory
Instrument implementing the Directive in the UK includes flexibility
to review and to change the approach in the light of experience
in administering IPPC on farms.
5. The decision to include certain farming
operations in the Directive appears to have been taken, not on
the basis of the sectors' relative contribution to, or risk of,
environmental pollution, but rather on the basis of the ease of
administration. The exclusion of whole sectors of livestock and
crop production, which are major contributors to the total emissions
of concern to this Directive, is highly discriminatory against
poultry and pig production. It is ironic that for the whole of
agriculture, only the two unsubsidised livestock sectors of poultry
and pig production are covered by this Directive. Perhaps this
is intentional.
6. In the case of poultry production, the
threshold of "installations of 40,000 or more places"
will capture most of the UK poultry industry, particularly given
that the DETR are interpreting "installation" as a farm
site and not as an individual poultry house. The integrated structure
of the UK poultry industry means larger farms than in many other
Member States. We understand that Italy and Spain will be similarly
affected as the UK but that others including France, Europe's
biggest poultry producer will be largely excluded. Interestingly,
it was the French who brought poultry and pig farming into the
draft Directive. This places regulatory and costs burdens on UK
producers not borne by our competitors selling in the UK market.
7. The Directive provides for General Binding
Rules to be applied to certain categories of installations instead
of including specific requirements in individual permit conditions.
We strongly support the development of General Binding Rules for
poultry farming and for the feed milling and slaughter and processing
operations being brought into the IPPC. These GBRs would reflect
the common practices that characterise operations across the poultry
sector. They must be set to greatly simplify the permitting process.
We are working with the Environment Agency on this.
8. The Directive requires the competent
authorities in Member States to ensure that all the appropriate
preventative measures are taken against pollution, in particular
through application of the best available techniques (BATs). EU
committees are currently drawing up European BAT Reference documents
(BREF Notes) for the various sectors to guide competent authorities
in Member States.
9. The DETR is proposing to phase in existing
installations sector by sector as the relevant BREF Notes are
completed. On this basis DETR propose that all existing poultry
farms be brought into the IPPC in 2003, whereas pig farming will
be in 2004. For poultry farming this entry date is four years
ahead of the 2007 deadline fixed in the Directive for all sectors.
10. Given the unusual and difficult situation
of having to accommodate the biological needs of pig and poultry
animals into the Directive's essentially industrial processes,
and given the dire plight of both these farming sectors in the
UK, we strongly urge that they be brought into the IPPC no earlier
than 2007. This will provide sufficient time to ensure satisfactory
rules are developed for these sectors which are new to the Environment
Agency and to DETR. It will also allow us to know how other Member
States are implementing the Directive in their own ariculture
sectors, and allow us to avoid over implementation in the UK.
11. We need to ensure that any General Binding
Rules developed for the UK poultry sector are not more onerous
than GBRs developed in other Member States with whom UK is competing.
IPPC—CHARGING
PRINCIPALS
12. DETR's Fourth Consultation Paper on
the implementation of the IPPC Directive (August 1999) points
out that the Environment Act 1995 provides the legal framework
for the Environment Agency to charge to recover the costs incurred
in carrying out regulatory functions. The IPPC Directive itself
makes no requirement for any charge to be levied and it does not
provide for Member States to levy any charges. The proposed charging
scheme will be a UK-only charge levied only on UK producers.
13. The British poultry industry is familiar
with the principles set out in the Treasury's Fees and Charges
Guide according to which the charges will be fixed. We have experience
of their application by other Government agencies, notably the
Meat Hygiene Service and indirectly, the VMD. The fundamental
problem with Treasury's guidance is that it requires all costs
to be charged to industry but does not appear to impose any controls
or discipline on the particular agency against incurring cost.
14. The Fourth Consultation Paper lists
10 principles which DETR says should underpin the Environment
Agency charging scheme. The principles of equity and consistency
cited should apply to all poultry operators covered by the Directive.
Instead the IPPC will impose high costs on UK operators which
will not be incurred by poultry producers in other Member States
who are exporting poultry meat to the UK market. Nor will these
costs be incurred by certain other livestock sectors.
15. The list of principles cannot disguise
the fact that these UK-only charges on poultry and pig producers
would further reduce the competitiveness of UK poultry meat and
UK pork. The fundamental principle should be that there should
be no UK-only charges to implement EU directives which do not
require or provide for any such charges to be levied.
16. From a survey of our Members we estimate
that around 1,200 poultry farms will come within the new IPPC
regulations. We have no experience of the permitting methodologies
the Environment Agency has applied to industrial installations
under the existing IPC. We are equally conscious that the Environment
Agency has no experience of the poultry sector, particularly poultry
farming operations.
17. The Environment Agency has proposed
an Interim Charging Scheme to apply to new applications and to
applications for substantially changed installations until a comprehensive
scheme can be developed which would embrace all existing installations.
In our view, the Environment Agency's lack of experience of the
structure, operating processes, environmental risks, and economics
of modern poultry farming is evident in the totally unrealistic
levels of interim charges proposed in its Consultation Document.
18. The proposed charges, based on a charge-out
rate of £1,215 per day, would be wholly disproportionate
to the risk posed by poultry farming and grossly excessive in
relation to any benefits gained. Quite simply, the charging approach
would be beyond the ability of any poultry farmer to pay in respect
of the output and economic viability of the farm affected. The
poultry sector receives no subsidies. All costs must be met from
markets returns. In the current very difficult market most UK
poultry meat companies are in a loss making situation.
19. The lack of costing data for assessment
duties in respect of poultry farms, which are new to the Agency,
and the time constraint referred to in section 5.1 of the Interim
Charging Consultation Document, do not justify simply applying
the previous IPC approach and charging levels to poultry operations.
We are firmly opposed to any charges being levied on industry
for implementing this Directive. If the Government cannot agree
to this, then we strongly request that a charging system appropriate
to the agricultural sectors of poultry and pigs be established
in direct consultation with those two sectors.
20. It would also be iniquitous if excessive
interim charges proposed were to be imposed on all applications
made in the interim period and then substantially reduced for
later applicants under the General Binding Rules proposed for
agricultural operations such as farming and feedmilling. It is
important to get the right charging levels in place from the beginning.
21. The Interim Charging proposals outline
two approaches to charging—Options 1 and 2. We have serious
objections to the basic cost assumptions and charging levels underlying
both Options as follows:
22. Increase in regulatory effort and costs
(Section 6.1). The Document provides no figures to substantiate
the claimed 40 per cent increase in regulatory effort and the
20 per cent increase in the overall impact on charges under existing
schemes. These are very large increases and the assumptions and
costings underpinning them need to be made available for examination
before such a statement can be assessed.
23. Daily charge-out rate (Section 8). We
note that the same daily charge-out rate is used under Charging
Options 1 and 2. The following therefore applies to both Options.
The breakdown of the daily charge-out rate provided to the BPMF
by the Environment Agency on 14 October 1999 is as follows:
| £ |
| Direct costs of employing front-line staff (including gross salaries, employers NIC and pension contributions, travel and subsistence)
| 462 |
| Support costs (accommodation, finance, personnel, legal, and administration services)
| 194 |
| Policy and technical advice to front-line staff from national centres of expertise
| 268 |
| IT support | 85 |
| Development of policy and supervision of front-line activities by Head Office
| 182 |
| Depreciation and rate of return on assets employed on chargeable activities
| 24 |
| TOTAL DAILY CHARGE | 1,215 |
24. If we assume that, on average, each front-line staff
member has four weeks holiday leave, one week of sick leave and
one week of training each year. The number of days available for
inspection work which can be charged annually to industry and
which must cover annual cost of the staff member is 230 days.
| Annual cost per average front-line staff member (daily rate x 230)
|
| Front-line staff (all direct employment costs)
| 106,260 |
| Support costs | 44,620 |
| Policy and technical advice | 61,640
|
| IT support | 19,550 |
| Development of policy and supervision by Head Office
| 41,860 |
| Depreciation, etc | 5,520 |
| Total annual cost per front-line staff member employed
| 279,450 |
25. We think the annual employment cost of front-line
staff (presumably the inspectors) is excessive at £106,260.
This implies an average salary of more than £80,000 per inspector.
This level of salary must assume a high level of expertise in
all aspects relative to the work of the Agency. It is therefore
inconceivable that each expert inspector would require a further
£62,000 of policy and technical advice each year from the
Centres of expertise, and £42,000 worth of supervision and
further explanation of the policies from Head Office. In all,
the level of overheads on each front-line staff member is a staggering
£111,450 or 105 per cent of the cost of the front-line inspector.
If the cost of the Centres of Expertise is added to the overheads
then overheads are 163 per cent of the cost of the front-line
inspectors.
26. We find these costings impossible to believe. We
cannot understand how the Consultation Document could have put
forward such a high daily charge-out rate without giving even
the details which BPMF had to request from the Agency. In our
view there can be no possible justification for such high average
front-line inspector costs and for the literally incredible level
of overhead costs for each front-line staff member revealed in
these figures.
27. Charging Option 2 (Section 9). We do not support
this approach to interim charging. We do not believe the existing
approach and charging level designed to control pollution from
industrial installations is the appropriate model for the agricultural
operations of the poultry sector. The approach reflects purely
administrative convenience for the Agency with no consideration
of the different circumstances of the sectors being administered.
28. Components. The Environment Agency is proposing a
charging system based on designating types of activities as a
component with each sector's operations consisting of a number
of components. Charges are according to the number of components.
We are concerned at the simplistic determination of the activities
which make up each component in intensive farming (Section 6.9
and 6.8 of the Appendix, Interim Charing Consultation Document).
The increase from one component to two components where the capacity
or number of places relating to an activity is five times the
threshold for application of the IPPC, is arbitrary and bears
no relation to the relative amount of regulatory effort involved
in assessing such activities. There is no reason why a farm with
200,000 birds should require twice the level of regulatory effort
than one of 150,000 or even 80,000 birds. The same comments apply
to the feedmills and processing plants under the sector category
treatment of animal waste and vegetable matter and food industries
under 6.8.
29. Inspector-days per component—The calculation
of five inspector-days to be included in each component is excessive
in respect of the likely assessment needs of poultry sector activities,
in particular farming operations. We think it will take nowhere
near the 10 days or 15 days suggested for a "two component"
or "three component" site.
30. The Agency's approach seems to assume that, just
as with a petrochemical works, each poultry farm is a unique and
different entity in terms of its practices and its impact on the
environment. The reality is that poultry farms and farming practices
are essentially the same and their impact on the environment is
a function of the number of birds and houses on a site.
31. To a lesser extent, management practices such as
whether the used litter is stored to be spread on land or immediately
removed for burning to generate electricity will also be relevant.
We believe that the application of BATs will be largely uniform
throughout the industry and that it would be possible to perform
all or most of the assessment without the need to visit every
site, once the Agency is familiar with the poultry sector. Thus
we believe that the inspector-days calculation for poultry farms
in particular is far too high in relation to the time required
to assess poultry sector operations.
32. The proposed interim charge for issuing an IPPC permit
for a poultry farm with fewer than 200,000 birds "places"
it would be £12,150. For a farm with more than 200,000 bird
"places" would be £18,225. If these charges were
to apply to permits for existing farms in 2003 the permit cost
alone to UK poultry farmers would be between £15 million
and £22 million, equivalent to between 2 pence and 3 pence
per bird. Permit charges applied to poultry feedmills and processing
plants would add to this cost.
33. Subsistence charges—Following on from the above,
we are strongly opposed to any annual Subsistence Charges being
levied. The question of subsistence charging is not sufficiently
detailed in the Consultation Document for us to be able to judge
the need for two Environmental Agency visits to every farm every
year. We do not think such frequent visits would be necessary.
Indeed we think it would not be necessary to visit any more than
a representative sample of farms if at all.
34. We believe it should be possible for the Agency to
take into consideration factors such as farm assurance schemes
within the industry which might include environmental BATs and
be independently audited. Compliance with the farm assurance scheme
should be sufficient to enable a permit to be issued, with the
Environment Agency only needing to undertake periodic audits of
a sample of farms within the assurance scheme. This would fulfil
the requirements of the Directive and reduce the costs of Environment
Agency involvement. This and other approaches to greater efficiency
must be explored in developing the proposed General Binding Rules.
CLIMATE CHANGE
LEVY
35. The Climate Change Levy (CCL) will apply to all poultry
operations. We understand the need to reduce greenhouse gas emissions
and recognise the commitments entered into in the Kyoto Protocol.
However, we have serious concerns about the Government's approach
to achieving the overall reduction.
36. The CCL is imposing on trade associations (TAs) legal
and contractual obligations which the TAs may not be legally structured
to enter into or to enforce. Voluntary TAs would have few if any
real sanctions against a member's failure to provide the information
necessary to monitor agreed targets. While the member's action
would incur the higher levy it could also penalise all other members
should the agreed sector target be missed as a result. The DETR
answer that the TA would have recourse to the Courts under laws
of contract overlooks the delicate funding structure of most voluntary
TAs and the cost of legal proceedings.
37. The approach is very complex and bureaucratic and
will place a heavy ongoing administrative burden on TAs and companies.
Individual sector and company target agreements is theoretically
appealing in that those who perform are rewarded with the 80 per
cent reduction in the levy and those that don't pay the full levy.
However, within a sector, companies which have already invested
in the most energy efficient technologies will have fewer options
open to them than their competitors to meet a sector target.
38. Under the current energy charging system companies
many have moved to energy efficient processes to be more cost
efficient and competitive overall. We suggest that it would be
more effective and far less administratively onerous to simply
apply a levy equivalent to 20 per cent of the full levy across-the-board,
coupled with tax incentives on investment in energy efficient
technologies. The overall energy usage could be monitored through
the distribution companies.
39. The difficulty is in determining what is a fair and
reasonable target for each sector or company and achieving some
consistency between them. Comparability between competing sectors
throughout the EU is even more difficult given that different
Member States have different targets for reduction of greenhouse
gases. We are concerned to ensure that the method of meeting the
UK target does not disadvantage UK producers in comparision with
competing producers in other Member States and Third Countries.
40. Some sectors will be required to pay the CCL but
will not be eligible for the 80 per cent reduction because they
do not fall within the scope of the IPPC Directive. Within the
poultry sector hatcheries are not covered by the IPPC because
they are not rearing installations. In the agricultural context
hatcheries are significant users of energy. We question the relevance
of linking eligibility for the reduction to scope of the IPPC.
It appears to us that the proposed agreements to reduce energy
usage are not dependent on compliance with any requirements of
the IPPC. DETR is proposing, in its draft Heads of Agreements
for the participation agreements, that operations which are below
the threshold for inclusion in the IPPC would also be eligible
for the 80 per cent rebate. This being the case then all energy
users which are subject to the levy should have the option to
enter into participation agreements with the Secretary of State
to meet energy reduction targets. The only relevance of the IPPC
is that companies which meet their energy targets under the CCL
could be deemed to be complying with the energy efficiency requirement
of the IPPC.
41. In terms of total energy usage in the British economy,
the share consumed by livestock farming operations must be extremely
small. Its exclusion would make no real difference to UK meeting
its Kyoto Protocol commitment. Livestock farming, poultry in particular,
has relatively few employees and therefore would benefit less
from the reduction in the level of National Insurance Contributions.
42. The objective of reducing energy use can be counter
to objectives of good husbandry practice and of bird health and
welfare. In fixing a target for energy efficiency, there is a
major difference in predictability between industrial processes
manufacturing objects from inanimate raw materials, and the breeding
and rearing of live animals and birds. While the design of poultry
houses and equipment offers some scope for energy efficiency,
energy use in poultry houses is more a function of climatic conditions
and flock health. Flocks are subjected to varying disease challenges
which can affect litter quality and consequently the need for
more ventilation for proper litter management. Changes in legislation,
such as the withdrawal of antibiotic growth promoters, can also
affect flocks and energy use The need to recognise the biological
imperatives which determine most energy use on farms would make
participation agreements for livestock farmers so qualified as
to be unenforceable.
43. It would be morally wrong to financially penalise
farmers for failing to meet a perscribed energy reduction target
because of the need to provide extra heating or more ventilation
than anticipated in order to safeguard the health and welfare
of flocks, or to meet new legislative requirements. We are firmly
of the view that livestock farming should be exempt from the CCL
for precisely these reasons and we urge the Agriculture Committee
to strongly recommend this in its Report.
44. The CCL applies to the other sectors of the poultry
industry including hatcheries, feedmills, and processing plants.
Our concerns over the bureaucratic burdens and administrative
complexities apply equally to these other sectors. We believe
that the implementation of the CCL must be delayed until these
complexities and the many questions and issues have been satisfactorily
resolved.
ABOUT BPMF
45. The BPMF is a voluntary trade association representing
the interests of all aspects of British poultry meat production
from breeding, and rearing, through to processing and production
of value added poultry products from chickens, turkeys, ducks,
and geese. BPMF Member companies account for around 95 per cent
of the 1.5 million tonnes of poultry meat produced in the UK each
year. The volume of UK poultry meat production is about twice
that of UK beef and 50 per cent higher than UK pork and bacon.
UK is the second largest producer in the EU after France.
10 January 2000
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