Memorandum submitted by the Ministry of
Agriculture, Fisheries and Food (M 14)
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
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, Outgoersaimed
at reducing pig breeding capacity; and Ongoerswhich 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
adding value to its product; and
enhancing its response to consumer
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.
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:
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