Select Committee on Agriculture Minutes of Evidence


Memorandum submitted by Mr Philip Richardson (M 2)

  Following the severe and expensive outbreak of Classical Swine Fever in Holland in 1997, the EU Commission and the Court of the Auditors stated that "Producers should be made more responsible for the financial aspects of the eradication of animal diseases, eg through some form of insurance scheme". During the current outbreak of CSF in the UK, the British Government has seized on this statement to propose the "Pig Industry Development Scheme" (still in draft form as at 22 November 2000), which "establishes a Development Fund to assist producers better manage their business risks". The fund would be established under legislation contained in the 1967 Agriculture Act, Section 9, which allows the MLC to collect a statutory levy from the industry to fund a development scheme. The establishment of the Development Scheme results from an agreement reached between the NPA and MAFF, announced in MAFF Press Release 317.00 of 8 September 2000, following NPA lobbying for adequate compensation to farmers trapped through no fault of their own in CSF surveillance areas.

  It is recognised by producers involved in the discussions leading up to the drafting of the scheme that the wording must satisfy both the 1967 Act and EU Commission rules on State Aid. But the scheme is drawn up at this time, and with the minimum 56 days of consultation in order to address the acute financial problems of those unfortunate East Anglian producers. On 15 November, the Minister visited East Anglia and gave his personal assurance that . . . "the swine fever top-up fund would not set a precedent, will not be used for any other purpose and will be wound up as soon as the current swine fever issue has been dealt with". Nevertheless, the draft wording of the scheme is very broad ranging, and raises questions of principle, which must be discussed before legislation is irrevocably placed on the statute book. Although Mr Brown suggests the levy will terminate once the current CSF compensation agreement has been paid, I suspect the legislation upon which the levy was raised will remain intact, and capable of re-activation.

  Discussions are taking place in parallel between NPA and MAFF, under the chairmanship of Neil Thornton of MAFF, to identify areas of "risk" in the pig industry, and how that risk can best be managed in future. It is possible that conclusions from these discussions could be at odds with provisions within the Development Scheme. Whilst I am very keen to see the compensation package delivered to East Anglian producers, I am also mindful of the need to take care in drafting legislation that may have long term consequences.

  I would like to point the Committee to some of my concerns. Firstly, in the draft covering note to the scheme, MLC state that . . . "It is not envisaged that this fund will affect the current responsibilities of the EU or the UK Government in . . . areas of animal health, public health, animal welfare or the environment". In the text of the Scheme, however, "The purpose of the Scheme is to make provision for . . . assisting producers to deal with the financial consequences for their business of:

    —  any incidence of a pig disease;

    —  the effect on the market in pigs or pig products of any serious concern in relation to public health affecting the consumption of pig products;

    —  any requirement imposed by or under the EC Treaty or any Community Instrument for the purposes of the protection of public health, the protection of the environment or the protection of the health or welfare of animals; and

    —  the risk of the herds of any such pig producers contracting any pig disease".

  This comprehensive section could be used by Government to argue it no longer had any responsibility to the pig industry, whatever disaster might befall, or whatever future legislation might prescribe. What are the current accepted responsibilities of Government to the industry? What guarantee that these will not change? Whatever the Minister's assurances, this broad definition, admittedly within a draft document which may have changed, leaves the industry vulnerable. An insurance policy for the industry to cover the range of risks specified above would not be affordable. If it chose not to pay the premium, the Government of the day could wash its hands of responsibility, and accuse the industry of taking insufficient action against risk, despite having the means at its disposal through the levy raising powers of the scheme.

  The method by which industry shoulders more responsibility for its own risk needs to be appropriate to the specific risk. The recent CSF outbreak in East Anglia highlights that for some risks, like CSF, the risk is greater for some herds than others. Bio-security on outdoor herds is poor compared to ring fenced indoor herds. Geographically isolated units are at less risk of disease spread than pig-dense areas. Systems which rely on the movement of pigs between different farms can increase risks of spread through transport contractors. For other types of risk, these observations may not hold. The point is that a single statutory levy may not be an appropriate method of collecting an "insurance premium" in every, or any, case.

  The Dutch rejected the idea of a levy on the basis that it is money taken in advance for an event that might never happen. Instead, they have arranged a facility from the Banks, which allows a large sum of money to be available for disease control while the mechanism for repayment can be set up. I understand that the fund is "capped", with the promise of an uncapped contribution from the Dutch Government and a 50 per cent contribution from the EU in the event of another CSF outbreak. Does the draft Development Scheme preclude a Dutch solution?

  The UK outbreak of CSF began as a result of illegally imported, contaminated meat being ingested by an outdoor sow. The global nature of the food trade inevitably increases the risk of importation of disease. Responsibility for import regulation clearly falls to Government, but there appears to be no recognition within the Development Scheme that Government should be morally bound to shoulder the increased risk. The current CSF outbreak was not caused by a problem in the UK industry, yet the industry as well as Government, is dealing with the consequences. The inevitable conclusion from recent Ministerial comments and the evidence of this scheme is that the industry alone, is expected to shoulder the extra risk.

  The UK pig industry currently faces many threats to its survival. It is now undoubtedly in structural decline because of these pressures. In drawing the attention of the Committee to an additional potential burden, and the possibility that this may have more onerous implications than the Minister currently intends, I hope that sufficient debate might result to ensure the solution is viable and just.

22 November 2000

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