APPENDIX 15
Memorandum submitted by the British Meat
Federation (A20)
OPPORTUNITIES AND DIFFICULTIES FACED BY AGRICULTURE
AS A RESULT OF POSSIBLE REDUCTIONS IN PRODUCTION SUBSIDIES—AND
THEIR IMPACT ON THE UK RED MEAT INDUSTRY
AGENDA 2000
The intention of the Agenda 2000 programme is
to amend the European agriculture regime with a view to assisting
the EU and its Member States to compete in the global market,
and to allow further enlargement of the EU to the East. To achieve
this over the next five years without destroying the EU budget
there has to be a reduction in existing financial support for
agriculture.
LIVESTOCK PRODUCTION
SYSTEMS
However, changes will impact in different ways
on EU Member States and are likely to particularly disadvantage
the UK livestock industry. Given the British landscape and climate,
which is well suited to welfare friendly, extensive animal rearing,
as compared with more intensive animal production of cattle in
Spain and Germany; or pigs in Denmark and the Netherlands.
This is an important issue since there is a
public perception that Britain encourages "modern factory
farming methods" when almost the opposite is true, and there
is an actual need for larger, more cost effective farm units if
the British meat industry is to compete in a wider market.
In 2000 the UK was 74 per cent self sufficient
in beef, 92 per cent in pork, 45 per cent in bacon, and 92 per
cent in sheepmeat, but the impact of the recent FMD outbreak is
to have further reduced the figures for beef, and also distorted
those for pigmeat and sheepmeat due to loss of exports. Any reduction
in subsidies that results in lower livestock production in the
UK will further increase dependency on imported meat.
THE IMPACT
OF ANIMAL
DISEASE IN
THE UK
Animal diseases in the UK over the last five
years have seriously reduced the size of British livestock herds
and flocks;
— BSE and the OTMS scheme affecting
cattle numbers, and beef production;
— Scrapie potentially linked with BSE,
leading to calls for scrapie resistant sheep;
— CSF hitting our pig sector just as
it recovered from a severe downturn in the production cycle, discouraging
restocking and further investment.
— PNDS/PWMS both currently reducing
the availability of pigs to the market;
— FMD adversely affecting all three
red meat species by reducing animal numbers.
The effect of this reduction is to make the
UK more dependent on meat imports, whereas the UK could and should
be concentrating on increased production of cattle, sheep and
pigs, and recovery of our lost export markets which were major
earners for the UK until 1996.
The Effect of Subsidies
Subsidies distort the market place, and a continuation
of dependence on subsidies by livestock producers will make it
ever more difficult to compete in what has become a worldwide
market place for meat, especially pigmeat and beef. It seems particularly
perverse to pay farmers not to produce food.
On the other hand, all EU Governments have a
need to preserve their rural communities, and farming plays a
vital role in supporting the broader rural economy. It is only
against this background that the current enthusiasm for diversification,
and care for the countryside and its environment, can hope to
make economic sense.
Subsidies differ for each red meat sector:
— Cattle. The Slaughter premium will
further increase in value, thus increasing the return to farmers
and allowing the price of animals to fall to nearer global market
levels. However, the 20 per cent of dry heifers permitted in the
Beef Slaughter Premium Scheme (BSPS) discourages increased production;
— Sheep. The Ewe Premium is currently
paid on ewes, whether or not they produce lambs, and we would
clearly prefer to see support that encourages further production
of good quality sheepmeat. Hill subsidies have had the effect
of raising the value of hill farmland only suitable for sheep
and thus artificially inflating the value of the sheep on the
hills;
— Pigs. There are no subsidies for
pig producers. The cycle of profitability and loss is shorter
in the pig sector than for cattle or sheep, but until the CSF
outbreak, pig producers were managing to survive on narrow margins
without subsidy.
If subsidies are to be removed, it is vital
that there is balance and fair competition across the EU. British
farmers must not be disadvantaged as they are now by a combination
of factors ranging from competitive isolation as a result of animal
diseases, through to flagrant flouting of EC legislation as practised
by the French Government to discourage meat imports of both beef
and sheepmeat.
LIVESTOCK FARMING
INCOMES
Despite subsidies, UK livestock farming incomes
are currently at their lowest levels ever, and this will do nothing
to encourage a younger generation into the industry at a time
when the average age of farmers is 55 and rising. Low incomes
are not matched by low expectations on the part of those in the
industry, but morale is further reduced by the high cost of production
in the UK, driven by high welfare, meat hygiene, traceability
and labelling standards, and the cost of investment in a rapidly
changing environment, which itself is driven by consumer lifestyle
expectations.
British meat production to these standards is
achieved at a high cost in terms of both money and discouraging
levels of bureaucracy, which necessarily lead to higher prices
in the shops. However, retailers have the option of importing
cheaper meat in order to compete with each other on price to the
disadvantage of British farmers and meat plants.
If British product is to compete successfully,
producers must become more aware of the need to produce consistent
high quality animals which have a repeat market. Red meat plants
are the marketeers for beef, pork and lamb, but need close relationships
with their producers so that the end product has a maximum value
and as many costs as possible are removed from the supply chain.
THE GOVERNMENT'S
WAY FORWARD
Encouragement by Government for farmers to diversify
must not become an acceptance that farming can no longer be economically
sustained, and an admittance that the UK will increasingly depend
on imported food. This cannot be right. While there is a growing
role for the tourism and leisure industries in the countryside,
they can only be successful against the background of a stable
and financially viable rural economy.
THE BMF VIEW
In order to trade our way to profitability without
subsidies, the UK needs to:
— develop alternative methods of encouraging
increased production of extensively reared, consistently high
quality animals for the retail, manufacturing, catering and export
markets;
— ensure a better return for livestock
producers by reducing costs in the supply chain, thus improving
margins;
— to actively promote consumer awareness
of British quality, welfare standards, and full traceability,
thus encouraging the consumer to choose British meat;
— ensure better control of imported
product, while safeguarding enhanced bio-security in the animal
and meat chain;
— recover export markets by renegotiating
the current beef Date Based Export Scheme, and pressing the EC
to ensure that national measures to protect local markets are
removed.
CONCLUSION
If the EU will not or cannot continue to support
livestock farming, and prevents Member States from doing so, then
market forces must prevail as they currently do in the pig sector.
In this event there will be no alternative to forming economically
viable farming units other than to become increasingly dependent
on imported food.
13 December 2001
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