Public AdministrationWritten evidence submitted by the Department for Environment, Food and Rural Affairs (Defra) (Eggs follow up 4)
ENVIRONMENT FOOD AND RURAL AFFAIRS COMMITTEE—WELFARE OF LAYING HENS DIRECTIVE AND THE PIG WELFARE DIRECTIVE
This Memorandum sets out Defra’s response to specific questions raised by the Committee concerning the EU ban on keeping laying hens in conventional cages which came into force on 1 January 2012 and the EU ban on keeping pigs in sow stalls which comes into force on 1 January 2013.
1. What analysis has the department made of the reported increases in the costs of eggs and egg products?
2. What assessment has the department made of the extent to which the implementation of the Directive has contributed to the increase costs of eggs; and what other factors does the department consider may have contributed to that increase.
On 23 March, the Minister of State met with a range of representative bodies and businesses directly involved in the production, processing and retailing of eggs to get their perspectives on reports of egg shortages and price increases. The consensus, borne out by market data, was that Class B eggs used for processing were in short supply but Class A eggs sold direct to the consumer were not.
The supply shortage of Class B eggs was causing unprecedented increases in the price of Class B eggs, outstripping that of Class A in some instances. The cause of the shortage was attributed to the belated compliance with the hen cage ban by some of the major Member State suppliers. While some decrease in production had been expected in the transition period between taking out flocks, installing compliant systems and returning to full production, the speed at which some of these countries had ceased production had been totally unexpected. This had created an immediate situation of demand exceeding supply with a corresponding market response of increased prices.
The situation is not unique to the UK. Defra’s report from an EU market management meeting on 22 March confirmed egg shortages in other EU countries but latest figures indicated that the recent turbulence in egg prices had peaked. The EU Commission’s view was that pressure on prices would decrease in the coming months as a consequence of an increase in compliant production and reduced seasonal summer demand. The Commission also felt that speculation had a part to play in the recent price increases.
Since that meeting, the downward trend in prices has continued and some stability appears to be coming into the market. A recent report (19 April) shows that egg prices have continued to fall for the fourth week running, following the peak just before Easter. Although the price of eggs for breaking has fallen even more sharply, the shortage due to the conversion of production away from traditional cages is still being felt most strongly in the processing sector. On the positive side, the high prices are contributing to an improvement in producer margins and helping to offset the investments in new production systems.
Despite the fall in prices it will take a few months before the market returns to a more normal situation. EU countries are at different stages in the conversion process which means that the effect of shortage followed by recovery in production will be staggered. This should help to avoid a sharp fall in prices as supplies are expected to remain weak throughout the summer. However, there are clear signs that the market is beginning to regulate itself and the situation will improve as we come into the summer period when demand is traditionally reduced.
The Department’s view is that industry should look to source eggs and egg products for the manufacturing sector to address the current short term shortage. This could mean using existing EU quotas for the import of eggs from third countries for processing and manufacture, which Government would support so long as this was within existing rules and to required standards. At this stage, we would expect to see a market-driven solution to the long term issues.
3. What has been the cost of monitoring compliance with the Directive in the UK?
When we drew up the UK enforcement strategy it was decided that this work should, where practicable, be carried out using existing funds and resources to minimise the cost of implementation. Inspectors combined checks for compliance with the welfare Directive and with on-going egg marketing enforcement. It was not considered necessary to record this separately from other welfare or marketing activity. Therefore, the Animal Health and Veterinary Laboratories Agency (AHVLA), the agency responsible for enforcing the conventional cage ban in Great Britain, Scottish Government egg marketing inspectors and officials from the Department of Agriculture and Rural Development in Northern Ireland did not record costs or time related to specific cage ban activity at specific premises.
4. The Government response stated that “The Government is working with the egg industry, retailers, food manufacturers and the food service industry, in preparing its enforcement strategy to deal not only with imports of non-compliant eggs from other Member States, but also non-compliant domestic production.” Can the department provide an update on that work?
As you are aware from the previous memorandum Defra submitted to the Committee on 22 February, the UK adopted a tough enforcement response to deal with the very small-scale domestic non-compliance after 1 January 2012, with full compliance being achieved across the UK by 13 February. The UK is adopting an equally robust enforcement approach to deal with non-compliance with the conventional cage ban in other Member States, within the legal constraints that exist. My written statement of 6 December 2011 sets out the UK’s enforcement strategy in full and can be found in the link below:
http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm111206/wmstext/111206m0001.htm#11120641000005
Risk based surveillance is being carried out by officials from the Animal Health and Veterinary Laboratories Agency (AHVLA), Scottish Government egg marketing inspectors and officials from the Department of Agriculture and Rural Development (DARD) in Northern Ireland on imports of shell egg (Class A eggs) from other Member States, checking origin details against Member States lists of compliant premises and using ultra violet light analysis to identify batches of caged eggs that are not from an enriched cage environment. This action, coupled with the pressure on importers from their customers to ensure that they are provided with eggs from hens reared in a legal environment is acting as a real deterrent to such importations.
Unlike for Class A eggs, there is no provision in the egg marketing regulations to prohibit the marketing of Class B eggs, used in processing, where such eggs come from hens reared in non-compliant conventional cages. Accordingly, we worked closely with the food industry at the end of last year to persuade retailers, food manufacturers, food service companies and processors to sign up to a voluntary pledge to not stock or source conventional caged eggs. A full list of those that signed up is provided in the link below:
http://archive.defra.gov.uk/foodfarm/farmanimal/welfare/documents/2012-cageban-signatories.pdf
Since the ban on conventional cages came in on 1 January 2012, the concern that the UK would have significant imports of Class B eggs produced from hens reared in conventional cages has not materialised. Encouraged by the UK, the Commission has done what it said it would do and has taken robust action to deal with the large-scale non-compliance across the EU. In addition to writing formal infraction letters to all 13 non-compliant Member States, it is reviewing Member States’ action plans on a monthly basis. These action plans include the commitment that eggs from conventional cages can only go for processing in the Member State of origin and cannot be exported. These egg products can then only be used in food products or industrial products manufactured within the Member State of origin. These products can then be exported. This measure has worked, which is one reason why there has been a shortage of eggs used for processing across Europe in the last few months—with processors and food manufacturers being hit the hardest. The demand for eggs from hens in compliant cages drove a considerable increase in wholesale egg prices.
As mentioned above, the Minister of State met representatives of the egg industry, retailers, processors, and manufacturers in March to discuss the market situation and to try and find ways to address the short term egg shortage. Since then, the Commission has recently confirmed that egg prices have started to fall quite quickly in the last few weeks, potentially indicating that the market is now beginning to stabilise.
5. The Committee is also conscious of the potential impact of the EU sow stall ban for the UK. A recent report in the Farmers Guardian stated that while 12 Member States expect to be compliant by 1 Jan 2013, “But questions marks remain over the other 15”. The report continues “Farming Minister Jim Paice said the Government was working closely with the pig industry to “keep up pressure on Europe so all countries meet the European ban by January 2013.” The Committee would be grateful for an update on this work and Defra”s assessment of the likely levels of compliance across the EU.
Full implementation of the sow stall ban across the EU by the 1 January 2013 deadline is a key priority for Ministers for both animal welfare and trade reasons. We do not wish to see UK producers disadvantaged, as they have already invested heavily in converting to group housing when the UK introduced a unilateral ban on the use of sow stalls in 1999.
Discussions on the sow stall ban are on-going at an EU level. Indeed, it is on the agenda of the Agriculture and Fisheries Council on 26–27 April. The Commission has clearly already learnt lessons from the laying hen cage ban and has sought early information on progress with complying with the sow stall ban. The latest Commission data is that 12 Member States have said they would be fully compliant, six said they would be at least 90% ready, six would be 70–89% ready and three between 28–60% ready. The UK, Sweden and Luxembourg are the only Member States to already be compliant with the sow stall ban. In early March, Health Commissioner John Dalli wrote to all Agriculture Ministers to remind them of their obligations and to encourage them to work closely with the Commission in providing information on compliance levels. The Commission also arranged a stakeholder event on 19 March, principally to discuss compliance and options for enforcement of the sow stall ban.
The Commission is training vets from the EU’s Food and Veterinary Office (FVO) who will inspect member states for compliance from next year, and is preparing to enact infringement procedures against non-compliant Member States from 1 January 2013.
Defra is in close contact with the pig industry. The Minister of State met with the National Pig Association in February and further meetings are planned over the coming months. We will also be working closely with retailers and food service companies as ensuring stringent traceability tests are in place will be a key part of the UK’s enforcement strategy. The Department of Agriculture and Rural Development (DARD) in Northern Ireland is in contact with the Ulster Farmers Union (UFU).
April 2012