CFG
04/07 final
March 2007
Foodaware response
to the Defra Consultation ‘Responsibility and cost sharing for
animal health and welfare: principles, December 2006’
Executive summary
The purpose and content of the consultation
The proposed principles
Responsibility sharing
Cost sharing
Executive summary
Foodaware members have discussed the proposed changes in the Government’
and European Community’s approach to responsibility and cost
sharing and are broadly supportive of the direction of travel. We
have also valued the consultations which Defra staff have conducted
with stakeholder groups, and benefited from the opportunity to question
the thinking so far. We support the principle of cost and responsibility
sharing but recognise that there is considerable work to be done to
determine the balance between taxpayers and suppliers and the possible
methods of approach. This work should include cost-benefit studies
and an assessment of price and consumer implications.
Foodaware members state that whatever decisions are taken, and however
they are implemented, food risk must not be increased as a result.
Suppliers already carry legal responsibility for producing safe food
and Government is responsible for enforcing legislation, carrying
out disease surveillance and monitoring. Clarity is needed about who
is responsible for what and where the benefits from proposed changes
lie. Defra has canvassed the possibility of 3 different organisational
models for delivery of this policy. We reject the suggestion of enhanced
consultation on its own as it fails to provide the necessary safeguards
to the public interest or the desired level of independence. However,
Defra needs to do more work in this area to define the scope of any
new organisation and the skills needed to carry out the tasks. We
await further proposals with interest. There is a distinct lack of
reference in the document to the potential implications for consumers
which may flow from this change in approach and we hope that omission
will be addressed in future proposals.
The purpose and content of the consultation
Defra has published this consultation document to help determine a
set of principles
that could be used to inform decisions about responsibility and cost
sharing between Government and industry within the context of animal
health and welfare policies. The Animal Health and Welfare Strategy
for Great Britain (AHWS) published in 2004 recognised that improvements
would depend on Government and industry working in
partnership and sharing responsibilities for reducing both disease
risk and the regulatory burden. Some have portrayed this policy as
being driven by a desire to reduce Defra’s budget and shift
costs on to industry; others recognise potential for a redistribution
of the costs of control between taxpayers, suppliers and consumers.
The consultation is a preparatory exercise which will be followed
by specific proposals for sharing responsibilities and costs during
2007. In addition to the formal consultation, Defra has held a series
of briefings for consumer representatives and other stakeholders in
which Foodaware has participated.
A number of developments in the UK and EC in recent years have led
to a questioning of how the costs of animal health measures should
be financed. The Anderson Inquiry into Foot and Mouth Disease in 2001[1]
concluded that ‘on narrow economic grounds, it is difficult
to see why costs as substantial as those of the 2001 epidemic should
be met by people not engaged in agriculture.’ The report also
acknowledged that ‘it is neither possible nor acceptable that
the farming industry should bear the full costs associated with that
control. ... The implication of this is that the public should bear
at least some of the costs of maintaining a healthy and extensive
livestock industry. But, in return the farming industry must recognise
that it, along with others, has responsibilities for the rural economy
and should contribute to its future development.’ The European
Commission is looking at this because of the perceived inequalities
in support in this area for the livestock sectors in different Member
States.
The AHWS laid out the reasons for Government intervention in this
are, namely:
- To protect human health
- To protect and promote the welfare of animals
- To protect the interests of the wider economy, environment and
society
- To protect international trade
The proposed principles
The ten principles on which Defra is consulting are:
- Preserving public safety and maintaining confidence both nationally
and internationally in UK food production
- Preserving the principles of the AHWS – especially that
prevention is better than cure
- Maintaining and improving capability to deliver policies
- Sharing responsibilities so that achievement of animal health
and welfare outcomes is effective and efficient
- Sharing costs only where the activity provides a clear benefit
or service to industry taking account of affordability and the
impact on competitiveness
- Focus cost sharing where it is most likely to reduce disease
risk
- Responsibilities should be shared at least where costs are shared
- Accountability for both industry and Government
- The regulatory burden should be reduced and measures simplified
wherever possible
- Consistency with EC and international developments
Q.1 Do you agree with the proposed principles?
It is difficult to judge the principles separately from the methods
by which they will be applied and their impact on the outcomes. In
the next consultation it will be important to have some examples showing
how the impacts of certain types of decision might be felt by different
stakeholders. It is also the case that some of the proposed principles
are ‘statements of intent’ rather than principles as such.
For example, principle 6 might read – to maximise disease reduction.
Principle 9, regarding reducing the regulatory burden and simplification,
is not specific to this policy area but applies as a general principle
of good regulation and so need not be included. The principle should
perhaps be ‘no departure from better regulation principles’.
Aside from these comments we await with interest an indication of
how the principles might be applied in practice and will be happy
to contribute further to those discussions.
Q.2 Can you identify any additional principles
which should be included?
From a consumer perspective the most obvious observation is that these
principles fail to take account of the consumer implications of any
proposed actions. For example, it is conceivable that if the costs
of controlling a particular disease were very high, its prevalence
widespread and the costs were all passed on to the industry because
the risk to the public was low, the outcomes could be to raise prices
to such an extent that the product was unaffordable and UK production
might cease. Apart from the consumer impact of that scenario leading
to dependence on production from elsewhere in the EC or worldwide,
there would be social impacts on rural communities the costs of which
would have to be picked up by other parts of government. Nation-wide
spread of bovine TB might be a case in point. Principles 2 and 5 might
cover that eventuality but it would depend on how the principles are
applied. A public policy objective to restrict the sale of poultry
to that which could be guaranteed free from Campylobacter might raise
similar risks.
Possible additions, therefore, could be a ‘reasonableness’
test or principle such as that which operates in law, and two consumer
principles about consumer/public benefit and the importance of sustaining
the food supply at a reasonable cost. There is also no reference to
principles of ‘equity’ or fair dealing between different
parts of the industry, or of the need to be open and accountable about
the reasons for the decisions and how they have been made so that
both the industry and the public can have trust in the outcome.
Responsibility sharing
Defra has identified three ways in which this policy could be implemented:
- extended consultation as happened in relation to the abolition
of the Over Thirty Month Rule;
- establishment of a Non Departmental Public Body such as an Agency
to manage disease control elements of animal health and welfare,
operating at arms length from government with an independent Board
but directly accountable to Ministers; and
- a Non Ministerial Government Department managed by a Board and
directly accountable to Parliament.
Q.3 How do these approaches to responsibility
sharing help to deliver the principles set out in section 2?
Defra has suggested that responsibility sharing provides a good opportunity
for livestock industries to become more active participants in deciding
the best approach to risk management activity beyond individual farm
level. We understand the attractions of this. However, the livestock
and poultry industries are very diverse in structure and there are
a wide variety of organisations which may or may not be able to bind
their individual members into solutions. The ongoing breaches of the
OTM rules in relation to pre-1996 cattle illustrate the point, and
consumers could not have confidence in reallocation of responsibility
without public accountability and sound enforcement. Furthermore,
the legal liability and responsibility for producing safe food already
rests with the suppliers. That principle must not be undermined by
whatever new arrangements are put in place. It is not clear how responsibility
sharing may relate to levels of enforcement and inspection and the
principles of earned autonomy being applied by the Food Standards
Agency. These details need to be clarified.
At this point in the development of Defra’s thinking, Foodaware
members would rule out the option of extended consultation as being
insufficiently independent from either Government or the industry
to assure public accountability for the division of responsibilities
and costs.
Further discussion is necessary about the functions which would need
to be covered in this area, the skill sets which would be appropriate
for executive staff in the organisation, the shape and role of the
governing body and relations with Government and Parliament. The type
of organisation should stem from the role and functions and not be
predetermined. At face value, there is considerable attraction in
having a body whose day-to-day operations are independent of both
Government and industry but it would need significant scientific,
regulatory and economic expertise and must interface closely with
the other functions covered by Defra, the Food Standards Agency and
the Agencies which are accountable to Defra.
Indeed, it would seem unwise to establish a new body which adds to
the fragmentation of policy formulation and implementation without
a clear analysis of the costs and benefits of such a model. However,
in whatever framework is established, we would expect significant
consumer and public interest involvement both in the work of the organisation
and in its governing body. Foodaware suggests that Defra take this
work forward by identifying potential models in more detail so that
the strengths and weaknesses of the different options are clearer,
and their scope is clearly defined.
Cost sharing
The consultation outlines a number of possible approaches including:
- transfer of work to the industry e.g. BSE testing for cattle
entering abattoirs;
- partial cost sharing e.g. the National Fallen Stock scheme to
which Government contributed initial pump-priming money but the
industry funds the remaining costs; and
- charges and levies.
Q.4 Do you agree with these approaches to cost
sharing? Can you identify any additional mechanisms for cost sharing
that could be used in the area of animal health and welfare?
Since public health is at risk from the spread of diseases between
animals and human beings, Foodaware believes strongly that public
funds at national and European level should be made available for
preventive measures, monitoring disease status, compensation (where
appropriate) and enforcement. Cost sharing is being widely interpreted
as cost cutting, given Defra’s requirement to curtail its demands
from the Treasury. If that is the sole underlying purpose, the initiative
is likely to fail and prove costly for disease prevention and public
health. Defra must ensure that the opportunity for clarifying responsibilities
and costs is not lost in a narrow debate about the cost of these policies
to the industry. There is also remarkably little in the consultation
about potential industry and consumer benefits. They should also be
part of the equation and we suggest that some cost-benefit analysis
is carried out before the next phase of the consultation.
These suggestions appear to be straightforward and comparatively simple
models to operate. We imagine that under the new arrangements, the
balance of cost and responsibility could be far more complicated to
establish and to determine. We can therefore see the value in having
an independent organisation to establish what the costs will be and
how they should be allocated. It is not clear from these examples
how cost and responsibility sharing could, for example, be used to
promote good practice such as encouraging sound biosecurity systems
or implementing quality assurance schemes. Nor is it clear whether
such arrangements could be universally available or only applicable
to certain sectors or areas of the country. Some schemes might need
to be of a very short duration, for example, to prevent the spread
of a disease from one area of the country to another previously unaffected,
or between different species in one area.
The subject does not lend itself to simple solutions, but we would
expect Defra to review ways in which existing funding streams might
be reallocated to this area of activity. Foodaware has been extremely
critical, for example, of the impact of the Common Agricultural Policy
in raising prices through inappropriate subsidy regimes. We consider
that it would be reasonable to divert CAP resources and/or regional
funds to support disease control programmes and improvements in biosecurity.
Indeed, members consider that such funds should be made available
as a matter of priority in order to reduce the risk and cost of controlling
avian flu and equally serious diseases where they impact on the social
and economic viability of some rural communities. In circumstances
where a particular farm or company’s practices adversely affect
the disease status of a particular area, the application of a variation
on the polluter pays principle would also be appropriate.
Finally, Foodaware members also recognise that farmers need incentives
to report disease outbreaks early, and systems of insurance or compensation
where infection is unavoidable and slaughter programmes the most appropriate
method of preventing further spread. There is also concern that if
farmers are required to pay more, the cost will be passed on to consumers.
Compensation for loss of animals can act as an important consumer
protection measure both in providing an incentive to report cases
early and to prevent diseased animals entering the food chain. This
option should remain as a policy tool.
1 Foot and Mouth Disease 2001: Lessons
to be Learned Inquiry Report, 22 July 2002
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