after bse – a future for the european livestock sector

After BSE – A futurefor the European livestock sector

EAAP publication No. 108, 2003

After BSE – A future for the European livestock sector

The EAAP series is published under the direction of Dr. P. Rafai

EAAP – European Association for Animal Production

The European Association for Animal Production wishes to express its appreciation to theMinistero per le Politiche Agricole e Forestali and the Associazione Italiana Allevatori for theirvaluable support of its activities

After BSE – A future for theEuropean livestock sector

EAAP publication No. 108

Editor

E.P. Cunningham

Wageningen AcademicWageningen AcademicP u b l i s h e r ssseessbP u b l i s h e r sP u b l i s h e r sP u b l i s h e r s

ISBN: 978-90-76998-23-7e-ISBN: 978-90-8686-516-1

DOI: 10.3920/978-90-8686-516-1

ISSN 0071-2477

Subject headings:BSE epidemic

Food chainFuture options

First published, 2003

© Wageningen Academic Publishers The Netherlands, 2003

This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned. Nothing from this publication may be translated, reproduced, stored in a computerised system or published in any form or in any manner, including electronic, mechanical, reprographic or photographic, without prior written permission from the publisher, Wageningen Academic Publishers, P.O. Box 220, 6700 AE Wageningen, the Netherlands, www.WageningenAcademic.com

The individual contributions in this publication and any liabilities arising from them remain the responsibility of the authors.

The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the European Association for Animal Production concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

The publisher is not responsible for possible damages, which could be a result of content derived from this publication.

Table of contents Page

Preface ........................................................................................................................................... a

Introduction .................................................................................................................................... c

The Working Group .............................................................................................................. cAcknowledgements .............................................................................................................. c

Executive Summary ....................................................................................................................... e

Chapter 1. BSE: the Facts, the Impact, the Lessons ................................................................... 1

1.1 The Epidemic in the UK................................................................................................. 11.2 International Spread ....................................................................................................... 31.3 Cost of the Epidemic ..................................................................................................... 51.4 The Learning Curve ........................................................................................................ 51.5 Containment Measures .................................................................................................. 81.6 Risk Assessment and Communication - the UK Experience ........................................ 91.7 Meat and Bone Meal .................................................................................................... 10References .......................................................................................................................... 13

Chapter 2. The Changing Context: an Industry in Transition ................................................... 17

2.1 The Changing Consumer .............................................................................................. 172.2 The Effect of Food Scares ........................................................................................... 212.3 Retailing and Processing: Rapidly Increasing Concentration .................................... 232.4 The Producers .............................................................................................................. 242.5 Scale and Intensification .............................................................................................. 262.6 Intensification and Animal Disease ............................................................................. 282.7 Externalities ................................................................................................................. 312.8 Trade and Competitiveness .......................................................................................... 402.9 Evolution of EU Common Agricultural Policy ........................................................... 482.10 Enlargement of the EU .............................................................................................. 49References .......................................................................................................................... 50

Chapter 3. The Future: Vision and Options ................................................................................ 55

3.1 Stakeholders - The Ethical Framework ....................................................................... 563.2 Stakeholders - the Market Structure............................................................................ 583.3 The Economic Context ................................................................................................ 623.4 Reconnecting the Chain ............................................................................................... 643.5 Transparency and Accountability ................................................................................. 663.6 Traceability ................................................................................................................... 683.7 Consumer Assurance .................................................................................................... 703.8 The Place for Regional and Special Quality Products ................................................ 733.9 Organic Production ...................................................................................................... 753.10 The Place for Science ................................................................................................ 77References .......................................................................................................................... 8 0

Conclusions .................................................................................................................................. 83

Acronyms ..................................................................................................................................... 89

Box 1. BSE Impact on Animal Value .................................................................................... 6Box 2. Food Scares in Europe, Jan-July 2002 .................................................................. 22Box 3. Bretagne, a Region of Intensive Livestock Production ......................................... 27Box 4. Cost of a Disease Outbreak - FMD in UK ............................................................. 29Box 5. Reducing Antibiotic Use in Livestock Production. ............................................... 34Box 6. Nitrogen and Phosphorous Flows in Danish Agriculture ...................................... 37Box 7. Dairy Quotas ........................................................................................................... 63Box 8. Energy Use and Livestock Production................................................................... 64Box 9. Iberian Pig, an Example of Sustainable Animal Production .................................. 73

a

EAAP Series no. 108

Europe faced a major crisis over the BSEphenomenon. In addition to affecting cattlebreeders and beef producers the BSE crisisinvolved many other sectors of society. Theseinclude the associated activities of animalhealth, meat processing, leather industry,wholesale and retail sale of beef, national andinternational trade, movement control of farmanimals and, last but not least, the perceivednew threat to human health by CJD with all itscomplex interactions between science,medicine, politics and legislation. This crisishad also other effects such as declining publicconfidence in science, a lack of trust inofficial and other official supervision ofissues affecting human health, broken farmbusinesses, a growing cost to governments andto the EU; necessary actions to limit thespread of BSE into further countries andterritories.

The long term effect and the ultimate impactof BSE on human society is still not fully clearand future livestock production and animalhealth practices are still being debated. Theway forward needs to be further clarified.

EAAP proposed therefore to prepare acomprehensive Report on BSE which drawsupon the deep strengths of the Association inthe livestock sector in all its components. Theaim of the Report is not to defend the sectionalinterests of animal production. Rather it seeksto provide light for those in all sectors ofsociety who have to make decisions on thisdifficult topic and in the future beware of othereventual emergencies. Therefore thecomposition of the Group established byEAAP to produce the Report includes, alongwith livestock scientists, distinguished expertsfrom other sectors such as consumerconcerns, trade, economics and health.

The outcome is a balanced, objective andforward-looking report which seeks toprovide new perspectives and some optionsfor the future, based upon a full understandingof the past. The Report had not the purpose ofdocumenting again the causes of BSE nor togainsay the scientific information alreadypublished by recognized and authoritativebodies dealing with the animal health issues.

It was appropriate that the EAAP, with its clearmandate for Animal Science and Productionin Europe and the Mediterranean basin, shouldoffer a comprehensive view on the difficultissues that our society faced at large andshould seek to identify realistic and creativeways to overcome the existing problems withsome indication of how to prevent arecurrence of similar situations in the future.

We want to thank Patrick Cunningham and histeam for taking on this difficult assignmentand successfully proposing a view of the needsof the livestock sector of tomorrow: animalhealth monitoring, animal products riskassessment and better animal agriculturemanagement but also and above all foodsecurity, the consumers’ awareness of foodquality, professional ethics in the livestocksector and the animals’ welfare.

Aimé Aumaitre(President EAAP) and

Jean Boyazoglu(Executive Vice-President EAAP)

Paris, June 2003

Preface

c

EAAP Series no. 108

Introduction

When, on March 20th, 1996, the UKgovernment announced its belief in a probablelink between the brain disease BSE in cattleand the similar disease vCJD in humans, anunprecedented crisis struck the beefproduction sector in Europe.

The crisis was first, and most dramatically, acrisis of confidence. Consumers reactedinstantly by taking their business elsewhere.As the continuing publicity has highlightedvarious related and unrelated deficiencies inthe production chain, there has beenpermanent damage to the relationship betweenconsumers and producers. Secondly, there wasan economic crisis, mainly borne byproducers. The scale of the economic loss hasbeen much greater than is generallyappreciated. Like the impact on consumerconfidence, these economic effects willcontinue into the future. Thirdly, there was acrisis for the public authorities. Large andunbudgeted costs were incurred. Regulatorystructures were shown to be inadequate. Theresult has been a rapid restructuring of publicservices in areas of agriculture, food andpublic health in all European counties, and atEU level.

This multiple crisis occurred in an industryalready struggling to adapt to the demands ofchanging consumer requirements, increasingcompetition, declining profitability, andadvancing technology. In the years to come,these parallel challenges are likely to beintensified.

At an early stage in the BSE crisis EAAP hasalready issued a special publication on thedisease and its implications (EAAP, 1994). Italso commissioned a major study on the future

evolution of the livestock sector (Politiek andBakker, 1982). The purpose of the presentreport is to carry forward that work: todocument the lessons learnt from the rollingBSE crisis, and to consider the futureevolution of the livestock sector in Europe.

The Working Group

Juan José Badiola (Spain)Gottfried Brem (Germany)Fernando Crespo (OIE)Patrick Cunningham (Ireland, Chairman)Jean-Claude Flamant (France)Janet Graham (UK)John Hodges (Austria)Karsten Klint Jensen (Denmark)Samuel Jutzi (FAO)François Madec (France, Secretary)Ben Mepham (UK)Attila Nagy (Hungary)Alessandro Nardone (Italy)Peter Sandoe (Denmark)

Acknowledgements

The European Association for AnimalProduction (EAAP) wants to acknowledge themeaningful technical inputs and supportreceived from the FAO (AGA) and OIE duringvarious stages of this project’s development.EAAP wants also to express its greatappreciation to the Italian Ministry ofAgricultural and Forestry Policies (MiPAF)and the FAO for their important financialparticipation.

After BSE - A future for the European Livestock Sector

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EAAP Series no. 108

Executive Summary

• The BSE epidemic, which began in 1986,is now gradually coming to an end. Thoughknowledge is incomplete, enough is knownabout the disease to be reasonablyconfident that such an epidemic will notrecur.

• Three principal questions remainunresolved: the origin of the BSE epidemic;the future of vCJD; and what to do with the16 million tonnes of animal byproductsproduced annually by the slaughter industry.

• Loss of value and cost of disposal of MBMexceed 1.5 billion Euro per year. Thoughnew EU legislation could permit over 80%of this material to be used again inlivestock feeds, the best option is tocontinue the ban on its use.

• The cost of the epidemic has beenenormous, and is estimated here at about10% of the annual output value of theEuropean beef sector. The discountedpresent value of these costs is estimated at€92 billion.

• The progress of the epidemic was markedby many deficiencies and failures, of whichtwo are particularly noted.- The inadequacies of public information,

particularly in the UK- Failure to prevent international spread

through contaminated meat and bonemeal.

• Ongoing changes in the industry aredocumented: changing consumerrequirements; concentration of processingand retailing power; declining producer

prices, and reduction in numbers of fulltime producers. These changes representboth the causes and effects of a continuingshift in the terms of trade to thedisadvantage of producers. To ensure fairtrading, increased controls to prevent abuseof economic power may be necessary.

• The ten countries which are destined to jointhe EU have 40% more farmers than in theEU 15. The challenge of accommodatingthem in a common EU policy, market andbudget has major implications for theexisting EU livestock sector.

• European production costs for milk, redmeats and cereals (the raw material forwhite meat production) are higher than inthe traditional exporting countries for thesecommodities. This is partly due to relativescales of production units. Withprogressive trade liberalisation, continuedpressure on producer prices is inevitable.

• Steady increases in unit scale andintensification, particularly in pig, poultryand dairy enterprises, have generatedproblems of nutrient overload in someregions. The industry will need toacknowledge and address these problems.

• In the present context it is ironic to notethat the situation on animal disease inEurope has never been better. All majordiseases are eradicated or under control.For the future the emphasis will be on thecontrol of enzootic diseases, largelythrough husbandry practices; reduction, andeventual elimination of routine use ofantibiotics in feeds; and intensive researchto cope with emerging diseases.

f

• Scientists have lost credibility as a resultof the BSE crisis. While it is more criticalthan ever that public policy be informed bythe best scientific advice, those involvedin providing such advice must morecarefully identify and distinguish the factualbasis from the value judgements involved.

• Scientific innovation has also lost favourwith the public, particularly where it affectsfood and health. The livestock sector willneed to weigh carefully the technicalbenefits against the risks and publicacceptability of technologies such asGMOs, BST in milk production, growthpromoters in meat production.

• Given that over 95% of European livestockproduction is destined for Europeanconsumers, the production industry mustconcentrate on securing their loyalty byfulfilling their expectations on- food safety;- transparency and accountability;- quality and variety, including response

to the demand for regional and organicproducts.

• New ways need to be found to build thecommunity of interest of producers,processors, and retailers in meeting thesegoals.

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EAAP Series no. 108

1.1 The Epidemic in the UK

The cattle disease now known as BovineSpongiform Encephalopathy (BSE) was firstconfirmed in a cow on a dairy farm in the southof England in 1985. It is believed thatunrecorded cases had occurred earlier thanthis. The disease, occurring in both sexes inadult animals, is a neurological conditioninvolving pronounced changes in mental state,abnormalities of posture, movement andsensation. Symptoms characteristically lastfor several weeks and are progressive andfatal. Post-mortem examination of bovinebrain demonstrated similar pathology to thefamily of Transmissible SpongiformEncephalopathies (TSEs), a group of diseasesoccurring in several mammalian species andin humans. The new disease became known asBovine Spongiform Encephalopathy (BSE), aform of TSE thought at the time to be specificto cattle.

In the years following 1986, the number ofcases in the UK increased dramatically,peaking at 37,289 cases in 1992. Since then,the epidemic has declined steadily, and thenumber of cases reported in the UK in 2002was 1144. While the disease has spread toother countries, over 95% of all recordedcases to date have occurred in the UK. Thecourse of the epidemic in that country and theparallel actions taken are shown inFigure 1.1.

In 1988 the disease was declared a zoonosis,an infectious disease transmissible undernatural conditions from vertebrate animals toman. This was noteworthy as conventionalwisdom until then held that the disease wasspecies-specific and posed no danger tohuman health. The confirmation, in 1997, thatBSE was no longer confined solely to cattle,

Chapter 1. BSE: the Facts, the Impact, the Lessons

but was the probable cause of new variantCreutzfeldt-Jakob Disease (vCJD) in humanswas a most significant event (Bruce et al.1997, Hill et al. 1997). The first case ofhuman vCJD was detected in the UK in 1994,and by 2002 over 100 cases had beenrecorded. This threat to human health has ledto the implementation of a number of criticalresponse measures.

The origins, progress and eventual control ofBSE in the UK are marked by a number ofcrucial advances in knowledge andconsequential responses. Initialepidemiological analysis showed the patternof BSE cases to be typical of an epidemicinvolving many individual, independent diseaseoutbreaks, each of which could be traced to acommon source. The only common featureof all investigated cases was the use ofcommercially produced compound feedcontaining meat and bone meal (MBM)(Wilesmith et al. 1988). Following theunderstanding that MBM was the probablemedium for spread of the disease(Southwood, 1989) progressive measureswere established to eliminate infectiousmaterial from MBM and to remove MBMfrom animal feed. In July 1988 ruminantMBM was banned specifically from ruminantfeed and later (1996) from all animal rations.Meanwhile specified risk material (SRM),including ruminant offal and brain, wasexcluded from human consumption and animalfeed and was banned from export from the UK.By 1995 regulations on mechanicallyrecovered meat (MRM) were also introduced.

These measures, increasingly effective in theUK, resulted in the displacement of MBMfrom the UK market. This led to an increasein export of MBM, initially to EU countries,

2

Chapter 1. BSE: the facts, the impact, the lessons

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EAAP Series no. 108

and as its use was banned there, to more distantmarkets. In August 1996 all MBM in the UKwas recalled for storage and destruction.

As research and field experience producednew information on the nature of the disease,containment and eradication measures weresteadily increased. These have been largelysuccessful in preventing new infections in thecattle population. This is confirmed by the factthat, almost without exception, all newlyrecorded cases are in animals born before1996.

The success of the measures taken to preventinfected animals entering the human foodchain is not yet clear. Numbers of vCJD caseshave shown a rising trend since 1994. Anumber of uncertainties (exposure/dose,susceptibility, incubation period) mean thataccurate prediction of future numbers isdifficult. Most estimates put the total numberof expected cases between a few hundred andseveral thousand, though under some sets ofassumptions, total expected cases couldexceed 100 000 (POST 2002, Valleron et al.2001, d’Aigneaux et al. 2001, Ghani et al.2000, Ferguson et al. 2002).

The epidemic has had catastrophic economicconsequences for UK farms, and for theeconomy. Real producer prices for beef felldramatically in 1989 and in 1996 in responseto waves of concern for the safety of theproduct (Figure 1.2). Economic loss to theUK in the year following the 1996 crisis wasestimated at €1.2 – 1.6 billion, or between62% and 82% of the total farm gate value ofbeef output. The cumulative budgetary cost ofBSE since 1996 was estimated to reach€5.6 billion by the end of 2001 (Atkinson2001).

About one half to two thirds of the nationalloss was accounted for by the fall in the valueadded of meat production. The remainderresulted from the cost of operating the variouspublic schemes, compliance costs associated

with new legislative requirements and costsassociated with the adjustments of productionto service new markets. The impact onspecific sectors varied. For example, in thefirst year the beef producers were largelyprotected from the crisis by variouscompensation payments. Slaughterers andrenderers also benefited from the variousschemes introduced during the crisis. On theother hand, meat manufacturers and retailersreceived no compensation, but the largerbusinesses were able to adjust their productmix.

1.2 International Spread

Some years after the BSE epidemic wasestablished in the UK, cases began to occurin other countries. Beginning with Ireland(1989) the disease has now been reported insome 19 additional countries, most of themin Europe (Table 1.1). In most countries thenumbers of cases are very small, and were itnot for the increased vigilance would possiblyhave gone unnoticed. In all cases, containmentmeasures are in place such that any threat toanimal or human health is controlled.

In each country where BSE has occurred,there have been two critical points. The firstis the recognition that BSE exists in thenational cattle herd. The second is theconfirmation of vCJD in the humanpopulation. These events have occurred atdifferent times in different countries(Table 1.1). Each event has provoked a crisisof public confidence in food safety and in thenational regulatory agencies, with severeeffects on economic life.

Each country has developed a set of responsesto these crises. In addition, the EU has takenactions applicable across countries. Theseresponses have evolved progressively asknowledge of the two diseases has increased.

4


Figure 1.2. UK real beef producer prices (January 1987 money).(Source: Atkinson, 2001).

80

100

120

140

160

180

200

1 11 21 31 41 511985 1990 1995 1999

Pence per kg/wt

Total BSE cases Date of first incidence

Total vCJD cases

Total cattle population (heads)

United Kingdom 181 375 1986 106 10 598 000 Ireland 833 1989 1 6 459 300 Portugal 628 1990 1 250 000 Switzerland 403 1990 1 610 800 France 499 1991 4 20 500 000 Denmark 8 1992 1 850 000 Germany 152 1992 14 480 000 Italy 54 1994 1 7 211 000 Belgium 68 1997 3 040 000 Luxembourg 1 1997 205 000 Liechtenstein 2 1998 6 000 The Netherlands 28 1997 4 050 000 Spain 88 2000 6 163 900 Austria 1 2001 2 155 447 Czech Rep. 2 2001 1 582 027 Finland 1 2001 1 085 000 Greece 1 2001 585 000 Japan 3 2001 4 530 000 Slovakia 5 2001 646 100 Slovenia 1 2001 493 670

Table 1.1 BSE, vCJD incidence and total cattle population in selected countries. Figures areto January 2002. (Sources: DEFRA, OIE & FAO).

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1.3 Cost of the Epidemic

For most animal disease outbreaks (forexample FMD - see Box 4), the costs ofcontainment, eradication and economicadjustment are temporary. After the outbreakhas been brought under control, the industryreturns to normal. BSE has been different.New and permanent changes have beenintroduced which impose substantialadditional costs for the indefinite future.

The cost of the BSE epidemic has varied fromcountry to country with the incidence of casesand with the different policies applied. The UKhad by far the largest number of cases, butadopted a policy of slaughtering only affectedanimals, on the grounds that lateraltransmission was not believed to occur. Othercountries, with fewer cases, slaughtered thewhole herd where an affected animal wasfound. This was regarded as a reasonableprecautionary measure given a degree ofuncertainty about the nature of transmission,and to secure public confidence in thecontainment measures.

However, the largest cost is not involved incontrol measures, but in the permanent lossin value of each beef animal produced due tothe exclusion from the food chain of certaincarcass components. In addition, new costsper animal are incurred for the safe disposalof waste material, for animal testing, and forextra procedures and precautions in theslaughtering industry. A set of estimates ofthese losses and costs is given in Box 1.

What is the total cost of the BSE epidemic inthe EU? From the figures in Box 1, it is clearthat a figure varying around €100 per animalis involved. Over half of this is the loss incarcass value, and the remainder consists ofMeat and Bone Meal (MBM) disposal,depopulation of affected herds, and BSEtesting costs. The average value of all bovines

slaughtered in the EU is close to €1000. Thus,about 10% of the value of each beef animalproduced has been lost.

Irrespective of the future course of theepidemic, most of this loss in value per animalwill continue. Some MBM use might beresumed, and BSE testing costs might bereduced. However, the changes in meatindustry practices will be permanent.Furthermore, the calculations given here takeno account of the costs associated with vCJDin humans, nor of the impact of BSE on beefprices at retail level. The figure of 10% ofthe value of beef output is therefore areasonable starting point from which toestimate the economic impact in the EU.

In 2000, beef accounted for 10.2% of the totalvalue of agricultural output in the EU, or€27.5 bn. The annual loss as a result of BSEcan therefore be estimated approximately as10% of this, or €2.75 bn. Discounting allfuture losses this gives a Net Present Value(NPV) of approximately A/r, where A is theannual loss and r is the discount rate. With anannual loss of A = €2.75 bn and a discountrate of r = 0.03, this gives a NPV of €92 bn.

This is an enormous sum, approximately equalto the whole annual budget of the EU. Higherdiscount rates or a shorter time horizon wouldproduce lower estimates. However, noreasonable recalculation is likely to reducethis estimate by 50%. Even if, as is expected,the BSE epidemic in Europe is coming to anend, its economic shock effect on thelivestock sector has been immense.

1.4 The Learning Curve

The BSE epidemic is perhaps unique in the20th century in the degree of ignorance of itscauses and nature at the time of the outbreak.While a number of TSEs (the most relevantand notable being scrapie in sheep) were

6


Box 1. BSE Impact on Animal Value

Before BSE became part of the cattle industry, every element of an animal presented for slaughter had value. Thebulk of the carcass went into the human food chain. Meat waste and trim went to the pet food market. Fat trim wasrendered for a variety of food and industrial end uses. Bone was processed into meat and bone meal for thelivestock feed industry.Post BSE, the destiny and value of many of these components has changed. In many cases components whichcould previously have been sold must now be disposed of. Instead of contributing to value, they have thereforecontributed additional cost.It is difficult to quantify this change in the values and costs at an industry level. No comprehensive figures arecollected. In addition, there are considerable differences between countries in the average slaughter weight ofanimals, and in the traditional use patterns of the components of the slaughter animal. It is, however, possible toillustrate the change in values and costs in particular cases, and these can give a general sense of the morewidespread pattern of change. Table 1 shows the values and costs in 1995 and in 2002 at one substantial beefslaughter plant.

Table 1 Component costs and values of beef animal pre and post BSE.

Value euro / head Pre BSE Post BSE Difference

Edible offals 10.09 2.72 7.37 Inedible offals 4.45 -2.74 7.19 Fat 11.13 1.02 10.11 Bone 3.39 -2.36 5.75 SRM 0.00 -12.11 12.11 MRM 6.00 0.00 6.00 Increased labour: cost per head 1.92 Reduced processing rate: cost per head 4.70 Total revenue loss per head 55.15

The amount of useable fat has gone down greatly, with a loss in value of €10.11 per head. Bone, pre BSE, includednearly all the material which is now classified as specified risk (SRM). Today, the SRM is separately treated. Theamount of SRM per head has increased steadily as the definition has been broadened to include additionalmaterials, and now accounts for some 40 - 50 kgs, depending on the weight of the animal. On average, in this plant,it has a disposal cost of €12.11 per head. Edible offals have been reduced in value by €7.37 per head and inedibleoffals by €7.17. Finally, mechanically recovered meat (MRM), which formerly had a value of €6.00 per head, nowhas zero value. The total revenue loss per head from the change in value of these components amounts to€48.53 per animal.With the increased segregation of materials necessary in a meat plant to cope with BSE precautions, substantialchanges in work practices have been necessary. In this plant an additional five workstations were required. Inaddition, the rate of throughput on the slaughter line is reduced, thereby increasing operating costs. Theseadditional costs amount to €6.62 per head, bringing the total reduction in revenue per head to €55.15.These estimates should be regarded as establishing the minimum impact of BSE on the value at slaughter of a beefanimal. To implement the new regulations additional capital expenditure has been incurred throughout the beefindustry. In addition, the rendering, storage and destruction of meat and bone meal has been subsidised to theextent of €670 per tonne, or €21.45 per animal. Futher control measures require a BSE test for animals over30 months to enter the market. Otherwise they are purchased for destruction. Herds with affected animals aredepopulated with compensation. Averaged over all cattle slaughtered, these additional costs come to €27.68 perhead. The total estimated cost per head therefore amounts to €104.28, or about 10 % of the value of the animal.

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known, their causative agent was a mystery.The pattern of transmission was alsomysterious, and no effective treatment wasknown.

The key scientific advance was the discoveryin 1986 that the infective agent of BSE wasan aberrant form of a normal class of proteincalled prions (Prusiner 1986, 1987).Furthermore, it was found that the aberrantform could induce structural changes innormal prions, converting them to thepathological form. The presence of thesepathological prions in brain tissue gives riseto irreversible changes leading to thesymptoms of the disease.

Further research showed that the disease couldbe established in several species (mice,calves, sheep, goats, mink) by injection oringestion of the aberrant prion. Since theoccurrence of the first recorded case of vCJDin 1994, cumulative scientific evidence pointsto ingestion of aberrant prions, probably ofbovine origin, as the likely cause (Bruce etal. 1997).

Research has also shown that the aberrantprion is much more resistant to normalsterilisation processes than other infectiousagents such as bacteria or viruses (Bellinger-Kawahara et al. 1987a,b). Furthermore, thelong incubation period of the disease beforethe appearance of symptoms, coupled with theabsence of an in vivo test for the presence ofinfection, has made it very difficult to predictthe progress of the disease in individuals andpopulations, both animal and human. Researchhas been unable to demonstrate the presenceof aberrant prions in milk or muscle of knowninfected animals, though recent studies inmice suggest that muscle tissue may not beimmune from infection (Bosque et al. 2002).

Much research has been devoted tounderstanding the mode of transmission of thedisease, and this has focused on the recyclingof infected material through the use of MBMin animal rations. While other hypothesessuch as accidental cross-contamination ofnon-MBM feed, environmental contaminationand vertical transmission from mother tooffspring are still being investigated, thecumulative evidence to date points to MBMas the transmission agent (SSC 2001).

Two principal questions arise – What was theprimary source of the first contamination ofthe UK MBM supply? Did changes inrendering processes in the 1970s permit thesurvival of prions that had been destroyed inthe earlier process? Both questions haveunsatisfactory, inconclusive answers.

The origin of the BSE prion is not knownthough many hypotheses have been suggested.These include suggestions that the BSE prionoriginated from a mutant form of scrapieprotein, a natural TSE in bovidae or felidaeor other wild animals such as Africanungulates whose carcasses were rendered intoMBM, a sporadic form of TSE, or aspontaneous mutation of normal bovine prionprotein into an infectious TSE protein(SSC 2001, Horn et al., 2001).

Whether changes in the rendering industrypermitted the survival of prions is also unclear,though survival may be related to the cessationof the hydrocarbon solvent extraction of fatfrom MBM in the 1970s and 1980s(Wilesmith et al. 1991). It has beendemonstrated, however, that aberrant prionscan survive the batch processing and solventextraction procedures that were in use beforethe change (Taylor, 1999).

8


5 Containment Measures

As the number of cases of BSE began to rise,various measures designed to contain theepidemic and to protect the human populationwere introduced. Throughout Europe, thebroad nature of the responses has been:

• Control of animal movement, primarily aban on exports of cattle and cattle productsfrom the UK (1996) and Portugal (1998).

• Elimination of Meat and Bone Meal(MBM) from animal feed. MBM has beenshown to be the principal agent throughwhich BSE was transmitted betweenanimals.

• Removal of Specified Risk Material (SRM)from the food chain. SRM (including spinalcord, brain etc.) from BSE infected animalsis believed to carry a danger of infectinghumans with vCJD.

• Exclusion of older animals from the foodchain. Because of the ban on use of MBMin ruminants (Ireland 1990, UK 1994, EU2000), animals born after these dates arepresumed to be free of BSE (surveillancedata generally support this).

• Introduction of carcass testing for BSE.Since January 2001, carcasses of animalsolder than 30 months (24 months in somecountries) cannot enter the food chainunless they have been tested for BSE.

• Improved disease reporting andsurveillance. This includes compulsorynotification of BSE (1990), epidemio-surveillance of all animal TSEs (1998).

• Improved control of animal feedmanufacture. This includes newregulations on treatment of MBM,increased sampling of feeds andrestrictions on feed manufacturinglicences to ensure exclusion of MBM.

• Improved traceability of animals andanimal products. This includes universalstandardised identification of cattle (andlater sheep), creation of databases,compulsory labelling at point of saleidentifying animal or animals of origin.

• Classification of risk status of countriesto facilitate international trade.

All of these actions are included in EUlegislation (Table 1.2).

Table 1.2 Chronology of principal EU legislation (European Commission).

March 1990 Compulsory notification of BSE June 1994 Ban on use of proteins derived from mammalian tissues for feeding

ruminants March 1996 Total ban on dispatch of live cattle and all cattle products from the UK July 1997 Prohibition of the use of SRM (mainly brain, eyes and spinal cord) October 1997 Restrictions on trade in MBM April 1998 Epidemio-survellance for all animal TSEs November 1998 Total ban on dispatch of live cattle and cattle products from Portugal July 1999 Lift of ban on dispatch of certain bovine products from the UK December 2000 Temporary ban on use of MBM December 2000 Extension on list of SRM (bovine intestines) December 2000 Prohibition of the use of dead animals in the production of animal feed March 2001 Extension of list of SRM (vertebral column) July 2001 Lift of ban on dispatch of certain bovine products from Portugal Source: http://europa.eu.int/comm/food/fs/bse/bse15_en.pdf.

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1.6 Risk Assessment andCommunication - the UK Experience

Much has been written about risk assessment(Kaplan & Garrick 1981, Hathaway 1993).Risk refers to exposure to danger. The firststep in an analysis of risk therefore is toobtain the required knowledge about exposureso that a simplified formula can be proposed:Risk = danger x exposure.

Hazard identification and characterization areeasily obtained when the problem has beenpreviously and appropriately addressed i.e.when accurate detection tests are available(detection of a virus, a bacteria, a toxiccompound). Exposure can be assessed throughepidemiological studies aiming at observingthe environment where the animals are raisedand, for the zoonotic aspects, the connectionwith human beings. On the other hand riskassessment is difficult when the problem isnot well defined, when the causative agent isunknown, when the problem occurs at a lowfrequency or when exposure is difficult toevaluate. Usually the lessons learnt from thepast help investigate the future.

Previously recorded data sets are used as thebasis for building prediction models. Formany animal diseases, factors associated withan increased likelihood of an event occurringare still poorly defined or unknown. They onlycome to light through the study of naturallyoccurring cases. Risk assessment becomes areal challenge when the problem is completelynew. The greatest difficulty is to predict eventswhich have not yet ever occurred. In otherwords, how can the innumerable potentialresults of multiple types of wrong functioningof a complex connected process be evaluated?Mathematics helps, but numerousassumptions are required to make possible thecalculations. On the other hand theyoversimplify the equations and hence moveaway from reality.

The various responses to the UK BSE crisishave been examined by the BSE Inquiry Report(Phillips et al. 2000) and more recently byJensen (2003). The inquiry found thatalthough reasonable measures had been takento address the potential risk to human health,these were not always timely or adequatelyimplemented. Neither were they suitablycommunicated to the public. Governmentofficials and scientific advisors have beencriticised as operating within a culture ofcomplacency and secrecy providingmisleading representation of risk.

An initial assessment of the potential risks,addressed by the Southwood Working Party(Southwood 1989), was complicated by theuncertainty of transmissibility to humans andthe further uncertainty over the mode, scaleand consequence of the disease. This meantthe indeterminate outcome of anyprecautionary measure, the effectiveness andcosts of which could not be known.

Serving as a guide to action for the UKGovernment, the Southwood report concludedthat the risk of transmission of BSE to humanswas remote. This judgement however gave noindication of the magnitude of the risk or anyreasoning behind it. In addition, no alternativesto the hypothesis that BSE would behave likescrapie were thoroughly examined

Given the difficulty of assessing the real risksand alternative theories, the report in itsrecommendations sought to gain publicconfidence. For example, based on the riskassessment, as a matter of ‘extreme prudence’the report recommended a ban on the use ofruminant offal and thymus in baby food butconsidered the proposed labelling of productscontaining brain and spleen unjustified. Thepremises for these recommendations are notentirely clear, though it is possible that theobservation that young animals were moresusceptible to BSE infection than adult animalsmay have influenced the decision to protect

10


infants. Nonetheless, the unclear premises ledto confusion rather than confidence amongconsumers.

Despite the scientific recommendations ofthe Southwood report, under considerableexternal pressure from the parliamentaryopposition, various lobby groups and thepress, and rising internal uncertainty of therisks, a ban on the human consumption ofoffals (Specified Risk Material ban, 1989)was introduced. Representation of the ban tothe public however clearly stressed theremoteness of the risk to human health,suggesting that the ban was a form ofinsurance rather than a necessity.

Public concern grew when two independentscientific studies demonstrated thetransmissibility of BSE to cattle and to mice(Barlow & Middleton 1990, Chandler 1990)and when a scrapie-like spongiformencephalopathy was reported in a domestic cat(Aldhous 1990).

After the publication of the SWP Report(Southwood,1989) concern increased over therising incidence of BSE and its possibledifference to known strains of scrapie. Animportant premise for concluding the remoterisk to human health appeared to bechallenged. This however was never clearlycommunicated to the public or to thoseengaged with the enforcement ofprecautionary measures.

Later assessments of risk by the ChiefMedical Officer and the SpongiformEncephalopathy Advisory Committee (SEAC)made further reassurances influenced byinternal pressure. Though they consideredpotential for the risk to be serious, theysuggested there was only a remote risk tohuman health, but, in contrast to theSouthwood report, that this was only becausethe control measures that were by now in place

were considered adequate to eliminate orreduce any risk to a negligible level (SEAC1994).

When the probable link to human vCJD wasannounced in 1996, the credibility ofscientific advisors and government officialsplummeted. In retrospect, it seemed unlikelythat there was enough scientific evidence atany time to consider the alternatives so smallas to be declared remote. If such risks wereremote it seemed unclear why some measuresappeared reasonable to implement. Thatscientific uncertainties were judged to havefewer rather than more possibleconsequences was a major failure of the initialrisk assessment.

The failure of the communication of riskduring the UK BSE crisis was inherent in thelack of transparency of the scientific riskassessments. The scientific advice requiredthe concise investigation of uncertainties andanalysis of all possible alternative theories andhypotheses. All facts and interpretation ofscientific advice must be communicatedclearly and unambiguously in the publicdomain. The only way in which consumer trustwill be restored is by ensuring that in futurethe highest levels of transparency prevail.

1.7 Meat and Bone Meal

The basics

During slaughter and processing 33 - 43% oflive animal weight is removed and discardedas inedible waste. This material, whichincludes fat trim, meat, viscera, bone, bloodand feathers is collected and processed by therendering industry to produce high quality fats(tallow) and proteins (meat meals) that havetraditionally been used in the animal feed andoleochemical industries around the world.Renderers in the EU process about 16 milliontonnes, while those in North America process

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nearly 25 million tonnes of animal by-products each year. Argentina, Australia, Braziland New Zealand collectively process another10 million tonnes of animal by-products peryear. Total value of finished rendered productsworldwide is estimated to be between US $6and $8 billion per year (Hamilton 2002).

Unprocessed animal by-products contain 60%or more water. When processing these rawmaterials heat is used to remove the moistureand facilitate fat separation. Globally, therendering process reduces the total volumeof animal by-product from 60 million tonnesof raw material to about 8 million tonnes ofanimal proteins and 8.2 million tonnes ofrendered fats (Hamilton, 2002). Storedproperly, these finished products are stable forlong periods of time. Heat processing alsosterilizes the product. The temperatures used(133°C - 145°C) are more than sufficient tokill bacteria, viruses and many othermicroorganisms. A recent study in the USA(Trout et al. 2001) showed that renderingeliminated Clostridium , Listeria,Campylobacter and Salmonella in rawtissues. Such high temperatures are alsoeffective in killing the anthrax bacterium anddestroying the foot-and-mouth virus.Unfortunately, it appears that rendering doesnot destroy the mutant prion thought to beresponsible for Bovine SpongiformEncephalophathy (BSE). This has led to theban on the use of animal meals in feeds inEurope and in many other countries, at leastfor ruminants.

The term ‘meat meal’ (which is used whencollecting trade statistics by Eurostat andFAOSTAT) covers a range of products. It wouldbe helpful in the present circumstances toseparate the data into bovine, ovine, porcineand avian, as well as into meat meal, meat andbone meal (MBM), bone meal, blood meal,feather meal, etc. There can also be a widevariation between plants and batches in whatgoes into the MBM that is being prepared. If

the ash content is high, this indicates that itcontains a higher amount of bone and isreferred to as MBM. If the ash content is lowerit is referred to as meat meal.

Feed value

As a feed, MBM is an excellent source ofsupplementary protein, has a well-balancedamino acid profile and is high in lysine (usuallythe first limiting amino acid) (FAO 2002). Inaddition, MBM is an excellent source ofcalcium and phosphorous and some otherminerals (K, Mg, Na etc.). The ash content ofMBM normally ranges from 28 - 36%;calcium is 7 - 10% and phosphorous 4.5 - 6%.MBM, like other animal products, is a goodsource of vitamin B12.

In ruminants MBM can readily be used toreplace most other supplemental proteinsources. The protein is less degradable in therumen. For this reason, it has been considereda good source of by-pass protein, suggestedto increase milk production in dairy cows.Replacing soya bean meal or fishmeal withMBM gave similar performance results inpigs. Up to 10% replacement levels for soyabean meal in poultry diets showed nodifferences in gain and feed conversion andeven higher levels were possible for turkeys.It was also successfully used in aquaculturefeeds (FAO 2002).

MBM and extracted fat from slaughter offalthus represent highly valuable nutrients for usein the nutrition of non-ruminant farm animalsand fish. For this application the appropriatesterilization treatment is an unalterablerequirement.

In Europe, the MBM ban resulted in a needfor alternative protein sources in feed.According to Abel et al. (2001), for all theprotein from MBM to be replaced in the EU,about 2.3 million tonnes (MT) soya bean meal,

12


4.6 MT peas, 3.9 MT beans or 2.8 MT lupinswould be needed (additional free amino acidsnot considered). Further, they note that plantmeals are inferior to animal meals with regardto various components. Plant meals containanti-nutritive factors which can negativelyaffect feed intake and/or nutrient availability.More accurate feeding of livestock (phasefeeding) with adjusted dietary amino acidconcentrations, however, would allow forproteins to remain at levels similar to thatcontributed by MBM. Thus in terms ofensuring amino acid supply, the ban is a minorproblem. The differences in cost are alsoconsidered insignificant.

A further consequence of the ban is areduction in phosphorous (P) supply which isnot compensated by the use of plant meals.An additional demand for inorganic feedphosphates of more than 100,000 tonnes isneeded in the EU (Abel, et al. 2001). Atpresent, this is supplied by increased miningof rock phosphates. A general application ofmicrobial phytase enzyme (which increasesthe availability of P from plant materials) indiets could partially solve this problem.

Disposal

The other part of the problem is the disposalof MBM if not used in feeds. The alternativesare incineration, co-incineration (cementindustry, waste incineration or fertiliserprocessing), burial, landfill, biogas orcomposting. Most European countries areresorting to some form of incineration.However, this still implies initial rendering ofthe material and storage before incineration.Recent estimates by EFPRA (European FatProcessors and Renderers Association) givethe incineration capacity in the EU as 2.5million tonnes while the quantity to beincinerated is put at 3.6 million tonnes. Abel

et al. (2001) also note the production ofgreenhouse and noxious gases produced byincineration. They calculate that combustionof 1 kg MBM causes about 1.4 kg CO

2, some

further trace gases (NOx, N

2O, SO

2) and CO.

Of these N2O (nitrous oxide) is the most

dangerous because its global warmingpotential is 310 times that of CO

2 and because

of its ozone depleting potential in thestratosphere. CO

2 dominates climate-relevant

gas emissions from waste incineration, morethan 100 times that of other gases such as N

2O

(calculated as CO2 equivalent). Real emission

data of N2O from plants co-incinerating

MBM, are not known.

It has already been noted that hightemperatures are essential for the sterilizationof the material. Composting or otherbiological methods do not achieve thenecessary heat to make the materialmicrobiologically safe. Burial, landfill andeven storage of dry material pose unacceptableenvironmental risks as they are subject toincursion of vermin, birds and other animals.

In any case, the costs of disposal are very high.The data of Abel et al. (2001) show that thetotal costs of the alternative use of 3.6 milliontonnes of MBM varies from €1.0 - 1.8 billion.On average, every kg of MBM not used as afeedstuff incurs costs of about €0.32. This isnearly twice the 1999 supply price of MBM.

The future

A new Regulation (EU, 2002) laying downrules concerning animal by-products notintended for human consumption was adoptedby the European Parliament and the Councilin October 2002 and will apply on 1 May2003. In particular, the regulation introducesstringent conditions throughout the food andfeed chains requiring safe collection,transport, storage, handling, processing, usesand disposal of animal by-products. Under the

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Regulation, only materials derived fromanimal declared fit for human consumptionfollowing veterinary inspection may be usedfor the production of feeds. The Regulationrequires the exclusion of dead animals andother condemned materials from the feedchain, the complete separation duringcollection, transport, storage, handling andprocessing of animal waste not intended foranimal feed or human food and the completeseparation of plants dedicated to feedproduction from plants processing otheranimal waste destined for destruction. It alsobans intra-species recycling and sets out clearrules on what can and must be done with theexcluded animal materials, imposing a strictidentification and traceability system,requiring certain products such as MBM andfats destined for destruction to bepermanently marked to avoid possible fraudand risk of diversion of unauthorized productsinto food and feed. The control of movementsof BSE Specified Risk Material (SRM) by arecord keeping system and accompanyingdocuments or health certificates is alsorequired. The Regulation does not affect thecurrent EU total ban on the feeding of meatand bone meal to farmed animals, which is aseparate issue and remains in force withoutany date set to terminate it. However, theRegulation establishes clear safety rules forthe production of meat and bone meal in caseit is ever re-authorized for inclusion in feedfor certain non-ruminant species, e.g. poultryand pigs.

The new Regulation requires the completedisposal, by incineration or landfill afterappropriate heat treatment, of Category 1materials (i.e., animal by-products presentinghighest risk such as TSEs or scrapie).Category 2 materials (including animal by-products presenting a risk of contaminationwith other animal diseases) may be recycledfor uses other than feed after appropriatetreatment (e.g. biogas, composting, oleo-chemical products, etc). Finally, only category

3 materials (i.e., by-products derived fromhealthy animals slaughtered for humanconsumption) may be used in the productionof feed following appropriate treatment inapproved processing plants. With the adoptionof this regulation, in the future, theenvironmental and economic repercussionswill be reduced as only 2 million tonnes ofmaterial derived from animals unfit for humanconsumption (compared to the 16 milliontonnes of animal by-products in case of a totalban) would need to be disposed of.

MBM could be used again in feed ifappropriate legislation and controls areimplemented. If SRMs are removed, fallenstock are excluded and the process ensuresheat treatment at 133°C at 3 bar pressure for20 minutes, it is assumed that the risk ofinfectivity of the BSE agent is reduced tovirtually zero. Better classification andseparation of different materials would ensurethat non-infective supplies would be assured.

There is, however, a serious problem of publicperception resulting from the publicitysurrounding BSE. The feeding of meat mealsis popularly seen as cannibalism. Thisperception will undoubtedly affect theacceptance of the use of meat meals in futureand further exacerbate the problem ofdisposal.

References

Abel Hj, Rodehutscord M, Friedt W, Wenk C,Flachowsky G, Ahlgrimm H.-J.,Johnke B., Kühl R. & Breves G. (2002).The ban of by-products from terrestrialanimals in livestock feeding:consequences for feeding, plantproduction, and alternative disposalways. Proc. Soc. Nutr. Physiol. 11.

Aldhous P. (1990). New fears on transmission.Nature. 345(6273): 280

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Atkinson N. (2001). The Impact of BSE onthe UK Economy. MAFF UK Paper,presented at IICA; www.iica.org.ar/BSE/14-%20Atkinson.html

Barlow R.M. & Middleton D.J. (1990). Is BSEsimply scrapie in cattle? Vet. Rec.126:295.

Bellinger-Kawahara C., Cleaver J.E., DienerT.O. & Prusiner S.B. (1987a). Purifiedscrapie prions resist inactivation by UVirradiation. J Virol. 61(1):159-66.

Bellinger-Kawahara C., Diener T.O.,McKinley M.P., Groth D.F., Smith D.R.& Prusiner S.B. (1987b). Purifiedscrapie prions resist inactivation byprocedures that hydrolyze, modify, orshear nucleic acids. Virology.160(1):271-4.

Bosque P.J., Ryou C., Telling G., Peretz D.,Legname G., DeArmond S.J. &Prusiner S.B. (2002). Prions in skeletalmuscle. Proc Natl. Acad. Sci. U S A. 99(6): 3812-7.

Bruce M.E., Will R.G., Ironside J.W.,McConnell I., Drummond D., Suttie A.,McCardle L., Chree A., Hope J., BirkettC., Cousens S., Fraser H. & Bostock C.J.(1997). Transmissions to mice indicatethat ‘new variant’ CJD is caused by theBSE agent. Nature 389(6650):498-501.

Chandler R.L. (1990). BSE scrapie andlaboratory models. Vet. Rec. 126 (9):223.

EAAP Publication no. 1/94. LPS Specialissue: Bovine spongiformEncephalopathy. Elsevier, Amsterdam.

d’Aignaux J.N.H, Cousens S.N. & Smith P.G.(2001). Predictability of the UK VariantCreutzfeldt-Jakob Disease Epidemic.Science 294: 1729-1731.

EU. (2002). Regulation (EC) No 1774/2002of the European Parliament and of theCouncil of 3 October 2002 laying downhealth rules concerning animalby-products not intended for humanconsumption Official Journal L 273,10/10/2002.

FAO. (2002). Animal Feed ResourcesInformation System (AFRIS). http://www.fao.org/ l ivestock/frg/afr is /default.htm

Ferguson N.M., Ghani A.C., Donnelly C.A.,Hagenaars T.J. & Anderson R.M. (2002).Estimating the human health risk frompossible BSE infection of the Britishsheep flock. Nature. 415:420-4.

Ghani A.C., Ferguson N.M., Donnelly C.A. &Anderson R.M. (2000). Predicted vCJDmortality in Great Britain. Nature. 406:583-584

Hamilton C.R. (2002). Real and PerceivedIssues Involving Animal Proteins.Proceedings of an Expert Consultationon Alternative Protein Sources for theAnimal Feed Industry. FAO, Rome (InPress).

Hathaway, S.C. (1993). Risk assessmentprocedures used by the CodexAlimentarius Commission and it’ssubsidiary and advisory bodies. FoodControl 4(4):189-201

Hill A.F., Desbruslais M., Joiner S., Sidle K.C.,Gowland I., Collinge J., Doey L.J. &Lantos P. (1997). The same prion straincauses vCJD and BSE. Nature389(6650): 448-50.

Horn G. , Bobrow M., Bruce M., Goedert M.,Mclean A. & Webster J. (2001). Reviewof the origin of BSE, DEFRA, London.pp66.

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Kaplan S. & Garrick B.J. (1981). On thequantitative definition of risk. RiskAnalysis, 1, 11-27.

Jensen K.K. (2003). BSE in the UK: Why theRisk Communication Strategy Failed(Forthcoming in Journal ofAgricultural and EnvironmentalEthics).

Phillips N. A., Bridgeman J. & Ferguson-Smith, M. (2000). The BSE Inquiry: Theinquiry into BSE and variant CJD inthe United Kingdom, Stationery Office,London; www.bse.org.uk

Politiek R.D. & Bakker J.J. (Eds.) (1982).Livestock production in Europe.Perspectives and prospects.Wageningen Scientific Publishing,Amsterdam, 335 pp.

POST, Parliamentary Office of Science &Technology. (2002). V-CJD in theFuture. Postnote, Number 171

Prusiner S.B. (1986). Prions are novelinfectious pathogens causing scrapie andCreutzfeldt-Jakob disease. Bioessays.5(6):281-6.

Prusiner S.B. (1987). Prions andneurodegenerative diseases. N. Engl. J.Med. 317(25):1571-81.

Southwood R. (1989). Report of the WorkingParty on Bovine SpongiformEncephalopathy, Department of Health,Ministry of Agriculture, Fisheries andFood, UK

SEAC, Spongiform Encephalopathy AdvisoryCommittee. (1994). TransmissibleSpongiform Encephalopathies: ASummary of Present Knowledge andResearch. HMSO, London.

SSC, Scientific Steering Committee. (2001).Hypotheses on the origin andtransmission of BSE. Opinion of theScientific Steering Committee Meeting,adopted 29-30 November 2001, ECBrussels.

Taylor D.M. (1999). Inactivation of prions byphysical and chemical means. Journalof Hospital Infection.43, S69-S76.

Trout H.F., Schaeffer D., Kakoma I. & Pearl G.2001. Directors Digest #312. Fats andProteins Research Foundation.

Valleron A.J., Boelle P.Y., Will R &Cesbron J.Y. (2001). Estimation ofEpidemic Size and Incubation TimeBased on Age Characteristics of vCJDin the United Kingdom. Science 294:1726-28

Wilesmith J.W., Wells G.A., Cranwell M.P. &Ryan J.B. (1988). Bovine spongiformencephalopathy: epidemiologicalstudies. Vet Rec. 123(25): 638-44.

Wilesmith J.W., Ryan J.B. & Atkinson M.J.(1991). Bovine spongiformencephalopathy: epidemiologicalstudies on the origin. Vet Rec. 128(9):199-203.

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The BSE crisis occurred, first in the UK, andthen throughout Europe, against a backgroundof rapidly changing structures in theproduction, marketing and consumption offood. While these changes apply across thefood and agriculture sector, they have beenparticularly marked in meat, and especiallybeef.

Some of these changes flow from theprogressive liberalisation of trade within theEuropean Union. A wider trade liberalisationunder the World Trade Organisation (WTO)is also a factor. However, most change is aresult of competitive pressures and technicaland economical evolution in production,processing and distribution. Finally, changesin the nature of consumer demand have alsohad an impact.

It is beyond the scope of this report to providea full analysis of these background factors.However, it is important to understand theimpact of the main drivers of change. For manyinvolved in production, processing ordistribution, the constant adaptation to changemade this an industry already in crisis, and illplaced to absorb the impact of a sudden newcrisis such as BSE. Furthermore, the rapidchange which has been taking place in theindustry interacted with the BSE crisis, and insome ways contributed to it. Finally, thechanges which can be observed in the industrywill continue. In looking to the future,therefore, it is essential to understand thecauses, nature, and probable consequences ofstructural change.

In that context, the following sectionsdocument the evolution of the foodproduction industry in Europe and furtherafield.

2.1 The Changing Consumer

The patterns of production of food on farm,and of its processing and distribution aredetermined by the demands of consumers. Afew generations ago in Europe, and still inmany developing countries, a high proportionof consumers were also involved in foodproduction. Consumer demand was verystable, and formed by traditional patterns offood availability. Today, food producers formless than 5% of the population and consumershave little connection with or knowledge offood production. In addition, with increasedpurchasing power and access to food from allover the world, consumers have no restraintson choice, and are subject to many influenceswhich change the pattern of demand.

For those involved in the production chain,these factors create a demanding marketrequiring constant adaptation and newdisciplines. The main elements affectingchange in the market are as follows.

The total population of the EU15 is currently379.4 million (January 2002). The totalnumber of consumers in Europe has beenincreasing at a rate of about 2% - 3% perannum (2.6% 1999, 2.8% 2000) and isexpected to reach a peak in 2023 returning tothe current level by 2050 (Eurostat 2002). Thetotal American market, as measured by grossexpenditure on food, has been expanding at1% per year, in line with population growth.

Consumers are becoming richer, and relativeto other products food is becoming cheaperin the European Union. Gross domesticproduct (GDP) per head of population hasbeen increasing at about 2% per annum (3.3%2000, 1.6% 2001). The index of consumer

Chapter 2. The Changing Context: an Industry in Transition

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Chapter 2. The changing context: an industry in transition

food prices in the three years to 2001 was104.4, 105.3 and 110.0 (base 100 = 1995)compared to the overall consumer price indexof 107.8, 110.5 and 113.3 for the same threeyears. These trends combine to give adeclining proportion of disposable incomespent on food (Figure 2.1). In the EU15 thisnow averages 12%, and varies from 8.6% inthe UK to 16.4% in Greece (Eurostat 2002).

In their food purchases, consumers are buyingmore services and less product. This is a resultof complex changes in lifestyles, with timefor food preparation becoming a steadily moreimportant issue. It also reflects the increasingcost and complexity of food processing,packaging and promotion. One consequenceis that the primary producer’s share of theconsumer’s expenditure is declining steadily.This is most clearly demonstrable in the USmarket (Figure 2.2) where the producer shareof the consumer dollar has declined from33% in 1970 to 20% in 2000 (ERS, USDA).

A similar trend can be seen in Europe. Figuresfor the German market (Figure 2.3) show thatfrom the mid 1970s to the mid 1990s, theproducer’s share of consumer expenditure onmeat products fell from 52% to 30% and fordairy products it declined from 61% to 46%,in each case about a 1% drop per year.

Changes in the pattern of consumer demandare also driven by changing social structures:smaller families, more single households,working women, ageing population,urbanisation, foreign travel and many otherfactors. One major element of change is theincreasing proportion of food purchased andconsumed outside the home. Again, this hasbeen documented in the US, where “out ofhome” purchases increased from 25% to over40% between 1965 and 2000 (Figure 2.4).

Consumers are increasingly conscious ofhealth and safety in food. One importantaspect is the demand for lower fat foods,

Figure 2.1 Food as percentage of disposable income. Figure includes all EU countriesfor which complete data were available (Source: Eurostat).

% of income

0

5

10

15

20

1990 1995 2000

Finland

Denm ark

Ireland

France

UK

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Figure 2.2. Percent of US consumer food expenditure going to farm producers (Source:ERS, USDA).

Figure 2.3. German producers’ share of consumer expenditure for livestock based foodproducts of domestic origin (Source: Weindlmaier, 2000).

% of expediture

%

0

10

20

30

40

5019

63

1964

1965

1966

1967

1 968

1 969

1 970

1 971

1 972

1 973

1 974

1 975

1 976

1 977

1 978

1 979

1 980

1 981

1 982

1 983

1 984

1 985

1 986

1 987

1 988

1 989

1 990

1 991

1 992

1 993

1 994

1 995

1 996

1 997

1 998

1 9991965 1970 1975 1980 1985 1990 1995

Dairy

Dairy

Meat

Meat

0

10

20

30

40

50

60

70

1976 1997

20


0

10

20

30

40

50

1960 1965 1970 1975 1980 1985 1990 1995 2000

Pig meat

Beef/veal

Poultry meat

Sheep/goat meat

0

10

20

30

40

50

1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 19991965 1970 1975 1980 1985 1990 1995

Figure 2.5. Consumption (kg carcass equivalent/head) of meat in EU 15 (Source:European Commission Directorate General for Agriculture).

%

Figure 2.4. Percent of US consumer food expenditure for food "out of home" (Source:ERS, USDA).

kg/head

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which has had a marked impact on meat anddairy sales, and on preferences in the meatmarket. Another is the impact of recurrentcrises such as BSE, salmonella, E. coli anddioxin on consumer confidence. Oneconsequence has been an increasing demandfor food labelled as “organic”. Organic foodsaccount for 1-2% of retail sales in both theEU and US. Expected annual growth in salesis about 20% in both markets (seesection 3.9).

The consumption of meat in Europe hasincreased substantially since the 1960s,almost twice as much meat being consumednow (88.1 kg/head) as in 1960 (48.2 kg/head).Of particular concern to European livestockproducers has been the shift in consumerdemand between the four main meats. Drivenmainly by price, but also by health, food scaresand lifestyle issues, the per capitaconsumption of the main meats has changedsteadily, and continues to change (OECD,Figure 2.5).

While overall meat consumption hasincreased, most of this has been due to growthin pigmeat and poultry. Beef and vealconsumption per head increased from18.2 kg/head in 1960 to almost 25 kg/head in1985, and has since declined again to19.3 kg/head in 2000. Red meats(beef/veal/sheepmeat) make up 26.2% of totalconsumption today, as against 45.4% in 1960.

2.2 The Effect of Food Scares

The largest and most economically damagingevents affecting livestock production inEurope in recent years have been majoroutbreaks of animal disease, such as FMD,BSE, or classical swine fever. Apart from BSE,most such outbreaks have no implications forhuman health. However, they cause greateconomic disruption and loss, and have asignificant impact on consumer confidence in

the safety and integrity of the productionchain.

In addition to livestock disease, there has beenan increasing level of reporting of other foodscares affecting the safety and acceptabilityof livestock products. Most of these concernthe discovery of banned or unacceptablecomponents in livestock feeds, or in livestockproducts. While it can be argued that the safetylevels of livestock products have never beengreater, there are a number of reasons why thelevel of reported food scares is increasing.The first is that such events are morenewsworthy now than in the past. Secondly,the range of prohibited substances has steadilyincreased, providing greater scope forbreaches of the law. Thirdly, levels ofsurveillance and analysis have also increased,both at official level and as part of themonitoring and control of commercial supplychains.

Though it is difficult to document, it is alsopossible that as intra community trade wasfacilitated by the Single European Act of 1990,the cross border flows of feed ingredients,waste materials and animals has increased therisk of contamination in the food chain. Threeevents illustrate this. The first is the rapidspread of FMD through a calf entrepot inFrance, from its origins in the UK, throughIreland to France and the Netherlands. Asecond is the recent discovery of MPA, anillegal hormone, in pig feed used on farms in11 EU countries. Its origin was traced to wastematerial recovered from a pharmaceuticalplant in Ireland, and marketed as a feedcomponent by a company in Belgium. A thirdis the international spread of BSE throughtrade in meat and bone meal.

Some significant food scares affecting theEuropean livestock industry in the first halfof 2002 are listed in Box 2. These representa small proportion of such events which arereported in the media. They also reinforce thememory of events such as the discovery of

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Box 2. Food Scares in Europe, Jan-July 2002

January Polychlorinate biphenyls in pig and chicken feedThe Belgian Food Safety Authority (AFSCA) found traces of polychlorinate biphenyls(PCBs) in pig and chicken feed. PCBs, which were once used in industry, have beenlinked to cancer and birth defects.

February Sulphonamide in chicken feedThe Belgian Food Safety Authority (AFSCA) found traces of sulphonimide, anantibiotic that can contaminate eggs and cause skin allergies in humans, in chickenfeed. Sulphonamide is authorised as a component of feed for pigs and broiler poultrybut is banned in feed for laying hens.

March/JulyNitrofuran and Chloramphenicol in chickenThe banned antibiotics nitrofuran and chloramphenicol were found in chicken importedto Europe from Thailand.

May Nitrofen in chickenIn Germany, wheat used in organic animal feed was found to contain more than 600times the lawful level of the herbicide nitrofen. Traces were found in some organicanimal products such as eggs, chicken, milk and meats. Nitrofen, has been banned inthe EU since 1988 because it is believed to cause cancer.

June Beef and pork protein in chickenTraces of beef and pork protein were found in chicken breasts imported from Thailandand Brazil and processed in the Netherlands. The added proteins allow the chicken toabsorb extra water in a process called “tumbling” resulting in greater weight andvolume of the product.

July Hormones in pig feedMPA (medroxyprogesterone-acetate) a growth hormone banned in the EU was foundin pig feed in 11 countries. MPA is a component of human hormone replacementtherapies and may cause infertility. The source of MPA was traced to reprocessedwaste from a pharmaceutical plant in Ireland.

human and animal waste used in animal feed(France, August 1999) and the discovery ofdioxins in animal feed arising from the use ofcontaminated fats (Belgium, May 1999).

Such food scares are often compounded byevidence of fraudulent practice. This is wellillustrated by the experience of Japan in theearly part of 2002. Following the first caseof BSE in that country in September 2001,and the subsequent collapse of the internalbeef market, the Government introducedsubsidies for domestic producers. In January2002, imported beef was found to bere-labelled as Japanese in order to avail of

these subsidies. Further investigation showedthat low grade beef was labelled as high valuedWagyu product, and that similar practices hadbeen in place in pork retailing, as well as inthe presentation of imported chicken under atop Japanese brand name with falsedeclarations on the labelling. Thesecombinations of breaches of security,evidence of fraud, and constant exposure inthe media have created a collective andpervasive distrust among consumers. Theeconomic consequences have been huge,including the collapse of 64 companies inJapan.

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2.3 Retailing and Processing: RapidlyIncreasing Concentration

Up to the 1940s, food retailing in Europe wasalmost exclusively a local matter. Consumerspurchased their food on a daily basis fromsmall, family owned stores. Apart from a fewinternationally traded commodities(e.g. coffee, sugar) most items of food wereproduced within a few kilometres from theretailer. This was particularly true ofperishable goods, such as milk, meat andbread.

In the post war period, the expansion of foodretailing chains began. In some cases, thesegrew from existing producer or consumer co-operative enterprises, while in other casesthey were based on the expansion of existingmultiple store groups. The dominance ofsupermarket chains in food retailing has nowprogressed to a very high degree in Europe.Competitive pressures have meant thatsuccessful chains are driven to seek an ever-

increasing market share. This has resulted inthe dominance of relatively few chains in eachmarket, and a growing dominance of thestrongest of these across markets.

The present position in Europe is shown inFigure 2.6. In many European countries thetop five chains have at least two-thirds of thefood retail market. This dominance is highestin northern and western Europe, rising to over90% in the Scandinavian markets.

As the barriers to trade within the EuropeanUnion have come down, the largest foodretailing chains have increased their marketshare across national boundaries. In 1990, thefive largest chains at the European level held13.8% of the total market, while in 2000 theyhad almost doubled that market share to26.4%.

A similar pattern of consolidation andstructural change is taking place in US foodretailing, with the top 20 retailers having over

Figure 2.6. Food retailing: market share of 5 largest retailers in differentcountries, 2000 (Source: www.mm-eurodata.de).

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50% of the market, and the top four increasingtheir market share from 16% in 1992 to 29%in 1998. (ERS, USDA)

It is clear that this consolidation has potentialbenefits for the consumer in terms of price,choice and quality control. For producers andprocessors, there are both challenges andopportunities. One consequence ofconsolidation at the retailing end is that largeretailers wish to deal with large suppliers. Thisreinforces the drive to consolidation in meatslaughter and processing. The trend is wellillustrated in the US, where the four largestbeef packing companies increased their shareof all animals processed from 35.7% in 1980to 71.6% in 1990 and 81.5% in 2000. (USDA2002a)

The growth of these large packing firms in turnhelps to drive consolidation at the productionend. In the US, 45 feedlots of 50,000 orgreater capacity provided 21.5% of all cattlemarketed in 1996, while in 2000 the numberof such feedlots had grown to 52 and theirshare of cattle marketed had grown to 24.5%.

These figures document a general evolutionin retailing, processing and productiontowards ever larger dominance by very largescale enterprises. The pace of consolidationin retailing is as high in Europe as in the US,though in processing and productionstructures it is less rapid.

2.4 The Producers

There are almost seven million farms inEurope (2001) with an average farm size of18.4 hectares. Approximately half of EUagricultural land is used for livestock farming.In Europe, animal output as a percentage offinal agricultural output was 60% in 1997compared to 46% in the US (OECD). Inseveral EU countries, animal productionexceeds crop production, the most extremecase being Ireland, where the livestock sectoraccounts for 90% of total agriculturalproduction (Eurostat).

In the earliest stages of development,agriculture constitutes practically the wholeof the economy. As economies evolve,

Figure 2.7. Agriculture as percent of GDP ( ) and employment ( ) in 15 EU states andin USA (Source: Agriculture in the European Union - Statistical and economicinformation, EUROSTAT).

%

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agriculture continues to play a fundamentalrole, since food security is the firstrequirement of an ordered society. The placeof agriculture can be tracked by two mainindicators: the proportion of GDP generatedby that sector, and the proportion of totalemployment that it accounts for.

The national economies of western Europe areamong the most evolved in the world. Theplace of agriculture in these economies, aswell as in the EU15 as a whole and in the USis shown in Figure 2.7. It is evident that asthe wealth of society increases, the proportionof GDP accounted for by agriculture declinestowards a value of about 1%. In general, theproportion of employment in agricultureremains at a higher level. In the EU15,agriculture accounts for 1.8% of GDP and4.5% of employment.

With increasing GDP per head, these twopercentages tend to converge. This generalpattern illustrates the nature of the continuingadjustment in European agriculture, in whichthe largest element is the progressivereduction in employment on farms. This isrecognised and facilitated by the CommonAgricultural Policy of the European Union.Through a variety of mechanisms, this policyaims to support those on low income, whileat the same time promoting improvements inthe scale and efficiency of production units.

As is evident from the small scale of mostfarm units in Europe, many farmers cannotfind full-time employment in their ownenterprises. Figures solely for the livestocksector are not available, but a recent studydocuments the extent of part and full-timeemployment on farms throughout theEuropean Union (Frawley & Phelan 2002).Eurostat figures for 1995 are given inTable 2.1.

Table 2.1 Employment status of farmers1 in EU member states, (1995).

Farming2 (full-time)

%

Farming3 (Underemployed)

%

Off-farm job4 (Subsidiary

occupation) %

Off-farm job5 (Main occupation)

% Belgium 60 25 3 12 Netherlands 60 16 14 10 Ireland 52 15 25 8 U.K. 49 23 9 19 Denmark 47 22 11 20 Luxembourg 47 32 7 14 France 45 30 10 15 Germany 37 18 7 38 Finland 33 16 27 24 Austria 30 31 13 26 Sweden 24 22 20 34 Spain 23 49 4 24 Portugal 18 49 5 28 Italy 14 61 2 23 Greece 12 62 3 23 EU–15 24 48 5 23 1Person responsible for the current, day-to-day management of the farm; 2Farm operator (FO) has no other occupation and devotes 100% of a full-time worker to the farm; 3 FO has no other occupation but devotes less than 100% of a full-time worker to farm; 4FO has an off-farm job but also devotes between 50% to 100% of a full-time worker to the farm; 5FO has an off-farm job but devotes from zero to 50% of a full-time worker to the farm. (Source: Eurostat).

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Figure 2.8 EU deflated index of producer prices (Source: Eurostat)

Less than one quarter (24%) of farms provideone full-time employment opportunity. Nearlyhalf (48%) have no other occupation thanfarming, but are under-employed in the senseof having less than one full-time employmentposition on the farm. Twenty-eight percenthave a significant off-farm job.

Behind these figures, there is considerablevariation between countries. With someexceptions (Sweden, Finland), full-timefarming predominates in Northern Europe. Incontrast, it is generally less prevalent (under20%) in Mediterranean countries.

This pattern of a mixture of full and part-timefarming has a parallel in the US. There, thetwo million farm units are classified intosmall family farms (90%), large family farms(8%) and corporate farms (2%). Average farmsize is ten times larger than in Europe. Over50% are classified as livestock producers.Some 55% of farm operators had off-farm

work, nearly two-thirds of these working inexcess of 200 days off-farm (Hoppe et al.2001).

The main factor driving structural change infarming is the low incomes of so manyfarmers. This is partly due to the uneconomicscale of many enterprises. It is also affectedby the steady decline in real prices receivedby producers. Figure 2.8 shows theexperience of EU farmers in the decadefollowing 1990. Agricultural prices generallydeclined at 3% per year with two majorlivestock products (cattle and pigs) sufferingeven greater rates of price reduction.

2.5 Scale and Intensification

As European livestock farming has changed,three parallel trends are evident:

50

60

70

80

90

100

110

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

All agricultural products

Cattle

Pigs

Poultry

Index

Figure 2.8 EU deflated index of producer prices (Source: Eurostat).

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• Increase in scaleo Dairy herds, now averaging 30 cows

(40% of herds have >50 cows), areincreasing in size at 3% per annum.

o The average number of sows on pig farmshas increased from 30 in 1987 to 43 in1997.

• Increase in intensityo Average milk yield per cow, in France,

has doubled since 1970 to 6,000 litres.

o Growth rate and feed efficiency in swinehave been improving steadily at 1% and0.6% respectively per annum.

• Specialisationo While this is difficult to quantify, most

livestock producers now are committedto a single enterprise.

These trends are well illustrated by theexample of Bretagne, a French region notedfor the success of its livestock economy(Box 3).

Box 3. Bretagne, a Region of Intensive Livestock Production

The case of Bretagne is of particular interest (Mahé 2000). Despite the fact that the region covers 5%of French land, it produces more than 50% of national pork and poultry output, 40% of eggs and 20%of milk. Animal production represents 86% of the value of Breton agricultural output. Specialised pigand poultry production make up 50% of regional agricultural production. Together with the Netherlands,therefore, it is perhaps the highest density livestock economy in Europe.

The “Breton Model” has for a long time been considered a success in France, not only for its technicaland economic efficiency, but also because it supported a very large number of viable farm units.These in turn are embedded in a network of small and medium sized companies, co-operatives andsupport organisations which provide an efficient range of financial, technical, market, transport andcommunications services. Because of its high dependence on pig and poultry production, which arelargely unsubsidised enterprises, the region is less dependent than elsewhere on price supportmechanisms.

In France, this model is now becoming less well regarded. Much of this changed perception has to dowith environmental issues. For example, in Bretagne (1997) average nitrogen application was 228 kgper hectare, 60% above the average for France. Some 56% of nitrogen in Bretagne was organic,derived from manure spreading, as against 34% for France as a whole. Additional concerns for thepublic are emerging on perceptions of animal welfare in intensive production systems. Finally, there isa growing consciousness and resentment among urban consumers of the degree of subsidisationinvolved in agriculture generally.

These considerations are leading to pressures for change, reflected in the recent “Loi d’OrientationAgricole”, which parallels the evolution of the CAP. In addition, commercial pressures in the samedirection are beginning to be transmitted through to primary producers. The net effect is likely to be, ata minimum, stabilisation at present levels of intensity of production, and beyond that some degree ofde-intensification. Paradoxically, this may lead to greater concentration of production, since smallerfarms and businesses are more likely to cease production than larger ones.

Reference

Mahé, L.-P. (2000). L’avenir de l’agriculture bretonne. Continuité ou changement? Editions Apogée.150 pp.

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Because these changes are interrelated, theyare often confused. In particular, the effectsof changes in scale and those of intensificationin the use of resources are sometimes treatedas if they were one factor.

A further source of confusion derives fromthe inclusion of all forms of livestockproduction in one set of discussions. Clearly,the land and forage based systems (sheep, beefand to some extent dairy production) requiredifferent treatment from those systems (pig,poultry, beef finishing, some dairy production)which convert bought-in feeds into livestockproducts.

One important form of intensification is theconcentration of large numbers of livestockin small areas. This applies primarily to pig,poultry and beef finishing operations.Increases in scale are driven by the search forlower unit costs. Economies of scale for theoperator, however, can often be more thanoffset by external costs, frequently borne bysociety. A recent study (Pretty et al. 2000)estimated that the “externalities” of Britishagriculture in 1996 were equal to 13% ofgross farm returns and 89% of net farmincome. About half of these external costscould be attributed to the livestock sector. Itis clear therefore that spatial concentrationof animals is an aspect of intensification whichrequires attention, and action, for the future.

For enterprises which are based on grazing orforage, the scope for intensification is limitedby the carrying capacity of land and theseasonal pattern of growth. Thus dryMediterranean grazing land may have amaximum capacity of 0.2 livestock units perhectare, and require seasonal movement ofanimals, while good quality grassland in theUK or Ireland may support 2.0 livestock unitsper hectare on a year round basis. Theinitiatives in EU policy (EuropeanCommission 2000) to promoteextensification are directed primarily at

reducing numbers of grazing livestock perhectare. They do not address the moreenvironmentally costly problem ofconcentration of non-ruminant livestock,

The dairy industry is a special case. Throughoutthe EU, intensification, specialisation andincreasing scale have proceeded in parallel.In the UK for instance, the average yield percow in 1998 was 22% higher than in 1984,and average herd size in 2000 (73.3) was 9%larger than in 1995 (DEFRA). Through breedchange and genetic selection, the cowpopulation is highly specialised for milkproduction, and most dairy farms no longerhave a secondary enterprise in beef or cropproduction.

Intensification in dairying has been achievedin two ways. Forage output per hectare hasbeen raised to high levels (13 tonnes drymatter per hectare) by high inputs of fertiliser(250 kg N, 50 kg P2

05). In addition, yield levels

above 5000 kg per cow have generally beensupported by purchased concentrate feed at arate close to 1 kg feed per kg milk. With highstocking rates (2.0 livestock units per hectare)such systems can lead to progressive nutrientoverloading of the environment.

2.6 Intensification and Animal Disease

The process of intensification of Europeanlivestock production has been underway forapproximately 50 years. With the increasedpressure on the physiology of the animal, andthe progressive changes in its environment, itcould be expected that parallel changes wouldbe observed in disease prevalence and overalllivestock health status. Widespread opinionholds that predisposing factors linked withintensification of livestock and farmingsystems are common to both the UK BSEepidemic and the more recent foot-and-mouth

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Box 4. Cost of a Disease Outbreak - FMD in UK

The cost of disease outbreaks in the livestock sector can be very high. These costs are also very widelyspread. Though livestock producers are the first to be affected, they may in fact not carry the principaleconomic impact. For many diseases there are publicly funded compensation schemes, so that taxpayersgenerally carry much of the cost. Secondly, the “collateral damage” to other sectors of the economycan be considerably larger than that carried by producers.

Estimation of the total cost of disease outbreaks, and its dispersion across the different sectors, can bedifficult. However, the economic impact of the most recent large scale disease epidemic, FMD in theUK, 2001, has been carefully analysed (DEFRA/DCMS 2002). The outbreak began on a pig farm inthe North of England in February 2001, and lasted for 221 days. During the course of the outbreak,over 6 million animals (0.8 million cattle, 4.9 million sheep, 0.4 million pigs) were slaughtered. Exportsfrom the livestock sector (worth €2 billion in 2000) were largely suspended. There was widespreadrestriction of movement of animals and people throughout the country, with a major impact on thetourist sector. Some of these costs were immediate, while others will have an impact for some yearsinto the future.

The total cost of the outbreak in the UK has been estimated at some €13 billion. This is more than thetotal value of UK livestock production in the year 2000 (€12 billion). Tourism and associated businessescarried the largest cost, amounting to €7.2 to €8.7 billion (low and high estimates). The public sectorincurred a cost of €4.1 billion, farmers €0.6 billion, and the food industry about half of that. Theeconomic impact on consumers was negligible.

Reference

DEFRA/DCMS. (2002). Economic Cost of Foot and Mouth Disease – a joint working paper byDEFRA/DCMS, March 2002

disease (FMD) epidemic. The costs of suchbreakdowns in animal health can be very great(see section 1.3 and Box 4).

Prior to intensification in Europe (<1960) themajor animal health problems were bothendemic and epidemic (Blancou 2000) andvaried from one place and population toanother. In cattle the main tasks of theveterinarian, besides individual interventions,concerned digestive disorders and parasites(internal and external). In many placestuberculosis was a major problem and had adirect relationship with human infection. InFrance, for instance, tuberculosis prevalencein bovine herds was approximately 25% in1955 (Benet 1999). In pigs, diarrhoea,

parasitism, erysipelas and peri-partumdisorders were the main grounds for veterinaryintervention. Where tuberculosis did occur incattle, the infection could be transmitted topigs by the feeding of unpasteurized milk anddairy by-products. In addition, faeces couldalso contain viable tubercle bacilli, a hazardwhere pigs and cattle are raised together whichwas often the case in European family farmsat that time. Similar epidemiological linkswere found between avian tuberculosis andpigs (Biering-Sorensen, 1959).

Outbreaks of other notifiable diseases werealso common. Rinderpest in cattle forexample (Plowright 1965), despite having

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disappeared from western Europe by the endof the 19th century, occurred sporadically later(Belgium 1920, Italy 1949). Classical SwineFever (CSF) and Foot-and-Mouth Disease(FMD) were also causes for major concern(Fuchs 1968, Henderson 1978).

In general, the first half of the 20th century inEurope saw farm animals faced with severehealth concerns, several of which werezoonoses. This, and in particular the rinderpestepizootic in Europe, was the reason for thefoundation of the OIE (Office Internationaldes Epizooties) in 1924, an inter-governmental organisation for animal healthmaintenance worldwide.

In the early decades of intensification inEurope, the efforts directed at geneticimprovements led to large-scale animalmovements sometimes over long distanceswithout any serious concern for biosecurity.This resulted in the reoccurrence of epidemicviral diseases. For example, in cattle,Infectious Bovine Rhinotracheitis (IBR),already known in North America, spreadmassively in Europe. In pigs, Aujeszky’sdisease, a herpes virus first described inHungary, also spread widely and TransmissibleGastro-Enteritis (TGE) (Goodwin andJennings 1958) decimated thousands of youngpiglets during the 1960s and early 1970s. Inaddition to these “new” epidemics, “old”diseases such as CSF and FMD (UK 1967-68;France 1974) continued to pose problems,although now more sporadically as specificpolicies were adopted in different countries.

In the meantime, technical guidelines forintensive livestock production wereprogressively learned and implemented.Changes in herd management and husbandrycombined with hygiene and prophylaxes(e.g. vaccination and de-worming) resulted ina profound modification of the overall animalhealth and disease scenario. Major zoonoseslike tuberculosis and brucellosis were

controlled. In France, the prevalence oftuberculosis in cattle came down to less than5% in 1970 and 0.2% in 1990. It continues tosteadily decrease. Likewise, health problemsrelated to internal parasites like worms weresolved. Other endemic diseases such aserysipelas in pigs nearly disappeared.Eradication plans were set-up and the majornotifiable diseases like FMD, CSF andAujeszky’s disease became increasinglysporadic.

Whereas the situation improved regardingthose well-defined (monofactorial) diseases,other disorders became progressively moreprevalent, particularly those related topathogen transfer through animal trading andinadequacy of on farm environmentalconditions. Respiratory disorders for exampleincreased in pigs, veal calves and beef cattlekept in confined housing systems and theoccurrence of digestive disorders in pigs rose.It slowly became obvious that multifactorialdiseases or syndromes with a quantitativeexpression develop on farms in cases of poorhousing, feeding, hygiene and biosecurity.Only some of the technical elements ofintensive livestock farming were known. Incertain cases however, the knowledge wasthere but was not properly used, opening thefield for endemic pathogen expression.

The current situation of livestock health inEurope can be summarized.

a) Major diseases that were formerly ofprimary importance (FMD, CSF,Aujeszky’s disease) have been mostlyeradicated. However, this does not meantotal and permanent freedom. Sporadicoutbreaks may occur locally if the relatedpathogens are introduced from infectedareas. This was the case with FMD in theUK in 2001. The same cause can have thesame consequences for other pathogensincluding parasites (Milne et al. 2001).

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b) Major zoonoses (tuberculosis, brucellosis)have been eradicated though there may bepossible sporadic recurrences.

c) Low impact of parasites especially internalparasites, which before intensification werea principal problem.

d) Pre-eminence of enzootic disordersrelating to inadequate managementconditions and shortcomings in hygienemaintenance. This does not mean that theconventional infectious diseases affectinglivestock have totally disappeared.Influenza still affects pigs and other animalspecies, and Bovine Virus Diarrhoea (BVD)and Infectious Bovine Rhinotracheitis(IBR) still affect cattle. Controlprogrammes are now being implemented.Conventional enzootic disorders werepresent prior to intensification but arebecoming much more apparent anddetectable in the current context.

e) Emergence of new and largelyunpredictable problems such as BSE incattle and Postweaning MultisystemicWasting Syndrome (PMWS) in pigs.

Figure 2.9 illustrates the main trends inlivestock health issues over time. The situationregarding disease is never fixed (Truyen et al.1995). The mechanisms responsible foremerging or re-emerging diseases and thecircumstances surrounding the occurrencesare multiple.

2.7 Externalities

Intensification of livestock production and theintegration of markets across countries haverepercussions far beyond the farmingcommunity. The extent and magnitude of thesechanges have so far been incompletely

Figure 2.9. Schematic retrospective view of livestock health problems in Europe inrelation to the intensification process.

Start of intensification (around 1960)

Current situation (around 2000)

Parasitism

Emergingdiseases

Enzootic multifactorialdiseases (syndromes)

Major zoonoses (TB, brucellosis)

Major monofactorialdiseases (FMD, CSF)

Relative impact of thediseases

Start of intensification (around 1960)

Current situation (around 2000)

Parasitism

Emergingdiseases

Enzootic multifactorialdiseases (syndromes)

Major zoonoses (TB, brucellosis)

Major monofactorialdiseases (FMD, CSF)



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assessed and only an indicative list of issueswith partial estimates is available. Theinterconnections between crop and animalagriculture make it difficult to attributeexternalities to one or the other sector forsome of the identified issues. Further, theadditional costs of intensification ofagriculture that go beyond the costs of otherforms of agriculture require quantification.These externalities, which need to be weighedagainst the benefits of intensification,encompass.

(Re-)emerging zoonoses

Intensive livestock rearing practices facilitatethe (re)-emergence of zoonotic diseases byinterfering with the ecological balancebetween microorganisms and theirmammalian hosts. This interference can leadto changes in virulence, host spectrum and/orother characteristics of the disease agent.However, the impact of these re-emergingdiseases has been dramatically reduced as aresult of improved hygiene and animalhusbandry practices. Overall, new diseaseshave been detected at a rate of one per yearover the past thirty years. For example, thepast decades have witnessed the emergenceof enterohaemorrhagic E. coli, Nipah, andzoonotic avian flu.

BSE is the most notable and costly of thezoonoses that have emerged over the pastdecades. The emergence of BSE in the 1980sclearly shows how changes in productionpractices of agricultural inputs in conjunctionwith trading and feeding practices can alter theepidemiology and biological properties of adisease causing agent. Modern meatprocessing practices of the food industry havepossibly facilitated the entry of the agent intothe human food chain and in 1996 the diseasewas suspected in humans.

Food-borne hazards

Changes in food consumption habits (lessmeals prepared at home and morepre-prepared meals) coupled to changes infood production, processing (e.g. largerbatches increasing the potential for and theeffects of contamination) and distribution(longer distribution chains) have increased theexposure of humans to food-borne hazards.In the US, for example, food-borne diseasesare estimated to cause approximately76 million illnesses, 300,000 hospitalisationsand 5,000 deaths each year, around1,500 deaths being attributed to Salmonella,Listeria and Toxoplasma (Mead et al. 1999),pathogens of animal origin.

Compared to 1980 some countries in Europehave witnessed a 20-fold increase in theincidence of human salmonellosis, themajority of cases caused by S. enteritidis andS. typhimurium. In Germany an average ofaround 100 outbreaks of salmonellosis havebeen recorded each year since the early 1990sand the majority of food-borne diseaseoutbreaks are linked to livestock products. Asimilar incidence of salmonellosis outbreaksis reported for the UK, poultry being the mostcommonly implicated foodstuff. The UKFood and Drink Federation for exampleestimates food-borne illnesses costing Britisheconomy around €1.6 billion per year.

Antibiotic resistance

Anti-microbials have been widely employedin the livestock sector, both for therapeuticpurposes and for growth promotion, and agrowing number of bacteria have developedresistance to a variety of anti-microbialcompounds. Multi-drug resistantS. typhimurium emerged in cattle in 1988 inthe UK and subsequently has been isolatedfrom poultry, sheep, pigs and horses. It hasstable resistance to ampicillin,

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chloramphenicol, streptomycin,sulfonamides, and tetracyclin. Infection withmulti-drug resistant S. typhimurium has beenassociated with hospitalization rates that aretwice that of other zoonotic food-bornesalmonella infections and with ten timeshigher fatality rates. E. coli from animals arefrequently anti-microbial resistant andtransfer of that resistance to human organismscan occur. Antibiotic resistantenterohaemorrhagic E. coli O157 has beenreported. Vancomycin resistance inenterococci associated with the animal use ofavoparcin is well documented.

Some of these can cause disease in humans,which previously were easily controlled, butcan now take a much more serious course. Forexample, a strain of Salmonella(typhimurium DT104), which is resistant tofive different antibiotics has emerged and isresponsible for an estimated 68,000 to340,000 illnesses a year in the US alone(Glynn et al. 1998). Anti-microbial resistancein pathogens from farm animals can be passedon to bacteria of humans through the exchangeof genetic material between microorganisms,thus increasing public health costs through therelated use of more expensive drugs fortreatment and longer hospital stays. For theUS, the annual cost of anti-microbialresistance has been estimated to amount tosome USD 30 billion (Institute of Medicine1992). The problem of antibiotic resistanceis compounded by the fact that no truly novelantibiotics have been developed over the lastdecade. While it is recognised that most anti-microbial resistance stems from inadequateuse of these compounds in human medicine,evidence suggests that the use ofanti-microbials in the livestock sector playsa contributing role.

The use of antibiotics in animals may increasethe pressure towards drug resistance.However, by minimising drug use in intensivesystems and a reconsideration of some farm

practices regarding hygiene, housing andmanagement in general could sustain intensiveagricultural practices (Box 5). Research inanalytic epidemiology (ecopathology) has tobe promoted.

Animal disease outbreaks

In recent years the EU has suffered fromsevere epidemics of classical swine fever(CSF) and foot and mouth disease (FMD).Both are highly contagious diseases withmajor trade implications. Although diseasespread can be curbed by vaccination, the useof vaccines restricts market access andstamping out is the conventional EU diseasecontrol policy.

In the case of CSF outbreaks in denselypopulated areas of the EU (in some areas thereare up to 9,000 pig places per km2), usuallyall pigs within a 1km radius of an affected farmwill be culled (culling zone) and a totalstandstill of pigs will be imposed on an areawith a 10km radius around an affected farm(surveillance zone). The standstill will onlybe lifted after laboratory confirmation thatvirus is not being transmitted any longer.Confirmation is obtained by serologicalexamination of pigs not prior to 30 days aftercompletion of disinfection of the last affectedpremises in the area. For areas with a highdensity of pig farms this may mean thatthousands of pigs cannot be marketed forsome time, yet require feeding and buildingspace. Once the marketing ban is lifted, thepigs may have become too old to be profitablymarketable and have to be destroyed. In therecent CSF outbreaks in the EU, around8.8 million healthy pigs, i.e. the vast majority,were slaughtered under the market supportprogramme for welfare reasons or becausethey had become too heavy to enter the market,not because they had contracted the disease.

34


Box 5. Reducing Antibiotic Use in Livestock Production.

For about fifty years, antimicrobial growth promoters (AGPs) have been used routinely in feed for healthyanimals to improve growth rates and feed efficiency. Normally, they are incorporated in compound feedand do not require veterinary prescription. Many of the AGPs developed over the years are closely relatedto antibiotics used in human and veterinary medicine. In both of these fields there is growing concern aboutthe emergence of antibiotic resistant pathogenic organisms. This is due to the natural selection pressureresulting from widespread use of antibiotics in medicine and agriculture. The contribution of routine use ofantibiotics in livestock feeds to the overall problem of growing antibiotic resistance has been difficult toquantify (Isaacson and Torrence, 2002. ).

Nevertheless, individual governments and the EU have moved to reduce antibiotic use in livestock production.In particular, the EU Commission in July 1999 banned the use of Virginiamycin, Tylosin, Spiramycin andBacitracin, and in March 2002 proposed to phase out the remaining four AGPs by 2006. Prior to this,considerable advances had been made in the Scandinavian countries. In 1986, Sweden banned the use ofAGPs in animal production. In 1998 use of AGPs was suspended in Danish poultry and pig production. Thishas led to a marked reduction in resistant bacteria from food animals (notably Enterococci, Ampylobacterand Staphlococci). There has been a parallel decrease in levels of resistance in bacteria from food (DANMAP,2001). Studies from a number of European countries have shown a decrease in levels of resistance toAGPs in bacteria from the intestinal tract of healthy humans in the community (Emborg et al., 2001), andthere are preliminary indications of declining resistance in clinical infections.

The impact on the livestock sector is well illustrated by the Danish experience. While there was a temporaryincrease in the prophylactic use of some drugs, total usage levels in the livestock sector have been reducedby more than 50% between 1994 and 2000. The economic impact has been less than might have beenexpected. Broiler productivity and health has not been affected. Feed consumption has increased slightly(by 16 gm per kg broiler). However, the increased feed cost is more than offset by the saving from theelimination of AGPs (Klare et al., 1999).

In pig production, average daily gains have continued to improve, and feed conversion rates have notdeteriorated to any significant degree. There was some increase in diarrhoea in weaning pigs, but adjustmentsin management and feeding strategies are gradually resolving these problems.

It is clear that the intensive livestock sector in Europe cannot in the future use antibiotics routinely as it hasin the past. The experience in Scandinavia and elsewhere demonstrates that with good husbandry theseadjustments can be made while maintaining continued increase in the efficiency of production.

References

Isaacson R.E. & Torrence M.E. (Eds.). (2002). The Role of Antibiotics in Agriculture. A report from theAmerican Academy of Microbiology, Washington DC http://www.asmusa.org.

DANMAP. (2001). Use of antimicrobial agents and occurrence of antimicrobial resistance in bacteriafrom food animals, food and humans in Denmark. A report from Statens Serum Institut, Danish Veterinaryand Food Admininstration, Danish Medicines Agency, Danish Veterinary Institute.

Emborg H.D., Ersbøll A.K., Heuer O.E. & Wegener H.C. (2001). The effect of the withdrawal ofantimicrobial growth promoters on the productivity in the Danish broiler production. Prev. Vet. Med.50: 53-70.

Klare I., Badstubner D., Konstabel C., Bohme G., Claus H. & Witte W. (1999). Decreased incidence ofVanA-type vancomycin-resistant enterococci isolated from poultry meat and from fecal samples ofhumans in the community after discontinuation of avoparcin usage in animal husbandry. Microb DrugResist 5:45-52.

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EAAP Series no. 108

The cost of the market support programmeamounted to €407 million and accounted forabout 60% of the total control cost.

Foot and mouth disease was introduced intothe UK at the beginning of 2001. The epidemicwas brought under control within the year, butat cost of some €13 bn (see Box 4). Most ofthese costs fell on sectors outside ofagriculture.

The reluctance by the authorities to abandonthe rigorous slaughter policy, even after it hadbecome clear that the disease was widelydisseminated (subsidy-driven sheepmovements are said to have contributed to itsspread), was justified by the additional coststhat would result from of an extended loss ofaccess to export markets (gross worth ofaround GBP 0.5 billion a year) as a result ofany disease control policy that would makeuse of vaccination.

Livestock epidemics

Trade facilitates the movement of animaldiseases. Large numbers of susceptiblelivestock, kept at high stocking densities areextremely vulnerable to the introduction ofhighly contagious diseases such as FMD, CSFor Newcastle disease, demonstrated by therecent outbreaks of CSF in Germany andHolland and FMD in the UK and Argentina.Not only can diseases spread very rapidly inlarge animal populations and in areas with highanimal densities, but also disease controlmeasures in these instances often requiremass slaughter of large numbers of non-infected animals. This puts a heavy burden notonly on the farming community, but also onentire regions and countries.

Biodiversity loss

Domestic animal genetic diversity tends to bereduced by the trend towards the use ofgenetically uniform stock as scales ofoperations increase, as vertical integration ofthe industry strengthens, and as the share ofconventional, diverse, small-scale productionin the market shrinks.

Animal welfare

If not properly regulated, intensive large-scaleanimal production may be associated withmanagement practices (e.g. space, light,movement limitations), which in some casesmay not allow the expression of naturalbehavioural characteristics of the animals.Such practices associated with real and/orsuggested animal suffering are increasinglyresented by society. Similar reservations arealso expressed with respect to animaltransportation to markets and slaughter overlarge distances and to certain feeding andmedication practices (Food Ethics Council2001).

Pollution and nutrient loading

The main environmental problems likely to beassociated with intensive systems are:1) accumulation of animal waste, leading tobuild up of excess nutrients and heavy metalsin the soil; 2) emission of ammonia andodours to the atmosphere; 3) emission ofgreenhouse gases: methane, nitrous oxide;4) release of chemical inputs, feed additivesand animal health inputs, tannery and slaughterhouse wastes; 5) degradation and depletion offresh water resources and 6) high consumptionof fossil energy leading to CO

2 emission and

global warming.

36


The considerable volumes of waste producedby large-scale, high-density livestockoperations can cause severe soil, water andair pollution. The most important emissionsconcern nitrogen, phosphorous, various heavymetals and greenhouse gases such as methaneand nitrous oxide. Further, where recycling ofmanure and urine to agriculture is not firmlyregulated, considerable environmental damagemay arise.

Nutrient loading in crop-livestock systemsmay occur in areas where the nutrients presentin manure are not properly recycled or treated.Even in well-managed systems substantialnutrient surpluses are normal (Box 6).

The major effects of animal wastemismanagement include eutrophication ofsurface water (deteriorating water quality,algae growth, damage to fish etc.) due to inputof organic substances and nutrients; leachingof nitrate and possibly pathogens into groundwater; and accumulation of nutrients, drugresidues and heavy metals in the soil(Hamscher et al. 2000, Hooda et al. 2000,Schröder 2002).

The impact of livestock on nutrient fluxes inthe European area has been estimated as partof a global study by the Food and AgricultureOrganization of the United Nations. Statistics(1995 – 2000) on agricultural land, crops,mineral fertilizers and animal numbers(weighted according to species andproduction intensity to give total livestockbiomass and total manure excretion) wereused to estimate the phosphate balance at soillevel per given agricultural land area.

The phosphate (P20

5) balance, a robust

indicator of livestock production impact onnutrient fluxes (Basnet et al. 2002, Gerber etal. 2002) is estimated as the differencebetween recognized inputs (manure spread andmineral fertilizers) and outputs (crop uptake)(Scoones & Toulmin 1998; Bindraban et al.2000). Although spatial patterns and levels

may vary, analyses of nitrogen balancesdemonstrate similar trends (Hoffmann et al.2000; Hooda et al. 2000, OECD 2001).

Phosphate overloads can result in watersystem pollution in two ways: 1) by surfacerunoff, which threatens surface water and2) by dissolved phosphorous leaching, whichmainly concerns ground water. The mostimportant factors influencing both diffusionmodes are fertiliser application, land use, soiltype and the Degree of Soil Saturation withPhosphorous (DSSP) (Hooda et al. 2000). Inthe Netherlands, a DSSP value of 25% isconsidered critical, above which significantphosphorous losses are expected to occur(Uunk 1991). By analysing nutrient balances,the speed at which the DSSP is progressing inthe various regions of Europe can beestimated.

Nutrient loading throughout Europe isinfluenced by livestock density and thecombination of manure and mineral fertiliserapplication. Mineral fertiliser applications,having risen steadily through the 1960s and1970s, stabilised in the 1980s and have sincefallen. Nitrogen applications were reducedfollowing the introduction of the EU NitrateDirective of 1991, which set a limit of170 kg N/ha/year. Phosphorous applicationsin particular are now below the levels of 1960(Figure 2.10). Throughout much of northernand central Europe, manure application is nowresponsible for over half of the P

20

5 supply in

agricultural land (Figure 2.11c).

The broad pattern of nutrient loading of theenvironment follows closely the distributionof total livestock density (Figure 2.11a).Livestock densities can be divided into threecategories:

High: High density areas (>500 kgbiomass/ha) are characterized by highintensity dairying (>2 livestock units/forageha plus >1.5 tonnes concentrate/cow) andhigh proportions of monogastric species (De

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EAAP Series no. 108

Box 6. Nitrogen and Phosphorous Flows in Danish Agriculture

While Denmark is not the most intensively used area in Europe for animal agriculture, it does have ahigh level of intensity of both crops and livestock, and an unusually high degree of integration betweenthem. Land use is carefully regulated and monitored. One consequence of this careful management isthat nutrient flows are exceptionally well documented (Kyllingsbaek, A., 2000, 2002).

The principal nutrients, and therefore the main potential pollutants, are nitrogen and phosphorous.Figure 1 shows the balance of input and offtake of these nutrients for both the crop and livestocksectors for the year 1998/1999. Both nutrients are in substantial surplus. Only 33% of the nitrogeninput and 45% of the phosphorous input are accounted for by plant and animal offtake. For nitrogen,the surplus amounted to 153 kg per hectare, and for phosphorous 17 kg per hectare. These levels ofannual surplus have come down substantially from the historically high levels of the 1980s, by about15% in the case of nitrogen and 30% in the case of phosphorous. This reduction has been due mainlyto reduced fertiliser use, though increased animal offtake has also contributed.

CropSector

Net Surplus387N/44P

equals153N/17P (kg/ha)

AnimalSector

Fertilisers (+10% N fixation) Feed Total

354N 26P 222N 52P

Feed

Animalmanures

576N 79P

78N 12P 111N 23P 189N 35P

INPUT

OFFTAKE

+ =CropSector

Net Surplus387N/44P

equals153N/17P (kg/ha)

AnimalSector

Fertilisers (+10% N fixation) Feed Total

354N 26P 222N 52P

Feed

Animalmanures

576N 79P

78N 12P 111N 23P 189N 35P

INPUT

OFFTAKE

+ =

Nitrogen and Phosphorous flows in Danish Agriculture, 1998/99. Figures are ‘000 tons of Nor P. Area used is 2.53 m.Ha (excludes set aside with grass ) (Source: Kyllingsbaek, 2000,2002).

References

Kyllingsbaek, A. (2000). Kvaelstofbalancer og kvaelstofoverskud i dansk landbrug 1979-1999. DJFrapport No. 36. Markbrug

Kyllingsbaek, A. (2002). Danish Inst. Agric. Sci. (personal communication)

38


0

50

100

150

200

250

300

350

61/62 64/65 67/68 70/71 73/74 76/77 79/80 82/83 85/86 88/89 91/92 94/95 97/98 98/99

Phosphorous

Nitrogen

Haan et al. 1997). High phosphate overloadsare generally evident in these areas(Figure 2.11b). The nutrient overloadattributable to the contribution of manure tototal P

20

5 supply on agricultural land is shown

in Figure 2.11c. When this is considered,areas with high livestock densities andsubstantial mineral fertilizer application (e.g.Netherlands, Brittany, Catalonia) have veryhigh overloads (>70 kg/ha), whereas areaswith high animal densities and low mineralfertilizer application (e.g. west UK, Denmark,northern Germany) have low (10-20 kg/ha) tomoderate (20-40 kg/ha) overloads. Localsurveys in the Netherlands have shown that atotal area of 270,000 ha in the sandy areas ofthe central, eastern and southern regions arephosphate saturated due to intensiveapplication of livestock wastes (Hooda et al.2000).

Medium: Medium density areas (200-500 kgbiomass/ha) are broadly suitable for forageproduction with lower intensity dairying, more

beef and sheep production and monogastricspecies constituting less than 50 percent ofthe livestock mass. In these areas, thecombination of manure and mineral fertilizerapplication is also critical to the nutrientbalance situation. In Northern Italy and Irelandfor example, the combination of mediumanimal densities and high mineral fertilizerapplications results in high overloads(>40 kg/ha). Conversely, in central France,central Germany and Spain, balances are lower(<20 kg/ha).

Low: Low intensity areas (0-200 kgbiomass/ha) are broadly in the Mediterraneanzones of Greece, Southern Italy, France, Spainand Portugal, Scandinavian countries, and thespecialized cereal zones of central France andEastern England. In these areas little or nophosphate overload related to livestockproduction is evident.

Figure 2.10. Trends in mineral N and P fertiliser consumption in 16 Europeancountries (Source: International Fertiliser Industry Association 2000)

Index

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EAAP Series no. 108

Figure 2.11. Livestock density and phosphorous status on agricultural land(Source FAO).

A) Total livestock biomasson agricultural land.

B) P2O

5 balance on

agricultural land.

C) Contribution of manureto P

2O

5 supply on

agricultural land.

< 1 0 01 0 0 - 2 0 02 0 0 - 4 0 04 0 0 - 5 0 0> 5 0 0

< 1 0 01 0 0 - 2 0 02 0 0 - 4 0 04 0 0 - 5 0 0> 5 0 0

kg/ha

kg/ha

0 - 2 02 0 - 4 04 0 - 6 06 0 - 8 08 0 - 1 0 0

Percentage

40


2.8 Trade and Competitiveness

Europe as a whole, including the EU15, islargely self sufficient for livestock products(Table 2.2). Nevertheless, because of thescale of the internal market (379 millionconsumers) it is the world’s largest importerand exporter (e.g. 41% of world market inpigmeat) for several of these products. In1998 the EU accounted for 14% - 31% of thetotal world exports of meat, butter, milk, andeggs. In addition, a substantial proportion ofEU intensive livestock production depends onimported feed grains and protein sources(Table 2.3).

In the world as a whole, demand and supply oflivestock products are rising faster than fornon-livestock foods. Between 1987 and 1997annual growth rates for milk and dairy

products, meat and cereals were 0.3%,1.8% and 1.4% respectively, and are projectedto be 1.4%, 1.7% and 1.1% between 1995/97and 2015 (FAO 2002). This demand is drivenlargely by expanding populations and risingincomes in developing countries where theannual demand growth rates for the abovefoods are 3.4% (milk), 5.9% (meat) and 2.5%(cereals). With this expanding market,international trade in livestock products andthe raw materials used in their production isalso expanding.

The future of the European livestock sectoris therefore substantially involved withdevelopments in international trade. In thepast, trade policy in each country wasdetermined at national level, in nationalinterest. More often than not, this interest wasseen as best served by a degree of protection

Table 2.2 Meat and milk production and self-sufficiency (1999) in the EU15.

Production Mt % Self-sufficiency %

Beef & Veal 7.8 21 101 Pigmeat 18.1 49 108 Poultrymeat 8.9 24 109 Sheep & Goat meat 1.1 3 81 Other meat 1.9 5 93 Total meat 36.8 100 105 Milk 126.5 100 108* Sources: European Commission 2000, Directorate-General for Agriculture, FAOSTAT and *Bundesministerium fur Verbrauchschutz, Ernahrung und Landwirtschaft, Bonn http://www.verbraucherministerium.de.

Table 2.3 EU15 livestock feed requirements (Source: The Agricultural Situation in the European Union, 2000 Report, p. 85). Total (Mt) Produced in EU Imported High protein 56 21 36 High energy 39 22 17 Cereals 110 108 2 Total 205 150 55

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EAAP Series no. 108

against outside competition. In other cases (asin the repeal of the UK Corn Laws in 1846) itwas served by the trade liberalisation. In yetother instances it may be served by policieswhich promote or subsidise exports. Withinthe European Union, policy in these mattersis now decided at EU level. Given the plannedenlargement to include most countries ofeastern Europe in the coming years,practically the whole of the continent will becovered by EU policy.

In its external relations, this policy is operatedwithin the framework set by the World TradeOrganisation (WTO). The broad objective ofthe WTO agreements is to promote orderedtrade by the establishment of common tradingrules and by the progressive removal ofimpediments to free trade.

Within this context, the greatest challengefaced by the European livestock sector is thelong-term adaptation to competition fromlower cost producers in other countries. In theshort term, this competition comes mainlyfrom the US and other developed economieswith large land resources. Increasingly, thereis also competition from developingeconomies such as Thailand and Brazil. In thefuture, there is likely to be an increase incompetition from eastern Europe as thestructural inefficiencies in Russian andUkrainian agriculture are resolved.

Competition between the European livestocksector and those in other developed countriesis affected first by the relative scale ofproduction units (Table 2.4). Though farmsizes are steadily increasing, agricultural landper person in the EU is low compared withother major developed regions.

Since agricultural land in the EU is relativelylimited, a more intensive pattern of land usehas evolved. Farmers endeavour to maximiseproduction per hectare by high levels ofexternal inputs (Table 2.5). A further meansof increasing farm income on limited spaceis by adding value to crops (grain) throughlivestock production; in addition, grain feedingremoves seasonality of production and thusensures a more even cash flow. Theconsequences are high livestockconcentrations in the EU with concomitantanimal health, welfare and environmentalimplications in intensive, often ‘land-detached’ production systems.

As a result of the high use of production inputsand of the ‘value added’ through livestock,gross value of production in the EU, measuredper hectare, is very high, and, despite very lowpasture availability, more than half of the grossvalue of agricultural production comes fromthe livestock sector. On the other hand, as landper agricultural production unit is low, gross

Table 2.4 Agricultural land per person, proportion of population in agriculture, area of permanent pasture and arable land per person in agriculture. (Source: FAOSTAT, 2000). Agricultural

land / head of population

(Ha)

Population in agriculture

(%)

Permanent pasture

(Ha/person in agriculture)

Arable land (Ha/person in agriculture)

Ratio Pasture/Arable

EU15 0.4 4.5 3 5 0.7 Canada 2.4 2.6 36 56 0.6 USA 1.5 2.3 38 28 1.3 Australia 24.3 4.7 466 55 8.4 New Zealand 4.3 8.9 39 10 4.1

42


value of production per person in agriculturein the EU is lower than in the US, Canada,Australia and New Zealand (Table 2.6).

Within the WTO structure, the most importantrelationship is that between the EU15 and theUS. This is partly because they are thedominant trading blocks, and also because thepositions which they agree effectivelydetermine the WTO rules. Starting with theUruguay Round Agreement on Agriculture(1994) agreement was reached on a range ofmeasures aimed at converting variable importlevies to tariffs, and progressively reducingall trade distorting export subsidies. Prior tothis, the EU, under the first CAP reformadopted in 1992, had begun the process ofshifting supports from prices to direct

payments. The second CAP reform, Agenda2000, continued that process with increasingemphasis on environmental aspects ofproduction systems. In 2000, the net incomeof EU agricultural producers was made up asfollows: 63% net returns from the market,28% from subsidies on products and 8% fromsubsidies on production.

The net effect of all subsidies to agriculturalproduction is calculated on a standard basisby OECD, and expressed in the form ofProducer Support Estimate (PSE) percent. Forthe years 1986 - 1988, the average PSE in theEU was 44% (US 25%). For 1998 - 2000, thecorresponding figures were: EU 40%, US23%. In the EU this support system accountedfor 1.3% of GDP and approximately half of

Table 2.5 Intensity of factor use (Source: FAOSTAT, 2000). Fertilizer

T/1000 ha agricultural

land

Tractors/ 1000 ha

agricultural land

Harvesters/ 1000 ha

arable land

Cattle/ 1000 ha pasture

Pigs/ 1000 ha arable land

Chickens/ 1000 ha

arable land EU15 121 49 7 1 445 1 667 13 421

Australia 5 1 1 66 55 1 907 Canada 35 10 3 445 272 3 402 New Zealand 40 5 2 674 237 8 167

USA 48 11 4 414 352 9 720

Table 2.6 Gross value of production per hectare and per person in agriculture (expressed in ‘International $’ of 1989-91) (Source: FAOSTAT, 2000). Gross value of

production / ha agricultural land

Gross value of production / person in

agriculture Proportion

from livestock (%) EU15 1 245 10 352 53

Australia 51 26 315 58

Canada 317 28 946 42

New Zealand 421 20 391 91

USA 422 27 785 47

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EAAP Series no. 108

the total EU budget. Though subsidy levels aspercent of output value are lower in the US,average payments to individual producerswere four times as high as in the EU.

The 2002 US Farm Bill (USDA 2002b)provides for an increase of 70% in the supportavailable to US agriculture for the comingdecade. The 2002 mid-term review of the EUprovides more for redistribution than forincreases in total supports in Europe. Inaddition, the CAP must provide forenlargement and integration of the agriculturalsector in Eastern European countries. Therelative subsidy positions in future years aretherefore difficult to predict. However, the UScommitment to substantial increases insupport in the medium term, coupled with thetraditional position where 25% of US farmoutput went to export markets, seems likelyto put long term downward pressure on worldcommodity prices. The net result forEuropean producers could be greaterdifficulty, both financially and politically, infinding export markets for the smallerpercentage of their production which issurplus to internal market requirements.

Competitiveness

The competitive positions of differenteconomies are a reflection of the basicproduction costs of commodities. These arevery difficult to establish in a comparativemanner because of variable quality of data anddiffering conventions. However, a recent study(Boyle et al., 2002) has produced estimatesof comparative production costs for the mainagricultural commodities across a range ofEuropean and other countries. A summary ofthe results is presented in Table 2.7.

The comparisons are made on the basis of‘cash’ costs. These exclude structural featureswhich also can have a bearing oncompetitiveness, e.g. exchange rates,

indebtedness of producers, and whether landis owned or rented. They do, however, capturethe main contributors to competitiveness: unitscale, climate, infrastructure, sophisticationof services, and technical efficiencies.

As the authors acknowledge, in somecommodities special factors may also affectthe results. For example, in milk production,there is an apparent improvement in thecompetitive position of Europe and otherareas relative to New Zealand. This, however,may be partly due to the costs of the rapidexpansion in dairy production in New Zealand(58% over the decade considered). In addition,in the EU, increased milk quota values are notcounted as a component of “cash” costs,giving an apparent advantage to the EUproducer. In contrast to these results, otherstudies (e.g. Danish Cattle Federation, 2002)show EU milk production costs at 250% ofthose in New Zealand.

Table 2.7 shows results for fourcommodities: milk, beef, sheepmeat andwheat. The resources used in the first threecommodities are largely tied to the local landbase. For intensive pig and poultry production,feed constitutes 70 - 80% of production cost,and cereal production cost could therefore betaken as a surrogate for competitiveness inthese industries. However, since cereals are arelatively freely traded commodityinternationally, differences in raw materialcosts for pig and poultry production do notvary greatly between countries. Relativeadvantage in these industries is thereforemore a consequence of other factors such asproximity to market, intensity of technologyand scale of operation.

The figures show that for all fourcommodities, production costs in Europeancountries are higher than elsewhere, andsignificantly higher than those of the lowestcost producer.

44


Table 2.7 Relative cash production costs per kg of product in different countries, 1988/89 and1998/89. Lowest cost producer is given a value of 100. a1999/00, b1993/94. (Source: Boyle et al.2002).

1988/89 1998/99Milk: relative to NZ = 100

Germany 286 118France 229 118Italy 286 106Belgium 186 82Netherlands 271 129Denmark 371 159Ireland 214 106United Kingdom 243 124Average 261 118

United States 329 159Australia 114 76Canada 243 165New Zealand 100 100a

Beef: relative to Argentina = 100Germany 355 328France 345 317Ireland 239 356United Kingdom 329 439Average 317 360

Australia 155 250Argentina 100 100

Wheat: relative to Canada = 100France 114 153Denmark 229 237Ireland 129 169United Kingdom 186 186Average 164 186

United States 100 92Canada 100 100Australia 86 129

Sheep meat: relative to NZ = 100France 237 314Ireland 171 327United Kingdom 220 424Average 209 355

New Zealand 100b 100

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EAAP Series no. 108

50

100

150

200

250

300

1955 1965 1975 1985 1995

Dairy

Beef

Broilers

Eggs

Pork

Productivity in the Livestock Sector

The record of improvement in technicalefficiency in the livestock sector in the lasthalf century has been remarkable. Fuglie etal. (2000) have documented changes in partialproductivity measures for different sectors oflivestock production in the US in the decadessince 1955 (Figure 2.12). It can bee seen that,on these measures, pork productivity hasdoubled, milk output per cow trebled andproductivity in beef and poultry productionhas increased by up to 50%. These figurestranslate into improvements in productivityranging between 0.5% and 2.3% per annumsustained over a forty year period.

These gains in productivity have been theresult of steady improvements in genetic valueof animals, reduction in loss from parasitismand disease, and improvements in theregularity, quantity and quality of feed.Improved standards of management andhousing have also contributed.

Over a slightly shorter period (1955 - 85) thesame authors show that labour productivity inlivestock production increased more thanseven-fold, with the greatest gains in the dairyand poultry sectors.

Parallel improvements in factor productivityhave taken place in European livestockproduction. These changes have beenaccompanied by steady increases in the sizeof economic units. Together, these two factorshave enabled producers to continueproduction in the face of a long term declineof the order of 3% per annum in real productprices.

Position in World Trade

For all livestock products except sheep meat,the European Union is a net exporter. In theyear 2000, self-sufficiency levels were 107%for pig meat, 103% for beef, 109% for poultrymeat, 81% for sheep meat and 108% for dairyproducts. This production beyond the

Figure 2.12. Productivity growth in US livestock production 1955 - 1995,beef: kg/cow; pork: kg/sow; milk: kg/cow, broilers: kg/bird; eggs: eggs/bird/year(Source: Fuglie et al 2000).

Index

46


requirements of the internal market is amodest proportion of total output. In 2000,with a total meat production of 38.2 milliontonnes, the market surplus was 2.14 milliontonnes or 5.6% of production.

Most of these surpluses are exported to worldmarkets, and most of these exports aresubsidised. The future of the Europeanlivestock sector will depend heavily on howthese exportable surpluses are dealt with infuture years, as well as on the effect that globaltrading patterns and arrangements will have oncompetition on the internal market.

In terms of total trade in agricultural products,the EU is a net importer, with exports oftemperate zone products more than balancedby imports of tropical products. The bulk ofexports are to other parts of the developedworld (North America 22%, Asia, includingJapan 13%, CEEC 10%). A small proportion(7%) goes to the 77 ACP (African, Caribbeanand Pacific) countries, which include nearlyall the poorest economies in the world.

For the principal livestock products, from 4%to 11% of global production entersinternational trade. The figures for 1999 areshown in Table 2.8.

For dairy products, the EU provides about aquarter of global exports, and for meat about20%. European exports are thereforesubstantial, but not dominant in the market.

Negotiations under the WTO to reduce, andeventually eliminate, distortions in globaltrade in agricultural products are proceeding,though with considerable uncertaintyfollowing the proposals of the 2002 US FarmBill.

A number of studies have attempted to quantifythe economic impact of such distortions, andto predict the consequences of their reductionor elimination. A recent study (Borrell &Hubbard 2000) uses a general equilibriummodel of the world’s most importanteconomies to simulate what would happen ifthe CAP were abolished, and EU barriers totrade and direct subsidies were eliminated.Many assumptions are involved, though theseare based on “reasonable empirical estimatesof historical producer and consumereconomic behaviour”.

The study concludes that the current CAPregime sustains European grain and milkproduction at levels more than 50% higherthan would be the case under fully liberalised

Table 2.8 EU and World trade in livestock products 1999 (Source: European Commission 2001) % of World Trade % of world output traded Imported by EU Exported by EU Butter 11 16.4 20.5 Cheese 8 13.0 31.9 Milk powder 45 3.2 32.0 Meat (total) 7 7.6 20.4 Beef 10 7.1 16.7 Pigmeat 4 2.4 41.6 Poultry meat 10 5.8 15.7

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EAAP Series no. 108

trading. For livestock and meat products, thecorresponding figures were 30% and 18%.These figures therefore represent, in broadterms, one set of potential consequences offull global trade liberalisation: reduced EUprices, leading to about one third reduction inthe scale of the grain and dairy sectors, andabout one fifth in the meat sector.

The net effect would be to turn the EU frombeing an exporter of these products into beingthe world’s largest importer. This, theycalculate, would lead to an increase of up to38% in global prices, which in turn wouldstimulate increased output in othereconomies.

Effects on developing countries

For some developing countries, the availabilityof low cost subsidised imports, particularlyof grain and milk products, can beadvantageous. In other cases, competitionfrom subsidised imports undermines theviability of local production, and thereforehinders development. The overall balance ofbenefit and damage is difficult to establish,but cases where the disposal of Europeansurplus inhibits the developmentopportunities for poor countries willundoubtedly not be tolerable in future years.

There is a high degree of dependence onagriculture in developing countries where theaverage share of agriculture in GDP is about25% and agricultural exports account for morethan one-third of export earnings.

As agricultural exports are strongly andpositively correlated with economic growth(Scandizzo 1998), one of the key concerns isaccess to competitive markets. Agriculturalpolicies largely determine this access, andrecently it has been estimated that developingcountries could carry annual welfare losses

of $20bn a year as a result of industrialisedcountries’ agricultural policies (World Bank2001b).

Since 1992 CAP reforms in the EU haveprogressively decreased trade-distortingsubsidies, making some headway towardsreducing inequalities in world trade to thebenefit of all suppliers, including developingcountry suppliers. Export subsidies nowrepresent 8% of the CAP budget, and 5.2% ofthe value of farm exports as compared to 30%in 1991.

In its most recent proposals (December 2002)for the WTO, the EU indicated its intentionto further reduce export subsidies by 45% andtrade distorting domestic support by 55%.Currently, 97% of LDC exports enter the EUduty free. The new proposal will provide for100% duty and quota free access for all farmimports from LDC countries.

While there have been specific cases whereEuropean export practices inhibit localproduction in poor countries, these cases areexceptions in a pattern of EU - LDC trade thatis broadly and progressively complementary.

For the future of the European livestocksector, these issues of equity in trade relationswith the developing world are unlikely to be amajor factor. In the first place, livestockproducts are a very small part of this trade. Inthe years 1996 - 99, products of livestockorigin made up just 0.84% of agriculturalexports of LDCs and 8.94% of their imports(Diaz-Bonilla et al, 2002). More broadly, theproposed changes in the CAP, together withinitiatives to make trading arrangements morefavourable to developing countries are likelyto progressively remove these issues from thepolitical and economic agenda.

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2.9 Evolution of EU Common AgriculturalPolicy

The foundation document of the EuropeanCommunity, the Treaty of Rome (1958),defined the general objectives of a CommonAgricultural Policy (CAP). The principles ofthe CAP were set out at the Stresa Conferencein July 1958. In 1960, the CAP mechanismswere adopted by the six founding memberstates, and two years later, in 1962, the CAPcame into force. The policy created a singlemarket for agricultural products, and providedfor financial solidarity through a EuropeanAgricultural Guidance and Guarantee Fund(EAGGF).

In the forty years since then, the CAP hasbroadly fulfilled its declared objectives.These objectives [Article 33 (39) of the ECTreaty] are:

• to increase agricultural productivity bypromoting technical progress and byensuring the rational development ofagricultural production and the optimumutilization of the factors of production, inparticular labour;

• thus to ensure a fair standard of living forthe agricultural community, in particular byincreasing the individual earnings ofpersons engaged in agriculture;

• to stabilize markets;• to assure the availability of supplies; and• to ensure that supplies reach consumers at

reasonable prices.

At the same time, as the Community wasprogressively enlarged, and became theEuropean Union, and as the economicstructure of European countries hasdeveloped, a number of reforms of the CAPhave been implemented. The first majorreform, known as the Mansholt Plan (1968)sought to reduce the number of peopleemployed in agriculture, and to promote theformation of larger and more efficient unitsof production.

Despite continued structural changes in thefollowing years, problems persisted; thesupply and demand of agricultural productswere not in balance, resulting in ever growingsurpluses. The budgetary cost of the CAP (atthat time 72% of total EC budget) was also amatter of continuing attention. In 1985, theCommission issued a Green Paper“Perspectives for the Common AgriculturalPolicy”, and in 1988 a new reform (The Delors1 Package), reforming the financial systemand CAP and doubling structural funds, wasagreed.

A further cycle of reforms (The MacSharryPackage) was enacted in 1992. This providedfor a reduction in agricultural prices to renderthem more competitive in the internal andworld markets, with compensation of farmersfor loss of income, as well as other measuresrelated to market mechanisms and protectionof the environment. At the same time, theinclusion of agriculture for the first time inthe General Agreement on Tariffs and Trade(GATT) introduced further pressures in thesame direction.

These trends culminated in theimplementation of Agenda 2000, the mostradical and comprehensive reform of the CAPsince its inception. This reform provided for

• the reinforcement of the competitivenessof agricultural commodities in domesticand world markets;

• the promotion of a fair and decent standardof living for the farming community;

• the creation of substitute jobs and othersources of income for farmers;

• the formation of a new policy for ruraldevelopment, which becomes the secondpillar of the CAP;

• the integration of more environmental andstructural considerations into the CAP;

• the improvement of food quality and safety;and

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• the simplification of agricultural legislationand the decentralisation of its application,in order to make rules and regulationsclearer, more transparent and easier toaccess.

The initiatives put in place under Agenda 2000were intended to underpin EU agriculturalpolicy until 2006. However, in July 2002, theEuropean Commission, as part of the mid-termreview of this programme, have proposed afurther major cycle of reforms.

In this mid-term review, the Commissionrecognises that public expenditure for thefarm sector must be better justified. Besidessupporting farming incomes, it must yieldmore in return regarding food quality, thepreservation of the environment and animalwelfare, landscapes, cultural heritage,enhancing social balance and equity. Thereview is intended to reduce bureaucraticprocedures, and to encourage farmers toproduce at high standards for the highestmarket return, rather than for the sake of themaximum possible subsidy. For Europeanconsumers and taxpayers, the review willensure better value for money. To achievethose goals, the Commission proposes:

• to cut the link between production anddirect payments;

• to make those payments conditional onenvironmental, food safety, animal welfareand occupational safety standards;

• to substantially increase EU support forrural development via a modulation ofdirect payments with the exemption ofsmall farmers;

• to introduce a new farm audit system; and• new rural development measures to boost

quality production, food safety, animalwelfare and to cover the costs of the farmaudit.

The broad aims of the evolving CAP are tostrike a reasonable balance between theinterests of the various stakeholders in thefood production chain. The principal element

in this balance is to serve the interests of thegeneral public, both as consumers andtaxpayers, on the one hand, and those offarmers, as food producers and custodians ofthe rural environment, on the other. Externalfactors which have a bearing on this balancingexercise include commitments under theWTO, as well as the process of adaptation inthe European Union to accommodate newmember countries. As the number ofproducers (and particularly full timeproducers) declines, and as the demands ofconsumers increase, this balance, in economicterms, is progressively shifting to thedisadvantage of producers. In the comingdecades, it is difficult to see a reversal of thistrend.

2.10 Enlargement of the EU

One of the major challenges facing the EU asa whole, and the agricultural sector inparticular, is the accession of ten new statesin the coming years. Along with the otheradjustments required to meet changing times,the CAP, originally designed for six memberstates, and now serving fifteen, must beupdated to accommodate the needs of twentyfive states.

The ten central and Eastern EuropeanCountries (CEEC) now on track formembership have a very different agriculturalstructure from the current EU. Table 2.9summarises some key statistics.

Despite the fact that these countriesexperienced, in varying degrees, forty yearsof collectivised or state managed agriculture,the current structures in many ways resemblethose of western Europe more than fifty yearsago. The new CAP must therefore assist thesecountries in the difficult social and economicrestructuring which is already two generationsadvanced in the rest of the EU.

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Just how challenging this task will be is clearfrom the statistical comparison. Despitehaving a total population one quarter as largeas that in EU15, the CEEC have 33% morepeople employed in agriculture: 10 millionas against 7.5 million. Productivity levels arelow, and therefore economic output per personemployed in agriculture is only 11% of thatin the western countries. Real incomes insociety are one third of those in the EU.

In the post communist era, livestock numberswere reduced drastically, with the result thatthe livestock sector in CEEC is smaller thanits historical levels. Despite this, and despitethe fact that output per animal and per hectareare lower than in EU15, the CEEC also faceproblems of surplus production in all livestockproducts and in cereals. The adjustmentprocess must therefore take place without theadvantage of a growing internal market, as wasthe case during much of the comparableevolution in western Europe.

References

Anderson K., Dimaranan A., Francois J.,Hertel T., Hoekman B., Martin W.(2001). The cost of rich (and poor)country protection to developingcountries. CIES Discussion Paper No0136. Adelaide, Centre for InternationalEconomic Studies.

Atkinson N. (2001). The Impact of BSE onthe UK Economy. MAFF UK Paper,presented at IICA; www.iica.org.ar/BSE/14-%20Atkinson.html

Basnet B.B., Apan A.A., et al. (2002).Geographic information system basedmanure application plan. Journal ofEnvironmental Management 64:99-113.

Benet J.J. (1999). La tuberculose. Documentsupport de cours aux étudiants desécoles nationales vétérinaires, 152 pp.

Table 2.9 EU15 and the 10 CEEC accession countries – general and agricultural statistics (1997). EU15 CEEC10 CEEC as % of EU Population (m) 373 105 28 GDP/head (Euro) 18 154 5 118 28 Employed in agriculture (m) 7.5 10 133 Agric. Area (m Ha) 135 60 44 Agric. as % of GDP 1.7 7 412 Agric. as % of Employment 5.1 22.5 441 Food expediture as % of household income

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Arable land (m Ha) 76 41 54 Cattle (m) 84 17 20 Cows (m) 34 8 24 Pigs (m) 118 41 35 Sheep (m) 94 16 17 (Source: Agricultural Situation and Prospects in the Central and Eastern European Countries, Summary Report, European Commission, June 1998).

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Biering-Sorensen U. (1959). Ophobning aftilfaelde af avier tuberkulose I ensvinebesaetning. Medd DanDyrlaegeforen, 42, 550-552

Bindraban, P. S., J. J. Stoorvogel, et al. (2000).Land quality indicators for sustainableland management : proposed method foryield gap and soil nutrient balance.Agriculture, Ecosystems andEnvironment 81: 103-112.

Blancou J. (2000). Histoire de la surveillanceet du contrôle des maladies animalestransmissibles. Office International desEpizooties OIE éd. 366 pp.

Borrell B. & Hubbard L.J. (2000). Globaleconomic effects of the EU CommonAgricultural Policy, Economic Affairs,20, 18-26

Boyle G.E., Brown S. & O’Regan K. (2002).The Competitiveness of IrishAgriculture, The Irish Farmers Journal(in press).

Danish Cattle Federation. (2002). AnnualReport, www.lr.dk.

De Haan C., Steinfeld H. & Blackburn H.(1998). Livestock and the environment,finding a balance . Wren MediaFressingfield, UK.

DEFRA, Department for the Environment,Food and Rural Affairs, UK,www.defra.gov.uk

Diaz-Bonnilla E., Robinson S., Thomas M. &Yanoma Y. (2002). WTO,Agriculture,and Developing Countries:A survey of issues. TMD DiscussionPaper No. 81, IFPRI, Washington

EEA, European Environment Agency. (2002).Agriculture. Chapter 7 In:Environmental Signals 2001.Environmental Assessment Report. No.8: 49-56. http://eea.eu.int

ERS, USDA, Economic Research Service ofthe United States Department ofAgriculture; www.ers.usda.gov/

European Commission. (2000). Agenda2000: for a stronger and wider Union,European Commission http://europa.eu.int/comm/agenda2000/

European Commission. (2001). AgriculturalSituation in the European Union fromAgriculture in the European UnionStatistical and Economic Information2001 http://europa.eu.int/comm/agriculture/agrista/2000/table_en/

Eurostat, Statistical Office of the EuropeanCommission http://europa.eu.int/comm/eurostat/

FAO. (2002). Agriculture towards 2015/30.Rome, Food and AgricultureOrganization.

Food Ethics Council. (2001). FarmingAnimals for Food: Towards a MoralMenu. Southwell, Notts, UK.

Frawley J. & Phelan G. (2002). Changingagriculture: Impact on ruraldevelopment. Teagasc, Irelandwww.teagasc.ie/publications/2002/

Fuchs F. (1968). Schweinepest. In Handbuchder virus-infectionen bei Tieren, Band3 Röhrer H. ed., Jena. Gustav Fisher,P16

Fuglie K, Narrod C., & Neumeyer C. (2000).Public and private investment in Animalresearch In: Public-PrivateCollaboration in AgriculturalResearch: New InstitutionalArrangements and EconomicImplications .Fuglie K. & D.Schimmelpfennig (Eds). Iowa StatePress.

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Gerber P., Chilonda P., et al. (2002). Livestockdensity and nutrient balances acrossAsia. (In press). www.ramiran.sk..

Glynn M.K., Bopp C., Dewitt W., Dabney P.,Mokhtar M., Angulo F.J. (1998).Emergence of multidrug-resistantSalmonella enterica serotypetyphimurium DT104 infections in theUnited States. N Engl J Med. 7;338(19):1333-8.

Goodwin R.F.W. & Jennings A.R. (1958). Ahighly infectious gastroenteritis of pigs.Vet. Rec. 70, 271-272

Hamscher G., SczesnyS., et al. (2000).Tetracycline and chlortetracyclineresidues in soil fertilized with liquidmanure. Workshop 4 on sustainableanimal production, Hannover.

Henderson W.M. (1978). An historical reviewof the control of Foot-and-Mouthdisease. Br. Vet. J., 134, 3-9

Hoffmann M., JohnssonH., et al. (2000).Leaching of nitrogen in Swedishagriculture - a historical perspective.Agriculture, Ecosystems andEnvironment 80: 227-290.

Hooda P. S., Edwards A.C., et al. (2000). Areview of water quality concerns inlivestock farming areas. The Science ofthe Total Environment 250: 143-167.

Hoppe R., Johnson J., Perry J., Korb P.,Sommer J., Ryan J., Green R, Durst R.,& Monke J. (2001) Structural andFinancial Characteristics of US Farms:2001 Family Farm Report. AgricultureInformation Bulletin No.768, ResourceEconomics Division, EconomicResearch Service, US Department ofAgriculture, May 2001.

International Fertiliser Industry Association(2000). Nitrogen – Phosphate – PotashIFADATA statistics from 1972/74 –1998/99. Paris, France.

ITC, International Trade Centre. (2002).Overview world markets for organicfood & beverages (estimates).UNCTAD/WTO.

Mead P.S., Slutsker L., Dietz V., McCaig L.F.,Bresee J.S., Shapiro C., Griffin P.M. &Tauxe R.V. (1999). Food-related illnessand death in the United States. EmergingInfectious Diseases. 5(5): 607-25.

Milne L.M., Bhagani S., Bannister B.A.,Laitner S.M., Moore P., Eza D. &Chodini P.L. (2001). Trichinellosisacquired in the United Kingdom.Epidemiology and Infection, 127,359-363

OECD. (2001). OECD national soil surfacenitrogen balances, OECD: 19.

OECD, Organisation for EconomicCo-operation and Development, MainEconomic Indicators. www.oecd.org/statistics/

Oxfam. (2002). Market access andagricultural trade: the double standardsof rich countries Chapter 4 In: Riggedrules and double standards: trade,globalisation and the fight againstpoverty. Oxford, Oxfam.www.maketradefair.com

Plowright W. (1965). Rinderpest, Vet. Rec. 77,1431-1438

Pretty J.N., Brett C., Gee D., Hine R.E.,Mason C.F., Morison J.I.L., Raven H.,Rayment M.D., & van der Bijl G., (2000).An assessment of the total external costsof UK agriculture. AgriculturalSystems 65: 113-136.

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Scandizzo P.L. (1998). Growth, trade andagriculture: An investigative survey.FAO Economic and Social DevelopmentPaper 143. Rome, Food and AgricultureOrganization.

Schröder J. (2002). Restoring farmer’sconfidence in manure benefits theenvironment. (In press), www.ramiran.sk

Scoones I. & Toulmin C. (1998). Soil nutrientbalances: what use for policy?Agriculture, Ecosystems andEnvironment 71: 255-267.

Truyen U., Parrish C.R., Harder T.C. &Kaaden O.R. (1995). There is nothingpermanent except change: theemergence of new diseases. Vet.Microbiol. 43, 103-122

USDA. (2002a). Captive supply of cattle andGIPSA’s reporting of captive supply. 63pp. USDA Report, January 2002

USDA. (2002b). United State Department ofAgriculture, Farm Bill 2002www.usda.gov/farmbill/

Uunk E.J.B. (1991). Eutrophication ofsurface waters and the contribution ofagriculture. London, The FertiliserSociety.

World Bank. (2001a). Global EconomicProspects and the Developing countries2001. Washington, World Bank

World Bank. (2001b). World DevelopmentReport: Attacking Poverty. Washington,World Bank.

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The BSE crisis has signalled the need for afundamental reappraisal of the animalproduction industry’s priorities and practices.Formulating a vision for a new Europeanindustry will require inputs from all interestedparties – citizens, politicians, farmers,retailers, scientists and economists, as wellas from those actively engaged in the agri-food industry. It is unlikely that the invisiblehand of the market will suffice, for “wherethere is no vision, the people perish” (Proverbs26; 18). In every country in Europe, as well asat EU level, this search for a new vision ofagriculture and food production is beingpursued.

In many cases, the debate leads to a conclusionthat much of recent and current developmentshould be reversed. This conclusion is wellarticulated in a recent report on UK farmingand food (Curry, 2002). The authors say “ourcentral theme is reconnection … the keyobjective of public policy should be toreconnect our food and farming industry: toreconnect farming with its market and the restof the food chain; to reconnect the food chainand the countryside; and to reconnectconsumers with what they eat and how it isproduced”. Similar conclusions can be foundin other reports at national level, for example,in The Netherlands (Netherlands Ministry ofAgriculture, 2001).

The vision includes:

• Decoupling support payments fromproducts and shifting support to sustainablerural development;

• Returning to more ecologically balancedmixed farming systems; and

• Shortening and promoting reconnection inthe food chain.

Carrying such a vision forward presents greatchallenges. Perhaps the greatest is that theindustry is in many ways driven in the oppositedirection by economic forces. The relentlessdownward pressure on output prices can onlybe met by steady increases in the scale,efficiency, and often the intensification, ofproduction.

Furthermore, the great national andinternational corporations that now controlmost of food processing and distribution arenot comfortable partners for large numbersof widely dispersed family-owned farmenterprises. Power in the food chain hasshifted to the corporations. While farmers andfood corporations do have interests incommon - most clearly in ensuring that theultimate consumer has confidence in foodquality and safety - they also have intereststhat are in very direct conflict. These largelyconcern the trading relationships between thetwo sides. The corporations buy their rawmaterial from the farmers. Corporate sellingprices to consumers are under continuouscompetitive pressure. In addition, increasinglycomplex manufacturing and distributionsystems, and growing regulatoryrequirements, add to their costs. Corporateprofits are best maintained by passing thesepressures down the line to producers. Farmersare at the end of the line. Hence the recurringstate of economic crisis at farm level.

In this section elements of the vision of a“leaner, greener European model ofagriculture, with contented consumers,cleaner countryside and competitive farmers”are developed.

Chapter 3. The Future: Vision and Options

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Chapter 3. The Future: vision and options

In parallel, the ways in which this can beachieved while increasing technical andeconomic efficiency in the industry areexplored.

The section begins with two analyses of thestakeholders and their concerns. The firsttakes a broad view of society’s expectationsfrom the industry. The second follows thestructure of the market and reflects theeconomic relationship between the varioussectors.

3.1 Stakeholders - The Ethical Framework

A number of measures necessary in the shortto medium-term have been recommended tomanage the BSE epidemic in Europe and torestore public confidence in the safety offood and other products derived from cattle.While such measures are necessary they areby no means sufficient. BSE was symptomaticof a much larger problem, which has becomeevident for instance in the more recentoutbreaks of CSF and FMD.

There is evidence that public concerns overanimal products are much wider and morefundamental than those impacting on humansafety and food prices. They extend to animalwelfare, protection of the environment,rebuilding consumer trust and the need toensure fairness in respect of the consequencesof international trade. In short, importance isincreasingly being assigned to the ethics ofanimal production systems.

The examination of the many issues andinterests affected by BSE has been informedby implicit appeal to a set of ethical principles.Those principles have been used to constructa framework called the “ethical matrix”(Mepham 2000) and used in studies of the UKlivestock sector (Food Ethics Council 2001a,2001b).

Despite the increasing diversity of modernmulticultural, pluralistic societies, the pursuitof democracy would seem to make certainassumptions that conform to the idea of a‘common morality’. These assumptions areencapsulated by three prima facie principles,namely, respect for:• well-being• autonomy• justice

Appeal to these principles does not determinethe outcome of ethical reasoning, but it doesensure that attention is paid to a range ofrelevant issues, that a consistent approach isadopted and that any decisions made areexplicit. The principles are based onestablished ethical theories (utilitarianism,Kantianism and the Rawlsian theory of ‘justiceas fairness’) that commonly feature inperceptions of ‘rightful actions’. Theimportance attached to such principles maydiffer between people, but for most peopleconcern for well-being, autonomy and justicematters – not only for themselves but also forothers, whether human or non-human.

When they were introduced in the context ofmedical practice (Beauchamp & Childress1994), they referred primarily to the interestsof patients and healthcare workers, but inconsidering agricultural practices the issuesraised have been explored by applying themto the interests of four, broadly defined,‘groups’. These are:

• People who work in the agricultural andfood industries (e.g. farmers, agriculturalsuppliers, food manufacturers, retailers,traders and caterers);

• Citizens (all of us, both as consumers andas participants in democratic society);

• Farm animals; and

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An ethical matrix showing, in twelve individual cells, the interpretation of respect for theprinciples of well-being, autonomy and justice in terms appropriate to the interests ofpeople working in the agricultural and food industries, citizens, farm animals and theecosystem. For people, both impacts and responsibilities are involved, whereas for farmanimals and the ecosystem (shaded) only impacts of human actions are relevant.

• The Ecosystem: encompassing allorganisms (including the humanpopulation, domesticated and wild species)considered collectively, as interrelatedspecies, breeds and populations.

Because the three principles can be appliedto all four interest groups, the resulting twelvetypes of ethical impact can be represented inthe form of a table (an ethical matrix), whichaims to facilitate discussion of the issues byarranging them in a rational structure(Table 3.1). The translations (or‘specifications’) of the abstract principles areexpressed in terms that are intended to befamiliar but at the same time authentic froman ethical perspective. For example, respect

for farm animal well-being is translated asanimal welfare, that for citizens’ autonomyis interpreted in terms of democratic,informed choice, and that for justice for theecosystem as sustainability.

These sometimes rather imaginativeinterpretations are of course open tochallenge and debate. However, the value ofthe approach has been confirmed in severalexercises in public participation, at which themerits and usefulness of the matrix have beencommended.

It would be a mistake to imagine that one canresolve complex ethical issues simply byconsigning them to the separate ‘cells’ of the

Table 3.1. An Ethical Matrix.

WELLBEING

AUTONOMY

JUSTICE

PEOPLE IN THE AGRICULTURAL AND FOOD INDUSTRIES

Satisfactory income and working conditions

Appropriate freedom of action

Fair trade laws And practices

CITIZENS

Food safety and acceptability & Quality of life

Democratic, informed choice e.g. of food

Availability of affordable food

FARM ANIMALS

Animal welfare

Behavioural freedom

Intrinsic value

THE ECOSYSTEM

Conservation

Biodiversity

Sustainability

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matrix. At its simplest, it merely serves as acheck-list of concerns, which happen to bebased on ethical theory. But it can alsostructure ways of systematically addressingthe issues and serve as a means of promotingpublic awareness and stimulating ethicaldeliberation. The necessity to consider hownarrow sectarian interests interact with thewhole enterprise can only have beneficialeffects.

3.2 Stakeholders - the Market Structure

The stakeholder categories identified in thisanalysis are fairly broad and fall into twodifferent groups. The first group follows afarm-to-table analysis, looking at how variousactors along that continuum may impact thehealth of animals, humans and theenvironment. The second group looks at thevarious institutions involved and at the impactthat they may have.

Regarding the principal concerns of thevarious groups of stakeholders, it is clear thatin almost all cases a critical concern iseconomic profit. In a competitive world, suchprofit can be equated with economic survival.This is a real issue for livestock producers,since the farm enterprise is usually more thanjust a livelihood. The group with a differentprimary concern is consumers, for whom foodprice, quality and safety are paramount.

Farm-to-table stakeholders

For the purpose of this analysis the potentialstakeholders are categorised into sixsubgroups affecting: (i) inputs intoproduction, (ii) production (raising) oflivestock, (iii) processing and preparation oflivestock products, (iv) wholesalers andretailers of livestock products, (v) foodservice providers, and (vi) consumers. A briefdescription of the categories is given below.

Table 3.2 presents a list of identifiedstakeholders and an assessment of theirpotential impact on animal, human, andenvironmental health. Their ability to have suchan impact is ranked by asterisks. Threeasterisks denote major impact while onedenotes only a little.

Input Providers

The principal concern of all input providersis economic profits. Suppliers of breedingmaterial have the ability to affect animal healthby developing breeding stock which has beenselected for certain disease resistance traits.They can also affect animal health by usingtechniques for the delivery of semen orembryos which reduce the risk of diseasetransmission. Providers of feed and nutritionalinputs can affect animal health by ensuring thedelivery of disease-free feed. They also havethe ability to affect human health by ensuringthat feed and feed additives used do notcompromise the safety of meat/milk/eggs forhuman consumption. Those involved in thedelivery of veterinary supplies can affectanimal health by ensuring the delivery ofuniform, effective, and high quality vaccinesand drugs. They can affect human health byensuring that preventive medicines used inraising animals are not at levels whereresiduals would interfere with treatment ofhuman diseases, or contribute to thedevelopment of resistant pathogens.

Production

As for other actors in the food chain,economic profit is a principal concern forproducers. However, most producers arefamily farmers, whose production resourcesoften consist of a patrimony of manygenerations, and include the family home.

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Non-cash concerns about ensuring thesurvival, maintenance and integrity of the farmare therefore also a major factor.

Producers can take measures to preventproductivity losses associated with disease intheir animals. They can affect human healthby establishing measures that preventmicrobial diseases on-farm. They can alsoimpact environmental health by disposing ofmanure (or treating it) in a manner thatnutrients do not overload the environment and

that pathogens do not get into the human foodchain (i.e. drinking water, aquaculture, fruitand vegetables).

Veterinarians safeguard animal health byidentifying and treating sick/diseased animalsprior to the spread of disease in a herd. Theycan also affect human health by identifying andtreating such animals before they enter thehuman food chain. They can affectenvironmental health by preventing animaldisease from farmed animal populations fromgetting into wild populations. Those involvedin the transportation of live animals to

Table 3.2 Farm to table stakeholders. Principal health issues Stakeholders Animal Human Environment Input Providers Breeding Suppliers *** Feed/Nutritional Sector *** ** Veterinary Suppliers *** ** Production On farm *** ** ** Veterinary services *** ** * Animal transport *** * Processors Slaughterhouse * *** ** Fabrication *** * Packaging and transport of carcasses/prepared food

***

Disposal of by-products of animal origin * ** *** Food wholesalers/retailers Storage/distribution/sale of carcasses/ prepared food

***

Storage/ processing of by-products of animal origin

***

Food service providers Institutional food providers *** Restaurants *** * Consumers Different groups * *** *

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slaughter can also affect animal and humanhealth by identifying sick and/or diseasedanimals.

Processors

The main concern of most of those involvedin the slaughtering and fabrication of animalsis also economic profits. They can affecthuman health by preventing product fromdiseased animals from getting into the humanfood chain. They can also control and reducemicrobial contamination at all stages. They canaffect environmental health by treatingby-products prior to disposal and by recyclingby-products whenever possible. Transport maybe the responsibility of the slaughterhouse orthe wholesaler/retailer or it may be by privateoperators. During this stage, growth ofmicrobial pathogens can take place. Growthand cross-contamination of microbialpathogens can be reduced via refrigeration andmeasures to prevent cross contamination ofcarcasses during transport. Improved logisticsof getting products from slaughterhouses tofood wholesalers/retailers can reducespoilage and cross contamination fromcontaminated carcasses. Those involved in thedisposal of by-products of animal origin canaffect animal health by making sure that anypotentially contaminated risk material isprevented from getting into the animal feedchain. They can also affect animal, human, andenvironmental health by making sure thatby-products are treated for pathogens and thatas much nutrient content as possible isrecycled prior to entry into the environment.

Food wholesalers/retailers

This group of stakeholders is dominated bythe large retail supermarket firms. They areinterested primarily in economic profits.Those involved in the storage and distribution

of both carcasses and prepared food can makesure that the processes they use retard thegrowth of microbes and spoilage of food priorto human consumption. Those involved in thestorage of by-products of animal origin canaffect environmental health by recycling asmuch nutrients a possible prior to storage.

Food service providers

Similarly those involved in the delivery offoods to consumers via restaurants orinstitutional catering are interested primarilyin making a living. Like retailers andwholesalers they can affect human health byensuring that the processes they use retard thegrowth of microbes and spoilage of food priorto human consumption.

Consumers

Consumers are interested mainly in access tosafe, affordable food. The trade-off betweenprice, quality and safety depends on incomelevels, cultural factors and changingconsumption patterns. Consumers areaffected by transient events, such as foodscares or periods of economic stress orprosperity. There are also many subgroups ofconsumers with special interests. It istherefore difficult to state a principal concernthat applies across the population. It is clear,however, that consumer choice is primarilyprice driven. Because, for most foods at mosttimes, there is little need to be concernedabout safety, safety becomes an issue (but anover-riding one) only when consumers arealerted to potential dangers. Finally, qualityof food means different things to different age,cultural and economic groups. It therefore hasa very variable ranking among the threeprincipal concerns of consumers.

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Consumer impact on animal, human andenvironmental health will also vary across thedifferent groups of consumers. Animal andenvironmental health are marginally affected,but consumer choice can have major impacton human health, for example by excessivecaloric intake, excessive fat, or insufficientfibre in the diet.

Institutional stakeholders

For the purpose of this analysis institutionalstakeholders are divided into two groups,those that are part of the national, provincial,and local government and those that are partof the international standard setting bodies.Table 3.3 presents a list of identifiedstakeholders, their principal concerns, and anassessment of their potential impact onanimal, human, and environmental health. As

in Table 3.1, their ability to alter animal,human, and environmental health is ranked byasterisks.

National, provincial, and local governments

The principal concern of those in the national,provincial, and local governments is theprovision of improved services that result inthe protection of animal, human, andenvironmental health. Livestock extensionservices can pursue these goals by providinganimal production standards, aiding farmersin adopting and meeting standards, improvinglabour conditions, and aiding farmers inmitigating environmental problems. Thoseinvolved in providing animal health servicescan safeguard animal health by enforcinganimal health standards, aiding farmers inadopting and meeting standards, monitoring

Table 3.3 Institutional Stakeholders. Health issues Stakeholders Principal concerns Animal Human Environment National, provincial, and local governments

Livestock Extension Improved animal production

*** * **

Animal Health/ Welfare Services

Improved animal health and welfare

***

Meat Inspection Service Identify disease of human health concern

* ***

Food Safety Agency Safeguard human health *** Environmental Protection Agency

Improved Environment ***

International standard setting bodies

OIE Reduce livestock disease worldwide

***

CODEX Reduce food borne disease worldwide

***

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and enforcing compliance, and preventing thespread of disease. Similarly (and this can alsobe a responsibility of the animal healthservice) there is a role in monitoring andenforcing compliance of animal welfarestandards.

In the wake of the BSE and other crises ofconfidence in the food industry, manygovernments (and the EU) have set up newfood safety institutions. Such food safetyagencies can affect human health by providingstandards and aiding participants along the farmto table chain in adopting and meeting thesestandards. They can also improve human healthby monitoring and enforcing compliance tostandards, as well as by educating consumers,food service workers and industry managersin guaranteed delivery of safe food toconsumers. Environmental protectionagencies can improve environmental health byproviding standards, aiding farmers andprocessors in adopting and meeting thesestandards, and monitoring and enforcingcompliance to environmental regulations.

International standard setting bodiesconcerned with animal and human health

The principal concern of the internationalstandard setting bodies is to aid countries intheir efforts to reduce livestock disease andfood-borne human disease world-wide. OIEis the WTO standard setting body with regardto animal health. Their goal is to limit thespread of disease via trade and to monitordisease outbreaks worldwide. Recently OIEhas decided to broaden its spectrum to animalwelfare and to certain aspects of food safety.CODEX is the standard setting body withregard to food safety worldwide.

3.3 The Economic Context

As in other sectors of the economy, changein the livestock sector is ultimately driven byeconomic forces. Policies developed througha political process are put into action throughfinancial incentives or disincentives. Withinsuch a policy framework, market forcesdetermine the structure of the industry.

In all countries, and strongly in the EuropeanUnion, the policy framework has had veryexplicit social as well as economic objectives.The result has been a sequence of policiesdesigned both to promote change towardincreased economic efficiency and tomoderate change in the interest of maintainingthe viability of rural livelihoods. To aconsiderable degree, these aims arecontradictory. The result is that neither aim isever fully realised.

Whatever changes in policy there are, whetherdriven by internal political initiative or byexternal pressures through the WTO, thisdilemma will persist. At its centre is the realitythat the unit scale of a majority of Europeanlivestock producers is too small for economicviability. Three quarters of the 7 million farmsin the EU do not provide for one fullemployment position. With the imminentenlargement, there will be an additional10 million farmers, the great majority of thembelow this threshold.

This central issue of scale is not directlyresolvable in either economic or social terms.In particular, any attempt to measure scale inEuropean livestock production on the samebasis as in some other developed economiesis unrealistic. US producers have eight timesthe land resources on average, Australianproducers 65 times (Table 2.4). Yet, in bothof these economies, producers are inrecurrent crisis, and family scale productionis only marginally viable.

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What then should Europe do on the scaleissue? At national and at EU level manypolicies and programmes are already in placeto sustain rural livelihoods, to stimulate off-farm employment, and to promote steadyincreases in efficiency and quality ofproduction. Much emphasis is given now tothe social value of countryside maintenance.The move towards decoupling of support fromproduction is now widely accepted. In thelivestock sector, some specific additionalinitiatives are possible.

Where production has a quota structure(primarily milk) the quota entitlement hasacquired a capital value (Box 7). For small,sub-economic, quota holders, it might beworthwhile to buy in and extinguish the quota

entitlement. This could provide a capitalincentive for transition to other work, eitheron farm or off. It would also reduce marketsurpluses, and consolidate the industry intomore viable units.

The age profile of the livestock producers inall European countries shows a preponderanceof older farmers. Most are content tocontinue in farming. In order to discouragetheir potential successors from continuingwith production on an uneconomic scale, aspecific programme of education foralternative career paths might be productive.In many cases this might effectively betraining for off-farm employment, whilesupporting the rural structure and current landtenure system through a move to part time,and perhaps less intensive, production.

Box 7. Dairy Quotas

Dairy production is in several respects the most important element in the EU livestock sector. With642,000 producers, most of whom are full time, it is the largest provider of on-farm employment. Milksales represent 14% of gross agricultural output, and dairy farms are the source of more than half ofthe beef output, which adds a further 10%.

To regulate persistent and growing surpluses, a quota system was introduced in 1984. Initially opposedby most dairy farmers, quotas are now defended for the stability and protection that they give toproducers.

Within the common EU rules, the management of the quota system varies somewhat between countries.The impact of the system can be illustrated by the case of Ireland. The country’s 28,000 dairy farmershave an average quota of about 180,000 litres. This corresponds to an average dairy herd size of40 cows. Production is grass based, with low (800 kg) concentrate inputs. For the average holder, milkrepresents 72% of gross farm output, and production costs exceed 60% of output value. At the currentprice of 28 cents per litre, this gives a farmer with an average quota an income of €28,000. Thisslightly exceeds the average industrial wage for the country (€26,945). About 60% of producers havequotas below the average, and therefore dairy incomes below the average industrial wage. Thiscomparison does not take account of the owned land and other capital involved in the dairy enterprise.

Since their inception, quotas have become progressively more tradable, and have acquired a capitalvalue, currently 34 cents per litre. The possibility of selling quota is an additional incentive for thosewho wish to cease production. At present, about 6% do so each year. Most of these are smallerproducers. The system can therefore claim both to offer stability to producers and to promoteconsolidation of the industry into more viable units for the future.

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Livestock production is increasinglyembedded in a complex of interconnectedeconomic sectors. Its raw materials andproducts are traded internationally. As withother sectors of the global economy, it mustcompete both for access to its inputs and formarkets for its outputs. In future years,tightening access to energy sources mayimpact the sector. Recent studies (Box 8) havedocumented the extent of reliance on fossilenergy in modern cereal and livestockproduction, as well as the likelihood ofsubstantial pressure on oil supplies.

3.4 Reconnecting the Chain

The Foot and Mouth Disease (FMD) epidemicof 2000 provoked widespread public concernwith farming systems in the UK, particularlywith the production end of the food chain. Thisdeep concern has fed upon anxiety about theBSE epidemic.

Following the FMD epidemic severalcommissions were established to makerecommendations on different aspects of theoutbreak. The report of the first PolicyCommission on the Future of Farming andAgriculture (Curry, 2002) concludedunequivocally that the present system offarming is unsustainable. Radical change isabsolutely necessary. Turning around a greatindustry however takes time, courage, visionand co-operation. Simply going in theopposite direction is not a solution.

The Curry Report strongly advocatesconnectedness as a theme to resolve thecurrent lack of consumer confidence. Ineffect, The report notes that the food chain isnot a chain but rather a series of componentswhich are not adequately linked, are focusedon their own specific interests, and thatdecision-making in each component is highlymotivated by efficiency within that sector. Thereport recommends reconnection:

reconnecting farmers with their market andthe rest of the food chain; the food chain witha healthy and attractive countryside; andconsumers with what they eat and where it hascome from.

Translating such a theme into practice is noteasy. Although the food chain is efficient ineconomic terms, measured by the unit costof food, in the short-term use of naturalresources and in the interests of the ownersof the components in the middle of thechain - the processors, transporters, industriessupplying supporting resources such aspackaging and advertising and of course theoutlets, especially supermarkets characterizedby competition for consumer attention andamong each other – producers at the end ofthe chain are marginalized. The principal wayfor producers to survive is to increase the scaleof production units, in turn often leading toincreasing intensification. Small farmerscannot compete. This has a major impact uponrural development, unemployment in ruralareas and quality of life in the countryside.

The lack of connectedness diagnosed by theCurry Report reflects the need for recognitionof community in the food chain. This does notimply replacing sound business practice withsome other social system. It meansrecognising that each link in the food chainand the whole of society gain or lose together.Events like FMD and BSE negatively affectall sectors in the food chain. The costs of suchdisasters can quickly offset years of economicbenefits gained by actions such as the feedingof meat and bone meal.

Establishing connectedness requiresco-operation in the better identification offood resources and products. Despite theefficiency of the food chain in reducing theunit costs of food, the source and nature offood products must also be known. A systemwhere the primary product - milk, beef, pork -disappears into a trading network, loses its

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Box 8. Energy Use and Livestock Production

Though primary agriculture uses only 5% of global consumption of fossil energy (Pinstrup-Andersen,1999), modern grain production, and therefore industrialised systems of livestock production, arehighly dependent on fossil fuels. The future of Europe’s livestock sector is therefore linked to theavailability and cost of oil.

While the real price of oil has declined substantially from the peaks of the 70s and 80s, in the longerterm it is likely to rise. Analysis of known and probable reserves and extraction rates indicate thatglobal production will begin an irreversible decline about a decade from now (Hatfield, 1997; Campbell,2000). While natural gas and coal reserves will last much longer, their use as substitutes for oil willinvolve cost increases. It is likely therefore that intensive livestock production systems dependent ongrain will also face major cost increases.

Analyses of energy use in modern cereal production have produced figures ranging from 2.7 (Dalgaardet al., 2001) to 5.02 (Pimentel, 2001) and 5.27 (Sainz, 2002) MJ of fossil energy input per kg of grainoutput. These figures are equivalent to 77, 144 and 151 litres of diesel equivalent per ton of grain.

In most modern livestock systems, energy is also needed for transport, heating or cooling buildings,and for processing the products. These additional energy inputs may exceed those required for feedproduction. For example, it has been calculated (Sainz, 2002) that the energy required in modernbroiler systems is approximately 32 MJ per kg of carcass weight produced, equivalent to 0.89 litres ofdiesel. Some 46% of this energy is for the feed component. Refsgaard et al. (1998) found total directand indirect energy use on Danish dairy farms to be between 2.2 and 3.6 MJ per kg of milk dependingon farming system and soil type. These figures were confirmed by Halberg (1999) who demonstratedthat the variation between farms is a possibility for improvements by changed farm management.Energy costs in pig production on four farms was between 14 and 20 MJ per kg liveweight gain, alsowith systematic differences between farms over three years.

References

Campbell C.J. (2000). The imminent oil crisis. Proceedings of the Clean Energy 2000 Conference,Geneva.

Dalgaard T. et al. (2001). A model for fossil energy use in Danish agriculture used to compare basicorganic and conventional farming. LPS, No 87 pp. 51-56.

Halberg N. (1999). Indicators of resource use and environmental impact for use in a decision aid forDanish livestock farmers. Agriculture, Ecosystems & Environment 76, pp. 17-30

Hatfield C.B. (1997). Oil back on the Global Agenda. Nature 387, 121.Pimentel D. (2000). Biomass utilization, limits of. In Encyclopaedia of Physical Science and Technology.

Third Edition Vol 2, p. 159.Pinstrup-Andersen P. (1999). Towards Ecologically Sustainable World Food Production, Vol. 22.

United Nations Environment Programme, Paris, pp.10-13.Refsgaard K., Halberg N. & Kristensen E.S. (1998). Energy utilization in crop production on organic

and conventional livestock farms. Agric. Systems 57, pp. 599-630.Sainz R.D. (2002). Fossil Fuel Component. Framework for Calculating Fossil Fuel Use in Livestock

Systems. Livestock Environment and Development Initiative (LEAD) Toolbox. FAO.

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identity and eventually reaches the consumerwith all identity lost or removed should beunacceptable.

Business organizations need to recognize thatthey are part of a civil society whose valuesinclude successful economics but are notlimited to those values. Mechanisms need tobe found by which decision-makersincorporate community values into thedecision-making practices and processes ofthe chain.

Some efforts are now being made to facilitatebetter communication along the food chain.For example, the BSE and FMD outbreaks haveforced governments and the EU to stress theneed for traceability of animals and animalfood products. This has been spear-headed byveterinary health services who are concernedabout animal and animal product movements.

However, the increased security brings withit an increase in costs. Unless there is a senseof community among the participants of thefood chain, these costs are likely to be passedback to the primary producers, making it moredifficult for them to meet the dual aims of lowcosts and totally accountable production.

3.5 Transparency and Accountability

In western society, where so few people arenow involved in the supply of food, there iswidespread ignorance of the detailed workingof the food chain. Over the last fifty years foodsupply has become so abundant, varied,available and cheap that it is often taken forgranted.

The predictability of the demand for food hashad an unusual effect on the supplyorganizations within the food chain. Extensiveadvertising, rather than persuading people toincrease consumption, seeks to redirect thebuyer to specific brands with claims of betterquality, convenience and price.

Because consumers are certain to buy foodthe market is guaranteed. This is central tounderstanding the modern day food chain,which differs from other goods and services.As a result, the few organizations controllingthe food chain are extremely powerful andrelatively secure. Supermarket chains forexample can negotiate low prices for bulkdeliveries. Food processors negotiate withfarmers the supply of raw products often yearsin advance with precise specification onquantity, quality and date for delivery. Farmersincreasingly produce according to contractsthat provide them with a degree of marketsecurity. Such contracts have built-in pricesand offer an alternative to governmentguaranteed prices for farmers. Surviving farmsbecome larger and more efficient whilesmaller scale farmers are required to findalternative goods and services for the market.

This food chain scenario has evolved underthe selection pressure of reducing the unitprice of food to consumers, providingconvenience and processed foods in greatvariety and enabling business organizations atall stages of the chain to maximize profit totheir shareholders. Until recently, it had beena success.

The recent BSE and FMD epidemics havechanged the attitudes of consumers to thefood chain. Confidence has been shaken.Consumers now realise that businessesoperating the food chain have quite differentvalues and decision-making processes toformer traditional farmer-food-producers.

The absence of accountability within the foodchain has created public fear and raised ethicalquestions about the handling of food.Governments in the EU have been criticizedfor a lack of concern and accountability infailing to ban the import (from the UK) anduse of potentially contaminated meat and bonemeal as soon as it was identified as the vectorfor BSE. BSE should not have been treated,

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as it initially was, as a national disease. Thefood chain is international and does notrespect national borders. Malfunctions in thefood chain are matters of international andpublic concern. Transparency andaccountability in the food chain musttranscend national interests, short-term profitand political expediency.

If the food chain is to become permanentlymore accountable and transparent,governments must be involved. In the EU,standards for traceability of food from pointof origin to consumption are beingintroduced. Legal liability is being extendedback to the primary producer

The largest integrated food market in theworld, the US, manages its affairs with areliance on federal regulation (FDA, FSIS) andon the reassuring messages of the major foodcompanies. The negative aspects of thisstructure, in terms of the poor conditions ofmany engaged and employed in foodproduction, the power of the corporationswhich control the industry, and thecompromised welfare of the consumer, arewell documented (Schlosser, 2001).Nevertheless, the system represents a modeltowards which much of the European foodchain is evolving. The question is whether thisevolution can be, or should be, interfered with.

The growth of corporate power seemsinevitable. The recent (2002) establishmentof the European Food Safety Authority(www.efsa.eu.int) is a first step in buildingpublic confidence in public surveillance of thefood chain. Together with its nationalcounterparts, the EFSA should be able toguarantee basic food safety. Thus, the twoprincipal elements of the American model,corporate power and a strong regulatorystructure, are in place in Europe.

However, Europe does not have the continentaluniformity of food traditions that apply in theUS. Mediterranean diets and traditions are

greatly different from Nordic or Slavic. Eachhas deep roots in the ecology and culture ofits region. These differences are part of therichness and variety that makes Europe whatit is. This variety has values worth protecting.Part of the challenge for the future thereforeis to find a way of acknowledging the value ofEurope’s diversity in the culture of food, andof ensuring that this value is reflected inpolitical decisions.

Compulsory controls on competition in thefood chain are also necessary. In 1999 theDirector General of Fair Trading, UK,established a commission to examine the leveland effects of competition in UK foodsupermarkets. The commission foundsignificant distortions in fair competitionbetween supermarkets and farm suppliers. Forexample, supermarkets were found to requirefarmers to contribute beyond their contractto research, advertising, packaging, hospitalityand special shelf space, all of which areretailers’ costs. Some supermarkets werefound to require farmers to contribute lumpsums for profit lost by store spoilage and bythe supermarkets’ own errors in forecastingdemand. In these situations individual farmersare extremely vulnerable and have considerablyless power than that previously provided bythe co-operative system.

The UK Secretary of Trade and Industryrecognised that such distortions are notacceptable. In the interests of all stakeholders,greater transparency and accountability areneeded. A mandatory procedure betweensupermarkets and farm-suppliers has beenrecommended requiring the introduction of aCode of Practice, breaches of which will bedealt with by legal means. Such a code ofpractice was introduced in 2002(www.oft.gov.uk).

The food chain is increasingly internationalin scope. The rationale for introducing civilsociety standards of transparency and

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accountability into the European food chainmust also extend to trading partners. To ensuretransparency and accountability beyond theEU, a comparable mechanism enforceable bylaw will have to be mirrored in the provisionsof the WTO.

Market economy practice alone has beenfound incapable of anticipating and dealingwith the unforeseen risk to human health posedby BSE. Damage limitation of BSE and vCJDare now the business of governments actingnationally or jointly and cannot be solved bymarket economy principles or organizations.It is therefore rational to conclude that, withso much at risk in the human food chain,national and international regulations requiringtransparency and accountability are essentialtogether with independent monitoring of newtechnologies, products and processes.

These are the minimum reasonableexpectations of consumers when the controlof food supply has been taken away from localcommunities and given to unknown distantparties whose primary values are profit.Legislated and enforceable standards oftransparency and accountability in the foodchain are minimum and reasonable for societyto enjoy greater benefits without furthertragedy from an increasingly global foodchain.

3.6 Traceability

Globalisation of trade has increased the needfor countries to ensure that food exports aresafe and free of disease. Perceptions aboutquality and safety have become moreimportant in consumer purchase decisions.The BSE outbreak sent a strong signal thatmore information based controls are needed,not only to protect consumers, but also tominimize possible impacts on internationalbeef industries. Total quality assurance mustensure the safety of a product and its

compliance with desired production methodsand treatment of animals. Traceability hasbecome a central theme in the resolution offood quality and safety.

There is a rapidly growing consensus in themeat industry that a fully verifiable animalidentification system, that allows completetraceability from producer to consumer, is theoptimal solution. Consumer confidence inbovine products will increasingly depend onfull traceability (even across national borders)of animals, carcasses, meat and meatproducts. Through this system liability isspread to all parties in the production chain.

EU Regulation 1760/2000 requires a systemfor the identification and registration ofbovine animals and the labelling of beef andbeef products. Each animal must be labelledon both ears with identical ear tags, bearing aunique identification code, and be issued apassport containing identification code, dateof birth, sex, breed or coat colour. Theseidentifiers can be subsequently linked tocentral databases containing analogousinformation. Conventional ear tags howevercannot be protected from forgery and can beexchanged by manipulation. If desired, thisidentification system therefore can becircumvented.

The regulation requires all fresh and frozenveal and beef to be labelled with a referencecode, linking the meat to the animal of origin,the country of slaughter and cutting and theabattoir and cutting plant. Since 2002 thecountry of birth and countries of rearing arealso required on the labels. A shortcoming ofthis system is that labels and/or barcodes canbe separated, tampered with and removedfrom animals, carcasses and meat products.Errors or frauds of this nature are difficult todetect.

Governments, health agencies and diseasecontrol organizations have teamed withlivestock industries, suppliers, universities,

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research organizations, veterinarians andtechnology companies to develop andimplement a range of identification devicesand systems. For example, electronic andradio frequency identification use electricpulses and radio waves to transmit identifiersfrom devices imbedded in the animals. Thesedevices however are not fail-safe or fraud-proof. Further, they identify only wholeanimals and cannot be used to trace individualmeat products.

Biological identification systems such asantibody assays may be more reliable. Usingantibody assays, all animals in a herd, regionor country are immunized with specificantigens. Later, antibody profiles can begenerated from blood, urine, semen, saliva,tissue, carcass and meat and matched to acentral database. Calves however do notdevelop antibodies until several months afterbirth and a proportion of animals immunizeddo not produce sufficient amounts ofantibodies. Although not as common as inother systems, errors and fraud can occur.

A simple analytical method, which enables theindependent confirmation and control ofinformation from producers, processors andmarketers is necessary. DNA analysisprovides such a system (Sancristobal-Gaudyet al., 2000; Cunningham & Meghen 2001).Not only can each individual be identified byits unique DNA composition but also DNA canbe isolated from any source at any point inthe production chain. Such innovativemolecular genetic tests are already being usedin forensic science and parentage testing ofbreeding animals.

Using modern detection methods the sourceanimal from which a meat sample or productsderived can be readily determined whereinitial samples have been collected fromliving animals. DNA profiles are matchedusing computer databases containing initialgenotypes with almost 100% accuracy.

The main challenge is to establish an economicsystem to carry out separate, targetedcollection, preservation, cataloguing andanalysis of whole populations. Devices andmethods allowing simple cost-effectivecollection of DNA samples are essential tothis system. This can be achieved by the useof ear tagging techniques adapted to extracttissue samples.

A DNA based identification system has thefollowing advantages:• Forgery-free proof of origin and identity

for all cattle and related products, at allstages of production;

• Stabilisation of targeted sales programmessuch as organic livestock, livestock kept onnational parks or livestock with specialgrade identification;

• Verification and monitoring of transportroutes for all cattle;

• Efficient border control and internationaltracking of cattle;

• Reliable monitoring of epidemic control;• Determination of quantity of beef in all

(processed) foodstuffs;• Identification of producers; and• Identification of the animal and stock origin

of milk and milk products.

It has been proposed that a tissue sample istaken from every new-born farm animal in theEU, the DNA isolated and the individualgenotype stored in a central database for futurereference. Consumers, retailers, dealers,butchers, processors, owners or inspectorswould be in a position to verify the identityand origin of any animal or product.

The monitoring of particular groups of animalsor herds for risk prevention, epidemic controlor testing for illegal residues, could beimmediately undertaken using such a database.If individual genotyping were consistentlycarried out it will be possible to reactimmediately to unforeseen problemsproviding the consumer with unparalleled

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protection and possibilities for monitoring.Establishing such a system in the EU wouldresult in an enormous increase in consumerconfidence in bovine products.

3.7 Consumer Assurance

With the growing number of food scares,quality assurance has become an essentialaspect of: 1) the raw materials for foodproduction, 2) the procedures involved in theproductive process, and 3) the finishedproducts.

Although food safety is a fundamental andnecessary part of food quality, consumers alsodemand other qualitative characteristics. Theconsumer is becoming increasingly careful inchoosing foods which are not only safe (withno health risks), but also easily digestible,tasty, energy poor, are good sources ofvitamins, have essential fatty acids and traceminerals etc. and also form part of theirtraditional food.

Consumers would also like to have a widechoice of foods but at the same time, due totheir increased environmental awareness, theywant these products to be environmentallyfriendly and to respect good farming practices,as well as the welfare of the animals involved.Finally they wish to be informed, and wantguarantees of the composition, the nutritionalvalue, the shelf life, the origin and theproduction methods used. This can be donedirectly, by means of an efficient labellingsystem, or indirectly, by checks by publicauthorities.

Delivering balanced and reliable informationto consumers is not a simple matter. Threemain complications exist. The first is thedifficulty of distinguishing information fromadvertising. The second related factor is thedivision of responsibility for informing theconsumers between public authorities, private

consumer organisations and those attempting,at different levels, to sell to the consumer.Finally there is the usually responsible, butoften sensational, influence of the media.

Consumer Expectations

France represents the largest nationalagricultural and livestock economy inWestern Europe. It is also a country with verystrong and distinct traditions in foodproduction and consumption. Frenchconsumers are highly discriminating andsensitive to issues concerning food. For thesereasons, and because the evolution ofconsumer attitudes in that country have beenintensively studied, the French experiencepost BSE is of particular interest.

As elsewhere, the 1996 announcement on thelink between BSE and the vCJD caused a largeand sustained reduction in beef purchases fromabout 180 g per person per week to around130 g. The development of public attitudes hasbeen debated and examined intensely (Flamant2001, MAA 2001), as well as stimulatingstudies in human sciences (sociology,anthropology). A great diversity of behaviouremerged.

Two categories of consumers did not changetheir habits: those with the highest level ofconsumption of beef, and those with thelowest level. The former are interpreted asbeing culturally attached to beef, and preparedto discount perceived risks. The latter, becauseof low consumption and diversified diet maysimilarly discount risk. Most of the reductionin individual consumption was due to thebehaviour of medium level consumers.

Combris (1997) observed higher reactions inyounger people, and concluded that this isevidence of a probable general trend for lowconsumption of beef in future. Adda (2001)noted that the percent of households making

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a short term choice to cease beef purchasesin France doubled as a result of the crisis. Itwas also noted that aversive reactions werestrongest in Paris and other urban areas leastconnected to agriculture.

The rolling debate on these issues, and on foodin general, “Les Etats Généraux del’Alimentation”, has documented this varietyof public attitudes, and concludes that• official surveillance and guarantees of

safety need to be strengthened;• that these are insufficient in themselves,

and that consumers in future will requiregreater transparency and more informationon food sources;

• that local, short chain, supply systems bestserve these needs; and

• that these also preserve and promote varietyand authenticity in food choice.

Standards

General (general characteristics of a product,with reference to norms such as those of theCodex Alimentarius, the ISO or otherinternationally accepted norms) and Defined(rules for product processing described in theproduct specification) Standards can be usedefficiently only if they are clearly and simplyformulated. The elements therefore thatdefine the standards must be: preciselydefined, verifiable by a repeatable procedure,easy to use, and, if possible, cheap. Theseconditions allow the verification to be reliableand avoid the confusion and arguments, whichmay arise due to the inclusion of superfluousor misleading elements.

The most frequently used General Standardsare those established by the CodexAlimentarius, which are designed to assure thehighest levels of consumer health protectionand to establish benchmarks for internationaltrade. Nonetheless some aspects, previouslyoverlooked, must be modified to assure

consumer safety and quality in every phase ofthe production cycle. More attention must bepaid in the General Standards to the rawmaterials and the system of production used.The production process must therefore beclearly defined and the products used in farms(animal feed, integrators etc.) must meetdefined standards.

Qualitative and quantitative parameters forproducts must be precisely defined rather thangeneric descriptions of goals, as is thesituation at present. Thus the defined standardsmust be described in detail, should provideclear information to permit correct and safeuse, and, in addition, should include preciseguidelines on inspection, sampling andanalysis.

Quality assurance

Quality assurance (QA) includes co-ordinatedactivities including checks on the product andthe phases of production to assure that pre-established standards and/or conditions areobserved. Respecting these standards and/orconditions guarantees the quality.

Consumer needs can only be guaranteed byadopting quality assurance programs(programs which establish the method, times,figures and costs involved in guaranteeing theapplication of the activities involved in QA)for farm products (Nardone & Valfrè 1999).

However the needs of the consumer (both thefinal user and the companies which processfarm products) are not limited to food safety.Safety against chemical, physical andmicrobiological contamination must also beassured as well as the followingcharacteristics:• sensorial;• chemical-physical;• microbiological; and• technological.

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There are many general or sector normsconcerning health and hygiene checks andinspections which must be respected foranimal food products when raising the animalsor processing the product. In addition to thesenorms greater attention should be paid to thefeed of the animals as this is a critical pointin assuring the quality of the product and ithas not been adequately considered until now.

Today the production of animal feed isregulated to facilitate the free circulation offeedstuff by means of a list of forbiddenproducts or permitted additives. A positive listof feed materials would be the clearest answerto the current lack of definition of feedmaterials. In the short term, the currentnegative list needs to be integrated with thepositive list of permitted products.

The principles of food safety must beapplicable to the feed sector, in particular toclarify the responsibilities of feed producers.With regard to the above, particular situationsmust be examined and generalisations shouldbe avoided. Here we refer to the proposedregulations on food (Amended Proposal for aRegulation of the European Parliament and ofthe Council laying down the general principlesand requirements of food law, establishing theEuropean Food Authority, and laying downprocedures in matters of food safety, COM –2001- 475 final) which also tend to consider“feed business” any producer producing,processing or storing feed for feeding toanimals on his own holding.

The effects on quality that the introduction ofinnovative technology in the production phasehas on farms producing typical products mustbe evaluated when new technology occurs.Action must also be taken with regard to thoseagricultural practices which may entail risksof contamination (by heavy metals, chemicalcompounds, mycotoxins, etc.) in growing feeddesigned for animal consumption. This can bedone by formal intervention aimed at

increasing the awareness and professionaltraining of the producer. The generalprinciples of hygiene and various Codes ofGood Practice must be communicated morewidely and also applied in livestock farms.

Thus a strong commitment is necessary untilQuality Assurance becomes the norm in allanimal husbandry processes. Farmers must beconvinced of their key role in QualityAssurance and not see themselves as havingonly a passive role.

The evolution from a policy of quantity to thatof quality which has been seen in theprocessing and marketing food sectors mustalso involve primary producers. Managementof the systems which assure and documentquality requires continuing investment inknowledge of the characteristics of theproduct and the risk factors which may bepresent in the productive process used on thefarm. This requires involving the workers inthe sector and improving their professionaltraining.

To achieve these objectives a policy oftechnical assistance is essential, aimed atimproving the knowledge of the specialcircumstances both of the farms and theproduction activity. This will also help to putgood production techniques into practice. Inthis way application of the quality assurancesystem could also help even small farms togrow.

Great attention must be paid to avoidingduplication of roles which could result indifferences in interpretation and conflicts overareas of competence. Training and qualifyingfarm workers and technical assistants may, inpart, offer a valid alternative to adopting theHACCP (Hazard Analysis of Critical ControlPoints) procedure complex, which is difficultto apply widely in small farms for costreasons. Involving not only farm workers butalso all the others involved in the work of thefarm (technical assistants, veterinarians,

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slaughterers, food processors, feedmanufacturers) could result in greater respectfor the standards.

3.8 The Place for Regional and SpecialQuality Products

It is believed that there will be an increase inthe demand for traditional and regionalproducts because consumers prefer them togeneric products and identify them withpositive characteristics. Indeed, consumersoften do not trust the modern productionmethods used in agriculture and believe thatproduction methods linked to a particular areaand which use traditional technology are moretrustworthy. Thus regional products should beencouraged as they increase consumer trust.

Such systems (Box 9) also respond very wellto other requirements of society, such assustainability and respect for the environment.

These advantages are recognised in importantinitiatives of the EU. Regulation (EEC) No2081/92 lays down common rules whichguarantee to producers who respect thoserules an exclusive right to use designationsof origin or geographical indications enteredin the Community register. This avoids unfaircompetition from “imitation” products whileat the same time facilitating the freemovement of products which are entitled tothe protected designations and indications. Itis worth noting that about 550 products havealready been registered, of which about150 are milk products (notably cheeses).

Box 9. Iberian Pig, an Example of Sustainable Animal Production

The production of the Iberian pig and its crosses, particularly with the Duroc-Jersey breed, is a goodexample of sustainable animal production and an important alternative to conventional systems.

One of the most outstanding breed characteristics is its rusticity that permits good production results.The production is linked to a particular ecosystem called dehesa, the result of the traditional interactionamong human, animal and Mediterranean forest. The main kinds of trees of this forest are holm oaksand cork trees. The dehesa area is distributed mainly in the south-west of Spain and covers about3 million hectares.

The system is based on the exploitation of natural resources and combines traditional habits and culturalvalues with specialized modern production systems. The pigs graze freely and eat the acorns producedby the trees. The density of animals is adapted to the available area and no additives are used. Thesystem is therefore considered highly environmental and welfare compatible.

The pigs are slaughtered at 165 kg live weight between 14-15 months old. The meat is mostly used toproduce ham and different kinds of sausages, but more and more it is being consumed as fresh pork inrestaurants. The meat has a high fat content with high levels of unsaturated fatty acids (55% of oleicacid). Because of this characteristic is considered as a healthy product.

An important and technologically advanced pork industry has developed in the local areas of Iberian pigproduction and has contributed to strong economic and social development of those regions. In fact, theproduction of Iberian products represents 10-15% of total pork production in Spain. Iberian ham, themost important, well-known and appreciated Iberian product, because of its special flavour, is soldunder a special label and achieves a market price of 30- 40 €/Kg, two to three times more thanconventional ham.

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Regulation (EEC) No 2082/92 is intended toprotect the special features of agricultural orfood products which have, independently oftheir origin, certain characteristics settingthem apart from other similar products.

There are, however, two types of probleminvolved in this:

1) The EC norms only allow the “territorialorigin” to be used for the PDO (ProtectedDesignation of Origin) and PGI (ProtectedGeographical Indication) products. In othercases the EU maintains that citing theproduction zone of the raw materials usedis a barrier to free trade. Meat productionhas demonstrated the limits of thisapproach, highlighting the need to trace anddescribe all phases of production precisely,including the production zone.

2) Until relatively recently, local productionsystems did not import raw materials fromoutside, and the whole productive cycletook place in the local area and used onlylocal raw materials. By contrast today themarket for raw materials is globalised, andis accessible to small farms which sell onlyin the local market. Thus regionalproduction per se does not meet thedemands of the consumer.

PDO and PGI production, governed by EECregulation 2081/92, are a good example ofhow these problems can be approached. Thegeographical origin of these products isrecognised and supervised. At the same timeproduct specifications which establish definedstandards are designed to protect theconsumer and ensure fair competition.

These product specifications define thephysical aspect and marketing composition ofthe final product and define the productionmethods to be used. For food products ofanimal origin (meat, processed meat, dairyproducts) the feeding system for the animals

is also normally defined as this is considereda fundamental aspect of the final quality ofthe product.

Finally the EC regulations which govern PDOand PGI establish that the costs of inspectionsare paid by the producer as it is consideredthat the protection given to the product is totheir advantage. This is unbalanced in as muchas the previous points show that a system ofthis type is above all of advantage to theconsumer. Thus it would be right if not all thecosts for inspections to ensure quality fell onthe producer.

For typical products the ability to trace theirorigins and respect for health and hygienenorms is indispensable, as it is for all foodproducts. Thus defined standards must beestablished for all typical products. Thisincludes defining the elements which make ita typical product, including the territory, aswell as the other composition, sensorial, andsize parameters, and the principal productionphases involved. The raw material used mustmeet precise standards related to theirchemical and microbiological characteristicsand the production process involved.

In small farms a distinction must be madebetween those where the whole productionprocess is carried out with products producedon the farm and those which use raw materialsbought elsewhere. In the latter case there mustbe stringent checks on the compositeparameters and the production methods of theraw materials brought in from outside.

These programmes have an importancebeyond their economic value: the protectionof these designations also raises a questionof culture. The defence of these designationsis also the defence of the cultural identity ofEurope’s regions. The system established byRegulations 2081/92 and 2082/92 isundoubtedly one that protects “labels” but

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behind these “labels” lie products whichconstitute real “cultural units”, each with itsown identity and bearing its own history.

Finally, the Commission and the MemberStates must work within bilateral andmultilateral agreements to ensure that PDOsand PGIs are recognised outside theCommunity. Article 12 of Regulation (EEC)No 2081/92 and Article 22 of the TRIPSAgreement provide a useful starting point fora multilateral registration system forprotected designations.

3.9 Organic Production

Organic food production is often proposed asthe logical alternative to modern high inputfarming. Its development depends to a largedegree on the increasing consumer demandfor safe and healthy food. Although organicfoods now account for just 1-2% of retailsales in both the EU and US, expected annualgrowth in sales is about 20% in both markets(ITC 2002, Lohr 2001). In Europe, some 2%

(>144 000) of farms are now certifiedorganic, with an average annual growth innumbers of 25% (Foster & Lampkin 2000).

Land area devoted to organic production in theEU is steadily increasing. Between 1993 and1998 organic land area went up four fold,from 0.7 million hectares on 29,000 holdingsto 2.7 million hectares on 104,000 holdings.This represented 2.1% of the total agriculturalarea in the EU. Though land in organic systemswas below 1% in most countries, it exceeded5% in Finland and Italy, and reached almost10% in Switzerland and Austria.

Although organic products are graduallyincreasing in volume, their overall share ofproduction in the EU remains low, rangingfrom 0.2% for organic pork to 2.3% fororganic fruit. Since EU regulation on organiclivestock was introduced only in 2000 data arelimited. Available statistics show that theproportion of certified organic livestock intotal livestock production is very low(Table 3.4). Austria has the highest share ofcertified organic dairy and other cattle with

Table 3.4. Certified organic livestock and cereals as percent of total production for some European countries (1998) (Source: Foster & Lampkin 2000)

Cows Other cattle Pigs Sheep Cereals

Austria 14.7 10.9 1.1 30.4 3.2

Belgium 0.5 0.2 - 1.3 0.2

Germany 1.2 0.9 0.2 4.2 1.4

Denmark 7.0 2.6 0.8 15.7 2.3

Finland 0.7 0.7 0.8 7.3 3.2

France 0.4 0.1 0.1 0.4 0.3

UK 0.2 0.2 0.1 0.1 0.2

Netherlands 0.5 0.2 0.04 0.5 1.5

Sweden 4.3 0.9 0.9 10.4 2.8

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10%, whereas in most other countries suchproduction is below 1%. Similarly Austria hasthe highest proportion of organic pigproduction (1%) compared to most other EUcountries (0.5%), and the highest organicsheep production (30% in Austria, <16% inother EU countries) (Foster & Lampkin2000).

Organic production has higher costs thanconventional production, and thereforerequires a price premium. In 2000, the EUaverage consumer price premiums variedfrom 31% for organic red wine to 113% fororganic chicken. The premium tends to besmaller in countries with well-developedorganic production. In Denmark, Austria andSwitzerland, consumer price premiums formany organic products were 20% less than theweighted EU average (Hamm et al. 2002).This is mainly a consequence of the greatermarket and the cost-effectiveness of bulktransport and distribution to major retailersin these countries (Michelsen et al. 1999).Price premiums for meat and dairy productsappeared to be less than for plant products andwere in the region of 20-30% for milk and20-50% for beef and sheepmeat (Kristensenand Thamsborg, 2002). In total, in 2000,organic produce was valued at US$ 7-7.5bnin retail sales in the EU, similar to theUS$7.5-8bn sales of organic produce in theUS (ITC 2002).

The guidelines for organic agriculture,developed by the International Federation ofthe Organic Agriculture Movement (IFOAM1996) have been used to develop the EUregulations on organic agriculture. Followingthe 1992 CAP reform, most EU member statesimplemented Council Regulation (EEC)No. 2092/91 defining organic crop productionin statutory terms. EU regulation 1804/99,introducing policy on organic animalhusbandry and supplementing the existing

regulation, was implemented in August 2000,providing and regulating a standard to labelfood as organic (Rahmann, 2002). Strictrequirements are set out in these regulationswhich must be met before products, whetherproduced in the EU or imported goods, maybe labelled as organic. In particular,compliance must be met in the restriction ofthe use of synthetic fertilisers, plantpesticides, livestock feed additives andprophylactic antibiotics.

The conversion to an organic productionsystem can take up to three years during whichtime the principles of organic farming mustbe followed before products can beconsidered organic. Losses are oftensustained by in-conversion farms. CouncilRegulation 2078/92 provides financialcompensation for losses incurred during thisperiod (Hau & Joaris 2002).

Organic farming aims to provide the consumerwith safe food. However, the impact on humanhealth is not known – a Danish investigationfound no scientific reliable evidence thatorganic food ensures better human health(Kristensen and Thamsborg, 2002). Organicfarming does provide suitable tools tominimise environmental pollution andnutrient losses at the farm level. By contrast,animal health does not appear to differsignificantly between organic andconventional production systems. With regardto animal welfare the higher level ofmanagement standards applied in organicbased systems provides several requirementsfor better living conditions of animals.However, there is little evidence for a system-related effect on product quality, which isprimarily a function of farm management andis highly variable in both organic andconventional production systems (Sundrum2001).

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3.10 The Place for Science

Much of the development in the livestocksector in the last five decades has been drivenby, and indeed made possible by, scientificadvances. These have led to great increases inthe efficiency of production. This in turn hasbeen essential for the economic and physicalsustainability of many different farmingsystems, as well as being the key to long termreduction in the real cost of food. The ultimatebeneficiary of all of these scientificdevelopments is the consuming public.

Science continues to contribute across thefull spectrum of the livestock productionchain. The result is improved technologies forbreeding, feeding, management and health careof animals. In addition, scientificdevelopments are required for improvedprotection of animal welfare, conservation ofgenetic resources, management of livestock-environment interaction, efficiency ofprocessing and marketing of livestockproducts, and to enhance the nutritional andconsumer safety aspects of livestock-derivedfoods.

In the past, most scientific developments wereintroduced without controversy. If theyconferred a benefit, and were economicallyfeasible, they went ahead. Today, these criteriaare not enough. New developments must alsosatisfy increasingly demanding expectationson ethical, safety, welfare and environmentalgrounds.

Reproductive technologies such as artificialinsemination (AI) and embryo transfer (ET)are now mature and accepted parts of theproduction structure. Practical methods ofsex determination by sperm separation arenow beginning to be used in commercialpractice in cattle breeding. In vitro fertilisation(IVF) embryo production is routine. Cloning,including cloning from adult cells, has beenachieved experimentally in most species offarm animals. Within the next decade,

improved efficiency in these techniques islikely to make them economically feasible,at least in dairy and beef production. Thesetechniques could add considerably to theefficiency of both breeding and production(Cunningham 1999). In addition, freezing ofembryos may contribute to the preservationof genetic variability in some species andbreeds.

Genetic technology holds the prospect of evengreater potential benefits, but could beconsiderably more controversial. Thetechnical benefit of genetic modification(GM) in plants is now firmly established insuch crops as maize, soya bean and cotton. Theuse of such GM crops has been accepted inthe USA and elsewhere, and in 2002 GMvarieties accounted for 34%, 75% and 70%of US acreage for these three crops.

Much of the soya bean and corn used inlivestock feeding now comes from GMstrains. To the extent that these reduce grainproduction costs, these benefits eventuallyflow through into reduced feed costs in thelivestock chain. More specialised possibilitiesalso exist. Rice has been produced whichincorporates a transgene coding forantibacterial proteins. Such grains, when fedto poultry, lead to improved feed conversionratio without the use of antibiotics.

In the EU, the attitude to GM crops has beencautious. There is widespread publicopposition to products from GM plantsentering the food chain. In the most recentlarge scale survey (Eurobarometer 58.0,March 2003) 56% of respondents consideredGM food to be dangerous, 71% “do not wantthis type of food” and 95% want the right tochoose. On the basis that the consumer hasthe right to make an informed choice, this hasled to the introduction of labelling regulations.Since 1997 (Regulation no. 258/99) labellingof GM is mandatory.

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More recently, opposition has focused onpotential environmental effects. TheDeliberate Release Directive (2001/18/EC)was implemented in October 2002, bringingimprovements to environmental safetyassessments and limiting consents to 10 years.However, the European Commission has ruledout a decision on new authorisations forGMOs until Autumn, 2003 at the earliest,following concerns by some member statesthat the marketing or importation of GMOsmight be approved before final EU regulationshave been put in place. Most member statesconsider it would be unsatisfactory to allowcommercialisation of GM crops before eachindividual country has finalised regulations,and some, such as the UK, have yet to enshrinein national laws the EU regulations on GMfood, feed, and on the traceability and labellingof GM products. So, at present, the de factomoratorium on marketing consents remainsin place.

In the EU, with a much different agrogeography to North America, the EuropeanCommission (2003) has recognised that theissue of the coexistence of GM, conventionaland organic crops is critical. Possiblemanagement measures include: isolationdistances, buffer zones, pollen barriers, croprotation, and monitoring regimes. A review ofgene flow studies from GM crops, publishedby the European Environment Agency (2002)concluded that the frequency of gene flow washigh from oilseed rape to other oilseed rapeand wild relatives; medium to high for sugarbeet and low for potatoes, wheat and barley.Maize demonstrates a high frequency of flowto non GM maize, but it has no wild relativesin Europe.

Although a European Directive on liability hasbeen proposed to determine responsibility fordamage caused by growing GM crops, it isrestricted in scope and currently at an earlystage of negotiation. There is currently no EUlegislation on economic liability, to protect

non GM farmers whose markets might be lostby GM contamination (e.g. licensed organicfarmers, whose products are certified GMfree by law).

In animals, most of the advances in GMtechnology have been in mice. In the twentyyears since the production of the firstgenetically altered mouse, more than1,000 lines of GM mice have been producedfor research purposes. In recent years,transgenic pigs, sheep, goats and cattle havebeen produced. Most of the incentive has beenfrom pharmaceutical interests, seeking to usethe animals as bioreactors. Clinical trials usinghuman anti-trypsin and anti-thrombin-3derived from transgenic sheep are now inprogress. Because of high cost, low successrates, and long generation intervals, thedevelopment of pharmaceutically usefultransgenic lines of livestock is an expensivebusiness. Nevertheless it is likely to be a partof the pharmaceutical industry in the decadesto come.

The opportunities for using transgeniclivestock in conventional food production areconsiderably less, again partly because of thehigh costs involved. In addition, thetechnology is so far insufficiently addressed.Furthermore, the acceptability of such animalswill also be a major issue. Nonetheless, wherethe objective is improved animal welfare, suchobjections might be overcome. A goodexample is the search for transgenic dairycows with an in-built resistance to mastitis.This is the most expensive disease in theindustry, costing US$2 billion per annum inthe US. Considerable progress has been madeon enhancing mastitis resistance byincorporating into the cow’s genome theability to produce antibacterial enzymes in theudder (Kerr et al. 2002). Success in thisresearch would also have the advantage ofgreatly reducing routine antibiotic use in milkproduction, a goal already being pursuedthrough conventional methods (Box 5).

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Apart from directly transforming the genomesof production animals, GM technology can beused in a number of other ways to enhancethe efficiency of livestock production andprocessing. For more than 20 years, mostcheese in Europe has been produced usingchymosin produced by genetically engineeredbacteria. Bovine somatotropin (BST),produced in bacterial culture, is now routinelyused to boost milk production in dairy cowsin the US. The product is delivered by periodicinjection, and results in increased output ofthe order of 10 - 15%, and increased feedconversion efficiency of 5 - 10%. However,following the recommendations of two expertgroups, on the animal welfare (EuropeanCommission, 1999a) and public health(European Commission, 1999b) implicationsof BST use, the EU has banned the commercialuse of BST. Even in the USA there are seriousconcerns over whether this is an economicallyviable technology. For example, the economicanalyses of Tauer (2001) at Cornell Universityshow that at least half the farmers using BSTare doing so at a loss, but the complexity offarm systems and inter-year variations in manycases precludes identification of ‘winners andlosers’. An analysis of BST use, identifyingthe ethical rationales of its use and non-use,is provided by Mepham (2000).

Less controversial uses of genetic technologylie in its adaptation to improve the efficiencyof selection practices. With the developmentof genetic marker maps, and eventually ofwhole genome sequence information in all themajor species, there are great possibilities forpinpointing genes with beneficial effects ona range of production and health traits. In somecases they can be used to test for, and rapidlyeliminate genetic defects, while in others,they can be used to identify animals carryingfavourable genes for production or healthtraits.

The same genetic technologies can also beused for a range of other purposes. The taskof documenting genetic differences, andplanning and executing genetic conservationprogrammes can be facilitated by analyses atthe DNA level. DNA technologies also offerthe ultimate solution to secure animalidentification for use in traceability andquality assurance schemes

Scientists have a special role in helping thelivestock sector, the public authorities, andsociety as a whole to find safe and acceptableways to deal with new technologies. Theexperience of the BSE crisis has sharpenedthe perception of these responsibilities. In theBSE crisis, scientists represented all sorts ofoccupations and interests, including industryemployees, Government advisors,representatives of consumer organisations andmedia commentators. They will continue tobe used in this way. Few if any scientists willbe completely independent of particularinterests. But all speak in the name ofscience.Preserving the integrity andcredibility of scientific advice is importantnot just for scientists, but for society as awhole. Scientists must therefore accept anobligation in putting any recommendation, toclearly separate the factual basis of suchadvice from the value judgements which theybring to it. The basis of these value judgementsmay be financial interest, or personalphilosophy on vital values.

Scientists must also recognise the complexityof the context in which such advice may beimplemented. This reflects not just the manydifferent interest groups with possiblyconflicting objectives, but the particulardifficulty of arriving at acceptable trade-offsbetween gain and risk. For instance, as oneexample, there is no such thing as theprecautionary principle: choice of the rightlevel of precaution in different circumstances

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is a complicated matter involving difficulttrade-offs (Jensen, 2002). This, and the factthat scientific advice may vary, are recognised(European Commission, 2000). ThisCommunication states: “Even if scientificadvice is supported by only a minority fractionof the scientific community, due accountshould be taken of their views, provided thecredibility and reputation of this fraction arerecognised” (7.2) and “Examination of prosand cons cannot be reduced to an economiccost benefit analysis. It is wider in scope andincludes non economic considerations”(7.3.4).

References

Adda J. (2001). Behaviour towards healthrisks : An empirical study using theCJD crisis as an experiment. (Inpreparation, University CollegeLondon).

Agriculture and Environment BiotechnologyCommission. (2001). Crops on Trial.www.aebc.gov.uk

Agriculture and Environment BiotechnologyCommission. (2002). Animals andBiotechnology. www.aebc.gov.uk.

Beauchamp T.L. & Childress J.F. (1994).Principles of Biomedical Ethics(4th Edition) Oxford University Press,Oxford and New York

Combris P. (1997). L’évolution de laconsommation de viande de bœuf depuis1980. In Encéphalopathiesspongiformes subaiguëstransmissibles. Contribution de l’INRA.34-38. INRA Editions, Versailles

Cunningham E.P (1999). The application ofbiotechnologies to enhance animalproduction in different farmingsystems. Livestock Production Science58: 1-24

Cunningham E.P. & Meghen C.M. (2001).Biological identification systems:genetic markers. Revue scientifique ettechnique, Office International desEpizooties. 20(2), 491-499.

Curry. (2002). Farming and Food: ASustainable Future by the PolicyCommission on the Future of Farmingand Agriculture, UK, available from theCabinet Office, Room LG12,Admiralty Arch, The Mall, LondonSW1A 2WH, UK or http://www.cabinet-office.gov.uk/farming

EU Consumer Policy and Health ProtectionDirectorate. (1996a). Report on AnimalWelfare Aspects of the Use of BovineSomatotrophin, 1999a.

EU Consumer Policy and Health ProtectionDirectorate. (1996b). Report on PublicHealth Aspects of the Use of BovineSomatotrophin,(1999b).

European Environment Agency. (2002).Genetically modified organisms(GMOs): the significance of gene flowthrough pollen transfer. EAA:Copenhagen.

European Commission. (2000).Communication COM(2000)1.

European Commission. (2002). EU theDeliberate Release Directive (2001/18/EC).

European Commission. (2003). GMOs:Commission addresses GM crop coexistence, Press Release 5.03.03 http://europa.eu.int).

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Flamant J.C. (2001). A national debate onthe food challenges: public perceptionof animal production and animalproducts before and during the BSEcrisis in France. EAAP Annual Meeting,Budapest, 22 August, 4 pages

Food Ethics Council. (2001a). Farminganimals for food: towards a moralmenu. FEC, Southwell, Notts, UK.

Food Ethics Council. (2001b). After FMD:aiming for a values-drivenagriculture. FEC, Southwell, Notts, UK.

Foster C. & Lampkin N. (2000). Organic andin-conversion land area, holdings,livestock and crop production in Europe.Final Report FAIR3-CT96-1794.

Hau P. & Joaris A. (2002). Organic Farming.European Commission Report. http://europa.eu.int/comm/agriculture/envir/report/en/organ_en/report_en.htm

Hamm U., Gronefeld F., & Halpin D. (2002).Analysis of the European market fororganic food. Organic MarketingInitiatives and Rural Development.Vol. 1., Aberystwyth.

Hodges J. & Han In K. (Eds). (2000).Livestock, Ethics and Quality of Life(2000). CABI Publishing, Wallingford,Oxon. OX10 8DE, UK. ISBN 0-85199-362-1. HB, pp. 269.

IFOAM. (1996). International Federation ofthe Organic Agricultural Movement:Basic Standards For OrganicAgriculture and Food Processing, 10th

Edition. SÖL, Bad Dürckheim

ITC, International Trade Centre. (2002).Overview of world markets for organicfood & beverages (estimates).UNCTAD/WTO.

Jensen K.K. (2002). Moral foundation of theprecautionary principle, Journal ofAgricultural and Environmental Ethics15, 59-55.

Kerr D.E, Wellnitz O., Mitra A. & Wall R.J.(2002). Potential of TransgenicAnimals for Agriculture. 53rd AnnualMeeting of the European Association ofAnimal Production, Cairo, Egypt, 1-4September 2002.

Kristensen E.S & Thamsborg S.M. (2002).Future European market for productsfrom ruminants. Organic meat and milkfrom ruminants. EAAP publicationno. 106. Kyriazakis I & Zervas G. (Eds).

Lohr L. (2001). Factors affecting internationaldemand and trade in organic foodproducts. ERS/USDA Changingstructure of Global Food Consumptionand Trade/WRS-01-1: 67.

MAA. (2001). Etats Généraux del’Alimentation. Que voulons-nousmanger? Publication Missiond’Animation des Agrobiosciences,pp. 50

Mepham T.B. (2000). The role of food ethicsin food policy. Proceedings of theNutrition Society. 59, 609-618

Mepham T.B. & Crilly R.E. (1999). Bioethicalissues in the generation and use oftransgenic farm animals. Alternatives toLaboratory Animals 27, 847-855.

Michelsen J., Hamm U., Wynen E. & Roth E.(1999). The European Market forOrganic Products: Growth andDevelopment. Organic Farming inEurope: Economics and Policy Vol. 7.Stuttgart, University of Hohenheim.

Nardone A. & Valfrè F. (1999). Effects ofchanging production methods on qualityof meat, milk and eggs. LivestockProduction Science 59:165-182

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Netherlands Ministry of Agriculture, NatureManagement and Fisheries. (2001). TheFuture of Dutch LivestockProduction -Agenda for Restructuringthe Sector. Report to the Ministry.

Phillips N. A., Bridgeman, J. & Ferguson-Smith, M. (2000). The BSE Inquiry: Theinquiry into BSE and variant CJD inthe United Kingdom, Stationery Office,London. http://www.bse.org.uk/

Rahmann. (2002). The standards, regulationsand legislation required for organicruminant keeping in the European Union.Organic meat and milk fromruminants. EAAP publication no. 106.Editors: Kyriazakis I and Zervas G.

Royal Society. (2001). The use of geneticallymodified animals.www.roysoc.ac.uk

Sancristobal-Gaudy M., Renand G.,Amigues Y., Boscher M.-Y., Leveziel H.& Bibe B. (2000). Traçabilitéindividuelle des viandes bovines à l’aidede marqueurs génétiques. INRA, Prod.Anim., 13, 269-276.

Schlosser E. (2001). Fast Food Nation.288 pp. Houghton Mifflin.

Sundrum A. (2001). Organic livestockfarming: A critical review. LivestockProduction Science 67: 207-215

Tauer L. (2001). The estimated profit impactof recombinant bovine somatotropin onNew York dairy farms for the years 1994through 1997. AgBioForum 4, 115-123

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This report has been prepared, on behalf ofEAAP, by a group of 14 persons, most ofwhom are scientists involved in and concernedfor the European livestock productionindustry.

In assembling, analysing and interpreting thefacts there has been general unanimity.Achieving consensus on the conclusions forthe future of the livestock sector has beenmuch less easy. This reflects the varying valuejudgements of the different members aboutthe broad goals of society, of the sector, andtherefore of the report. While the grouppossesses some expertise in presenting thefacts, it claims no special moral authority insetting the goals. These are in any caseextremely complex, and involve difficult tradeoffs between conflicting objectives, as wellas between different interest groups.

Behind all this complexity is a majorphilosophical question: to what extent shouldfuture agricultural policy in Europe place foodproduction in a free market context?Historical concerns about food security, andabout the social and demographic structure ofsociety, have put agriculture at the centre ofEU policy. That policy has been protective ofproducers. It is now facing substantial change,with commitments to eventual global opencompetition. The expected benefits forsociety are chiefly lower food prices. Thecosts are more diverse, and include reducedincomes for European farmers, and longer, andtherefore less transparent, food supply chains.The balance sheet of gains and losses, and ofwho the beneficiaries and losers are, has beeninsufficiently quantified and debated.

Conclusions

While the balancing of these interests is amatter for deliberation in the whole of society,policy is eventually crystallised into regulationthrough the political process. Given, andaccepted, that progressively more unrestrictedcompetition is the future, how can valuedobjectives such as ethical standards inproduction, authenticity or quality of product,or fair terms of trade be achieved? Since,under the free market, profit maximisationdrives all decisions, it seems that these otherobjectives are unlikely to be served unless theregulatory framework makes them arequirement. Already, substantial change inthis direction has taken place to guarantee foodsafety. A major task for the future is to debateand refine the regulatory context under whichthe European livestock sector can serve thebroad goals of society. A particular challengefor those involved in the sector is to persuadesociety that food, and the rural environmentin which it is produced, have values to thecommunity beyond those of the cash register.

The BSE epidemic, which began in 1986, isnow, with high probability, drawing to a close.Though 95% of cases occurred in one country,the economic impact has been felt equally byall beef producers in Europe. Up to 10% ofthe annual value of beef output has been lost(half through reduced animal value, half inadditional costs for control measures).Though the epidemic will, in all probabilityend, much of the cost and loss will continueindefinitely. In present value terms, it isestimated at €92 billion for the 15 countriesof the EU.

The experience of the epidemic hashighlighted deficiencies in the production andprocessing industries, and in the public foodsafety structures. The dangers in recycling

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industry waste as feed materials were notappreciated; excessive and opportunistictrading and movement of materials, animalsand products was part of the system;identification and traceability were deficient.The response of the public authorities sufferedfrom divided responsibilities, untransparentprocedures, insufficient knowledge, and aculture of caution.

Several negative consequences have arisenfrom these deficiencies. Of prime import hasbeen permanent damage to consumerconfidence not just in beef, but in all foods.The reputation of the scientific establishmentfor providing objective and independentinformation has been severely downgraded inthe public mind. Government authorities havebeen perceived as protecting sectoralinterests rather than the public in general.

Positive outcomes include the wave ofcorrective measures at national and EU levels,and the establishment of new structures andauthorities to bring greater supervision,accountability and integrity to the food chain.These positive developments, while theyimpose extra costs in the system, costs whichwill largely fall on primary producers, shouldbe welcomed as necessary and overdue.

Three major unresolved questions remain. Thefirst two concern BSE itself, the origin ofwhich is still not known with certainty, andvCJD in humans, the future of which is alsouncertain. The third unresolved issue is thefuture of MBM. At present all of the16 million tons of raw material produced eachyear by the slaughter industry in the EU isrendered and destroyed at a cost exceeding€1 billion. Before BSE it had a protein feedvalue of more than €0.5 billion. New EUlegislation would permit most of this tore-enter the feed industry.

However, despite the strongest of controls andguarantees regarding safety, there is greatresistance to such a move. While the origin,

presence and transmission of BSE andassociated TSEs in animal tissues, food andhuman bodies remain unknown, no absoluteguarantees are possible. A greater influenceagainst implementing such a re-introductionof MBM to the animal feed chain is theresistance of livestock producers rightlyfearful of consumer reaction. The onlyrealistic option for the immediate future ofthis issue is a continuation of the ban on MBM.

The BSE crisis was an unwelcome addition toa list of interrelated challenges already facingthe European livestock production sector.

These include:

• Long term decline in real producer pricesof about 3% per year.

• Changes in EU policy which will exposeproducers to increased competition fromother areas of the world.

• A growing dependence for economicsurvival on politically sensitive subsidyprogrammes, paralleled by a declininginfluence of producers on policyformation.

• A major power shift in the food chain todominant retailing and processing firms,further accentuating price pressure onproducers.

• Increased costs for enhanced controls andcompliance.

• Rapid changes in the pattern of consumerdemand.

• Consumer distrust, fed by recurrent foodscares, and amplified by a sensitised media.

• As the numbers of producers decline, andas the food chain lengthens and becomesmore anonymous, the mutual knowledgeand understanding between primaryproducers and ultimate consumers isreduced.

• A historical structure where three quartersof the 7 million farms in the EU do not havesufficient scale to provide one full-timework and income opportunity.

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• The prospect of integrating the 10 millionadditional farmers in the 10 countriesacceding to the EU.

• An intensity of land use in some areas thatcauses progressive nutrient overloading ofthe environment.

In the face of these formidable challenges, andenergised by the BSE epidemic, Europeanlivestock producers, processors and therelevant public authorities have madesubstantial changes. New food safety agencieshave been set up. All cattle and most sheepare identified. Traceability rules are beingimplemented. New controls on the feedindustry have been introduced. Policy atnational and EU levels has been adapted.

Many commentators, representing viewsamong producers as well as consumers, feelthat these adjustments are not enough. Thisview, articulated for example in the CurryReport in the UK, The Netherlands’ MinistryReport, and in Hodges & Han, 2000, calls formore radical restructuring.

Many of their recommendations are aimed atreturning to shorter, more local food chains,rewarding good practice and product quality,and responding to consumer expectations,particularly on safety. The dilemma forproducers, policy makers and society is thatmarket forces alone will not deliver theseobjectives. In particular, it serves theeconomic purposes of large processing andretailing firms to focus consumer trust oncompany brands rather than on productsidentified by region or production system.Companies also need to minimise the costsof these supplies, a goal often best served iftheir suppliers are producing anundifferentiated product.

The non-monetary values involved in livestockproduction (safety, ethical production,environmental protection, fair trade,conservation of rural society, respect fortradition, and others) are important. However,

it is quite ineffective to simply advocaterespect for these values. They will berespected only if it is profitable to do so, orthere are penalties involved in not doing so.In the context of this report it is not possibleto describe or invent all the mechanismsrequired, but the general point is that itrequires either profit or regulation. As themarket is now evolving, profit is king. If thenon-monetary values are to be respected, thefree market needs to be circumscribed byformal requirements. The task for the futureis to develop these so that they achieve theirobjective, without simply serving the interestsof particular groups or increasing the burdenof regulation to unreasonable levels.

Producers, processors or retailers are all mostresponsive if desirable practice is profitableand undesirable practice carries penalties. Itis therefore important to emphasise thenecessity of ensuring that public policy,through its standards and regulations,acknowledges and protects the non-monetaryvalues which are part of the food productionsystem. As a result of BSE, this is now wellrecognised for food safety. Similar initiativesare needed to define the standards of ethicalproduction, environmental protection, and fairtrade within which the market must operate.

While the broad evolution of the marketingstructure is not favourable to these goals,there are many examples of how producergroups are working together with retailers toprovide, and be rewarded for, quality products.This provides one model for recognising andsupporting genuine differentiation inproduction. Already, the PDO and PGIsystems, and certification for organicproducers, are in place.

Another model is where the producers investcollectively in processing and distribution.This also already exists and is very effectivein much of the EU dairy industry and in the

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pigmeat sector in Denmark. Such large co-opstructures can strike a fair balance betweenthe interests of the producers and other actorsin the food chain, and are perhaps the best wayof re-establishing the connections that havebeen weakened. The livestock sector shouldvalue and continue to invest in the co-operativestructures that have served European societywell for over a century.

In all countries and at the EU level, legalconstraints can be invoked where a dominantmarket position could lead to unfair tradingpractices or reduced competition. There isevidence (e.g. in UK) that dominant retailgroupings exploit their strength to imposeunreasonable terms on their suppliers. Giventhe pace of which food retailing (andprocessing) power is being concentrated,there is a strong case for closer monitoringand control of such abuse of economic power.

The question of food safety should not be anissue in the competitive market: all foodshould be safe. Some companies may wish toadd to their customers’ sense of security byadding guarantees, testing regimes andtraceability above what is required by law.However, the basic safety certification of foodand its production systems should be theresponsibility of public agencies.

The failures which led to the BSE crisis haveprovided a hard lesson for all involved in theEuropean livestock sector. A technicalinnovation (use of MBM), which had beenjudged safe, and had been widely used formore than 40 years, proved to be theinstrument which spread a new and frighteningdisease in animals and humans. All scientificinnovation is now suspect. This hasstrengthened public opposition todevelopments such as GM crops, use of BSTin milk production, or growth promoters inmeat production. Producers are oftenambivalent – appreciating the technicaladvantages, but unsure on long term safety and

public reaction. Policy is driven mainly bythese wider public attitudes. Present EUpolicies do not allow these technologies tobe used. As evidence on food safety and otherconcerns accumulates, and as public attitudeschange, these policies may also evolve.Livestock producers must work within theseregulations. They must also recognise thatEurope has chosen a deliberately cautiouspath, and that though they are precluded fromtaking advantage of some technicaldevelopments, this can be offset by increasedconsumer appreciation of and loyalty to localproducts.

Beyond the many difficulties which havefollowed from or been exacerbated by the BSEcrisis, the European livestock sector has afundamental problem of the scale ofindividual enterprises. Too many farms are toosmall to provide an income for one person.This structural problem will be made moreacute by the continuous price reductionswhich will flow from the progressiveglobalisation of trade in agriculture. This is aproblem for which there is no direct solution.Unit scale is increasing, but, as can be seen inUSA, scale alone does not assure economicsurvival.

The inevitable further decline in numbersengaged in livestock production, and theparallel increase in scale of remainingproduction units, has no particular end point.It is a continuing process, shared by othersectors in an evolving world economy. ForEurope, it leads to a spectrum of structures,varying greatly across the continent, butincreasingly classifiable into two groups:

• efficient, full time, larger units, responsiblefor most of production, but representing asmall fraction (at present one quarter) ofproducers

• smaller, part time, units, managing a highproportion of land, but only partially relianton agricultural production for income.

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EU policy is being adapted rapidly to meet theneeds of society, and of these different sectorsof production. The challenge is to managechange in a fair and balanced way, drivenprimarily by Europe’s own requirements, andrecognising that measured change, rather thanstasis or abrupt adaptation can bring greatestbenefits at least cost.

Despite the problems created by continuousadaptation, and by occasional crises such asBSE, the European livestock sector has a verypositive future for many of its actors. Itsstrengths include:

• A well endowed resource base, with goodclimates and soils, well capitalised farms,and well developed services.

• A highly skilled workforce, mainlyindependent owners, with deep traditionsof good husbandry, and with welldeveloped organisational structures.

• A large internal market of 478 million,which takes 95% of its production, andappreciates its products.

• A common agricultural policy, throughwhich measured change and progress canbe made.

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ACP: African, Caribbean and PacificCountries

AGP: Antimicrobial Growth Promoters

AI: Artificial Insemination

BSE: Bovine SpongiformEncephalopathy

BVD: Bovine Virus Diarrhoea

CAP: Common Agricultural Policy ofthe EU

CEEC: Central and Eastern EuropeanCountries

CJD: Creutzfeldt-Jakob Disease

CSF: Classical Swine Fever

DEFRA: Department for the Environment,Food and Rural Affairs, (UK)

DSSP: Degree of Soil Saturation withPhosphorous

EAGGF: European Agricultural Guidanceand Guarantee Fund

EFPRA: European Fat Processors andRenderers Association

EFSA: European Food Safety Authority

ERS: Economic Resource Service,(USA)

ET: Embryo Transfer

EU: European Union

FAO: Food and Agriculture Organizationof the United Nations

FDA: Food and Drug Administration,(USA)

FEC: Food Ethics Council, (UK)

FMD: Foot and Mouth Disease

FSIS: Food Service Inspection Service,(USA)

GATT: General Agreement on Tariffs andTrade

GDP: Gross Domestic Product

GM: Genetically Modified

GMO: Genetically Modified Organism

HACCP: Hazard Analysis of CriticalControl Points

IBR: Infectious Bovine Rhinotracheitis

IFIA: International Fertiliser IndustryAssociation

ISO: International StandardOrganization

IVF: In Vitro Fertilization

LDC: Less Developed Countries

MBM: Meat and Bone Meal

MRM: Mechanically recovered meat

NPV: Net Present Value

OECD: Organisation for EconomicCo-operation and Development

OFT: Office of Fair Trading, (UK)

OIE: Office International desEpizooties

Acronyms

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PDO: Protected Designation of Origin

PGI: Protected Geographical Indication

PMWS: Postweaning MultisystemicWasting Syndrome

PSE: Producer Support Estimate

QA: Quality Assurance

SEAC: Spongiform EncephalopathyAdvisory Committee, (UK)

SRM: Specified Risk Material

TGE: Transmissible Gastro-Enteritis

TSE: Transmissible SpongiformEncephalopathies

USDA: United States Department ofAgriculture

vCJD: variant Creutzfeldt-Jakob Disease

WTO: World Trade Organisation