FSA Stakeholder Meeting

Tim Smith, Chief Executive of FSA, gave an overview of food poisoning instances and the need to maintain the safest controls on production and processing of fresh meat.

He outlined efficiencies that the MHS were making across GB. He said that over 400 redundancies had reduced their workforce from just over 2,000 to 1,600 and that this was ahead of the targeted 15% reduction by 2010/11. He gave the example that one plant in England had moved from 13 meat inspectors to only 8 and added that £10 million had been spent on management changes, IT and redundancies. The aim was to reduce MHS charges by 21% from £91 million in 2007 to just £72 million.

The administration of MHS will be merged with that of FSA to become a more simplified organisation.

He acknowledged that the nature of the meat industry and remote abattoirs in Scotland require a different approach. He also said that the consultation on the changes to the charging regime was “a real consultation” and welcomed debate even it was heated.

He said that the move from time based charging would create better use of resources. He then acknowledged the increase in raw material prices over the last year – beef 21%, lamb 41%, pork 37% and chicken 17% and stated that the industries ability to pay might be threatened by squeezed margins. Regulatory impact assessments would need to reflect on that.

The second speaker at the meeting was Ian Anderson, Executive Manager of SAMW. He said that his association had 30 members employing 3,000 people with a turnover of £¾ billion. He also reminded the meeting that MHS charges had gone up 8% last year despite industries objection in the consultation. He added that this consultation feels like death by a thousand consultations.

Food business operators are not interested in producing unsafe foods so he felt that FBOs should play a greater role and that the auditors should not be enforcers.

Turning to the proposals to increase MHS charges he said that MHS had to become an organisation that is more efficient. He reminded those present that at the Scottish Food Advisory Committee members of that Committee had noted that MHS was “not fit for purpose” and “not value for money”. The pace of change he said “makes a snail look like jet propelled”.

Optimisation report and business agreements are vehicles for positive change but he felt that communication of changes coming out of MHS York was poor and with no specific Scottish information. Ian suggested that the high sick pay and pension levels of MHS, running at 20% of overhead, was unsustainable. Remedial action is really what is required.

There should no increase in charges until the transformation project is completed and stakeholders can see the results. He accepted that time based charging was more transparent but felt that it was wrong for SRM costs to be borne by the industry. The SRM controls are a public health protection measure and FSA would have more credibility if it took steps to remove disproportionate and irrelevant SRM controls.

Ian Anderson told the meeting that the proposed increased charges were unfounded and lacked reality. The 9% increase proposed was contrary to the claimed assistance that government wished to give industry in this time of recession and said the magnitude of the increase “beggars belief” and includes an element of 4% for inflation that is clearly out of date. He concluded this is the wrong consultation at the wrong time.

Nigel Miller, Vice President NFUS, feared that the increase in charges would be passed onto producers rather than onto consumers. He said MHS redundancies were essential and flexibility of working practices had still to be achieved. Official vet coverage could be reduced and he observed that the cluster scheme for OV provision was not assisting efficient working. He warned that one size fits all does not work.

Nigel said that the vertebral column removal in sheep was no longer necessary and looked for a more proportionate regulatory burden to reduce SRM controls especially in the UK, which was ahead of other EU countries. He claimed that the difference in the “extraordinary risk” of testing cattle over 48 months at one animal to the risk of testing at 60 months at two animals.

He went on to say businesses in the processing sector are not in a good position to pay more, it could be damaging to the meat industry and not good for the consumer either. The Scottish Food and Drink Policy, built on quality production and use of Scottish Food and Drink should be used to take Scotland out of recession.

Martin Caldwell, Consultant to the Isle of Mull slaughterhouse gave the views in an island context, describing himself as a mini micro site. The Isle of Mull slaughterhouse is a cooperative jointly owned by 60 farmers processing 1280 animals per year. Its turnover has gone from £2,000 to £70,000 purely as a result of cutting and packing. This has had a ripple effect employing a trainee slaughter man, refrigeration engineers etc. Farmers have been able to supply direct to the public on Mull and two jobs had been created at Mull Butchers all reducing the food miles by 10,400 per year.

The abattoir tries to be responsive to the needs of local farmers but their small size remains a problem with 15% – 20% of Mull farmers unable to use the facility. He went on to state that at this time of year the slaughter man was on part-time and that the abattoir faced major funding challenges with no reserves.

Martin was concerned about increased MHS charges and while he understood the logic and time-based charging it posed problems for a tiny community based operator. He felt that local food supply chains should be encouraged along with local jobs and local economic activity that it created. He claimed that it could be the straw that breaks the camels back and he was very worried if the current support to lower throughput abattoirs disappeared. 100% of any increase in costs would have to be passed onto producers on Mull. Martin suggested that the extent to which meat inspection was part of public health should be examined.

In the questions session that followed Alan Kirkwood, past President of SAMW but now retired described himself as being 45 years in the business from boy to boss. He said that he had seen only six business agreements and he gave factual evidence that revealed large variances in the hours necessary for meat inspection in contrast to the operational hours of abattoirs. He also said that business agreements were flawed because plants had not had a chance to implement changes.

Alan McNaughton, SAMW held up the consultation paper and asked the audience if anyone had read and understood this. No-one had understood the document and he called it “bureaucratic poppy-cock” he said there should be no increases but agreed with time cost charging provided there was support for smaller rural abattoirs. He agreed that business agreements were the right way forward and hoped that they would end the practice of paying for contractual overtime. On the issue of the ability of meat processors to pay increased charges he said major multiples sought cheaper meat and over rider discounts. He said we are in a serious position yet the FSA is hiding behind legislation and just passing on the cost of inefficiency. He said his meat hygiene inspection costs would rise from £270,000 in year to June 2008 to £332,000 in June this year an increase of 23%. Full cost recovery would be £398,000 he ended by saying that FSA should sit up and listen.

Jamie Chapman added support to Nigel Miller's claim that one size does not fit all. He said that at Shotts they were charged on a headage basis that recovered only 30% of the total cost. The abattoir provides a necessary service to local butchers and local farmers. He felt that the abattoir was forced to have vets in full-time attendance yet with an hourly throughput of just 8-10 beasts per hour the 80 hours inspection time charged often left the vets with no work.

Jim McLaren, President NFUS, warned that the inherent belief that the livestock industry is in good position to pay increases was totally wrong and is in fact fragile. He said that the Euro to Pound currency issue and reduced volumes meant that there would have to be a radical review of costs.

In conclusion it was said that any increase in MHS charges would require the political support of government and all devolved bodies. Our consultation response should clearly state the business, environmental and economic context that these proposals are brought forward in. There is a sizeable public health issue here that would justify support to low throughput abattoirs and full cost recovery is not an option for this part of the industry.