Ministry of Agriculture, Fisheries and Food and the Intervention Board : BSE, the cost of a crisis report / by the Comptroller and Auditor General.

  • Great Britain. National Audit Office.
Date:
1998
Catalogue details

Licence: Open Government Licence

Credit: Ministry of Agriculture, Fisheries and Food and the Intervention Board : BSE, the cost of a crisis report / by the Comptroller and Auditor General. Source: Wellcome Collection.

    10/130 (page 4)
    On compensation to farmers Ey = In 1996-97 the Board made compensation payments of £670 million to farmers under the Over Thirty Month Scheme. The rate of compensation was set by the European Union at the start of the scheme at one ECU per kilogram for animals presented through markets (liveweight); the rate for animals presented directly to abattoirs (deadweight) was initially set at twice the liveweight rate, because carcasses are lighter than live animals. However, this ratio, while reasonably accurate for dairy cows, was too generous for beef animals. This meant that farmers who presented such animals directly to abattoirs were over-compensated. This position was corrected by the European Commission after the first three months of the scheme, by which time additional costs of some £15 million had been incurred. [Paragraphs 2.36 to 2.43] EF] By September 1997 the value of compensation payments to farmers had fallen substantially, for four reasons: @ adjustments in the compensation rates in line with falling market prices; ™ successive reductions in the rates used to convert EU payments into sterling; @ the introduction of maximum compensation weights for cattle in August 1997, which has reduced the incentives for farmers to retain (heavier) beef cattle for entry into the scheme, or to fatten up ex-dairy cows; and M@ the reduction in the deadweight rate for beef cattle described above. EF] = The Board implemented an effective range of measures to enable it to boost the weekly slaughter rate to over 60,000 animals, and eliminate the backlog by December 1996. In addition, it offered advance payments to farmers in view of the difficulty they faced at first in getting their animals into the scheme. The arrangements applied only for one month, but the National Audit Office considers it unsatisfactory that of the advances made in July 1996, £2.6 million remained outstanding at September 1997. By the end of March 1998, the situation had improved so that £1.5 million remained due, of which £0.3 million was covered by agreements to repay in instalments. [Paragraphs 2.45 to 2.57] EZ} = The Board hoped to introduce a computerised system for processing and paying Over Thirty Month Scheme claims within a few months of the scheme becoming operational in May 1996. However, the nature of the task changed substantially and the full requirements were not established until October 1996.