A review of public expenditure on BSE eradication in Ireland from 1996 to 2004

Department of Agriculture and Food, 2005

Table of Contents / Page
Executive Summary / 6
Glossary of Terms / 10
Chapter 1. Introduction / 11
1.1 Expenditure Review process / 11
1.2 Agriculture in Ireland / 11
1.3 BSE Expenditure Review / 11
1.4 Terms of Reference / 11
1.5 Aims / 12
Chapter 2. Overview of BSE
2.1 Introduction / 13
2.2 What is BSE / 13
2.3 BSE and MBM / 13
2.4 The impact of BSE
2.4.1 Initial impact / 14
2.4.2 Financial impacts / 15
2.4.3 Impact on feedingstuffs / 15
2.4.4 Other impacts / 16
2.5 Requirements by Third Countries / 16
2.6 Pharmaceuticals / 17
2.7 The evolution of BSE policy / 17
2.7.1 Strengthening the controls / 18
2.8 Legislative actions / 18
2.9 Strategy / 19
2.10 Prognosis / 19
Chapter 3. Inputs
3.1 Introduction / 21
3.2 Financial inputs by the State / 21
3.2.1 Net costs / 22
3.3 Staff inputs / 23
3.3.1 Meat plant staff / 23
3.3.2 District Veterinary Office staff / 23
3.3.3 Managing staff increases / 24
3.3.4 Imputed staff costs / 24
3.3.5 Review and future trends / 25
3.4 Other BSE-related costs / 25
3.5 Industry costs / 26
3.6 Auditing of inputs / 26
3.7 Conclusion / 27
Chapter 4. Processes and outputs
4.1 Introduction / 28
4.2 Safe sourcing of beef
4.2.1 Segregation, batching and testing of over 30-month animals / 28
4.2.2 Traceability of all bovines / 29
4.2.3 Passive surveillance / 29
4.2.4 Active surveillance and testing of animals over 24 months / 30
4.3 Safe processing
4.3.1 Removal of SRM / 30
4.3.2 Separate SRM rendering plants / 31
4.3.3 Ruminant feed processing / 31
4.3.4 Heat and pressure treatment / 32
4.3.5 Training in epidemiological and clinical aspects of BSE / 32
4.4 Safe disposal
4.4.1 Comprehensive regulations for use and disposal / 32
4.4.2 Licencing and approvals / 33
4.4.3 Inspection of feedstuffs for cross-contamination / 33
4.4.4 Control of knackeries / 33
4.4.5 Exports / 34
4.4.6 Depopulation of cohorts, progeny and herd when BSE is
found / 34
4.4.7 Detailed monitoring of MBM / 34
4.5 Conclusion / 35
Chapter 5. BSE eradication strategy and whole-herd depopulation
5.1 Introduction / 36
5.2 Measures introduced in Ireland / 36
5.4 EU rules on herd depopulation / 36
5.4 Irish whole-herd depopulation policy / 37
5.4.1 Public health / 37
5.4.2 Animal health / 37
5.5 Market implications / 37
5.5.1 Markets for Irish beef / 37
5.5.2 Exports of dairy products / 39
5.5.3 Sensitive products / 39
5.6 External influences / 39
5.6.1 Media influence on public opinion / 39
5.7 Reliance on science / 40
5.7.1 Criticisms of the political approach / 41
5.7.2 More recent strategies / 42
5.8 Expenditure on BSE depopulation in Ireland / 43
5.9 A rationale for depopulation / 43
5.9.1 Efficiency / 43
5.9.2 Market implications / 43
5.9.3 Trust and the no-risk framework / 44
5.10 Conclusions / 44
Chapter 6. Impacts and comparisons
6.1 Introduction / 46
6.2 Evidence of impacts
6.2.1 General trends / 46
6.2.2 Fewer young cases / 46
6.2.3 Stopping the source / 46
6.2.4 Fewer clinical cases / 47
6.2.5 Fewer total cases / 48
6.3 Projections / 48
6.4 Other measures of impact
6.4.1 Stable controls / 49
6.4.2 Maintaining beef markets / 49
6.4.3 Enhanced animal health / 49
6.5 Incidence of BSE in other countries / 50
6.6 Scenario analysis / 51
6.7 Comparison of approaches
6.7.1 Non-EU approaches / 52
6.7.2 Comparison within Europe / 52
6.7.3 Incidence of BSE / 53
6.8 Options / 54
6.9 Conclusions / 54
Chapter 7. Conclusions and recommendations
7.1 Introduction / 56
7.2 Justification of intervention / 56
7.3 Achieving value for money / 56
7.3.1 Economy and efficiency / 56
7.3.2 Could things have been done differently? / 57
7.3.3 Effectiveness / 57
7.4 Overall conclusions / 58
7.4.1 The importance of BSE controls / 58
7.4 2 The value of whole-herd depopulation / 58
7.4.3 Effectiveness of BSE controls / 58
7.5 Terms of reference
7.5.1 Examining the objectives / 59
7.5.2 Efficiency and effectiveness / 59
7.5.3 Measuring outcomes / 59
7.5.4 Alternatives / 59
7.5.5 Performance indicators / 60
7.6 Recommendations
7.6.1 Regulatory reform / 60
7.6.2 Testing for BSE / 60
7.6.3 Thermal treatment of meat and bonemeal / 60
7.6.4 Other uses of animal by-products / 60
7.6.5 Co-ordination / 60
7.6.6 Public expenditure / 61
7.6.7 Whole-herd depopulation / 61
7.6.8 Testing for BSE / 61

Annexes

Annex 1. Cattle and beef industry in Ireland / 62
Annex 2. Role of the Agriculture and Food industry in the Irish economy / 65
Annex 3. Irish beef exports 1998 – 2004 / 69
Annex 4. Performance indicators / 71
Annex 5. Summary of expenditure relating to BSE up to 30/11/2004 / 86
Annex 6. EU intervention purchases 1992 – 2001 / 77
Annex 7. Cost of alternative policies in 2002 and 2005 / 78
Annex 8. BSE-related legislation / 80
Annex 9. Relevant veterinary notices and operating procedures / 92
Annex 10. Controls introduced in Ireland since the discovery of BSE / 93
Annex 11. References / 95

List of Diagrams

Diagram 1. Irish beef exports 1992 - 2003 / 14
Diagram 2. Legislative activity brought about by BSE 1989 – 2003 / 19
Diagram 3. Net costs for compensation 1997 - 2004 / 22
Diagram 4. Net compensation costs and active surveillance 1997-2004 / 22
Diagram 5. Professional and technical staff numbers 1996 – 2004 / 24
Diagram 6. Staff costs 1996 – 2004 / 25
Diagram 7. Exports to non-EU countries 1994 – 2003 / 38
Diagram 8. Number of BSE cases in animals less than six years old / 46
Diagram 9. BSE Incidence in Ireland by year of birth & year of
occurrence / 47
Diagram 10. Number of clinical BSE cases in Ireland 1996 – 2004 / 48
Diagram 11. Number of BSE cases in Ireland 1995 – 2004 / 48
Diagram 12. Exports to EU and Non-EU areas, 1992 - 2003 / 49
Diagram 13. Number of cases of BSE worldwide / 50
Diagram 14. BSE trends for Ireland, Portugal, Spain and Switzerland / 52
List of Tables
Table 1. Level of inspections for feedingstuffs, 1992 – 1997 / 16
Table 2. Costs of market support measures and BSE-related schemes / 25
Table 3. Payment of disposal costs for fallen animals / 30
Table 4. Costs of depopulation / 43
Table 5. Some BSE comparisons for Portugal, Spain, Switzerland and Ireland / 53


Executive Summary

The central aim of the Expenditure Review process is to improve the efficiency and effectiveness of expenditure by systematically analysing what is being achieved by programmes. The purpose of the BSE Expenditure Review is to analyse what has been achieved by Exchequer spending in this area and to provide a basis on which more informed decisions can be made concerning BSE-related policy in the future. This review forms part of the Government Expenditure Review Process for the period 2002 – 2004.

The agreed terms of reference of the Review are to examine the operation of BSE measures with a view to:

  1. Identifying and examining the objectives of the measures, taking account of public health, animal health and regulatory and trade requirements, in the light of the goals set down in the Department’s statement of strategy.
  1. Defining the inputs and outputs and the associated costs and benefits of BSE herd depopulation and BSE testing measures and identifying the efficiency and effectiveness of those outputs.
  1. Examining the extent to which BSE eradication measures, as described in the Department’s statement of strategy and Divisional business plans, are being achieved and whether appropriate outcomes, including value for money, have resulted from expenditure, taking account inter alia of emerging trends.
  1. Examining the scope for alternative policy or organisational approaches for achieving the objectives more efficiently and effectively, having due regard to available budgetary resources.
  1. Specifying potential future performance indicators that might be used to monitor the performance of the measures.

Chapter two provides the background to the BSE crisis and the Department’s response. It also outlines the impact of the disease and the methods used to combat it as well as the regulatory impact on the rendering and feedingstuffs sectors. BSE had a profound impact on the beef industry, particularly after the mid 1990’s. The suggestion in 1996 that a link between BSE and vCJD could not be ruled out caused a massive decline in beef consumption. Ireland stood to lose even more significantly than other countries because up to 90% of Irish beef is produced for export. Many export markets imposed restrictions in the 1990’s and some closed access altogether to EU beef when BSE was discovered in Germany and Spain in 2000. A number of measures have been introduced to monitor and control all aspects of beef production and these have affected the rendering and feedingstuffs industries, while blood, medical and pharmaceutical supplies are also affected.

Chapter three examines the financial and staff inputs to BSE control measures. Apart from market support measures the main costs are for BSE testing, transport, rendering and disposal of depopulated herds and compensation payments. These costs were particularly significant from 2001 to 2003, when cases of BSE were relatively high. Staff costs increased significantly from 2000 to 2002, but have since declined in line with the reduction in BSE cases. However, many of the existing staff will be required for the foreseeable future to maintain the comprehensive controls now in place.

Chapter four outlines the principal activities and outputs involved in the Department’s strategy of safe sourcing, safe processing and safe use. The key requirements are to guard against infection and to ensure that beef is produced safely even when the animals have tested negative for the disease. Controls also extend to animal by-products so that all possible sources of infection are controlled. The controls in place are audited regularly by various national and EU agencies and Ireland’s controls have been declared ‘optimally stable’ since 1998 by the EU Scientific Steering Committee. The continued implementation of the Department’s strategy is essential to protect consumers and markets.

Chapter five provides a detailed analysis of Ireland’s whole-herd depopulation strategy. The Department keeps this policy under continuous review. This chapter draws together previous internal assessments and includes an analysis of the possible risks of ending this strategy. Whole-herd depopulation is no longer mandatory under EU regulations and scientific analysis suggests that there is little additional benefit in terms of food safety to be gained from this approach. Nonetheless consumer opinion both in Ireland and in international markets is heavily influenced by media reports and it is likely that any savings made by ending whole-herd depopulation (the costs of which are falling in any event) would be more than offset by beef market reactions. Other sectors, particularly the infant formula milk sector, could also be adversely affected. The Department will continue to monitor this area as the number of BSE cases declines.

Chapter six shows the long-term benefits arising from BSE controls. It shows that Ireland began to tackle BSE as early as 1989 and that the further controls introduced in 1996-97 have been remarkably effective. Ireland’s exports markets have not been targeted at any stage throughout the crisis while some other countries with small numbers of cases have encountered difficulties and bans on exporting in some cases. Recent events in the USA and Canada demonstrate that world markets will still react when cases of BSE are found. Ireland’s controls have been inspected by several ‘third country’ officials and the reports have been very positive. The decline in the number of younger cases demonstrates that BSE is now well under control, with cases largely limited to older cattle that were infected prior to the implementation of comprehensive controls from 1996 onwards. While some other countries are still finding younger cases and even finding increases in the overall number of BSE cases, Ireland has made considerable progress towards controlling and eventually eradicating BSE in Ireland.

Chapter seven provides overall conclusions and recommendations. It sets out the need for public sector intervention in this area and shows how the Department has achieved efficient and effective outcomes. The review demonstrates that imposing minimal restrictions is insufficient and that controlling BSE is a critical national objective. Strict controls must be maintained for both animal and human health reasons. Many of these controls are now seen as best practice regardless of BSE as they ensure the highest standards of quality control.

The main recommendations of the report are as follows:

  1. The Department should review national BSE-related legislation in order to minimise the regulatory burden on the industry and ensure clarity for all stakeholders.
  1. The possibility of using private vets to assist in BSE testing of fallen animals should be assessed.
  1. The Department should continue its support for a national incineration or co-incineration solution for the disposal of meat and bonemeal.
  1. Uses of animal by-products in other EU Member States should be assessed to see whether similar options would be suitable for Ireland.
  1. The Department should ensure that coordination arrangements are in place between Departmental divisions and state agencies to ensure strategic cohesion.
  1. The level of state financial assistance should be continuously monitored to ensure that costs are appropriately apportioned between the public and private sectors.
  1. The policy of whole-herd depopulation should be kept under continuous review, with a view to assessing whether the risks involved in ending this policy have diminished.
  1. The 30-month rule on testing should be kept under review as the incidence of BSE in younger animals continues to decline, to see whether a higher age requirement could provide the same protection at less cost.

Current trends show a marked reduction in the number of animals showing clinical signs of BSE. The introduction of active surveillance has ensured that the full level of infection is identified and controlled. The age profile of BSE cases is also increasing, with very few incidences of animals younger than six years being found with the disease. The current decline in BSE incidence is expected to continue and the prognosis for the eventual elimination of the disease is very good as a result of the comprehensive measures introduced.