Both Commissioners point to a number of recent developments which warrant this firm response: the discovery of the first ever cases of BSE in both Germany and Spain; the question marks over the implementation of Community safety laws on BSE in the Member States; the opinion of the Scientific Steering Committee of 28 November on the national measures recently introduced in the Member States and the collapse in consumer confidence in the safety of beef. "This exceptional chain of events calls for an exceptional response".
Speaking on the proposed ban on meat and bone meal, David Byrne added that it was necessary to allow a full evaluation of the controls in place in the Member States. "I have repeatedly said that the existing Community controls, if strictly implemented, ensure that MBM is safe. The Scientific Steering Committee yesterday once more confirmed this view. However, consumers now clearly want copper-fastened guarantees that these controls are being implemented. The Commission proposes, therefore, to ban MBM until it is satisfied that Member States can provide such guarantees".
The ban will also apply to exports to third countries and appropriate safeguards on the processing and disposal of MBM including its huge environmental implications will also be required.
During the last four weeks, the EU beef market saw an important drop in prices and beef consumption. As the market situation appears to be worsening, the Commission today has put forward a combination of measures in order to stabilise the beef market. In order to minimise the costly storage of beef, the Commission proposes to start a "purchase for destruction scheme" and a flexible handling of the public intervention system. It is further proposed to raise the advances paid for the beef premia from currently 60% to 80%, in order to ease financial pressure on beef producers.
Commenting on the proposals, Franz Fischler said: "BSE is an EU-wide problem which requires EU-wide answers. Firm action is required and today the Commission has delivered. We have to restore consumer confidence. And we have to stabilise the beef market. The Commission has today proposed a set of measures to achieve this. In order to minimise the potentially explosive cost of full-scale public intervention, we have proposed a "purchase for destruction-scheme". European farmers and consumers are in the same boat. Now it is up to the Member States to take the necessary decisions.
David Byrne added: "If animals aged over 30 months are not tested, they would have to be destroyed. BSE has not been found in animals aged less than 36 months for several years. By testing all animals aged over 30 months we are taking an ultra-precautionary approach".
Details on proposals for market measures
The Commission proposes that the intervention system is used in a flexible way in order to try to avoid as much as possible a fall of prices beneath the level of the safety net. Although public intervention is the classic answer to a market problem, this tool has considerable disadvantages when consumption declines. The meat will have to be sold afterwards and, even if consumption should recover, it will have to compete with beef on the market at that moment. Therefore intervention should be limited as far as possible. Thus taking beef into intervention now implies the need to reduce production in the future.
The Commission proposes to introduce a co-financed and time-limited "purchase for destruction" scheme. Animals aged over 30 months would either be destroyed or only enter the food chain, if tested negatively. Such a scheme could provide a cost efficient alternative to intervention and avoid the problem of what to do with the meat after expensive storage.
It is proposed to raise the advances paid for the beef premia from currently 60% to 80%, in order to take the financial pressure from beef producers.
Consequences of a total meat and bone meal (MBM) ban
"One should not over-dramatise the question how the meat and bone meal could be replaced. There is flexibility in production terms, there are market forces which will make oilseeds production more attractive and there is already a special aid regime for protein crops like beans or peas. I think that further measures to make this production more attractive could be explored.", Franz Fischler said.
The current production of MBM in the EU is estimated at 3 Mio t. Some 2,5 Mio t of this quantity are used for animal feed in the EU and 0,5 Mio t. are exported. According to estimates it would cost about 3 bn € to destroy this quantity through incineration. The value of MBM production is estimated at around 1,5 bn €. This figure includes both the revenue for the farmer and the value added of the industry.
MBM can be replaced in the feeding ratios by plant proteins (oil meals from soya beans, rapeseed or sunflower seed; protein crops like peas and beans; dried fodder). Currently the EU uses already more than 50 Mio t. of oil meals and protein crops in animal feed. About two thirds of it are imported, mainly in the form of soya meals and beans (26 Mio t. of meal equivalent). Soya is the nutritionally most important oilseed for animal feed.
It should be possible to mobilise the additional quantities of soya or other oil meals needed on the market. The additional demand could lead temporarily to price increases, which would set incentives to increase the production of oilseeds in the EU as well as in other countries. Although production in Europe could be expected to increase, a lot of supplies would still continue to be imported as production conditions in the EU are often less favourable than in the US or South America. Crop specific incentives to increase EU oilseed production would rapidly hit the limits of the Blair House agreement and are therefore not an advisable solution.
The limitations of the Blair House agreement do not apply to protein crops (peas, beans, sweet lupins) and dried fodder Already today, these crops receive a higher aid than cereals. Here further possibilities to make production more attractive could be explored, but that would have to be compatible with the WTO.
If EU prices fall under 78% of the intervention price, when the price in the Member State is below 60% of that price, the safety net intervention system opens with an obligation for the EU to buy every quantity offered