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Responsibility and Cost Sharing. Who pays the Piper? And to the tune of what?

DEFRA announced on 7 July 2009 a joint industry and government working group to be chaired by the economist and government adviser, Rosemary Radcliffe. (See her notes on "ways of working" Sept 09) It is to advise on how best to develop a body to share responsibility and costs of animal disease with the livestock industry. There are concerns about the new board's powers and independence regarding policy. There are also other concerns relating to membership of the board, to staffing, to cost and to a number of other outstanding issues, such as animal welfare. The National Audit Office (pdf file) recently stated that The new animal health body must accurately work out costs and they must be tightly controlled if livestock farming is to survive.


(Industry Cost Sharing a paper by Dr Roger Breeze.)
"Ms Radcliffe was adamant responsibility sharing must come before cost sharing in her report. She wanted the group to take a good look at Defra's accounts - deemed unfit to consider full cost sharing in a 2010 National Audit Office report - before making any firm recommendations.
This process is now under way." FG Feb 24th 2012

LATEST

February 8th 2012 ~ "there must be concern about whether the mechanisms devised for responsibility and cost sharing will ever be able to make up for the imminent shortfall in funding." Veterinary Record

January 31 2012 ~ It will require changes to the way everyone works: Ministers; civil servants; animal keepers and their representative organisations; vets; other stakeholders alike.

September 16th 2011 ~ More than 60 people have applied for places on England's new Animal Health and Welfare Board (AHWBE).

April 26th 2011 ~ Responsibility and Cost Sharing - the Animal Health and Welfare Board for England - operating within DEFRA itself - yet a "completely new way of working" says Jim Paice

December 13th 2010 ~ Can the newly unveiled Cost Sharing plans take animal health policy "out of high-emotion politics and into science-based policy-making"?

June 4th 2010 ~ Cost Sharing "not a done deal" says Rosemary Radcliffe.

May 8th 2010 ~ Cost-sharing - Rosemary Radcliffe's comments will be of particular interest in the light of the outcome of the General Election

Feb 6 2010 ~ "We are very concerned about the government's determination to split health from welfare."

Feb 5th 2010 ~Farmers' frustration with the new draft "Animal Health" Bill

27 January 2010 ~ "the subject is shrouded in more uncertainty than ever..."

27 January 2010 ~ BVA "we are deeply disappointed that DEFRA remains committed to splitting animal health policy and animal welfare policy"

January 26th 2010 ~ Conservatives say there is no guarantee they would implement the Government's Responsibility and Cost Sharing plans if they come to power.

January 25 2010 ~ DEFRA's draft Animal Health Bill presented today

January 2010 ~ Rosemary Radcliffe acknowledged that the draft Bill may "engender an element of alarm" among livestock producers who fear their sector could be landed with a hefty bill.

December 3 2009 ~ Cost Sharing- no benefits except that farming takes over government costs?

November 20 2009 ~ Cost sharing - looks set to be introduced before the next General Election

November 18 2009 ~ Cost sharing - "we have to keep our guard up on this issue - its not gone away.."

November 17 2009 ~ The issue to be shelved for now - "It's rather like beaching the Titanic before it reached the iceberg."

Oct 30 2009 ~ "we are deeply concerned about DEFRA's current plans for England.." BVA President

September 15 2009 ~ "The DEFRA establishment is well-meaning but utterly ill-informed and disconnected from rural Britain and farming in particular."

Sept 15 2009 ~ "Change is urgent and inevitable"

Sept 14 2009 ~ Tories plan to charge farmers for the cost of a badger cull

August 30 2009 ~ "they will throw the cost back to farmers, by which time it will be too late"

Friday August 14 2009 ~ "My strong recommendation to veterinarians is that, whatever government responsibilities might be, the profession should step into the leadership vacuum and assume greater responsibility" - Professor Philip Lowe

Sunday July 10 2009 ~ farm livestock database - it seems horse owners too will have to pay

July 7 2009 ~ Reaction to the cost sharing proposals

July 6th 2009 ~ Responsibility and cost sharing already a "done deal"?

30th June 2009 ~"We're asking DEFRA to go back to the drawing board on responsibility and cost sharing." Nicky Paull

June 15 2009 ~ Six industry bodies have combined to express their opposition to the establishment of an independent body for animal health in England

May 6/7 2009 ~"We know how cavalier DEFRA is with money and it seems vital that we should have some control, since it is our money that will be spent "

Wednesday May 6 2009 ~ DEFRA hopes to raise £24 million a year from the headage levy on pigs, cows and sheep

April 25 2009 ~ DEFRA spending on opinion polls, focus groups and market research

22 April 2009 ~ NFU concerned that farmers might have to finance nine tenths of the cost of combatting an outbreak of a disease such as foot-and-mouth

21/22 April 2009 ~ National Beef Association says NO to cost and responsibility sharing because the cost to farmers would be too great

April 3 2009 ~ " This approach is disjointed, distorted and discriminatory..."

April 1 2009 ~ Peter Kendall: "It must be a genuine partnership between livestock farmers and the government, and must have real powers and be able to deal with the European Commission on animal health issues."

March 31 2009 ~ BVA President urges those involved to make sure their voices are heard in the Cost Sharing consultation

March 31 2009 ~" It's the job of the government to keep out disease": Peter Kendall

March 31 2009 ~ "Never let a crisis go to waste. ... a chance for business to transition from an anonymous, complex system to one that is direct and transparent."

March 30 2009 ~ "details of proposed fund-raising mechanisms...."

March 30 2009 ~ dismay at plans to install "an expensive new organisation, possibly modelled on the "over-staffed and sluggish Food Standards Agency" to run animal health policies ... for which the bill is mainly funded by farmers

March 30 2009 ~ "the livestock production and animal product processing industry and the retail sector should all pay a share of the above costs not borne by government because all components benefit from animal agriculture - this includes auctions, retail stores and slaughter plants."

Feb 5 2009 ~ National Sheep Association says, "...good words and acceptance of recommendations is all well and fine..."


Received Feb 5 2009

".. the best way to encourage farmers to vaccinate their stock against BTV and anything else that crawls out of the woodwork in the next few years is to offer them a hefty discount the more proactive they are.."


Feb 4/5 2009 ~ "We plan to consult on specific proposals for implementing responsibility and cost sharing for animal health shortly."

February 4 2009 ~" well and truly bushwhacked in a carefully planned ambush" Kim Haywood

December 12 2008 ~ A concerned British Veterinary Association asks, "What price animal health?"

November 6 2008 ~ Cost-sharing ".... they have taken their bat home because they do not think you have played fair with them on bovine TB.."

November 4 2008 ~ "The NFU has confirmed that it is not engaged in any discussions with DEFRA on livestock disease cost and responsibility sharing"

August 14 2008 ~ farmers to pay a headage fee in return for "possibly" an independent body on Animal Health policy

July 23 2008 ~ Non-participation in cost-sharing. Non participation on "TB Partnership". New call for a truly independent body on Animal Health matters

June 21 2008 ~ DEFRA won't help towards Surrey's £250,000 FMD bill.

June 2 2008 ~ "...regular contact with stakeholders, and being as open as possible about current and future policy-making, has contributed to creating a climate of trust" CVO report 2007 (page 21)

May 28 2008 ~ Surrey County Council will prosecute neither IAH Pirbright nor Merial over FMD leak last August

February 5 2008 ~ "...animal disease crises, plus the flooding, cost DEFRA £65m in unplanned spending last year."

January 4th 2008 ~ "Vigilance" plea repeated yet again

(Industry Cost Sharing - the wisest plan on sharing the cost of animal disease control we have read: a paper by Dr Roger Breeze. Click here)
Paper by Dr. Roger Breeze, CEO, Centaur Science Group (formerly, Associate Administrator, United States Department of Agriculture, Agricultural Research Service), Washington DC.

Industry Cost Sharing

In the US, the Golden Rule is that he who has the gold makes the rules. That the British government is now looking to the livestock industry to share the costs of epidemic disease control is a welcome change, because when the government had all the gold and set all the rules, the results were demonstrably not to anyone's liking. Cost sharing offers industry a chance to sit at the table as a partner to make sure that when it pays what is asked, it gets what is promised.  In this context, I use "industry" to mean those concerned with the raising, processing and sale of livestock and poultry from farm to fork in the UK, including all zoo and commercial animals and birds (from which commerce or profit is derived) regardless of species. There are other private sector industries that I will identify later in the narrative.

To be a partner in a real negotiation, the industry has to know what it wants so that proposals from the government can be assessed in terms of how well they advance or retard what industry wants to see as the outcomes. Industry cannot negotiate meaningfully if its "negotiation" comments are only responses to proposals and goals of the government.

The following comments are directed at all foreign animal and poultry disease emergencies but particularly for foot and mouth - one cannot detail all possibilities here.

Industry desires might be as follows:

1.            FMD does not occur in the UK or the EU.

2.            The only way FMD virus can become a livestock problem in the UK is if someone accidentally or deliberately brings the virus, live infected animals or infected animal products into the UK.

3.            The industry has no powers to prevent accidental or deliberate FMD introduction - this is an essentially governmental function. The industry recognizes that a portion of the costs of keeping FMD and other infections out of the UK should be borne by those passing across the country's borders or importing animals or goods that might carry these infections.

                     i.            Plans should be developed for effective screening of persons, conveyances (cars, trucks, boats, planes) and goods of all kinds arriving in the UK to ensure that illegal imports of animals and animal products that might carry foreign pathogens of concern are detected.

                   ii.            Performance Benchmarks should be established - what proportions of passengers, conveyances and goods will be examined, how they will be examined and how results will be reported. When possible, robotic automated devices should be employed to screen the maximum numbers of potential targets.

                  iii.            Industry accepts that it is not possible to examine all travelers, goods or conveyances and will agree with government what an acceptable fraction should be. Later, there might be redirection of inspection resources based upon risk assessment and experience. A case can be made to inspect a greater proportion of travelers, containers and goods coming from countries in which FMD and other diseases of concern are known to be present than from disease-free countries, thereby encouraging countries to eradicate disease within their borders.

                 iv.            A fee should be assessed on all travelers, conveyances, shipping containers and goods entering UK to pay for an agreed share of the increased costs of inspection. This fee would be greater for conveyances carrying live animals or animal products and for imports of live animals and animal products - but inspection should not be restricted only to these since the declared manifest might be incorrect. Reduced fees might apply to those meeting higher standards of validation as to the nature of the import and country of origin. ALL sector components should contribute - the shipping companies as well as the shipper - to ensure that all are vested in the outcome. There should be real and significant penalties on the boat, truck or airline industry members found to be carrying illegal imports to discourage illegal imports at the point of loading in a foreign country.

                   v.            On a non-disclosure basis, the government should make available to industry representatives the records on how well Performance Benchmarks are being met - the government should have the necessary resources to meet these benchmarks from tax revenues and user fees and be prepared to demonstrate that it is meeting its Performance promises.

                 vi.            Laws and regulations on penalties for failing to comply with importation requirements should be reviewed to ensure that penalties are commensurate with the likely degree of economic consequence.

                vii.            Through differential fees, the government should encourage adoption of importation practices that minimize fraud and maximize effective inspection, such as source validation, unalterable product seals, electronically verifiable certificates of origin, and lifetime tracking of the imported products in ways that can be validated in real time by the customs inspector at the point of importation.

              viii.            The purpose of the above program component is to ensure that all those engaged in entering the UK, with and without products or animals that might carry infection, contribute towards the costs of an effective program with measurable impact on preventing illegal importations.

                 ix.            The above comments do not address deliberate introduction (see below).

4.            Government has chosen to retain all powers to diagnose FMD and to respond to an introduction by vaccination and other health interventions and by release of vaccine to livestock owners. The industry is willing to share the costs of an agreed and effective diagnostic and response system in which government meets agreed Performance Benchmarks that will limit industry losses should FMD occur. By "livestock" below I also intend zoo, game and other non-farm animals and birds.

a.             Early reporting of suspicious cases is critical to limiting any subsequent epidemic. Through education and training, the government should ensure that livestock owners and those employed in the industry know what to look out for and how to report suspicious cases. An inducement scheme might be adopted to encourage reporting. This component should have Performance Benchmarks.

b.            Within 6 hours of notification by a veterinary surgeon of a suspicious case, government should have made a definitive detection of the foreign animal disease by transporting samples to Pirbright or by examining samples in regional laboratories or on the farm. This component should have Performance Benchmarks.

c.             In cooperation with the livestock industry and the Royal College of Veterinary Surgeons, the government shall have in place an emergency communications capability to inform directly all UK livestock owners and veterinary surgeons or a defined subset of them immediately (within 1 hour) after a definitive diagnosis. This communication system might be by telephone or other electronic means. This component should have Performance Benchmarks.

d.            Through education and training, the government shall ensure that all livestock owners and veterinary surgeons know what preventative measures they should employ under their farming circumstances when disease is diagnosed. This component should have Performance Benchmarks.

e.             Within 24 hours, government should have determined the strain or subtype of the pathogen and ordered the production of the most efficacious vaccine from stockpiled antigens. This component should have Performance Benchmarks.

f.              The government will maintain a stockpile of vaccines (in the form of frozen antigen of indefinite shelf life) to protect UK livestock against all strains of the pathogen circulating in the world. The numbers of doses of each vaccine may not be the same as the total number of susceptible animals or birds but the government shall fully compensate owners for whom vaccine is not available in the event of an outbreak.

g.             The government will have a plan and capability to deliver sufficient vaccine for all susceptible livestock to their owners at pre-determined distribution points starting 72 hours after definitive diagnosis and being complete by 144 to 168 hours. This component should have Performance Benchmarks.

h.             The government shall ensure that sufficient laboratory capability and capacity exist to perform all diagnostic and differential diagnostic tests during and after an outbreak in a timely manner.

i.               All components of the livestock production and animal product processing industry and the retail sector should pay a share of the above costs not borne by government because all components benefit from animal agriculture - this includes auctions, retail stores and slaughter plants. The consumers' portion is paid by government tax revenues.

j.              The purpose of the above program component is to ensure that all those benefiting from production, processing or sale of animals and animal products of UK origin and those similarly benefiting from imported animals or animal products contribute towards the costs of an effective program for earliest detection and most rapid effective response to foreign animal and poultry disease threats and are actively engaged in such a program should disease occur.

5.            When a disease outbreak occurs during a period in which the government is not meeting its Performance Benchmarks for importation security, the industry shall not have to pay its share of disease control and compensation costs stemming from failure on the government's part.

6.            When a disease outbreak occurs during a period in which the government is not meeting its Performance Benchmarks for diagnosis, vaccine deployment and preparedness, the industry shall not have to pay its share of disease control and compensation costs stemming from failure on the government's part.

7.            Livestock owners will be compensated for the value of stock slaughtered in the period before vaccination has occurred and disease control measures are fully implemented - this might be as long as two weeks after definitive diagnosis. The first owner to report a suspicious case that proves to be an infection of concern shall be compensated at four times the value of the stock; those subsequently reporting suspicious cases that prove positive within the first two weeks after a definitive diagnosis shall be compensated at twice the value of the stock. Owners of stock deemed to be infected more than two weeks after definitive diagnosis shall not be compensated from government funds, although insurance against such an eventuality shall be offered in advance. This scheme is intended to promote industry-wide vigilance and immediate diligent attention and response after disease is diagnosed.

8.            With all Performance Benchmarks met, by government and industry, the goal is to snuff out an outbreak in two weeks after diagnosis by active commitment of all sections of the industry and related industries.

9.            The issue of who should pay what in the event of deliberate introduction of disease is difficult. Deliberate introduction will be either a crime or a terrorist attack - deterring and responding to either of these are inherently governmental functions.  I have argued that changing the way government responds to FMD and other foreign infections can reduce or remove the terrorist threat since it is the drama and visual theater of mass slaughter and destruction that the terrorists seek to have shown on al Jazeera and BBC World News. This is why I assume vaccination above, not mass slaughter. I am not sure of UK law on insurance against terrorist attack - if terrorism causes damage, does the liability fall to government not the insurer? Who paid for the physical damage to the London Underground? Was it insurance or the government? Seems like a similar principle would hold for deliberate disease attack.

 

August 5, 2005

 

Roger Breeze,

CEO, Centaur Science Group (formerly, Associate Administrator, United States Department of Agriculture, Agricultural Research Service), Washington DC.

 

Sharing Responsibilities and Costs for Animal Disease


Government Policy and the Way Forward


By Caroline Cranbrook


(Vice-President Suffolk CLA Branch, Member CLA Policy Committee & Chair of the East of England Grazing Forum)




Prevention and control of animal disease are of incalculable importance to the livestock industry and to the health and well-being of the human population. Some diseases, such as foot and mouth, only affect livestock. Others, such as bovine TB and avian flu, are a real threat to human health. It is in the interests of everyone that animal diseases should be prevented and controlled as scientifically, efficiently, economically and humanely as possible. At present this is not happening. The devastating spread of bovine TB is a dreadful example of the failure of existing policies, resulting in huge costs to the industry, to individuals, to animals, to the taxpayer and to the reputation of British livestock.

The regulatory framework of animal health and welfare remains excessively complex, bureaucratic and expensive. At present, 14 governmental bodies are involved, some with overlapping responsibilities. Channels of communication are often ill-defined, as are lines of responsibility. Links between scientific research and policy are particularly opaque. And the costs are enormous. Sometimes this has been the consequence of ill-conceived government policies, such as the deplorable, unscientific, impractical contiguous cull of livestock in the first foot and mouth epidemic. At the same time, the EU requires a mandatory framework for sharing responsibilities and costs to be in place in all member states by 2010. Meanwhile, DEFRA's budget is continually being reduced.


So, for all these reasons, DEFRA plans to share responsibility and costs of animal disease with the livestock industry by introducing new arrangements, though it intends to keep animal welfare separate as part of DEFRA. The new framework will involve the whole livestock industry - even those who rear game-birds - but possibly not horse owners.


Change is urgent and inevitable. Following extensive consultations, DEFRA has put forward a variety of proposals as to how sharing responsibility and costs will work. The one supported by the CLA, the NFU and the British Veterinary Association is that a new body, a Non-Ministerial Department (similar to the Food Standards Agency), would be established, governed by an animal health board and staffed by personnel transferred from DEFRA. A joint advisory working group on the proposals is being set up but, although it has a chair (the economist Rosemary Radcliffe), to date it has no members. Government expects the total cost to be £44 million a year, with £22 million coming from the industry. Start-up costs are estimated at £12 million and running costs at £2 million a year.


The CLA, NFU and BVA all agree that we need a new approach to animal health and welfare (which should remain together) and that this should be based on a genuine partnership with DEFRA. This is crucial. Although in principle they support the proposal, there are concerns about the new board's powers and independence regarding policy. There are also other concerns relating to membership of the board, to staffing, to cost and to a number of other outstanding issues, such as animal welfare.


As regards sharing responsibility for animal health and welfare, the CLA is very clear that the new board must be separated from ministerial politics. It should be truly independent of ministerial control and have real responsibility, not only for animal health but also for animal welfare. The two cannot be separated and both must be taken out of politics and be given stronger links to science. Logically, the existing Animal Health Agency and the Farm Welfare Council should become the executive agencies of the new body. Prevention and control of exotic diseases, particularly the zoonoses (those which infect people as well as animals) should be government-funded as they provide a public good. The new body should be empowered to simplify and reduce the regulatory framework. It should also be allowed to operate at EU level and be able to advise ministers when they negotiate in Europe.


An unresolved problem is the lack of uniformity across the United Kingdom. The devolved administrations in Scotland, Wales and Northern Ireland will operate differently. This will have serious consequences. Disease does not recognise frontiers. If different systems and standards are introduced in different UK countries, this will inevitably distort competition, making livestock farming and disease control more difficult. The livestock industry and its markets, abattoirs, meat plants and the supermarkets are all closely interconnected and operate freely across the United Kingdom. Introducing new artificial boundaries relating to disease would inevitably distort the industry, making it uncompetitive and more difficult to operate.


The CLA has concerns about the membership of the new board. DEFRA suggests members should be appointed according to Nolan rules. This is fine for DEFRA's own appointees but if the industry is paying for 50% of the costs, then it should be allowed to choose the members who represent it from its own sectors - beef, sheep, pigs and poultry. I suggest that smallholders and the rare breeds should also be represented, as should the private sector vets and probably LACORS (Local Authorities Regulatory Services), which has an important regulatory role. The Chief Veterinary Officer, together with DEFRA's chief scientist should certainly have seats on the board. It is essential that strategy and good practice are based on the best up-to-date science and on the practical, local knowledge that the livestock sectors and their vets can provide. This should go some way to improving and making more transparent vertical and horizontal communication, the lack of which has been a constant criticism in the past.


Staffing needs to be looked at carefully. DEFRA employees should not automatically be transferred to the new body. Many will have unique knowledge and expertise. Even so, if we are starting afresh, then individuals should be invited to apply for jobs which have terms and conditions similar to private industry.


The industry should certainly help fund the new organisation. However, the CLA is unhappy with DEFRA's proposals. Trust first needs to be rebuilt between government and livestock farmers, many of whose businesses are being crippled by government's unwillingness to take measure to control bTB. Imposing a new cost structure before setting up the new independent body would completely undermine confidence in it. The CLA is also critical of DEFRA's calculations in its Impact Assessment, as is the National Audit Office, which has stated that ‘the Department does not have sufficiently robust financial or performance information on controlling diseases to assess routinely the costs and benefits of intervention, and to underpin a transparent and equitable cost-sharing scheme'.


It is unclear how DEFRA has calculated the cost of £44 million a year. It has also under-estimated the costs already borne by the industry. We need better and more transparent cost analysis and a new consultation on the true costs, disease by disease, sector by sector, before we agree to pay our share. The £12 million set-up and £2 million a year running costs seem excessive and need to be detailed in full and reduced. The example of the Meat Hygiene Service (the enforcement agency of the Food Standards Agency) is not encouraging. In 1995, the total cost of the MHS was £29 million but by 2007 this had gone up to £94 million, an increase of over 320%. It is essential that costs are tightly controlled by the new animal health body, otherwise it will be the end of livestock farming. Insurance has also been suggested by DEFRA, but it is not possible to insure against exotic disease, while commercial insurers say they are unable to assess the risks and at present are unlikely to provide the sort of cover suggested by DEFRA.


DEFRA's responsibility and cost sharing initiative provides a unique opportunity for the livestock industry, the vets, the scientists, the regulators and DEFRA itself to revolutionise and make more efficient the prevention and control of animal disease. However, we must end up with a better, more science-based, practical, streamlined affordable system which is less bureaucratic, with costs properly evaluated, reduced and controlled. There has to be a genuine partnership. And this can only happen if the new Non-Ministerial Department is truly independent, responsible for both animal health and welfare and with genuine powers of decision. We cannot go on as we are but we have to get it right.


Published by the East Anglian Times on September 12 2009