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The Foot and Mouth Disease (Scotland) Order 2006 and the Foot and Mouth Disease (Slaughter and Vaccination ) (Scotland) Regulations 2006 - Full Regulatory Impact Assessment

DescriptionThe Foot and Mouth Disease (Scotland) Order 2006 a
ISBN0 7559 1330 2
Official Print Publication Date
Website Publication DateMarch 01, 2006

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1. Title of proposal

The Foot and Mouth Disease (Scotland) Order 2006 and the Foot and Mouth Disease (Slaughter and Vaccination ) (Scotland) Regulations 2006.

2. Purpose and intended effect

Objectives

The objective of these measures is to provide an up to date regulatory framework for the control of Foot and Mouth Disease ( FMD). This will be achieved by transposing Council Directive 2003/85/EC of September 2003 on Community measures to be taken should foot and mouth disease ( FMD) be suspected or confirmed in EU territory. This Directive amends previous measures to control and eradicate FMD to incorporate recent scientific developments in the field of disease control and experience gained in eradicating FMD during the 2001 outbreak.

These measures will only be implemented in the event that FMD is suspected or confirmed, and do not have an ongoing impact. However, it is imperative that in the event of a FMD outbreak, disease control and eradication are achieved as quickly as possible, thus safeguarding animal health and welfare and minimising impacts on industries and rural communities. The central purpose of this Order is to create a legislative base from which this can be accomplished.

Background

Previous community measures for the control of FMD were laid down in Directive 85/511/EEC. The current Order, which dates from 1983, requires updating in the light of the advances made in disease control, and experience gained from the 2001 FMD outbreak. Furthermore, the current Order does not reflect the EU obligation (on all member states) to implement the new Directive fully. New legislation is required which fulfils our EU obligation and provides an up to date and comprehensive legislative basis for tackling any future outbreak quickly and effectively.

The proposed legislation comprises two Statutory Instruments. Existing domestic legislation gives powers for most of the disease control measures required, and these have been encapsulated in the Foot and Mouth Disease (Scotland) Order 2006, made under the Animal Health Act 1981. Powers under the European Communities Act 1972 have been used to transpose the additional measures required by the Directive in respect of vaccination and slaughter, expressed in the Foot and Mouth Disease (Slaughter and Vaccination) (Scotland) Regulations 2006.

This Order will also support the implementation of the Scottish FMD Contingency Plan ( www.scotland.gov.uk/agri/documents/CPjun04.pdf)

Rationale for government intervention

The rationale for Government intervention is based on the need to mitigate the serious risk to animal health and welfare which would be caused by an outbreak of FMD.

The FMD virus itself presents no appreciable risk to human health, although the mental and psychological distress of being caught up in an outbreak can be severe. FMD however is a serious threat to animal health and welfare, as it is extremely contagious, causing painful lesions, reduced yield, abortions, sudden death in younger animals as well as much suffering and distress. It affects cloven-hoofed animals, in particular cattle, pigs, sheep, goats and deer. These represent sectors of vital importance to the Scottish farming industry and the wider rural economy.

As a result of the severe economic consequences of FMD, it is regarded as a high risk List 'A' disease by the Office International des Epizooties ( OIE), the international animal health body. Any country affected by FMD cannot take part in international trade of susceptible animals or products derived from them. The internationally recognised status of 'disease free without vaccination' is important to international trade in animals and animal products. The primary aim of this Order is to maintain this status, or in the event of an outbreak, to regain it promptly, thus minimising costs to industries and unnecessary suffering to animals.

Under the Scotland Act (1998) we are required to fully implement EU legislation; not fulfilling this obligation could lead to infraction proceedings and ultimately European Court of Justice action. The existing legislation does not allow full implementation. More importantly, not implementing (and ignoring the many important lessons learned as well as the scientific advances in disease control) would leave us open to an FMD epidemic on the scale of, or worse than, 2001. Impacts would be felt on all rural industry sectors, in particular the agri-food industry, tourism and rural communities.

The potential scale and extent of the financial impacts of FMD can be inferred from the 2001 FMD outbreak. In Scotland the outbreak lasted from 1 st March until the final case on 31 May, with disease freedom being confirmed on 11 th September, and was confined to Dumfries & Galloway and Borders regions. The following points give an indication of the extent of the outbreak:

  • 187 farms were confirmed as being infected with FMD
  • 132,000 animals slaughtered on infected premises (73% sheep, 27% cattle)
  • 28 farms had animals slaughtered on suspicion
  • 1445 dangerous contact premises slaughtered out
  • In total 735,000 animals were culled during the outbreak, 643,900 of which were sheep.
  • Total compensation paid for animals slaughtered for control of FMD, 2001 was £178.8 m
  • estimated losses to farms not slaughtered out, due, for example movement restrictions, was £60M
  • Overall total impact of FMD in the initial year was to reduce the Scottish GDP by between £13.6M and £29.8M
  • Average farm cleansing and disinfecting projected costs £39,000 per farm ( NAO)

The effects of the outbreak were not confined to infected areas but were wide reaching, and impacted on both rural and urban economies; this sharply highlighted the interdependency of businesses. For example tourism was badly affected due to negative and emotive images of the outbreak, discouraging visitors from both home and overseas.

Economic consequences are, however, only one element of the total cost of a FMD outbreak. Although difficult to quantify, farmers and farming families can be affected emotionally and suffer strain and distress; these effects are likely to continue beyond the duration of the epidemic. However, as with other costs, these impacts will be greatly reduced by controlling the disease quickly and efficiently.

Environmental costs, for example the costs of slaughter, disposal issues/logistics, environmental and health risks associated with burning and burial, and environmental monitoring, must also be considered. Disposal issues present major logistical problems, as well as environmental and health concerns. For example the sourcing of appropriate disposal sites, the biosecure transportation of carcases, and the subsequent programme of environmental monitoring that must be carried out to ensure public health is not affected.

3. Consultation

The consultation exercise was undertaken within Government as well as with the wider public.

Within Government

Within Government we have worked closely with the Scottish Executive Health Department, Health Protection Scotland, Food Standards Agency (Scotland), the other UK administrations and the State Veterinary Service in preparing the legislation.

Public consultation

Stakeholders were initially consulted on the Draft FMD Directive as part of its negotiation through the EU Council Working Group in 2003. Following the adoption of the Directive, a full written public consultation package gave stakeholders the opportunity to comment on the proposed legislation. This consultation period ran from 29 July 2005 to 23 September 2005. A meeting of key industry stakeholders was held during this period to explain the main provisions of the draft legislation and to elicit comments. A summary of consultation responses is available on the Scottish Executive website 1.

4. Options

In considering the options to be examined in the Regulatory Impact Assessment, it is important to note that existing policies, especially enhanced contingency planning and the 13 day movement standstill for susceptible animals, will help to reduce the potential scale of a future outbreak.

Option 1: Do nothing

This approach requires no further legislative action and relies upon existing legislation to enforce disease control measures. It is included to provide a baseline for the costs of controlling an outbreak using the existing powers but is not of itself a viable option as it does not provide the range of measures required by the Directive.

Option 2: Transpose the Directive exactly, using the minimum measures

This option is a 'least action' approach. It fulfils the requirements of the Directive but provides only the minimum complement of powers/measures to do so.

Exact implementation of the EU Directive would entail the following measures:

  • Slaughter of infected animals and dangerous contacts as the main disease control policy
  • Prohibition of movements of (susceptible) animals in protection and surveillance zones. Movements in surveillance zones may be permitted under licence in certain specified conditions where the risk of disease spread is considered negligible.
  • Specified treatments of fresh meat and meat products from (susceptible) animals in protection and surveillance zones
  • Vaccination (either 'to kill' or 'to live'). Guidance on vaccination is set out in Scotland's FMD contingency plan. Vaccination will require a large subsequent programme of serological testing to show freedom from disease.
  • Maturation and deboning treatment of meat from vaccinated animals
  • Discretionary powers to kill non-susceptible animals, such as pets, on infected premises. (Veterinary advice is that they do not envisage circumstance in which they would wish to use this power but we must transpose it if we are not to be in breach of the Directive.)
  • Zoo and rare breed animals protected by measures including heightened biosecurity which may include restricting public access.

Option 3: Transpose the Directive with additional measures

This involves the minimum requirement of transposing of the EU Directive ( i.e. option 2); however, in addition, takes full advantage of the Directive's flexibility allowing Member States to adopt further measures with which to fight a disease outbreak.

Veterinary advice is that in certain areas the Directive should be strengthened by the addition of further controls. These measures, already contained within the existing FMD Order, are considered vital elements of a disease control strategy as demonstrated in 2001.

The following additional measures will be implemented under Option 3.

  • Pest control on premises where disease is suspected or dangerous contact there will be a requirement to control rats and vermin.
  • Requirement to control dogs and poultry within the protection and surveillance zones around infected premises.
  • Licensing of activities such as shearing, dipping and scanning of sheep in protection, surveillance and restricted zones.
  • A provision to close footpaths within the protection and surveillance zones
  • Shooting/stalking/drag hunting activities prohibited within protection and surveillance zones. In all other circumstances these activities may continue under license .
  • Markets/fairs/shows/gatherings of animals (including collection and dispersion of susceptible species) are prohibited in the protection zone and surveillance zone. Out with these areas such activities may continue under strict license and the risk of disease spread is considered negligible.

5. Costs and benefits

Sectors and groups affected

This RIA takes account of the impacts of the proposals on rural industries as a whole, as there is a considerable degree of interdependency between them. In the event of an outbreak, agricultural sectors, in particular livestock producers, will be severely affected as will the meat trade, abattoirs, auction markets, milk companies, food processors and hauliers. The wider food industry may be affected due to reactions of some export markets. Tourism sectors are also likely to be affected.

As this legislation deals with outbreaks of exotic disease, the costs associated with them will depend very much on the size, location and duration of the outbreak. For example, if a large abattoir or meat processing plant is "caught" in a Protection Zone ( PZ), this would have a much greater effect on the operation of the industry than if the PZ included only farms. However, it is likely that any outbreak will predominantly affect livestock keepers and the agri-food industries, and within these categories the provisions will be even handed and proportionate to risks.

Cost Benefit Analysis

As the circumstances of an outbreak cannot be predicted, a scenario approach is considered to be the best way of estimating the costs and benefits of a set of control measures. This is in line with the recommendations of the main FMD Inquiries, in particular the recommendation of Dr Anderson in his "Lessons Learned" Inquiry (2002). As a result, Risk Solutions were commissioned to undertake a Cost Benefit Analysis ( CBA) of FMD controls. The objective of the CBA was to provide epidemiological and economic information on the impact of a number of scenarios. An epidemiological model was built to characterise a range of disease control options and economic data was then applied to these. The results (on a UK basis) are summarised in the table below:

Key
IP - Infected premises
DC - Dangerous Contact

Scenario

Cost of outbreak (£ million)

Advantage of option 3 compared to next best

Option 1

Option 2

Option 3

Small outbreak, IPDC cull

21.8

22.6

21.9

-0.1

Small outbreak, IPDC cull + cattle vaccination

38.2

37.5

37.8

-0.3

Medium outbreak 1, IPDC cull

102.7

98.3

91.4

+6.9

Medium outbreak 1, IPDC cull + cattle vaccination

111.8

112.7

106.5

+5.3

Medium outbreak 2, IPDC cull

158.0

150.2

128.9

+21.3

Medium outbreak 2, IPDC cull + cattle vaccination

176.9

167.4

152.7

+14.8

Large outbreak, IPDC cull

648.3

612.2

435.1

+177.1

Large outbreak, IPDC cull + cattle vaccination

381.6

348.2

308.9

+39.3

Although the figures in the table above cannot be realistically broken down to give the Scottish position, the relative rankings will remain the same. A further conclusion from the CBA is that future outbreaks are likely to be significantly smaller than in 2001, as the speed and effectiveness of control measures make a major difference to the costs of an outbreak.

Benefits

Overview of benefits

The benefits (under all three options) accrue from reducing the severity of an outbreak, and thus reducing or avoiding the associated costs. Until an outbreak occurs, benefits are not accrued nor costs incurred.

Benefits of option 1:

This option requires no regulatory changes to be made, which would have a benefit (in the sense of costs avoided) of lack of disturbance to well understood work practices. In each of the scenarios modelled, this case is used as the "base case".

Benefits of option 2:

The main benefits of this option are listed below:

  • Vaccination, if appropriate to the epidemiology of the disease situation, could offer benefits in reducing the severity of an outbreak by stemming further spread of the disease. The CBA scenarios allow us to model not only the main scenarios themselves but also delays in the deployment of vaccine. In a large outbreak a delay in the deployment of vaccine resulted in a roughly 5% increase in total outbreak costs. A speeding up of vaccine deployment reduced costs by around 2%. Faster vaccination deployment may be a reasonable proxy for some of the additional powers under either Option 2 or Option 3, and so these estimates give an idea of the potential benefit in some scenarios.
  • There could be some benefits (in the form of small reductions in costs) to some farmers and others under Option 2 as they would no longer be legally obliged to comply with some of the provisions of the 1983 FMD Order.

Benefits of option 3:

The following benefits should result from the enhanced measures in Option 3:

  • Pest control and control of dogs/poultry : This will reduce the threat of disease spread from mechanical vectors.
  • Licensing of activities: Itinerant workers undertaking activities such as shearing, scanning, dipping etc. present a high risk of spreading disease. However loss of these activities for any length of time would risk serious welfare issues. Licensing of itinerant workers who provide such services will allow these workers to carry on their trade, avoid any potential welfare issues and ensure strict biosecurity guidelines are adhered to.
  • Restricted access on footpaths : Powers to close footpaths/access within the infected area ( i.e. protection and surveillance zones) will be provided. This will have major benefits for tourism and related industries as access to areas outwith these areas will be left open and the public will be urged to adhere to biosecurity measures i.e. disinfect footwear, where the facilities exist
  • Shooting/stalking/drag hunting activities will be prohibited within protection and surveillance zones; this reflects the risk of disease spread associated with these activities. However their continuation under license outwith these areas will ensure strict biosecurity measures are adhered to, and be beneficial both in generating income and a sense of normality within affected communities.
  • Powers to ban all markets/gatherings etc. in the restricted and surveillance zones are considered essential to halt and eradicate disease. Outwith these areas such activities may take place under license. This again is important as it represents a social norm as well as allowing a more usual pattern of business and income generation.

Costs

Overview of costs

As with the benefits (above), most of the costs associated with this proposed legislation are incurred only when an outbreak happens. They are however, real costs where they do occur. As the severity of an outbreak depends on several variables, including location and timing, it is difficult to estimate them in advance with any accuracy; however the model examines the potential impact of each option.

Costs of option 1

Option 1 is regarded as the "base case" for each of the scenarios, and the cost estimate is given in the table above. However, as Option 1 does not fulfil our obligation to implement EU legislation, there may be further costs relating to infraction proceedings and fines imposed by the European Court of Justice, which are impossible to estimate in advance but would be expected to be substantial.

Costs of option 2:

The extra control provisions in Option 2 will involve some additional costs for livestock producers. The estimated cost range across the outbreak scenarios are as follows -

  • Animal movements are one of the major disease transmission mechanisms. Drawing on knowledge of the 2001 outbreak, and the fact that movement restrictions on susceptible animals have been in place ( i.e. 13 day standstill) since then, direct costs of livestock movement controls in Scotland in a future outbreak could be up to £3.2m. These costs include additional feed associated with keeping animals longer than intended, price penalty from keeping animals beyond their optimum sale date and production inefficiencies as a result of longer retention. Specialist beef, specialist cattle and mixed farms are the farm types most affected by the movement controls .
  • Meat from vaccinated animals will require to be either heat treated or de-boned and matured, imposing costs on abattoirs and meat processing plants. These costs will be a major factor governing industry acceptance of a vaccinate to live policy. Reactions from industry were sought, but little firm information was forthcoming. However, estimates suggest that the requirement of maturation and de boning of meat from vaccinated cattle would increase costs of slaughtering by 5 - 15 %. These costs would be greater for sheep/lamb as there would be proportionately more waste on the smaller carcase. It is difficult therefore to provide a meaningful figure for the cost of heat treating a carcase. We have estimated instead, with the help of the farming and processing industry, the cost as being the likely reduction in value of a carcase that was heat treated and therefore only able to be marketed as processed product rather than fresh meat. In the case of pig meat (where heat treatment is the only treatment permitted) we estimate that this reduction would represent around half the value of the carcase. If we assume proportionately similar costs for cattle and sheep (which can only be heat treated in a PZ) then it would clearly not be in a livestock producer's economic interests to send his animals for heat treatment in a PZ, or for pigs at all, if any alternative were available. However, the Directive does allow for a derogation from these treatments 30 days after a PZ has been in place and cleansing and disinfection and surveillance testing has been completed. We have therefore assumed that the most realistic scenario is that producers would wait for this derogation to become available. This is because the cost of treatment would outweigh the economic cost of waiting, such as extra feed and the loss of value from not marketing livestock at its optimum weight. These withholding costs over 30 days have been estimated to range UKwide from £250,000 to £5.6m.
  • Meat and meat products originating from protection and surveillance zones are prohibited unless treated by heat and other methods. Firm costs for these treatments have not yet been established. Estimates of the costs and benefits of an emergency vaccination policy suggest that, for fresh meat from vaccinated cattle, the requirement for both de-boning and maturation would increase the cost of slaughtering by some 5%-15% and require a price discount of broadly 10%. Evidence from the sheep industry suggests that the effects on sheepmeat would be greater due to the practical difficulty of deboning cuts of sheepmeat, other than the leg and shoulder. Such costs would also apply to cattle and sheep producers in Surveillance Zones where deboning and maturation is permitted. Again, it has been assumed that producers would wait for derogations to be available, as they would be in phase 3 of a Vaccination Zone, before sending their animals for treatment. This would result in a similar range of likely nationwide withholding costs as set out above. In fact, such costs would probably be lower as, depending on the size and epidemiology of the outbreak, the area and number of animals covered by Vaccination Zones would probably be smaller than that covered by Protection and Surveillance Zones, although it is not possible to model with any certainty where such vaccination would take place.
  • Prohibition on testing milk samples (from the protection zone) for milk hygiene purposes in laboratories not authorised to test for FMD virus. This will potentially cause practical problems for dairy companies monitoring the quality of milk collected in these zones prior to pasteurisation. The milk is normally tested at a laboratory for antibiotic residues, water and butter fat content, as farmers are paid for the quality of the milk .
  • Compensation will be provided by the Government for infected animals culled-out

Costs of option 3:

All costs associated with option 2 above also apply here.

The additional measures contained in option 3 have the following estimated costs ( UK wide):

  • Pest control and control of dogs/poultry £14,000 to £1.2m
  • Licensing of activities £10,000 to £0.57m
  • Restricted access on footpaths £53,000 to £4m
  • Shooting/stalking/drag hunting activities £9,000 to £195,000
  • Powers to ban all markets/gatherings £228,000 to £0.96m

The largest costs in the above list affect a wider community than just the affected farmers, and the costs of the farm level measures (such as rodent control) are unlikely to be significant for individual farmers.

6. Impact on small businesses

In the event of an FMD outbreak the measures in this Order are likely to affect small businesses in particular, predominantly farmers, but also other small businesses in rural areas. During consultation on the draft Directive which this Order implements, we received no specific feedback from small businesses. Our normal stakeholder consultation arrangements involve SMEs from all parts of the meat supply chain across Scotland, and they have been kept informed of the requirements of the Directive and have been able to make representations on the measures and their effect on the businesses. They are fully aware that the impact of an FMD outbreak will depend on its location, scale and timing.

From the responses which were received the main issues centre round vaccination. Its availability as a disease control tool is welcomed; however concern is raised by the meat industry regarding consumer acceptance and Scotland's capacity for heat treatment of meat.

7. Test run of Business Forms

The business forms required by this legislation are revised versions of forms which have been tested in use over a long period. Those forms which are new (primarily those which relate to vaccination) have been tested by the SVS, who will be the main users of the forms.

8. Competition assessment

These SSIs are likely to have only a minor impact on competition in the markets directly affected by them. The major markets affected include the European markets for beef, sheep meat and pig meat, as well as markets for the trade in live animals. Other farm types, such as poultry holdings, may incur indirect impacts from the legislation. Furthermore, whole other sectors of the rural economy such as the tourism industry may be indirectly affected by the SSIs.

Of the markets directly affected by the draft legislation, all are characterised by low levels of concentration; no firm has 20% market share and no three have 50%. The SSIs will affect some firms substantially more than others, but this will depend primarily on the location and nature of the disease outbreak. The shocks to supply that the SSIs may bring about if implemented would not be due to competitive distortions.

The legislation will have a temporary impact on the market structure if an FMD outbreak occurred, reducing the number of meat and animal suppliers. However, consumers are not expected to suffer as a result of this, since substitution to imports or other non-affected meat, such as poultry, will be possible.

9. Enforcement, sanctions and monitoring

In the event of an outbreak in Scotland, the proposed measures will be implemented by the State Veterinary Service Agency, as under existing EU and national law. Local Authorities will assist in enforcement.

The European Commission has responsibility for monitoring enforcement by Member States in order to ensure uniform application of EU legislation.

Monitoring of the effectiveness of the Regulations will arise from regular Contingency Plan Exercises.

10. Implementation and Delivery Plan

The measures in this legislation will only be implemented in the event of an outbreak of disease in Scotland. Delivery of the measures will be as set out in the Scottish FMD Contingency Plan, which clarifies the respective roles of the SVS, local authority and other public and industry stakeholders.

11. Post Implementation Review

This legislation will only be implemented in the event of a disease outbreak. However, the contingency planning arrangements for which it provides the legal base are kept under review and subject to regular exercises.

12. Summary and recommendation

Three main policy options for the transposition of the EUFMD Directive are examined in this Regulatory Impact Assessment. A modelling approach was adopted to estimate the costs to the UK of FMD outbreaks (of varying size and type) under each of the three policy options.

In small outbreaks there was little to choose between the options. Option 3 was the best in medium or large outbreaks, whether involving vaccination or not. The cost advantage of Option 3 was particularly marked in the case of large outbreaks.

Option 3 is therefore recommended as offering a complete transposition of the EU Directive and a cost effective set of "tried and tested " measures derived from the 1983 FMD Order.

Declaration

I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.

Signed by the responsible Minister:

Ross Finnie signature

Ross Finnie, Minister for Environment and Rural Development

Date: 6th February 2006 date as graphic

Contact: Neil Ritchie
Animal Health and Welfare Division
January 2006