All change

Running an abattoir is a tough business and with change almost a constant, it is hard for operators to keep pace. Fred A'Court looks at the key issues facing the sector

Ambitious targets to reduce costs, build efficiency and bring in a schedule of planned improvements as part of a transformation programme are well under way at the Meat Hygiene Service (MHS), with the aim of helping the abattoir sector fight off the recession. New business agreements with abattoirs and a revised MHS structure are also being introduced in a bid to bring about change and improve communication, it is claimed.

Yet it remains to be seen how effective the planned changes really are. The MHS can certainly claim to have reduced costs and, with it, manning levels, albeit not by as much as industry leaders want. In the last few years, it has cut average manpower by well over 400 and, by the end of next year, reckons it will be well on the way to slicing nearly a third off its costs in real terms since 2006.

While giving a cautious welcome to the MHS' efforts, abattoir leaders say there is still much to do, with ongoing concerns over inspection manning levels and some abattoir owners wary that the new business agreements will restrict the flexibility with which their businesses are able to operate. Falling livestock numbers are also a growing concern.

In particular, new contracts for delivery of meat inspection services in abattoirs, introduced in February, remain controversial in some quarters. Delivery of the services is now in the hands of just 11 contractors compared to some 70 before the changeover. The MHS says the move has been made in a drive to achieve better value for money. But Norman Bagley, from the Association of Independent Meat Suppliers (AIMS), believes that the new arrangements offer a 'dumbed-down' service in terms of the competence of vets. "The way the MHS has put out these new contracts has resulted in far too many 10-an-hour vets, who are frankly not up to the job - neither in terms of enforcement nor plant audit," he says.

Putting the work into the hands of fewer contractors has excluded many of the smaller contractors who previous organised the work efficiently and obtained compliance by respect, he claims. He labels the new contract system as badly designed and on the cusp of a complete shambles for which MHS will bear total responsibility, with lowest cost the first concern and quality of delivery a distant second.

However, veterinary and technical director for the MHS Jane Downes refutes the suggestion that the new contracts might mean some vets are not up to the job. The qualifications of all inspectors are checked to ensure they can do the job, she says. There have been suggestions that some inspectors simply tick boxes on forms when doing their inspections. But, says Downes: "There isn't a box to tick unless you carry out the duties."

Lead vets are responsible for ensuring audits are carried out properly and the new contracts have been introduced to provide better value-for-money, she says.

Staffing reduction

Progress has been made on MHS staffing levels, with the average number employed dropping from 2,023 in 2006/7 to 1,595 in 2008/9, a fall of 21% over the period. Cost savings of 5m had been planned for the period, but actual savings were 84% better, at 9.2m. And further progress is anticipated, the MHS says.

Downes has been involved in monitoring the progress of 34 recommendations for better working practices and inspection procedures in plants, following visits to 19 abattoirs last year to look for improvements. The recommendations are contained in a report on the optimisation of MHS services and cover a wide range of activities - among them achieving better animal identification systems to reduce duplication of work, better working practices in some plants, along with improved layouts and use of equipment, and better use of IT, particularly for more accurate and efficient capture of inspection findings.

Under a new structure that came in at the same time as the new contracts, two business directors now oversee MHS operations for the south and the north of England. Previously the country had been split into a number of areas. A dozen business managers work under the two directors, with the managers in touch with groups of plants known as clusters. Each cluster, 37 in all, has a local manager who is a lead vet.

The two business directors are Geoff Ogle, based in Newcastle, who covers the north of England, and Peter Styler, based in Devon, who covers the south. Styler says the new geographical division into just north and south has been established to counter allegations of inconsistencies between different areas of the country. He admits that covering such a big area of the country will be a challenge and adds: "We are still bringing in some of the new management systems, but so far nothing has fallen over and the vast majority of the industry seems pretty happy."

He says a new compliance strategy is being developed. "We need to be working better with the industry, so it is very clear where we are. If plants don't want to work with us, we will apply powers to ensure that healthy, safe meat comes out of the plants."

As to Bagley's concerns over veterinary competence, he says the MHS will clearly not accept below-standard performance. "We need to keep an eye on that to make sure they get the support and are as effective as we want them to be. Some will be fine from the start and others may need more support."

He adds that it is up to plant operators to alert the MHS to specific examples of where practices are falling down.

Two trial forums are being arranged for September, where the MHS and plant operators will be able to discuss issues. If successful, other forums will follow.

Business agreement controversy

The recent introduction of business agreements between abattoirs and the MHS is claimed to be resulting in valuable cost savings and improvements in efficiency. But there are doubts about whether they can be properly introduced into some plants, especially those that contract-kill.

The agreements, first introduced late last year, seek to help operators improve working practices and efficiency in their plants, so that inspectors are employed more effectively. So far, 174 abattoirs out of nearly 400 across Great Britain have signed business agreements, while a further 177 plants have provisionally agreed to them.

Many of the savings have been achieved by small, but significant adjustments to the way inspections are carried out to avoid duplication. Some plants have invested in 'rise-and-fall' platforms in the inspection area for example. This has allowed one inspector to examine both the top and bottom of carcases on the line, rather than having two inspectors present to do the job. Other plants have reorganised their lines, so that one inspector can inspect both red and green offals, rather than have an inspector for each.

Producers and plants are also being encouraged to deliver more stock into abattoirs the day before the animals are due to be killed. This allows vets to carry out ante-mortem inspections the day before, potentially saving on an early-morning start on the day of the kill and thus additional charges.

An important focus of the new agreements surrounds operating times, throughputs and types of species going through plants each day, thus making it easier for the MHS and the operator to assess required inspection manning levels. However, it is this aspect that has caused some concerns.

MHS business manager David Lowe has been responsible for introducing the new agreements. He says: "We needed to have a different relationship with operators and we have developed the agreements as a tool for sitting down with them to explain what we provide and how we provide it. It's a two-way process. The operator can comment on our services. There's lots to be gained both for us and the operator."

With more detailed planning of plant livestock delivery and throughput, it is possible, for example, to plan more inspectors on the line when cattle are being processed and less when sheep are going through, he says. "We're not trying to tell people how to run their businesses, but we can discuss possibilities and options with them."

Bagley believes the agreements, while good in principle, could force plants into an expensive straightjacket, particularly those that contract-kill and where it can be very difficult to predict the precise daily throughputs, due to extremely variable customer requirements. The agreements could reduce the ability of many plants to be flexible in the way they work, other than at a prohibitive MHS-imposed cost, he says.

Lowe responds: "Flexibility has been built into the charging arrangements. If we have to review the agreements on a daily basis, they will not work. If plants find they suddenly have an increase in hours worked, they should immediately contact the lead vet or the MHS business manager. We will always look to provide short notice cover and we've never let anyone down yet. If any change is long-term, we can always review the business agreement," he adds.

The MHS' eventual goal is to achieve business agreements with all plants. Stuart Roberts of the British Meat Processors Association says the introduction of the business agreements is one example of better communication between processors and the MHS, and is proof that the MHS is serious about addressing deficiencies in its services and achieving necessary cost-savings. A move away from the present child-adult mentality is now under way, he adds. However, concerns about overmanning, restrictive working practices and expensive office overheads are still to be addressed, he says. Bagley agrees, claiming that meaningful reductions in MHS staffing have failed to reach his members so far.

A fundamental key to the future prosperity of the abattoir sector in the UK lies in the number of livestock available for slaughter. Numbers of available animals have been falling for several years and the decline has accelerated since the end of direct production subsidies, following the 2003 CAP reform agreement. This effectively separated subsidies from the number of cattle, sheep and pigs that farms have to keep to qualify for payments. There are falling numbers of livestock across the board. Since 2000, the beef cattle breeding herd has fallen by more than 10%, the dairy breeding herd by 18%, sheep by 22% and pigs by almost one-third.

Although the decline in beef cattle numbers has been smaller than for other types of animal, the impact is potentially much worse, because it can take at least three years to replace animals through a breeding programme and up to five years to produce productive females. The cattle kill in UK abattoirs this year will fall below two million. "The real concern is that the number of female animals being killed is on the increase," says BMPA director Stuart Roberts.

Concern over numbers

The decline, and consequent increase in prices for live animals, has brought back a familiar spectre for the abattoir sector - over-capacity. Roberts reckons many abattoirs only see a throughput of about 70% of their capacity. "No abattoir works more than eight hours a day," he says. "They should be able to kill another 30% of animals. Lack of animals to kill is one issue and lack of storage refrigeration is another. The general working method in abattoirs is to turn up early and get the job done." Ironically, the current relatively good price for beef cattle being obtained by farmers is also exacerbating the problem because, rather than using the income to invest in building businesses, many farm businesses still do not have confidence in the future. The average age of farmers is 58 and many are taking the opportunity of a 30% increase in prices to sell off their herds and get out of the sector.

Roberts says the situation can be improved, but producers and processors need to work together in a structured way to ensure that, in 10 years, there is an adequate supply of British livestock coming into the food chain. The jury is still out on how a successful collaboration can be achieved. There will be a period of short-term pain in order to get the gain, Roberts reckons. "Females need to stop going into the food chain," he says bluntly. While this may mean even less availability for a few years, it will avert what is looking like a slow, creeping, long-term decline. "We are beginning to see people recognise this problem" he says.

Roberts reckons that producers, processors and retailers probably need a new approach to ensure there is confidence that a market for cattle exists and there are enough animals available. The current method of doing business is to simply decide a price and buy the livestock. With less stock now on the market, simply buying on price is becoming a thing of the past. Roberts suggests that one way forward may be for processors to be more involved in the breeding programme, perhaps by purchasing animals themselves or investing in fattening units. "A more long-term, strategic way of sourcing livestock for the food chain is needed if we are to halt what has been a 27% decline in the breeding herd since 1990. If we do not increase supply, we will lose critical mass," he says. EBLEX, which recently published a paper on the problem, says there is substantial room for improvement in both technical and business performance within the sector. "The beef supply chain remains convoluted and opaque," says chairman John Cross. "Strong retailer pressure on suppliers and a lack of transparency in the supply chain squeeze margins, distort market information, too often create adversarial relationships and, ultimately, lead to inefficiencies and higher costs. High regulatory costs are further burdens on operators in the chain; these costs tend to get passed back down the chain, rather than be reflected in final prices."

Meanwhile, AIMS' Norman Bagley says beef production numbers look dire. Fears of not making a real return on their investment mean farmers are unlikely to increase production of suckler cows. He predicts a fall in UK sheep production of up to 30% over the next few years if compulsory electronic tagging (EID) is introduced. Farmers are also unlikely to increase pig production. He suspects most will simply cash in on reasonable prices, afraid that many long-term contracts will not survive that long.

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