FSA votes for full cost recovery

The meat industry faces a “winter of discontent” after the Food Standards Agency (FSA) gave the green light to full cost recovery of UK meat hygiene inspections.

It agreed to halt its £25m subsidy for inspecting abattoirs and cutting plants, arguing that its role was to regulate, not sponsor the industry. The FSA pointed to efficiency savings made in the Meat Hygiene Service (MHS), which had cut operating costs from £91m in 2006/07 to £69m in 2009/10.

The meat industry currently pays 35% towards the cost of controls, about £24m of the £69m total cost. The remainder is funded by the Government: £20m from Defra and £25m from the FSA. Agency chief executive Tim Smith said its subsidy limited the agency’s ability to do as much as it wanted in areas such as dietary health, campaigns and research.

The FSA argues that full cost recovery would have little impact on retail prices – the price of a whole £4 chicken would rise by less than a penny (0.8p) and the price of 500g of lean mince, priced £1.92, would rise by less than half a penny (0.47p).

However, Alan Craig, president of the Scottish Association of Meat Wholesalers, said the move signalled the start of a winter of discontent. “It is completely disingenuous of the FSA to express the effect on our industry as half a penny on a half a kilo of lean mince,” he said. “What might seem insignificant because of FSA spin has the potential to comprehensively wipe out all the profit from our industry.”

Phil Hambling, food policy manager for the British Meat Processors Association, agreed that, for some, it could be the straw that breaks the camel’s back: “It could mean a potential 40% increase in many people’s MHS bills.”

NFU chief livestock advisor John Mercer also expressed concern that increased costs would be passed down the chain.

AIMS policy director Norman Bagley added that the MHS could still make substantial cost savings. “We can demonstrate that there is much more to be done to get much closer to a delivery cost of £50m, at which point full cost recovery ceases to be a problem as controls could be delivered at close to current costs to industry,” he said.

The FSA will now set up a consultation process with industry to decide how best to implement the policy.

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