Livestock Feed Controls in Scotland review Partial Business and Regulatory Impact Assessment

3. Option 1

Option 1 would affect livestock businesses, sectors involved in the production and regulation of livestock feed, and final consumers of these products. The expected benefits and costs to different sectors is expanded below.

3.1 Benefits

The proposed changes would level the playing field with the EU, providing a platform that will allow investment into the insect protein sector in GB. There is a potential benefit to the insect PAP sector, who would be able to sell their product to a GB market through the use of insect PAP in pig and poultry feed. The global market for insect protein was worth approximately $540 million in 2022 and has been forecast to hit $1.4 billion by 2029, with Europe making up around a fifth of the market^[1].

Allowing the use of insect PAP in non-ruminant feed could provide opportunity for growth of this market in the GB. For example, in 2017 the EU permitted (and Scotland has retained) the use of processed protein from seven species of insect to be used as feeds in fish farms, including black soldier flies and species of mealworms and crickets^[2]. Black soldier flies (and to a lesser extent yellow mealworms) are now being farmed in GB. Estimates from the World Wildlife Fund for Nature suggest that demand for insect protein in the UK could be over 500,000 tons by 2050, with half supplied within the country^[3]. Because insect farming is just starting to develop and considering its requirements (e.g., hygienic treatment of waste substrates and detection of microscopic contaminants), it may also be a driver for innovation in other sectors.

There are potential benefits to animal by-product (ABP) processing plants manufacturing porcine or poultry PAP as they would be able to sell to a GB market for use in the production of pig and poultry feed. Discussions held between Defra (who are also considering the proposed feed control changes) and industry suggests that most of the porcine and poultry PAP currently produced in GB is exported for use in pet food, with a small amount used by the GB pet food industry. Porcine ABPs are often mixed with ruminant ABPs, and the mixed PAP products have less value than porcine PAP. Enabling the use of porcine and poultry PAPs in non-ruminant feed would therefore enable them to be marketed more widely, diversifying product ranges and keeping markets competitive.

Approximately 76% of global soy production goes towards livestock feed, mostly for pigs and poultry^[4]. In 2022, the UK imported 3.46 million tonnes of soybean equivalents, with 90% either used as animal feed or embedded within imported meat, eggs, or dairy products^[5]. The soybean industry is a significant contributor to deforestation and greenhouse gas emissions, with over 75.5 million hectares cultivated globally ^[6].

Defra is currently conducting research and development, including a life cycle analysis on the potential environmental benefits of using insect protein in animal feed in comparison to soymeal and fishmeal. As farmed animals, insects are prohibited from being fed manure, catering waste, and feed material containing or derived from catering waste. We are aware of innovation in the insect protein sector identifying novel insect substrates that are currently underutilised. These innovations, in the medium term could potentially contribute to a more sustainable global supply chain, and reduce the reliance on soybean-based feed.

3.2 Costs

3.2.1 Costs to businesses

As the changes are voluntary, businesses will only have to make changes to incorporate the new regulations if it makes business sense for them to do so (e.g. creating a separated production line for multiple types of PAP in one location).

Concerns have been voiced by some industry representatives about possible impact on feed price, on the assumption that insects would be fed on crops/by-products normally destined for conventional livestock feed. It is feared that that farmed insects could compete with conventional livestock for the same feeds, leading to price rises. However, this has not occurred in the EU since changes there were introduced.

3.2.2 Costs to Government

There will be a cost to Government as the use of animal protein in non-ruminant feed would need to be monitored by APHA through the NFA. Expected costs include:

• The cost to Government of additional equipment and laboratory staff resource required to carry out additional testing on animal feed.
• The cost to Government of additional resources to carry out additional inspections of facilities who choose to adopt the new legislation.

It is difficult to robustly estimate the cost at this stage, as the amended regulation is voluntary and the additional cost will depend upon the number of facilities who choose to produce feed under the new guidance. The additional number of visits and sampling required would also depend on the type of facility and whether it also produces ruminant feed on site. Therefore, the cost to Government will depend on the uptake by industry (i.e., the number of businesses who choose to adopt the new legislation). Any changes will likely be gradual, and shared with Welsh and UK Governments.

3.3 Regulatory and EU Alignment Impacts

3.3.1 Intra-UK Trade

UK and Welsh Governments are considering making the proposed changes in England and Wales. Subject to ministers’ decisions, the intention is to implement the changes in each GB administration at the same time. This would bring GB in line with NI which, under the provisions of the Protocol on Ireland/Northern Ireland, already has these proposals in place.

Due to the UK Internal Markets Act and the frequent movement of animals throughout GB, any changes to feed regulations in just one part of GB would be very difficult to enforce. Therefore any updates to the feed regulations would best take place in conjunction with UK and Welsh government.

3.3.2 International Trade

It is unlikely that these changes would affect international trade as they would bring Scotland in line with current EU regulations.

3.3.3 EU Alignment

The proposed changes would bring Scotland into alignment with EU policy, as these policy changes were implemented in the EU in 2021.

3.4 Scottish Firms Impact Test

As part of the consultation, the proposals will be sent to renderers, compound feed manufacturers and feed ingredient manufacturers and industry representatives in Scotland. It will also be made available to pig and poultry producers to respond to.

As most poultry and pig keepers are also business owners, and the consultation will be sent specifically to industry stakeholder organisations for distribution, the consultation will capture the views of businesses.

The views expressed will be reported in this section in the final BRIA.

3.4.1 Competition Assessment

This is a non-limiting proposal as the changes are deregulatory and on an opt-in basis. As such, businesses will only make use of the amendments if it is beneficial for them to do so. The proposal would allow innovation and the development of products that are not currently on the market. It would also allow for an expanded use of materials, giving businesses more options for creating / buying-in feed. It would also allow for trade opportunities with EU when new products were developed.

3.4.2 Consumer Assessment

There is a risk that poultry fed on porcine PAP would not be considered Halal or Kosher and would potentially need to be labelled accordingly. Dietary laws from the Qur’an state that for meat to be considered Halal the animal slaughtered must be reared on a vegetarian diet. Jewish dietary laws also dictate which animals can be eaten, with pigs listed as not kosher. Having monitored the situation in the EU and NI, this could be a longer-term issue as uptake has been slow.

However, there are already some businesses specialising in the production of religiously compliant products. As these changes are voluntary, these businesses would still be able to retain religious compliance, albeit such products for comparatively small markets would be (and already are) more costly than mass-produced products.

3.4.3 Test Run of Business Forms

Businesses that take advantage of these updates will be subject to inspection and monitoring by APHA and the NFA. New forms / fields may be introduced to capture the additional testing / process requirements (e.g. ensuring separation of porcine / poultry PAP in facilities that process both). However, any new documentation required will be in the format of those already in use by APHA and so should not put additional onus on to keepers.

3.4.4 Digital Impact Test

These changes would not have any impacts on the use of digital technology.

3.4.5 Legal Aid Impact Test

The proposal is unlikely to have an impact on the legal aid fund.

3.4.6 Enforcement, Sanctions and Monitoring

The proposed legislation will not create any new offences. APHA will continue to monitor livestock feed production and feeding practices through their site/farm visits under the NFA to ensure businesses remain compliant with existing legislation.

3.4.7 Implementation and Delivery Plan

If Ministers are content with the policy proposals, changes to legislation could be made concurrently with the UK and Welsh Governments by mid-2025. However, this is dependent on legislative processes in all three administrations. If Scotland goes alone with these changes, we may aim for earlier in 2025.

These changes will be made by making amendments to The Transmissible Spongiform Encephalopathies (Scotland) Regulations 2010 and Assimilated Regulation (EC) No. 999/2001.

3.4.8 Post-implementation Review

Any new legislation that is made as a result of this consultation will be reviewed within 10 years to ensure it remains fit for purpose.

3.5 Summary and Recommendation

Which option is being recommended and why? Refer to analysis of the costs and benefits in reaching the decision. Summarise, using the table below, the information gathered for each option.

3.5.1 Summary costs and benefits table

Option: 1

Total benefit per annum: - economic, environmental, social

Amend Regulation (EC) No. 999/2001 to authorise the use of certain proteins of animal origin in feed to non-ruminant farmed animals, with consequential amendments to other legislation

This option would bring Scotland in line with EU legislation and allow for innovation in the livestock feed industry, creating new products, processes and markets, and create environmental benefits.

Total cost per annum: - economic, environmental, social - policy and administrative

There will be costs to the government for additional resources to test livestock feed (including equipment to test feed and inspections on site)

There may be additional religious concerns with new products.

Option: 2

Total benefit per annum: - economic, environmental, social

Do Nothing

This would bring no additional benefits.

Total cost per annum: - economic, environmental, social - policy and administrative

Scotland would remain out-of-step with EU legislation and potentially with the Welsh and UK Government

3.6 Declaration and Publication

3.7 Sign-off for Partial BRIAs:

I have read the Business and Regulatory Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options. I am satisfied that business impact has been assessed with the support of businesses in Scotland.

Signed: Jim Fairlie

Date: 19 September 2024

Minister's name: Mr Jim Fairlie

Minister's title: Minister for Agriculture and Connectivity

Scottish Government Contact point: Nathan Liddle