Overview of costs and benefits associated with regulation in Scottish agriculture

9. Scottish Statutory Instruments 2007 No. 559 The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007

Abstract

These regulations implement EC Regulation ( EC) No. 21/2004 which establishes a system for the identification of sheep and goats through double tagging. The previous UK national system had benefits in terms of traceability but compliance was an issue and this led to the loss of a previous derogation for double tagging. The new system has benefits in terms of decreased cost as movement tags are no longer required and record keeping is simpler. The full benefits of the scheme will not be realised until linked to a system for monitoring movements, for example electronic identification (currently set for implementation in 2010). Industry views have been mixed and the NFUS is currently petitioning for the removal of the requirement to double tag. The Scottish Government will need to ensure that further proposed animal identification measures are practical and useful within the Scottish agricultural system.

Introduction

The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007 implement Community legislation ²⁴, which aims to standardise and improve the identification and tracing of sheep and goats across the EU and to provide a system that allows animals to be traced quickly and effectively. Experience gained during the foot-and-mouth disease epidemic in 2001 highlighted the need for traceability systems for sheep, and both sheep and goats are now identified according to the Council Regulation ( EC) No 21/2004.

The EC Regulation required that all animals born after 9 July 2005 be identified individually with a visible eartag and a second identifier (eg an eartag, electronic mark or tattoo) with the same code.

The main purpose of the Scottish amendment is to amend the principal domestic Regulations ²⁵ relating to sheep and goat identification and tracing. This reflected the fact that the UK derogation from the main double tagging regime under Council Regulation 21/2004 expired in June 2007.

Double tagging of sheep and goats is now required under the Scottish Regulations, which came into force in January 2008.

Scotland has applied the 'slaughter' derogation which means that animals not intended for export and intended for slaughter under the age of 12 months can be identified by a single identification tag.

There are estimated to be about 20,600 livestock holdings that keep sheep and/or goats in Scotland, and many livestock markets and slaughterhouses that deal in sheep and goats. Any analysis needs to take into account the size of the Scottish sheep industry, the stratified system and the large number of animal movements. The UK has the largest number of sheep, and moves each sheep more times on average compared to other Member States.

NFU Scotland ( NFUS) is continuing its campaign against EU sheep-tagging proposals, which it claims are "unworkable". The Scottish Farmer and NFUS are calling on the Commission to remove the current double tagging rules, and postpone the introduction of electronic identification until it is proven to be cost effective and based on batch movements only.

The National Sheep Association ( NSA) has welcomed the changes and says they are broadly in line with what NSA and others in the industry have been calling for since it became apparent the derogation would be lost. The NSA see that the negatives in these changes are far outweighed by the practical benefits in terms of not having to apply movement tags when sheep move from one holding to another.

Analysis

Effectiveness of the regulation

The EC Regulation aims to standardise and improve the identification and tracing of sheep and goats across the European Union and to provide a system that allows animals to be traced quickly and effectively, back to their premises of origin.

The UK operated under a derogation for double tagging between the introduction of the measure in 2005 and 2007. The derogation was allowed on the basis that the UK national system (in place since 2001) allowed the residence history of any sheep to be read from the ear tags. After three EU Food and Veterinary Office inspections, it was clear that UK farmers were failing to adhere to the 2001 rules. EU veterinary officials reported "significant deficiencies" in the UK's traceability system for sheep during an inspection of farms, auction marts and abattoirs in February 2007. The UK withdrew its request for extending the derogation just before it expired in mid 2007.

While the UK national system was found to be inadequate, the effectiveness of the new regime has also been called into question. A regulatory impact assessment carried out in relation to double tagging notes that the main measures to ensure the effective tracing of animal movements do not come into effect until electronic identification becomes mandatory (2010) and, even then, they might only be obligatory for breeding animals.

While double tagging enables identification of the animal's birth holding (as it is less likely that both tags will be lost at the same time), it is more important to be able to trace animal movements in the UK system which involves a large number of sheep movements. The UK national system allowed for this as a new 'movement tag' had to be fitted with each movement.

Given difficulties in reading individual identification markings from large numbers of animals in a short time, electronic transponders were proposed with obligatory introduction set scheduled for 1 January 2008. However, a 2007 Commission report concluded that it was not possible to fully justify a decision on the final date of obligatory introduction. The Council of Ministers has agreed to an EID implementation date of January 2010.

In moving from the previous UK national system to double tagging, there will be a reduction in the Scottish Government's ability to trace sheep in the event of a disease outbreak until EID (or another monitoring system) is fully introduced. The Scottish Government's ability to trace animals during this period is further hampered by EU laws which put constraints on what can be required in terms of movement documents and holding registers. Further, for legislative reasons, the Scottish Government can no longer enforce the movement tag rule under the EC Regulation.

Financial Implications

A regulatory impact assessment has been completed for this instrument that provides full detailed costing which shows a slight decrease in cost burden for most sheep and goat keepers. England also carried out a regulatory impact assessment that was very much along the same lines. Although the amendment instrument provides that animals will now require to be identified with two means of identification, cost savings set out below can be attributed to:

• no longer having to apply a further means of identification every time the animal moves
• the adoption of a slaughter derogation that means animals under the age of 12 months intended for slaughter can be identified by a single tag
• a reduction of the administrative burden on most keepers as a result of making the system less complex.

Cost comparison for Scotland: Previous UK national system compared with the introduction of double tagging, movement tags abolished for all animals

Measure	Total Cost of UK national Single Tagging System (Option 1)	Total Cost of Option 2	Cost of Option 2 compared to UK national system
Identification: Cost of identifying slaughter animals Cost of identifying breeding Animals Cost of replacement tags Cost of applying Movement tags Cost of export tags	£580,000 £390,000 £44,300 £457,200 £61,000	£580,000 £690,000 £53,800 £nil £15,200	£nil +£300,000 +£9,500 -£457,200 -£45,800
Total Identification Costs	£1.53m	£1.34m	-£190,000
On farm records:	£91,000	£45,500	-£45,500
Movement documents:	£178,000	£167,000	-£11,000
TOTALCOSTS	£1.80m	£1.55m	-£0.25m

Source: Regulatory impact assessment for Scotland on the implementation of double tagging for ovine and caprine animals under Council Regulation ( EC) 21/2004.

For the industry as a whole, the savings from the abolition of movement tags (£457,200 per year) outweighs the increased cost of double tagging (£300,000).

The main costs of the Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007 ²⁶

	Action	Scale of cost
Admin	Tags	low
	On farm records	low
	Movement records	low
Policy	Traceability	medium

The main benefits of the Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007

	Action	Scale of benefit
Private	Tags - abolition of movement tags	medium
	Fewer on farm records	medium
	Fewer movement records	low
Social	Traceability	low

Industry views

The UK industry has not presented a unanimous stance throughout the sheep and goat identification debate. While some recognised that extending the derogation was going to be difficult and that the final decision was ultimately out of the UK's control, others continue to push for a re-think of the double tagging system.

NFUS commented positively on the degree of formal and informal consultation with Scottish Government in the lead up to the draft. While they endeavoured to keep members informed of developments, the NFUS recognise that it is difficult for the Government to comment publicly while the instrument is in draft form and still undergoing changes. The comment was also made that the Scottish Government was both sensitive to industry concerns and pro-active in putting them to Defra as the competent authority.

The NFUS is currently running a sheep tagging petition which it plans to present to the EC this year to show the strength of feeling against EID in Scotland.

The petition calls on the EC to

• Remove the current requirement to double tag low-risk sheep,
  in particular home-bred ewes.
• Scrap plans to individually identify sheep and their movements.
  Any future sheep ID and movement recording system must be on a batch basis.
• Review the cost-effectiveness of EID prior to considering implementation.

Industry representatives are being involved in trial work for EID. Again, NFUS comments were positive in terms of the Scottish Government's inclusive approach on this matter.

The National Sheep Association ( NSA) states that it is broadly content with the implementation of the regulation, given that the industry had to accept change from the previous system.

The Scottish Crofting Foundation ( SCF) believes that for the vast majority double-tagging is a big disincentive to keeping a few sheep as the system is viewed as being a "complex nightmare".

The Tenant Farmers Association of Scotland ( STFA) think the system of double tagging could be made simpler, and that industry needs more time to become familiar with the system.

The Scottish Rural Property and Business Association ( SRPBA) stated that the regulation has caused problems for the industry in terms of practicality in remote areas, and that the regulation could be improved to reduce its burden on the industry by allowing for traceability on a flock basis.

Goat keepers are primarily concerned about the welfare implications of the move to double tagging. Animal welfare issues could increase costs though the need for replacement tags and vet time.

Overall the industry was anxious that the derogation allowed in EU regulations not to double-tag animals being slaughtered before 12 months old was included in the national regulations. Farmers viewed double-tagging in this situation as an unnecessary waste.

On the suggestion that the move to double tagging would compromise traceability, some in the industry commented that as long as movements are properly recorded in movement documents, there is no need to use 'S' tags when moving sheep.

Industry is calling for pragmatism in the application of the regulations in this area to ensure that they carry as little cost as possible, are easy to understand and comply with and deliver a level of identification and traceability that is proportionate and yet effective.

Ability of the Scottish Government to influence

This regulation brings the UK into line with the EC Regulation and thus reduces the likelihood of infraction and disallowance. As the EC Regulation is taken into account for cross-compliance for the single payment under CAP, it is crucial that Scottish sheep farmers are able to comply.

As this issue is in a state of flux, the Scottish government has a role to play in shaping future animal identification and traceability measures to ensure that the interests of Scottish farmers are represented. A key area for further work could be the workability of identifying animals on a batch basis.

The Government will also need to be closely involved with developments surrounding the introduction of EID. This will impose additional costs on sheep farmers in terms of equipment and training. While some in the industry have already embraced this technology, they point out that flock production management could be enhanced if the technology was taken up along the supply chain so that individual animal results could be fed back. A major processor commented there had been little call for tracing individual animals along the production line. The practicality and cost of introducing such technology, and the number of add-ons to be incorporated will need careful consideration.

Industry views seem to be mixed at present on the implementation of EID and consultation will be required to fully understand their concerns, and those of others along the supply chain. It would also be worth exploring how the implementation of double tagging is working in practice and how it has affected farmers financially.

Though it is not a good time to be suggesting extra costs given the current unfavourable market conditions, farmers are more likely to act positively to any changes if a sensible lead time is allowed in order to familiarise themselves with new requirements and technologies.

Conclusions

Does the regulation originate from an EU Directive?

Yes - EC Regulation ( EC) No. 21/2004 and associated directives

Has a Scottish RIA been completed?

Yes

1. Are the benefits adequately quantified?
   
   The RIA does not quantify benefits. Benefits listed include reduced level of infraction and disallowance as it complies with European law, simpler rules, and potentially increased compliance levels.
2. Are the administrative costs adequately quantified?
   
   Yes
3. Are the policy costs adequately quantified?
   
   Yes

What are the problems with the regulation?

While the new Scottish regulation will lead to cost savings there are risks involved in terms of animal traceability which could hamper responses to disease outbreaks, until movement information is linked either through the introduction of EID or more requirements for keeping movement records. However, Scotland is constrained in its response to these issues following the expiry of the derogation which made it clear that the previous UK national system was not operating as it should. It should be born in mind however that the UK lost the double tagging derogation as a result of low levels of compliance with the previous UK national system. This means that the actual level of traceability 'lost' in the change to the double tagging system is less.

What is the overall balance - cost or benefit?

While the implementation of the regulation will lead to cost savings, the benefits in terms of ability to trace animals do not come into play until better movements are required, eg with the introduction of EID. Double tagging in the interim appears to have little benefit other than still being able to identify the animals birth holding should one of the tags be lost. The cost to the industry as a consequence of a disease outbreak and limited traceability in the interim period could be significant, but no estimates were given.

Suggestions for improvements

The Government's role going forward will need to focus on ensuring that the regulations are implemented effectively, and that future regulations to enhance traceability are fit for purpose and balanced with ongoing industry concerns about cost, proportionality and practicality. This will be particularly important if the EC continues on the path towards introducing EID in 2010. As with the current Regulation, it is imperative that the Scottish industry is able cope with the physical and financial implications in order to comply.

Does it meet the Better Regulation guidelines?

Transparency: Medium. The requirements of the new regulations are fairly clear but there may have been some uncertainty around the derogation review as to what rules would apply and when. More information on the cost benefits and implications around EID may have allayed some industry concerns.

Accountability: High. The Scottish government is responsible for designing and implementing the regulation in accordance with the EC regulation. At the practical level, goat and sheep keepers are responsible for complying with the regulation. Local authorities will enforce the legislation in markets, the Meat Hygiene Service in abattoirs and Scottish government inspectors on farm.

Proportionality: Low. The derogations and other measures used by the Scottish government in designing the regulation make the costs more proportional, but, as outlined above, the benefits are yet to come into play in terms of traceability.

Consistency: Medium. The regulation applies to sheep and goats except where certain derogations apply relating to the type and number of movements (ie direct to slaughter within 12 months). However, all breeding animals need to be double tagged, even if they are not going to be moving from the property until due for slaughter.

Targeted: Low. This regulation aims to standardise and improve the identification and tracing of sheep and goats across the EU and to provide a system that allows animals to be traced quickly and effectively. This will not be achieved until better movement information is required.

References

The Sheep and Goats (Identification and Traceability) (Scotland) Amendment Regulations 2007

Council Regulation ( EC) No. 21/2004 (establishing a system for the identification and registration of ovine and caprine animals and amending Regulation ( EC) No. 1782/2003 and Directives 92/102/ EEC and 64/432/ EEC)

Regulatory Impact Assessment for Scotland on the Implementation of Double Tagging for Ovine and Caprine Animals under Council Regulation ( EC) 21/2004

Impact Assessment of the introduction in England of Double tagging for Sheep and Goats Under Council Reg. ( EC) 21/2004