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Crunch time on cost sharing

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IN A YEAR in which Britain's farmers have suffered significant hardship as a result of outbreaks of foot-and-mouth disease and bluetongue, some politicians might hesitate before suggesting that they should contribute more to the costs of safeguarding animal health, particularly when speaking just a week after confirmation of an outbreak of another notifiable disease, this time highly pathogenic avian influenza. However, in a speech to farmers in London this week, the Secretary of State at defra, Mr Hilary Benn, had no such qualms. Addressing a conference on the future of farming, Mr Benn gave the clearest indication yet that the Government is determined to press ahead with its agenda for sharing costs and responsibilities for animal health, and to do so soon. He told delegates:

‘The events of these last few months have brought home to us — in dramatic fashion — the importance of managing risk of animal disease.

‘Now I know this won't be popular with everyone, but I have to tell you that my experience of dealing with the outbreaks of avian influenza, foot-and-mouth and bluetongue this summer have brought home to me that cost and responsibility is not “just another thing to deal with” — I have seen how this is the right direction and we need to get moving. I want the industry to be much more deeply involved in the key policy and operational decisions, and rather than shy away from hard choices I think now is an opportune time to reinvigorate this debate.

‘Some advised me not to raise this now, because of the difficulties over the summer. But I have to tell you the truth. The current arrangements are unsustainable. Public spending on animal health and welfare is in excess of £400 million a year, and that is without the additional costs of dealing with disease outbreaks. Direct costs to the taxpayer for the 2001 foot-and-mouth crisis were of the order of £3 billion, with wider costs to the economy a further £5 billion.

‘I want to reform the current system so that farmers — those who benefit more than anyone else from well managed risk — are central to the decision-making process and contribute to the costs of those decisions in a fair way. In doing so, not only will disease risk be reduced, but so will the regulatory burden on farmers — and with it the feeling that defra has put controls in place for its own reasons. We don't do that. In the future, the industry should take those decisions because no-one has a greater incentive to get it right than you do.’

Noting that sharing responsibilities and costs was also likely to feature in the new eu animal health policy (see VR, September 29, 2007, vol 161, pp 435-436), Mr Benn said that the Government would be consulting on the issue before Christmas, and would be looking for answers within 18 weeks. He believed that, as part of this process, the industry should be exploring market-based ways of managing animal disease risks, including associated costs.

As if to reinforce Mr Benn's message that the current arrangements are unsustainable, reports emerged in the newspapers over the weekend that defra was planning emergency cuts of between £130 million and £270 million across the department this year. This is the second year in a row that defra has had to cut back on its spending plans; last year the cuts amounted to £200 million and the department was criticised for the way its budget had been managed (see VR, March 3, 2007, vol 160, p 277).

In his speech, the minister reaffirmed that protecting the environment and tackling climate change were high on the Government's list of priorities. He paid tribute to the role that farmers had played in shaping the landscape, arguing that farming should aim to be an industry that ‘embraces its environmental responsibilities — tackling climate change, managing water and the soil — and sees them as essential to its long-term economic success, rather than as a threat to it’. He argued that further reform of the Common Agricultural Policy was ‘both inevitable and necessary’ and that this needed to move ‘much further in the direction of reduced market management, with farmers producing for the market, and the taxpayer paying for the delivery of public goods — particularly environmental ones — which the market cannot provide’.

On the matter of safeguarding food supplies, he argued that food security ‘is very important in the 21st century’ and should be ‘a fundamental goal for all Governments’. However, he argued, ‘Food security is not the same as self-sufficiency. What matters is effective risk management, ensuring security of energy supplies, access to food from a number of sources, a strong food chain and infrastructure, and the capacity and contingency planning to deal with specific risks to our food supply.’

Cost and responsibility sharing on animal health, together with the new European animal health strategy, were among matters discussed at this year's bva Congress (VR, October 6, 2007, vol 161, p 461, pp 464-466). The idea that, by encouraging disease prevention, cost sharing could bring benefits in terms of animal health certainly seems to have gained ground of late, although it is also clear that many of the arguments are financially driven. ‘Public good’ arguments apply to animal health as well as the environment but, if governments are less able or less inclined to pay for it, the gap must be filled by the industry. It is not clear at this stage what cost-sharing mechanisms might be introduced in the uk. What is clear is that the issue seems set to come to a head over the next few months, and the veterinary profession must be ready to contribute to the debate.

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