MHSprice rise

19 February 1999

MHSprice rise

of 21% adds to

beef burden

By Philip Clarke

Europe editor

A SUBSTANTIAL hike in Meat Hygiene Service charges is threatening to put a further dent in beef producers margins from April.

The MHS draft budget, which went out to interested parties earlier this month, pencils in a massive 21% increase in total costs, which go up to an expected £75m for the next financial year, covering both abattoir hygiene inspection charges and specified risk material (SRM) controls.

That follows an earlier government decision to withdraw public funding for SRM controls from Mar 29, saddling the industry with an extra £21.5m bill.

Higher wages, extra staff, accounting adjustments and additional overheads have all been offered to the industry as reasons for the increase.

But the figures have been rejected out of hand by the Industry Forum – made up of trade and farming interests. "We are at a loss to understand how a 21% increase can possibly be justified," says Peter Scott of the Federation of Fresh Meat Wholesalers.

He is particularly critical of the 181% leap in MHS overheads drafted for 1999/2000, while the current wage dispute will have only a minor impact on total costs.

But there is only limited scope to get the budget reduced and the fear is that any increase will hit farmers. "Experience shows that any charges put on at the abattoir get passed back down the line. They never get passed forward," says NFU livestock adviser, Carol Lloyd.

Mr Scott agrees. "At some time this will have to come out of the price we pay for our stock." He reckons that the charges work out at about £11 an animal – of which £5 is down to MHS inspections and £6 is due to SRM controls.

He does not predict the higher charges will lead directly to abattoir closures.

But, combined with the loss of the fifth quarter, (worth about £110 an animal), and a predicted shortfall in cattle numbers, a fresh spate of bankruptcies seems inevitable.

The Industry Forum meets again next week to discuss the draft budget, which then goes back to MAFF for approval. New charges will be circulated to abattoir owners in mid-March, ready to kick in on Apr 1.

The MHS was unwilling to comment on the proposed increases while the consultation was still in progress.

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