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BSE Inquiry Friday, 17 December, 1999, 13:06 GMT
Britain's bill for mad cow crisis
The cost of the BSE crisis to the nation has been phenomenal
When evidence first emerged of a human version of mad cow disease, the full horror of a beef industry crisis dawned on the British public.

The priority was to end the risk both to people and to the industry's reputation - at all costs.

And the financial sums involved were huge. No-one can ever put a definitive figure on the cost of the crisis, as it was highly complex and had incalculable ramifications. But it is possible to break down parts of the bill Britain faced.

To the nation

With the introduction of the ban on British beef exports, foreign markets worth nearly 650m a year disappeared.

By the end of the two-and-a-half-year ban the industry had lost more than 1.6bn.

Meanwhile, the home market for beef was also decimated. The government was forced to introduce compensation schemes and industry guidelines to support beef farmers and begin eradicating the disease.

To the taxpayer

The cost of compensating everyone in the meat production chain, propping up markets and implementing slaughter schemes is estimated to run to 3.5bn by next year.

Last summer, the National Audit Office calculated public expenditure on BSE-related schemes had amounted to 2.5bn since March 1996, when the worldwide ban began, with a further 1bn expected between 1998 and 2000.

At first farmers did not admit their cattle were infected
By the time other costs are counted, some newspapers have forecast the final bill will be at least 5bn.

The vast sums involved included advance payments to farmers of 13m in July 1996, and more than 1.2bn to producers under the Over-Thirty-Month Scheme, which banned beef from animals over 30 months old.

In time, the value of compensation to farmers fell in line with market prices and reductions in the conversion rates of sterling.

Compensation packages also included the Calf Processing Aid Scheme, for anyone linked to the meat production chain, such as abattoirs, renderers and beef producers. They received some 500m.

In December 1997 the government announced "one-off" compensation of 85m for beef farmers. It was followed by 50m nearly a year later to those hit by the general farming crisis, mainly sheep and beef farmers.

Britain has had to find huge sums to cope with the crisis
But even these calculations do not show the full picture. BSE had first been detected in cattle in 1986, and farmers received only 50% of market value from this date, so many did not admit they had BSE-infected cattle. Only in 1990, when BSE was made a notifiable disease, was compensation raised to the full market value and many more farmers came forward.

UK slaughterhouses did not have enough incineration capacity to deal with the numbers of animals killed, so thousands of tonnes of meat and bonemeal had to be stored, costing more than 7m.

In January 1998 a 2m marketing campaign was launched to attempt to restore confidence in British beef. The EU made a financial contribution.

Meanwhile, the BSE inquiry itself is estimated to be costing 16m. The figure includes paying for hearing rooms, keeping evidence and staff salaries.

The Ministry of Agriculture is planning to spend a further 12.8m on research into BSE and related diseases.

To jobs

Many thousands of jobs in the meat trade and rendering industry were lost, said the audit office. The cost to the nation of the extra unemployment is probably impossible to estimate.

To farmers

No-one doubts that farmers were hit hardest.

Cattle prices fell from about 120p per kilogram before the crisis, to 95p within two months.

The inquiry alone is costing 16m
Farmers' incomes plummeted from 4.1bn in 1996 to about 1bn in 1998.

Many warned of bankruptcy; today, with the beef-on-the-bone ban still in place, some still do. Some were forced to give up farming altogether. One bank reckoned 25,000 farmers were driven out.

Not all the blame can be laid on the BSE crisis, but for many already struggling to make a living, BSE was the final straw.

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04 Aug 99 | Business
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