REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the implementation of Title II of Regulation (EC) No 1760/2000 of the European Parliament and of the Council establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products

SUMMARY

In this report to the Council and the European Parliament, the Commission evaluates the application of the legislation on beef and veal labelling by the Member States, examines the feasibility of extending beef origin labelling to processed beef products and beef prepared by operators in the restaurant and institutional catering sector, and formulates proposals that will serve as a basis for discussion.

The implementation of the provisions for beef traceability and origin labelling in Regulation (EC) No 1760/2000 has greatly helped to restore consumer confidence and beef consumption to the levels of before the second BSE (bovine spongiform encephalopathy) crisis in October 2000. It has led to a profound change in the way the operators in question organise their work and make trade in beef more transparent.

However, according to the European meat trade sector the scheme has caused a certain re-nationalisation of the trade in beef, in particular for beef products sold directly to final consumers (i.e. in the retail sector).

Consequently, the possibility of labelling beef as of EU origin rather than national origin, without reducing the guarantees provided for consumers, is worth looking into. This would be limited to establishments that prepare cuts of beef intended directly for final consumers. Under such a scheme, these operators would be free to decide whether to label products as being of national or EU origin, depending on the preferences of consumers and the distribution sector.

The Commission also notes that a number of Community rules are proving difficult to apply to certain types of operators in the beef sector in all Member States. The problems mainly concern the requirements regarding homogeneity in batches of beef at secondary cutting plants, traceability and labelling of off-cuts, supplies to minced beef plants and consumer information on beef products marketed in non-pre-wrapped form.

In most of these cases it should be possible to find a satisfactory solution without changing the principles underlying the Community legislation or compromising the operation of the traceability and origin labelling scheme already implemented by operators.

By contrast, the Commission is not in favour of extending the origin-labelling rules to cover processed beef products, products containing beef and other ingredients or prepared meals produced by the restaurant and institutional catering sector or the fast-food sector.

It believes that this would be particularly difficult for the operators in question to apply, for both technical and commercial reasons. Although Regulation (EC) No 1760/2000 has helped restore consumer confidence and beef consumption, extending its scope would bring only restrictions and extra costs without any commensurate public health benefits or increase in beef consumption: the costs associated with such a measure would outweigh any benefits.

For minced beef production, the Commission believes that introducing the possibility of using beef from slaughterhouses located in different countries in the same batch of minced beef could pose problems as regards tracing the origin of the beef.

This report is designed to serve as a basis for a debate in the Council and European Parliament regarding the Commission's assessment of the situation and the need, if any, to amend the legislation currently in force. Once the Council and the European Parliament have examined this issue, and in the light of any contributions made by the various interested parties, the Commission will make the appropriate proposals.

In the meanwhile, the Commission will endeavour to resolve the application problems which have arisen by using the Management Committee procedure, i.e.

- permitting beef from more than one primary cutting plant to be combined in the same batch of secondary cuts;

- adopting simplified measures for labelling off-cuts and beef products sold in non-pre-wrapped form;

- facilitating the mutual recognition of the specifications approved by the competent national and regional authorities under the voluntary beef labelling scheme.

1. Introduction

Under Article 21 of Regulation (EC) No 1760/2000 of the European Parliament and of the Council [1], the Commission is required to report to the Council and Parliament on the application of Title II of this Regulation on labelling of beef and beef products.

[1] Regulation (EC) No 1760/2000 of the European Parliament and of the Council of 17 July 2000 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products and repealing Council Regulation (EC) No 820/97 (OJ L 204, 11.8.2000, p. 1), Commission Regulation (EC) No 1825/2000 of 25 August 2000 laying down detailed rules for the application of Regulation (EC) No 1760/2000 of the European Parliament and of the Council as regards the labelling of beef and beef products (OJ L 216, 26.8.2000, p. 8).

This report has three main goals:

- to evaluate the application in the Member States of the labelling provisions specified in Title II of Regulation (EC) No 1760/2000, almost three years after its entry into force,

- to examine the possibility of extending the scope of that Regulation, in particular to cover processed products containing beef and beef products,

- to formulate, if necessary, proposals on how some of the provisions in the current Regulation can evolve in the medium term.

Title I: Recapitulation

The Community legislation on beef labelling has evolved alongside the establishment by Member States of a system for identifying individual animals. In the context of the two BSE crises, it has also responded to the demand for information from the European Union's consumers.

2. Legislation on beef labelling - a brief overview

Council Regulation (EC) No 820/97 [2] introduced a voluntary beef labelling scheme, covering all the labelling information apart from that required by Directive 2000/13/EC [3] on foodstuffs labelling.

[2] Council Regulation (EC) No 820/97 of 21 April 1997 establishing a system for the identification and registration of bovine animals and regarding the labelling of beef and beef products (OJ L 117, 7.5.1997, p. 1).

[3] Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs (OJ L 109, 6.5.2000, p. 29).

It also allowed Member States which had established a system of individual livestock identification and movement registration to adopt national legislation introducing the compulsory labelling of certain characteristics of beef produced from animals born, reared and slaughtered within their borders.

Three Member States adopted such national legislation for a transitional period, requiring beef to be labelled with its origin and possibly other characteristics such as meat category and type of production, depending on the breed of the animals.

Regulation (EC) No 820/97 also provided for the introduction of a system of compulsory origin labelling for beef in all Member States from 1 January 2000. The Commission subsequently adopted a proposal for a Regulation [4] which provided for compulsory labelling of the origin and category of the animal from which the meat was produced.

[4] Commission Report COM(1999) 486 final of 13.10.1999 to the European Parliament and the Council on the situation regarding the implementation of the beef labelling schemes in the different Member States.

However, following negotiations under the co-decision procedure, compulsory labelling was confined to origin only, with the other characteristics continuing to be governed by the voluntary labelling scheme as provided for in Regulation (EC) No 820/97.

2.1. Link with individual animal identification systems

The requirement to label beef with its national origin has been made technically possible by the establishment in each Member State of an individual cattle identification system supported by a central database containing the identification details of all cattle within their national borders and their movements throughout their life.

2.2. Link with the BSE crisis

The first BSE crisis in 1996 caused a loss of consumer confidence and a decline in beef consumption in the European Union. From 1999, there were early signs of a new crisis, despite the range of measures taken to combat BSE at Community level, and in certain Member States at national level.

Regulation (EC) No 1760/2000 was adopted in July 2000, shortly before the start of the second BSE crisis, and it enabled the authorities to respond very quickly to a strong desire among consumers for origin labelling of beef.

This demand for information was due partly to diverging perceptions of the risks posed by BSE in the Member States and partly to greater confidence in beef monitored by the official national bodies.

The adoption of Community legislation establishing a compulsory traceability system and national origin labelling for beef thus became essential for restoring consumer confidence and reviving beef consumption in the European Union.

By 2002, this package of measures had helped beef consumption to return to the levels seen prior to the second BSE crisis. However, this relatively rapid result must be attributed to the combination of the beef labelling measures and a package of health measures to combat BSE that has been continually expanded in response to each new set of Community scientific advice.

3. The main labelling provisions in Regulation (EC) No 1760/2000

These provisions concern both the compulsory origin labelling scheme and the voluntary labelling scheme. They are based on the establishment of a specific traceability system for beef.

3.1. The beef traceability system

The beef traceability system, which covers the product from the holding on which the cattle are born right up until the beef products appear in retail outlets, represents a major advance in terms of consumer information and transparency in the beef sector.

Beef traceability is guaranteed by:

- the individual cattle identification system that has been compulsory in all fifteen Member States since 1997;

- the individual identification data on cattle and their movements from birth to slaughter, which are recorded in a central computer database;

- the compulsory individual cattle passport accompanying all intra-Community movements of the animals, and in some cases movements within Member States;

- the systematic recording at slaughterhouses of a reference code for each carcase, corresponding to each animal's individual identification number and the indication of this code (or a related one) at the different steps of the beef processing chain up to the retail outlets.

Beef traceability, like the "step-by-step" traceability system applicable to all foodstuffs, gives operators and the competent authorities the information they need to withdraw from the market any beef that could constitute a danger to public health.

It also enables the characteristics of the animals (or the meat), which are officially recorded under the voluntary labelling scheme, to be traced throughout the course of the beef processing chain up to and including the product sold to the final consumer.

3.2. Characteristics of beef traceability

The beef traceability system has some additional features that are not part of "step-by-step" traceability systems. These are derived mainly from Article 13 of Regulation (EC) No 1760/2000 and Article 1 of Regulation (EC) No 1825/2000.

At each stage of beef processing, the following information is available:

- the national origin(s) of the cattle from which the meat is obtained;

- the reference code used to link the meat and the animal or group of animals;

- the Community approval numbers of the establishments (slaughterhouses and cutting plants) where the meat has been processed.

In addition, at each stage of the processing chain, a correlation must be established between incoming and outgoing batches of beef at any given establishment where processing takes place.

3.3. Compulsory beef labelling

With the adoption of Regulation (EC) No 820/97, the origin of beef was defined as the country (countries) in which the animals from which meat is obtained are born, reared and slaughtered. Since 1 January 2002, under Regulation (EC) No 1760/2000, it has become compulsory to indicate the complete origin of all cattle.

In other words, the origin of beef is quite different from both the idea of provenance, meaning the last country from which the animal or the meat has come, and the idea of origin as defined in customs legislation, which refers to the last country where the product has been sufficiently processed for that to be regarded as the country of origin.

At each stage of the processing chain for any beef that is likely to be marketed, the meat must be labelled to indicate in detail the origin of the animals from which it is obtained.

This removes the need for operators or official inspection bodies, when monitoring the products, to trace the information back via all the previous customers and suppliers ("step by step") in order to find out the origin of the raw materials used in the production of the foodstuffs.

Compulsory beef labelling also requires the reference code mentioned above to be indicated, as well as the countries where the animals are slaughtered and cut up and the approval numbers of the establishments where this takes place. This information must be labelled in clearly legible form at each stage of processing for any beef likely to be marketed.

3.4. The voluntary labelling scheme

This system was already provided for by Regulation (EC) No 820/97 and was to cover all types of information to be included in the beef labelling, including origin.

Since the adoption of Regulation (EC) No 1760/2000, the voluntary beef labelling scheme has applied to all labelling information except origin. It does not, however, apply to the other compulsory labelling information required by the other Community legislation, such as Directive 2000/13/EC on foodstuffs labelling.

The system mainly covers labelling information on breed, type of production and animal age, as well as information on the way the animals are reared and fed and their general welfare. The use of this voluntary labelling information is made systematically dependent on:

- the compilation of specifications laying down how it can be used and controlled;

- the approval of these specifications by the competent national or regional authority designated by each Member State.

Responsibility for enforcing compliance with approved specifications can lie either with the competent authority or with an independent outside body which meets the criteria of standard EN 45011.

Title II: Evaluation

4. Evaluation of the implementation of the traceability and beef origin labelling scheme

This assessment of how the compulsory labelling scheme laid down by Regulation (EC) No 1760/2000 is being applied is based on the following:

- reports by Food and Veterinary Office of the Directorate-General for Health and Consumer Protection's, which audited the implementation of this Regulation in the fifteen Member States (its reports are on the Europa website);

- missions by the Directorate-General for Agriculture in three Member States, which enabled it, through meetings with the competent authorities and the various interested parties in the beef sector, to improve the understanding of the implementation problems and the expectations of the various interested parties;

- the results of the meeting of the group of government experts on beef labelling held in Brussels on 7 May 2003.

4.1. Implementation of origin traceability

Tracing the origin of beef is more complicated than for other agricultural products (such as fruit and vegetables), due to the movements of animals throughout their life and the different stages of processing which the meat undergoes between the slaughterhouse and the final consumer.

4.1.1. Impact on operators in the beef sector

The generalised introduction of the beef traceability system has entailed a major change in how operators organise their work so as to ensure that the batches of meat they produce are of homogenous origin.

Homogenous origin within a batch means that:

- the national origin of the animals is identical, whether they have single or mixed origin [5];

[5] Single origin for cattle born, reared and slaughtered in the same country. Mixed origin for cattle born, reared and slaughtered in at least two different countries.

- all the slaughtering work on the beef and all the cutting work on the carcases (boning) are performed respectively in the same establishment;

- the production lines are organised so as to process each batch separately without mixing beef that has different origins.

Operators have had to review their supply policy and select suppliers capable of providing them with sufficiently large batches of homogenous origin.

They have also been obliged to invest in computer-based traceability systems capable of recording the characteristics of their supplies, in order to guarantee the traceability of this information within their premises and indicate it on the labels of the marketed products.

4.1.2. Results of the implementation of the beef traceability system

Despite the operators revising their supply policy and working methods and making the necessary investment in beef traceability systems, the inspection reports by the Food and Veterinary Office for the fifteen Member States show that traceability cannot be guaranteed with the same degree of reliability at all stages of beef processing.

To avoid any confusion with the definitions laid down in Community health and hygiene legislation, the terminology used in this report to designate the different stages of beef processing will be the following:

- slaughter - production of carcases, half-carcases and quarters;

- first cut or boning - removal of whole muscles, which are generally vacuum packed;

- second cut or pièçage - production of meat cuts intended for final consumers or the restaurant and institutional catering sector. This stage of the beef processing chain may also include the production of minced meat and products containing beef and other meats or ingredients;

- manufacture of processed beef products - e.g. tinned meat, prepared meat products and ready-made meals, for which the meat has been prepared in a particular way such as cooking, drying, smoking, etc.

To be quite clear about the assessment made in this report, it should be pointed out that Regulation (EC) No 1760/2000 does not currently apply to (i) products containing beef together with other meats (unless beef accounts for the majority of the meat) or other ingredients, and (ii) processed beef products.

The Food and Veterinary Office reports indicate that in almost all slaughterhouses and primary cutting plants the beef traceability measures implemented were satisfactory in all Member States.

This is probably because slaughtering and boning constitute stages at which a single carcase is "disassembled" into several quarters, and then into individual muscles. The identification number of the carcase is noted on the different parts that are obtained in each stage, including the individual muscles, which are the central constituent in the beef processing chain.

But when it comes to cuts of beef obtained in secondary cutting plants, these reports point out that most Member States have experienced difficulties implementing the traceability system.

The work of these plants consist mainly of cutting up the same kind of muscle from different batches in order to make up orders of a certain product in various volumes and intended for final consumers or the restaurant and institutional catering sector.

This work of re-assembling cuts from a large number of individual muscles regularly entails mixing meat from different slaughterhouses or cutting plants in batches constituted at the secondary cutting stage. This means that the origin of the batch is no longer homogenous in relation to the numbers of the establishments and, with the exception of minced meat, which is subject to special provisions, is no longer in compliance with the existing provisions.

The beef traceability and origin labelling schemes currently in place are generally not designed for dealing with non-homogenous batches, which could explain some of the shortcomings found.

What is more, the Food and Veterinary Office reports note that the recording of incoming and outgoing products at beef processing establishments is not always complete, although this is an essential element in the traceability system and the monitoring of it.

4.1.3. Need to standardise beef traceability systems

Beef traceability generally requires a computer system to be set up to record the compulsory (and voluntary) origin labelling data and, generally, reproduce it in the form of bar codes and clearly legible detailed labelling.

The inspection visits to different beef processing companies showed that:

- implementing beef traceability is often complicated and requires investment in an efficient traceability system;

- traceability systems can vary widely in terms of performance, reliability and cost, and must be suited to the working arrangements of each individual company;

- the systems implemented by each company in the customer-supplier chain are not always mutually compatible. This means that operators have to enter traceability data from other systems manually, with the attendant risk of error;

- during inspections, inspectors sometimes have to cross-reference a large amount of information from the label (bar code, batch number, cut type, production date, etc.) to make traceability work;

- the reliability of traceability depends not only on the IT resources used, but also on the ability of the company to implement the traceability measures in full, the way its work is organised, how the company's premises and production lines are laid out, whether both staff and management are trained in how to implement the system, etc.

In the light of the specific features of beef traceability in the European Union, the wide range of different traceability systems on the market and the experience already acquired in the industry itself in existing Member States, the Commission recommends that:

- beef industry trade bodies (including in the new Member States) draw up a Community-level good practice guide for beef traceability;

- a set of specifications common to all beef traceability systems be drawn up, containing specifications regarding performance, reliability and compatibility. These specifications would then represent a minimum standard which the traceability systems on the market would have to meet;

- the trade bodies look into the possibility of asking the European Committee for Standardisation (CEN) to convert these specifications into a Community standard.

4.2. Implementation of origin labelling

Beef origin labelling is applied at each stage of the processing chain where products are likely to be placed on the market. Information on origin must be indicated so as to be clearly readable for purchasers, consumers and inspection bodies.

The Food and Veterinary Office reports highlight certain difficulties in interpreting Regulation (EC) No 1760/2000 as well as a number of shortcomings in its implementation, such as:

- the labelling of several slaughterhouse numbers for a same batch of beef;

- products presented for sale in non-pre-wrapped form without labelling information provided;

- labelling errors in retail outlets;

- trimmings combined from different batches.

4.2.1. Labelling meat with more than one slaughterhouse number

The Commission has received many queries about the interpretation of Regulation (EC) No 1760/2000. For example, a number of Member States asked to be allowed to label meat in the same batch of cuts with more than one slaughterhouse number. These Member States wanted to be able to indicate all the approval numbers of the slaughterhouses that had supplied carcases to the cutting plant on a given day.

In fact this would greatly reduce the effectiveness of the traceability system - indicating all the slaughterhouses that had supplied the beef would make it impossible to accurately determine which of these establishments supplied which parts of the meat in the batch. The request was rejected by the Commission in 2000.

4.2.2. Labelling of non-pre-wrapped products

Non-pre-wrapped beef products sold in butcher's shops or supermarket butcher's departments are also covered by the labelling provisions in Regulation (EC) No 1760/2000. How labelling of products sold in non-pre-wrapped form should be implemented in practice is left to the national authorities.

However, the Food and Veterinary Office reports note that such products are rarely labelled with their origin and the other compulsory information (slaughterhouse approval numbers). Vendors of meat in this sector claim that they provide their customers with origin information orally on request but are not able to provide it in up-to-date printed form on labels.

Most of them keep records of incoming and outgoing meat, as well as a beef labelling scheme in their cold stores, and are thus able to trace the origin of the meat whenever inspected by the authorities.

The regulations on beef labelling are considered by the butchery and charcuterie trade to constitute a burden; its members complain of a growing workload as a result of the adoption of new legislations.

4.2.3. Labelling in retail outlets

Origin labelling errors have been found in cutting facilities belonging to retail outlets where beef is cut, pre-wrapped and labelled before being placed on the shelves.

Some such cutting facilities have not invested in the appropriate new equipment for reading the information on the labels of the beef delivered by their suppliers.

It is all the more worrying that the origin is properly traceable up to the point of retail sale and that the labelling error happens at the end of the chain when the product is purchased by the final consumer.

4.2.4. Labelling of trimmings

Off-cuts of meat and trimmings from carcases - further designated as "trimmings" - are subject to the same traceability and origin labelling requirements as cuts of beef marketed without further processing.

However, the trimmings come from different batches and are assembled for sale by the full pallet. What is more, the quantity produced in a day's work by small cutting plants is not always sufficient for a full pallet.

In practice, operators are not generally able to make batches of trimmings that are of homogenous origin.

4.2.5. Imports from third countries

The same origin labelling provisions also apply to beef imported from countries outside the Community. If these countries have an animal identification system that can provide the required level of assurance as to the origin of the animals, imported beef can be labelled "origin: (name of third country)". If not, a derogation is provided for under which the meat can be labelled "origin: non EC" and "name of country in which slaughtered".

In fact, no third country producers or EU importers apply the derogation: they label their products "origin: (name of third country)", basing themselves on the approvals issued by the Commission in 1998 on the basis of Regulation (EC) No 820/97, which have not been reviewed since. For each non-Community country, these approvals lay down an exhaustive list of information that must be included on the labels of imported beef placed on the Community market.

At the request of a third country, these lists can be reviewed by drawing up specifications laying down the conditions that operators must apply in order to be able to put this information on their labels. These specifications must be approved by the competent authorities in the third country and then notified to the Commission for agreement.

Although the third countries have not yet generally taken the steps set out above, some have already made numerous improvements to their animal identification and beef traceability systems that can give assurances as to origin. In collaboration with the Commission, the main beef exporting countries to the European Union (Argentina and Brazil) have already adopted and started to progressively implement legislation making compulsory the individual identification of the cattle whose meat is intended for the European Union.

In addition, a beef traceability system, generally based on the serial number of the herd, traces the link between each piece of meat delivered to the different retail outlets in the Member States and the farm in the third country from where the animals come.

4.3. Official inspections of the compulsory labelling scheme

The division of responsibilities between the official bodies in the Member States responsible for inspecting traceability and origin labelling is often complex and is currently being restructured in a number of Member States.

The official bodies responsible for inspecting health and hygiene in slaughterhouses and cutting plants have often been designated as the competent authority for inspecting beef traceability and origin labelling in these establishments.

These bodies are not generally responsible for monitoring foodstuffs labelling and sometimes have not received any specific instructions on how to oversee origin labelling and beef traceability. In addition, this inspection work is generally not regarded by these bodies as a priority when viewed alongside their public health mission.

There are other official bodies responsible for overseeing the traceability and labelling of foodstuffs by retailers, but these either do not carry out any inspections at all on establishments further back in the chain, or where they do, very few.

This separation of responsibility for inspections is compounded by what can be regarded as a lack of involvement on the part of the inspection bodies in some Member States. For example, the Food and Veterinary Office inspectors found that labels indicating more than one country of slaughter were sometimes accepted by these bodies.

The differences in how the inspections are applied across the Member States can pose a real problem, both as regards consumer information and conditions of competition between operators, since beef is traded heavily among Member States, either directly between producer and consumer countries or via triangular trade.

4.4. Impact on the beef market

In the opinion of all the interested parties, the Regulation on origin labelling has had a significant impact on the recovery in beef consumption, which since 2002 has regained the levels enjoyed in the period prior to the second BSE crisis.

The extensive media coverage given to that crisis helped increase consumer awareness of the traceability and origin labelling measures. Official publicity campaigns, part-financed by the European Community, helped drive home the message.

The Community rules on beef labelling have also had a major impact on the organisation of the beef sector and the beef market in the European Union. They have considerably improved transparency in the sector by limiting both the number of the intermediaries between the farmer and final consumer and the number of suppliers to each operator.

They have, however, according to the European meat trade sector, also led to a certain re-nationalisation of trade in beef, particularly in the case of beef products sold directly to the final consumer (i.e. the retail trade sector). Consumers seem to prefer meat of domestic origin, although since 2002 there have been signs of a pick-up in the intra-Community beef trade.

In addition, this trend has been reinforced by the distribution sector's tendency to restrict the range of origins of the meat that is marketed. The different retailers in self-sufficient Member States, by generally offering consumers meat either predominantly or wholly of domestic origin, have not only been responding to customer preferences but have also externalised the risk of errors in origin labelling and the possible consequences of this in terms of image and sales.

These commercial priorities can lead to problems finding outlets for animals of mixed origin. This is a particular problem for veal production, where a large portion of the animals are bought from dairy holdings in some Member States for rearing and slaughter in other Member States which specialise in veal production.

Similar problems have also been noted with beef producers in Northern Ireland, who are having difficulties marketing the meat they produce, a great deal of which is from cattle born and partially reared in the Republic of Ireland.

5. Evaluation of the voluntary labelling scheme

5.1. General evaluation

The main objectives of the voluntary beef labelling scheme are:

- to enable operators to differentiate their products by identifying particular characteristics and thereby gain a commercial advantage;

- to provide a more precise legislative framework than that created by the general principles of the labelling directive (Directive 2000/13/EC).

The voluntary beef labelling scheme is halfway between the system used in the poultrymeat sector, where all the authorised labelling information on the type of rearing or feeding is laid down in the Community legislation, and the pigmeat sector, which is subject to the same provisions as other foodstuffs.

5.2. Scope

The voluntary labelling information to be indicated for beef depends on the specifications drawn up by the operator(s) concerned and their approval by the competent national authorities. These specifications are by their nature highly diverse and can cover:

- compulsory information on individual cattle passports. The only reason for drawing up specifications is to ensure that this information is carried forward at each successive stage of processing up to and including the final consumer product, and is traceable all along the chain;

- measures already compulsory under current Community legislation (e.g. the requirement that animals must not have been treated with anabolic steroids);

- information on rearing, feeding or animal welfare, for which detailed specifications need to be drawn up.

The number of approved specifications varies greatly among the Member States. They are used mainly by distributors and farmers.

Where the beef sector is not structured at national or regional level, each type of operator tends to draw up their own specifications, covering only that particular stage of processing, to ensure that what they produce will be allowed onto the market. The different operators thus end up creating different specifications for each stage of processing, whereas it would be sufficient simply to draw up contractual agreements between commercial partners.

This generates a great number of different specifications - several hundred in some Member States - which runs counter to the goal of differentiating beef for the final consumer.

This variety is causing more and more operators to abandon the voluntary labelling scheme, as can already be seen in a number of Member States, due to its failure to increase the value of their products and the additional costs associated with drawing up and enforcing specifications.

5.3. The approval procedure

The procedure for approving specifications falls under the remit of the national or regional body designated by the Member State authorities.

The Commission is simply informed by the national authorities of the specifications which they have approved. It can only dispute the validity of any approved specifications, therefore, if they are likely to create real barriers to trade.

The Food and Veterinary Office reports show that the competent national authorities have a very varying perception of the role of the voluntary labelling scheme and thus of the criteria on which the specifications should be judged. Some place even more importance on the voluntary labelling scheme than on origin labelling, while others consider such a system to be essentially commercial in character and leave its implementation largely to the industry.

This difference in approach has several consequences: it means that cases of mutual recognition of approved specifications are rare and it holds back intra-Community trade. It can distort competition between operators who are not subject to the same restrictions on obtaining approval for their specifications or for the organisation of inspections.

5.4. How inspections are organised

Official inspections can be carried out either by the competent authority or by independent outside bodies.

The inspections are organised according to the same principles, whether the specifications are applied by a small number of operators or whether they concern all the operators in a given country. However, the cost of the inspections per operator differs depending on how they are organised.

When a large number of operators, especially farmers, apply specifications drawn up by a trade body or the competent authority, the inspections are generally organised on a two-tier basis:

- an initial inspection or internal audit at the level of the trade body which drew up the specifications, comprising checks on the specifications used by all its members;

- validation of this system of checks by independent outside bodies, who audit a sample of the members, determined by risk analysis.

Where such arrangements do not exist or have not been approved by the competent authority, the operators are inspected individually by independent outside bodies, once or more a year.

Where the cost of these inspections is born solely by the farmers and not offset by an improvement in the financial value of their products, it becomes a real economic problem and poses the question of the long-term sustainability of the voluntary labelling scheme.

5.5. Links between Regulation (EC) No 1760/2000 and other Community legislation

The labelling provisions in Regulation (EC) No 1760/2000, which are specific to beef, can cause certain problems of consistency and interpretation in relation to the provisions of the labelling Directive (2000/13/EC) and other Community legislation.

The first problems of this type concern the indication of the categories of cattle from which the meat is obtained:

- Categories of cattle are defined in several Community legal instruments on agriculture, although none of these are intended specifically for labelling purposes. For the category of veal, these definitions differ greatly depending on the purpose.

- Some Member States, on the basis of the provisions for the voluntary labelling scheme, have adopted specifications corresponding to generic terms (e.g. for veal). Although responsibility for approving specifications and the information given on the label under the voluntary labelling scheme lies with the competent national (or regional) authority, Regulation (EC) No 1760/2000 empowers the Commission to impose limits, in particular where the approved specifications are a potential barrier to trade.

- Other Member States believe that the generic terms "veal" and "beef" represent the name, or part of the name, under which such products are sold within the meaning of the labelling Directive 2000/13/EC. As such, definitions which correspond to these reserved names should be notified in advance to the Commission for approval, as happens with the other national labelling measures.

Another such problem concerns the labelling of products with the name of a region or geographic place.

Regulation (EC) No 1760/2000 allows operators to obtain approval for labels referring to the name of a region according to a national or regional approval procedure, depending on the Member State.

Regulation (EC) No 2081/92 [6] on the protection of designations of origin and geographical indications (PDOs/PGIs) provides for the protection of designations of origin for foodstuffs other than wine and spirit drinks via a procedure that begins at national level and then passes to Community level.

[6] Council Regulation (EEC) No 2081/92 of 14 July 1992 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs (OJ L 208, 24.7.1992, p. 1).

This disparity of procedures could distort competition if operators were allowed to choose between one or other procedure in order to qualify for a designation of origin even though the rules governing each procedure are very different.

In any event, it is the responsibility of the competent national authorities to ensure that this voluntary labelling information on regional or local origin does not create confusion with products that have been granted a protected geographical indication or designation of origin under Regulation (EC) No 2081/92.

Title III: Scope

6. Feasibility of extending the scope of origin labelling

The mandate given to the Commission by the Council and Parliament is, first and foremost, to examine the feasibility of extending the scope of Regulation (EC) No 1760/2000 to processed products containing beef and beef-based products. The feasibility of informing consumers about the origin of beef prepared and served by restaurant and institutional catering sector and fast-food outlets is also to be examined.

6.1. Extension to beef products mixed with other ingredients

The scope of Regulation (EC) No 1760/2000 is defined by a series of customs codes which relate to beef carcases and quarters, the ensuing pure beef products, and minced, or comminuted, beef.

These customs codes do not cover products containing raw beef and other ingredients, such as beef kebabs with vegetables, beef burgers, carpaccio of beef, and so on.

Since the origin of the beef used in these products has itself been traced, they could in theory also be covered by the scope of the Regulation. In practice, given the multiplicity of products containing beef and other ingredients, an extension of the Regulation to cover such products would be extremely difficult to implement. In any case, "step-by-step" traceability already applies to these products.

6.2. Extension to processed products containing beef and beef-based products

Processed products containing beef and beef-based products include cooked meat products, canned meats, ready meals containing beef and beef products and certain prepared-meat ("charcuterie") products, whether or not combined with other meats. This report deals with these products under the generic term "processed beef products".

Extension of the traceability and origin labelling rules to these products would pose a number of problems:

- The risks of origin traceability errors are multiplied at each new stage of processing of beef products, particularly as a multitude of batches of raw materials are combined to prepare a single batch of finished products. It does not appear feasible to extend the current provisions to processed beef products even before developing a reliable way of applying them to the beef obtained in secondary cutting.

- Industrial production of processed beef products makes use of large quantities of raw materials simultaneously, and therefore of numerous batches of beef. These batches meet the specifications agreed by clients and suppliers, which indicate the precise characteristics of the cuts required and the cost constraints but not the origin within the meaning of Regulation (EC) No 1760/2000. Requiring a homogenous origin would create additional supply constraints which would not be easily compatible with production conditions.

- Indication of origin would apply only to beef, but these products might contain other types of meat and other ingredients whose origin the consumer might also like to know.

Extension to processed beef products would therefore create major constraints both for the trade in beef and for actual implementation by the industry itself. The businesses concerned might even be led to replace beef with other types of meat which are not subject to these labelling constraints.

In conclusion, extension of the rules to these products would not produce any extra safeguards for public health - the businesses concerned already apply "step-by-step" traceability to their products - or have an impact on beef consumption, which has already returned to its level prior to the second BSE crisis. The cost/benefit ratio of such a measure would therefore be disadvantageous.

6.3. Extension to the restaurant and institutional catering sector and the fast-food sector

The "extension" of origin labelling to the restaurant and institutional catering sector and the fast-food sector is a misnomer, as the raw beef supplied to these sectors is already covered by the Regulation.

However, while consumers buying cooked beef can ask caterers where it comes from, they are not automatically given this information.

Calls to extend origin labelling to the restaurant and institutional catering sector and fast-food outlets are a recent phenomenon, although France made this compulsory in 2001. The following arguments are advanced:

- Consumers, in particular clients of institutional caterers, sometimes do not have any choice in what they eat. They may therefore like to know where the beef in question comes from.

- Recent surveys of consumers in some Member States have shown that most assume that the beef they are served in restaurants and other catering establishments is produced in their own country, while it may in fact come from another Member State or a non-Community country. National beef producers would therefore like information about the origin of the beef served to be posted in restaurants, fast-food outlets and so on.

The principle of informing consumers about the origin of the beef offered by the catering sector as a whole may appear legitimate, insofar as it is based on an apparent "equal treatment" of the beef marketed by the distribution sector and that offered by the catering sector.

However, if this information were made compulsory, implementation would pose problems similar to those resulting from an extension of the scope of the Regulation to processed beef products:

- given the quantities of beef prepared by the institutional catering industry, a large quantity (i.e. several batches) of the same type of cuts of beef must be combined; the origin of this beef is not necessarily homogeneous;

- beef supplies to institutional caterers are subject to certain specifications and tender procedures which involve considerable constraints on technical and cost grounds, but do not indicate a specific origin;

- the operational and administrative constraints imposed by traceability and by posting the origin of the beef served in catering might result in beef being replaced by other types of meat, particularly in the institutional catering sector;

- extension of the origin labelling requirement to the catering sector is inextricably linked with extension to the processed beef product sector. Both involve beef products which have undergone a process such as cooking.

- in the absence of equal treatment of the two sectors, caterers might opt directly for supplies of cooked beef products, which are not covered by the Regulation and for which no origin information is available, in place of raw beef products.

Compulsory extension of the origin labelling provisions to the catering sector would therefore bring extra constraints and expense for all operators concerned without any obvious benefits, particularly in terms of public health: the application of "step-by-step" traceability to the products served in institutional catering establishments is already compulsory in most Member States.

However, operators in the catering sector can still opt to post the origin of the beef used for their customers, if this meets client expectations.

Any information provided about the origin of the beef must not mislead the consumer: operators may thus be subject to checks by the competent authorities under existing national trading standards and consumer protection laws. These checks can also be carried out by an independent body under contract.

In the case of institutional catering establishments, a contract binding suppliers, the authorities in charge of these establishments and consumer representatives might provide a satisfactory response to users' expectations as regards the various characteristics of the beef served in these establishments.

Title IV: Simplification and harmonisation

7. Simplification of the origin labelling provisions

In the context of the BSE crisis, which led to the adoption of Regulation (EC) No 1760/2000, the intention of the legislator was to pass on to consumers all available information, including information about the system of traceability, with the aim of restoring consumer confidence in the safety of beef.

Following all the measures which have been implemented to combat BSE, and after three years of application of this Regulation, beef consumption has returned to its level prior to the second BSE crisis.

Conversely, some labelling provisions are very restrictive for operators, without generating any extra safety elements for consumers or supervising authorities.

Based on the findings of official national and Community inspection services, the Commission believes that some simplification of the compulsory labelling scheme might be needed, and would make it easier to distinguish between the traceability and origin labelling provisions.

Such changes should also improve the implementation of traceability and origin labelling by operators, with a view to the long-term application of Community beef labelling legislation.

7.1. Constitution and labelling of batches at the secondary cutting stage

The Food and Veterinary Office reports have revealed frequent failings in the application of traceability and origin labelling at the secondary cutting stage, which concern all Member States to varying degrees.

These result in particular from the homogeneity constraints which are currently applied to batches assembled at the secondary cutting stage. So far the rules have been interpreted to mean that the beef constituting a secondary cutting batch must not only come from animals of the same origin, but also from the same boning plant and the same slaughterhouse.

This extremely strict interpretation of the rules was justified in 2000 in the context of the second BSE crisis. Nevertheless, it should be revised with regard to secondary cutting for a number of key reasons:

- Continuing shortcomings in the traceability of the origin at the secondary cutting stage have been found to varying degrees in all the Member States. The size of the batches cannot be adapted according to meet customers' orders, but these form the basis of the organisation of the work of secondary cutting plants.

- This interpretation is in fact too restrictive in view of the provisions laid down in Article 13(2) of Regulation (EC) No 1760/2000. Indeed, Article 4(2) of the implementing Regulation (EC) No 1825/2000 provides for the possibility of assembling beef in the same secondary cutting batch from different primary cutting batches, whether or not they come from the same primary cutting plant.

Provision should therefore be made for the possibility of assembling, within the same secondary cutting batch, beef from different primary cutting plants.

As regards labelling, the derogation from the indication of establishment numbers in force for minced beef does not apply to secondary cutting plants: the numbers of the various slaughterhouse and primary cutting plants from which the beef comes must be indicated on the label, in accordance with Article 13 of Regulation (EC) No 1760/2000.

The proposed flexibility should not be confused with the request to be able to label beef with more than one slaughterhouse number, which was rejected by the Commission in 2000 (cf. paragraph 4.2.1.). In fact only the approval numbers of the establishments from which the beef really comes (and not all the numbers of establishments from which it might come) would be registered and labelled for each secondary cutting batch.

Moreover, the provisions of Article 13 of Regulation (EC) No 1760/2000 as regards the animals making up the same beef consignment having the same origin must be complied with.

This flexibility in the constitution of batches would not apply to primary cutting plants for the following reasons:

- the activity of boning plants involves cutting up carcases or quarters, to which the current provisions are well adapted: the Food and Veterinary Office reports do not reveal any difficulties of application in the vast majority of boning plants;

- the reliability of traceability at the secondary cutting stage depends very much on how it has been implemented at the preceding stages.

In all cases, operators are responsible for the traceability of the beef and for the registration system that they have set up. Accordingly, any secondary cutting plants which make use of the proposed flexibility in constituting the batches should be in a position to carry out, batch by batch, the registration of the establishment numbers and to transfer this information to the labels.

7.2. Introduction of the possibility of EU origin labelling

The current origin labelling rules provide for:

- either an indication of "origin: name of Member State or third country" where the country of birth, rearing and slaughter of the cattle is one and the same; or

- a separate indication of the countries of birth, rearing and slaughter where they are not the same.

As already indicated in point 4.4 of this report, detailed labelling of the origin of cattle has created problems at the point of retail sale. There are problems in marketing the meat of animals of mixed origin, leading to an unjustified cut in returns for producers. Some distributors also choose to stock only domestic beef.

Consequently the possibility of derogating from Article 13(5) of Regulation (EC) No 1760/2000 in certain cases and indicating EU origin instead of national origin could be examined.

This possibility would apply to meat obtained at the time of secondary cutting and sold directly to the final consumer. It would not cover minced meat which already benefits from an exemption from the labelling provisions in Article 13, nor meat intended for the catering sector as a whole - to the extent that the obstacles to marketing referred to above do not exist in that sector - nor to mixed products composed of beef and other ingredients - which are not covered by the Regulation.

This exemption could eliminate some of the barriers to free circulation in the Community and provide a satisfactory solution for labelling meat from cattle of mixed origin.

On the basis of this assumption, the choice of whether to indicate a national origin or an EU origin would be made by operators at the secondary cutting stage, in line with the requirements of consumers in the Member State of consumption and distributor demand. The competent authorities of the Member States would therefore not be able to impose an indication of national origin instead of EU origin (or the other way round).

Also, the possibility of indicating an EU origin would not alter the current beef traceability system: systematic recording of detailed national origin would be maintained at all stages of processing, as would labelling of origin for all products not intended directly for the final consumer.

This provision would therefore enable operators to maintain the way they work and would support the investments made. Also, it would not change the competent authorities' control methods at the various stages of beef processing.

7.3. Labelling of trimmings

At present trimmings must be labelled according to the same provisions as for unprocessed cut meat sold to the final consumer.

In practice, trimmings resulting from different batches in boning plants or secondary cutting plants are mixed and sold by the full pallet to the beef processing industry, whose products are not covered by Regulation (EC) No 1760/2000. Operators are hence unable to make up trimming batches of homogeneous origin.

Consequently, simplified origin labelling provisions should apply to these products, as provided for in Article 14 of Regulation (EC) No 1760/2000.

However, it is important to take account of the different ways in which trimmings are used.

Directive 94/65/EC [7] on the production of minced meat prohibits the use of trimmings for the manufacture of minced meat. However, meat cutting practices and the weight of trimmings vary from one Member State to the next. As a result, trimmings may be of such a size as to justify their use for making minced meat.

[7] Council Directive 94/65/EC of 14 December 1994 laying down the requirements for the production and placing on the market of minced meat and meat preparations (OJ L 368, 31.12.1994, p. 10).

The Commission is therefore in favour of adopting simplified labelling provisions for trimmings which take account of the two types of use and the fact that it is impossible to foresee what they will ultimately be used for at the time they are produced.

It therefore seems logical to extend the origin labelling rules already applied to minced meat to include trimmings.

7.4. Supplies to minced-meat production plants

Minced meat is a mixed product for which certain composition criteria (maximum fat content, protein-to-fat ratio, etc.) are laid down in Directive 94/65/EC. It is generally produced by mixing beef of various compositional characteristics. This mixture must enable the minced meat's fat content to be adjusted without adding any fat.

At present minced meat producers can take beef from different slaughterhouses in the same Member State and combine it in one production batch. Because of the simplified provisions on the origin labelling of minced meat, they can also use the meat of animals of mixed origin.

However, under Article 13(5)(a)(iii) minced meat producers are not allowed to mix beef from more than one country of slaughter in the same batch of minced meat. In practice this constraint means that they obtain their supplies in only one country of slaughter, and this can complicate the technical and commercial process.

Therefore the majority of industrial operators in the minced meat sector would like this constraint to be removed while maintaining traceability of origin by a system of recording the origin of the raw material used.

However, the Commission is not in favour of introducing such flexibility for the following reasons:

- the second subparagraph of Article 14 of Regulation (EC) No 1760/2000 clearly sets out that beef used as a raw material for the production of minced meat must come from only one country of slaughter and would therefore have to be amended;

- this provision is the result of a compromise reached when the draft Regulation was being negotiated, allowing exemption measures for the labelling of minced meat provided that the beef used as raw material for any minced meat batch comes from only one country of slaughter;

- the possibility of mixing beef from more than one country of slaughter should be made subject to the systematic recording of the full origin of each raw material used for each minced meat batch;

- recording this would require highly organised working methods and a very rigorous traceability system, which would have to be evaluated ad hoc by the official inspection services or an independent outside body;

- since not all minced meat manufacturing establishments would be able to set up such a system, they could not all benefit from such flexibility of supply; this would, de facto, distort competition between operators.

7.5. Non-pre-wrapped products

The Food and Veterinary Office reports show that the origin of beef sold over the counter by butchers and supermarket outlets is seldom labelled by these two types of operator throughout the Member States.

These difficulties are the same as those encountered with the labelling of other non-pre-wrapped food (nowhere to place the label and continuous turnover of products displayed at the counter). They are also compounded by the highly detailed labelling requirements under Article 13 of Regulation (EC) No 1760/2000 (indication of the national origin(s) and the reference numbers of the various establishments for each product).

Responsibility for defining the labelling methods applicable to beef products marketed unwrapped lies with the competent national or regional authorities. However, Article 19 of Regulation (EC) No 1760/2000 provides for the possibility for the Commission to adopt "measures required to resolve specific practical problems" under the management committee procedure.

Therefore, for labelling problems specific to beef products marketed unwrapped and identified by the competent national authorities, the Commission intends to submit a proposal containing simplified rules of application, within the limits permitted by Article 19 as referred to above.

8. Harmonisation of application of the voluntary labelling scheme

The wide variations in specifications should be narrowed down by taking out those elements already made compulsory by other legislation. Also, wider use should be made of the possibility of laying down specifications on a contractual basis between operators in the beef sector, without the need for them to be approved by the competent authority.

8.1. Drafting, approval and monitoring of specifications

At the meeting of the group of experts on 7 May 2003, a large number of Member States expressed the wish that the Commission should draw up guidelines for the drafting, approval and monitoring of the specifications for the content of voluntary labelling.

Although the authorisation procedure is the responsibility of the Member States, in view of the differences between the national evaluation and approval procedures for specifications, such guidelines should be drawn up in order to streamline their development, define common evaluation and approval criteria and establish common rules for the organisation of controls.

8.2. Informing the Commission and the other Member States of approved specifications

Regulation (EC) No 1760/2000 requires the Member States to inform the Commission of specifications that they have approved and the Commission to forward this information to the other Member States.

As a rule, the lists of approved specifications sent to the Commission are not in a usable form and cannot be forwarded to the other Member States as they are.

Therefore, in the Management Committee for Beef and Veal, the Commission has pressed for harmonisation of the way in which the national competent authorities must provide this information. It also envisages posting the lists of specifications for voluntary labelling approved by each Member State on the Europa Agriculture website.

8.3. Harmonisation of cattle category definitions

Labelling the category of cattle from which meat has been obtained may be an important item of information influencing consumer choice. However, a product legally marketed under a category name in one Member State may be substantially different to a product marketed under the same name in another Member State (veal, for example).

If the Council and Parliament take the view that the fact that the definition of these categories of cattle is not harmonised is detrimental to consumer information or the free circulation of beef products, the Commission could examine the possibility of submitting new proposals for a definition of these categories for labelling purposes, along the lines of the table of definitions in the Commission's draft implementing Regulation drawn up in 2000.

9. Conclusions

The Community beef labelling legislation has provided the guarantees demanded by the consumer as regards beef origin traceability and labelling. It has greatly helped to restore consumer confidence and to return beef consumption to previous levels in the European Union and should therefore be maintained.

However, according to the European meat trade sector it has led to a degree of re-nationalisation of trade in beef, particularly in the case of beef products sold directly to final consumers (i.e. the retail sector).

For that reason the possibility of indicating EU origin instead of national origin without weakening consumer guarantees could be studied. That possibility would be restricted to establishments preparing beef cuts intended directly for final consumers. In that situation it would be up to those operators to decide whether to indicate a national or a Community origin depending on the requirements of consumers and the distribution sector.

There have also been technical difficulties in application, relating to constraints on the homogeneity of beef cut batches in secondary cutting plants, the constitution and labelling of beef trimming batches, providing consumer information for non-pre-wrapped products and the voluntary beef labelling scheme.

Therefore, without affecting consumer guarantees, the Commission proposes the adoption, under the management committee procedure, of a number of measures designed to improve and facilitate application of this Regulation.

These are:

- allowing beef from more than one primary cutting plant to be combined within the same secondary cutting batch;

- adopting simplified measures for labelling trimmings and for labelling beef products sold unwrapped;

- facilitating mutual recognition of approvals granted by competent national or regional authorities for the specifications provided for under the voluntary beef labelling scheme.

On the other hand, the Commission is not in favour of extending the beef origin labelling provisions to processed beef products, products composed of beef and other ingredients or cooked beef prepared by institutional caterers, restaurants and fast-food outlets.

It feels that this would be particularly difficult for the operators to apply for both technical and commercial reasons. While Regulation (EC) No 1760/2000 has helped to restore consumer confidence and re-establish beef consumption, extending its scope would merely bring extra constraints and expense without any extra safeguards for public health or any impact on beef consumption: the cost/benefit ratio of such a measure would be disadvantageous.

Where minced-meat production is concerned, the Commission feels that introducing the possibility of combining beef from more than one slaughter country in the same batch of minced meat would result in origin traceability problems.

With this report, the Commission would like to engage the Council and the European Parliament in a discussion of its assessment of the situation and the need, if any, to amend the rules in force. Once the matter has been examined by the Council and Parliament, and in the light of contributions to the debate by the various stakeholders, the Commission will make appropriate proposals.