Special Report No 19/98 concerning the Community financing of certain measures taken as a result of the BSE crisis, accompanied by the replies of the Commission (submitted pursuant to Article 188c(4)(2) of the EC Treaty)
Date: 1998-10-07
Institutions: European Court of Auditors
Subjects: EU aid, EU financing, animal disease, cattle, infectious disease, report

9.12.98

EN

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I

(Information)

COURT  OF  AUDITORS

SPECIAL  REPORT  No  19/98

concerning  the  Community  financing  of  certain  measures  taken  as  a  result  of  the  BSE  crisis,
accompanied  by  the  replies  of  the  Commission

(submitted  pursuant  to  Article  188c(4)(2)  of  the  EC  Treaty)

(98/C  383/01)

TABLE  OF  CONTENTS

Paragraph
reference

Page

EXECUTIVE  SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 — 15

1 — 11

European  Parliament’s  Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 — 15

PRINCIPAL  FEATURES  OF  THE  MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 — 21

ELIMINATION  MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 — 55

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 — 23

The  United  Kingdom  ‘over  thirty  months  scheme’  (OTMS) . . . . . . . . . . . . . .

24 — 32

British  calves  exported  before  20  March  1996 . . . . . . . . . . . . . . . . . . . . . . . .

33 — 35

Repurchase  of  ex-intervention  beef . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36 — 37

Cull  schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Herd  culls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The  United  Kingdom  selective  cull

38 — 52
38 — 40
41 — 44
45 — 52

Compensation  for  BSE  cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53 — 55

MARKET  MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56 — 88

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56

Producer  support

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disparity  of  aid  rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct  support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57 — 71
58 — 61
62 — 64
65 — 67
68 — 70
71

3

5

5

6

7

7

7

8

9

9

10
10
10
11

11

12

12

12
12
13
13
14
14

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Production  control

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The  calf  processing  aid  scheme  (CPAS)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
The  early  marketing  premium  (EMP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effectiveness  of  the  calf  schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Paragraph
reference

72 — 88
72 — 74
75 — 78
79 — 83
84 — 88

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

89 — 96

TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Replies  from  the  Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

14
14
15
15
15

16

18

26

GLOSSARY

BMPS

BSE

BSP

(UK)  Beef  Marketing  Payment  Scheme:  Community-financed  aid  paid  to  producers
who  sold  cattle  for  consumption  between  20  March  and  30  June  1996

Bovine  Spongiform  Encephalopathy

Beef  Special  Premium:  100 %  Community-financed  headage  premium

Casualty animal

An  animal  injured  on  farm,  during  transport,  at  markets,  etc.

Cohorts

Groups  of  animals  which  received  the  same  (potentially  infected)  feed  when  young

CPAS

EMP

MBM

OTMS

SBM

SCP

SCS

SEAC

Calf  Processing  Aid  Scheme:  headage  premium  100 %  Community-financed

Early  marketing  Premium:  headage  premium  100 %  Community-financed

Meat  and  Bone  Meal  —  dry  material  that  results  from  rendering  animal  carcases

(UK)  ‘Over  Thirty  Months  Scheme’:  Community  part-financed

Specified  Bovine  Material.  Broadly  speaking,  the  head  (including  brain  but  excluding
tongue), spinal cord, tonsils and spleen from cattle over 6 months old and the thymus
and  intestines  from  cattle  of  any  age

Suckler  Cow  Premium:  100 %  Community-financed  headage  premium

(UK)  Selective  Cull  Scheme:  Community  part-financed

Spongiform  Encephalopathy  Advisory  Committee  to  advise  the  UK  Ministry  of
Agriculture,  Fisheries  and  Food  and  the  Department  of  Health  on  all  matters  relating
to  spongiform  encephalopathies

Tallow

Oil  produced  as  a  result  of  rendering  animal  carcases

TSE

Transmissible  spongiform  encephalopathies

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EXECUTIVE  SUMMARY  OF  SPECIAL  REPORT  CONCERNING  THE  COMMUNITY  FINANCING
OF  CERTAIN  MEASURES  TAKEN  AS  A  RESULT  OF  THE  BSE  CRISIS

Introduction

Regulations  were  adopted  by  the  Council  to  finance,  out  of  the  EAGGF,  specific  measures  to
deal  with  the  1996  BSE  crisis.  They  provided  for  the  swift  transfer  of  1996  and  1997  EU
Budget  funds  to  the  Member  States,  allowing  them  a  wide  range  of  choices  for  the
implementation  of  those  measures.  About  25 %  (ECU  550  million)  of  the  total  amount  (ECU
2 149 million) was made available to the United Kingdom for the Over Thirty Months Scheme
(OTMS)  and  Selective  Cull  Scheme  (SCS),  the  rest  being  distributed  to  all  Member  States,
roughly  in  accordance  with  the  size  of  their  national  bovine  herds.  The  Council’s  declared  aim
was  to  act  quickly  to  protect  human  and  animal  health  and  to  support  beef  producers.  At  the
time,  the  latter  were  already  facing  an  imbalanced  market  which  was  near  the  peak  of  its
production  cycle.

In this Report, the Court examines the measures taken to eliminate certain cattle/beef deemed to
pose  a  risk  to  public  health  and  those  taken  to  support  producers  and  limit  production  with  a
focus  on  Community  expenditure.

Elimination  measures

These measures are, for the most part, veterinary in nature (normally co-financed at 50 %)  but
have nevertheless been co-financed by the Community at 70 %  and  charged  to  market  support
under  the  European  Agricultural  Guarantee  Fund  (see  paragraph  23).

Concerning  the  implementation  of  the  elimination  schemes  considerable  weaknesses  were
found:

(a)  the  OTMS,  created  serious  logistical  problems  for  the  United  Kingdom  (see  paragraph  27);
cross  checks  for  duplicate  claims  were  not  performed  (see  paragraph  29);  as  a  result  of  the
failure  to  ensure  a  complete  audit  trail  (see  paragraph  31)  there  was  no  guarantee  that  all
animals  claimed  for  were  disposed  of  in  the  manner  prescribed  by  the  regulations;

(b) The decision of the Belgian authorities to take the option not to slaughter and destroy calves
imported from the United Kingdom reduced the impact of the measure to restore consumer
confidence  in  beef  (see  paragraph  35).  Although  all  such  calves  were  slaughtered  in  France
and  the  Netherlands  there  is  no  evidence  that  all  carcases  were  properly  disposed  of  (see
paragraph  34);

(c)  The  deadline  set  by  the  Commission  for  the  repurchase  of  former  intervention  beef  in  the
United Kingdom was not compatible with the objective of buying back meat that might have
come  from  animals  aged  over  thirty  months  at  the  time  of  slaughter  (see  paragraph  37);

(d) Some  scientific  research  suggests  that,  with  regard  to  the  United  Kingdom’s  selective  cull
scheme  it  will  have  only  a  marginal  effect  on  the  eradication  of  BSE  (see  paragraph  48);  it
has  not  been  possible  to  trace  65  000  of  the  animals  concerned  all  of  which  were  born
before  July  1993  (see  paragraph  50).

Market  measures

The  proposals  put  forward  by  the  Commission  prior  to  the  adoption  of  Council  Regulation
(EC)  No  1357/96  provide  exclusively  for  top-up  payments  to  producers  within  the  framework

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of the eligibility for the beef special premium and suckler cow premium. The decision taken by
the Council to also grant lump sums to Member States enabled them to extend the aid to other
categories  of  producer  (see  paragraph  59).  Council  Regulation  (EC)  No  2443/96  went  even
further  in  this  direction  in  that  it  allocated  ECU  500  million  to  Member  States  on  the  basis  of
the  size  of  their  national  beef  herd  and  allowed  them  to  compensate  producers  in  respect  of
animals not normally entitled to premiums and for which no reliable databases exist. Groups of
producers  who  derive  their  principal  income  from  sources  other  than  beef  production,  notably
from  milk  and  veal  production,  also  received  Community  support  (see  paragraph  69).

The degree of flexibility allowed to Member States resulted in substantial variations in the level
of  compensation  paid  for  the  same  category  of  animals  (see  paragraph  71).  To  the  extent  that
recoveries  fall  short  it  may  not  be  possible  to  pay  in  full  all  producers  whose  entitlement  to
premiums  in  respect  of  the  calendar  year  1996  relates  to  more  animals  than  1995  (see
paragraph  66).

Concerning  the  measures  taken  to  control  production,  the  calf  processing  scheme  can  be
justified  on  economic  grounds  (see  paragraph  85),  whereas  some  40 %  of  the  expenditure
incurred  under  the  early  marketing  premium  scheme  constitutes  a  gratuitous  payment  to
producers.  Whilst  it  is  too  soon  for  the  effects  of  the  calf  processing  scheme  to  be  felt,  the
impact of the early marketing premium on red meat production is limited and has been achieved
at  a  high  cost  (see  paragraph  88).

Conclusion

The degree to which the Community budget should bear the financial costs of such emergencies
merits further consideration, given the quasi-veterinary nature of many of the measures taken in
such  circumstances.

The failure to adequately monitor the feed ban in the UK meant that a large number of animals
which  developed  BSE  (36  000)  were  born  after  the  ban  had  been  introduced.  Different
approaches  were  adopted  with  regard  to  the  culling  of  BSE  infected  herds  and  the  slaughter  of
British  calves  which  were  exported  before  the  export  ban.

The  controls  performed  by  the  clearance  of  accounts  unit  focused  primarily  on  the  United
Kingdom  and  payments  made  under  Council  Regulation  (EC)  No  1357/96.  In  addition,
numerous  visits  by  the  Commission’s  veterinary  officers  were  made  to  the  Member  States.
Nevertheless,  there  was  a  lack  of  rigour  and  consistency  in  the  implementation  of  measures
within  and  between  Member  States,  in  areas  such  as  the  slaughter  of  British  calves  exported
before  the  ban,  the  repurchase  of  ex-intervention  beef,  cull  schemes,  compensation  to  farmers
under  Regulation  (EC)  No  2443/96,  and  the  calf  schemes.

The  inconsistencies  in  approach  undermined  the  measures  taken  to  compensate  farmers
equitably. This was due primarily to the fact that the two main measures (Council Regulations
(EC) No 1357/96 and (EC) No 2443/96) enabled Member States to make payments not linked
to  the  traditional  beef  special  and  suckler  cow  premia  schemes  and  therefore  outside  the  scope
of  IACS-controls.

The occurrence of BSE and  its aftermath have underlined the urgent need for the EU to design
and to adopt a strategy (i.e. Action Plan) to deal, in a coordinated, effective and timely manner
with  this  kind  of  crisis.

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INTRODUCTION

Background

notifiable  at  Community  level  in  April  1990 (4).  Since
April  1990 (5)  the  carcases  and  offal  of  confirmed  cases
of BSE must be destroyed. The number of confirmed BSE
cases  in  the  EU  is  shown  in  Table  1.  It  is  clear  that  the
incidence  in  the  United  Kingdom  is  vastly  greater  than
elsewhere  but  it  has  been  in  rapid  decline  since  1992.

1. BSE was first identified by pathologists at the Central
Veterinary  Laboratory  in  Weybridge,  England,  in  1986.
BSE  is  one  of  a  number  of  transmissible  spongiform
encephalopathies  (TSEs)  a  characteristic  of  which  is  the
presence of an abnormal form of a protein called a prion.
TSEs  are  not  contagious  and  scientific  evidence  to  date
suggests  that  it  is  acquired  by  cattle  eating  fodder  that
contains  the  infectious  agent.

5.
It  is  not  known  how  much  of  the  infective  agent  has
to  be  ingested  before  the  disease  is  contracted.  Genetic
predisposition  may  also  play  a  role.  A  low  level  of
maternal transmission occurs (less than 10 %) but this in
itself  would  not  perpetuate  the  disease (6).  There  is  some
doubt  as  to  whether  BSE  can  occur  spontaneously,  i. e.
cannot  be  attributed  to  contaminated  feed  or  vertical
transmission.

2.
In  December  1987  ruminant  derived  meat  and  bone
meal  (MBM)  in  feed  was  identified  as  the  most  probable
cause  of  BSE (1).  Two  main  factors  are  considered  to
have  led  to  the  United  Kingdom  epidemic:  the  high
proportion  of  scrapie-infected  sheep  meat  used  in  rations
and  the  use  of  rendering  processes  that  did  not  eliminate
the cause of infection. Consequently the United Kingdom
introduced  a  ban  on  feeding  ruminant  derived  protein  to
cattle  in  July  1988 (2).  The  ban  was  extended  to  any
animal  feed  in  September  1990  and  exports  of  such  feed
were  effectively  banned.  In  June  1994  Commission
Decision 94/381/EC prohibited the feeding of mammalian
protein  to  ruminants  throughout  the  European  Union.
Commission  Decision  94/382/EC  of  27  June  1994
introduced  alternative  heat 
for
processing  animal  waste  in  order  to  ensure  that  plants
handling  high  risk  materials  inactivate  the  agents  of
scrapie  and  BSE.

treatment 

systems 

6. On 20 March 1996 the United Kingdom Government
announced that there might be a link between BSE and a
new  variant  of  Creutzfeldt-Jakob’s  disease  (nvCJD),  a
fatal  disease  in  man (7).  The  incubation  period  in  man  is
unknown  but,  by  analogy  with  other  human  TSEs,  may
be  up  to  30  years.  As  at  1  July  1998,  there  were  27
definite  or  probable  cases  of  nvCJD  in  the  United
Kingdom and one in France. No reliable forecast exists of
the number of people who may yet develop the disease as
a result of eating contaminated beef products many years
ago.  The  United  Kingdom  Government’s  announcement
was  to  have  far-reaching  economic  consequences  for  the
EU  beef  and  veal  sector.

3.
It  is  now  acknowledged  by  the  United  Kingdom
authorities  that  due  to  cross-contamination  of  feed  the
ban  was  only  fully  effective  from  1  August  1996 (2),
when  the  possession  of  MBM  on  premises  where
livestock  feeding  stuffs  are  kept  was  made  illegal (3)  by
which time some 36 000 BSE cases had arisen in animals
born  since  the  1988  ban  was  introduced.

4. Legislation making the disease notifiable in the United
Kingdom  was  introduced  in  June  1988,  and  it  was  made

(1)  BSE  in  Great  Britain:  A  Progress  Report  (June  1997)

Ministry  of  Agriculture,  Fisheries  &  Food.

(2)  The  BSE  order  1988  (Statutory  Instrument  1988  No  1039)
prohibits  the  sale,  supply  and  use  of  certain  feedingstuff  for
feeding  to  ruminants,  initially  for  a  specified  period  but
extended  indefinitely  in  December  1989.

(3)  The  BSE  Order  1996  (SI  1996/2007).

7. On 27 March 1996 the Commission formally decided
(Commission Decision 96/239/EC) to ban all beef exports
from the United Kingdom both to the rest of the EU and
to  third  countries.  On  21  June  1996  the  Florence
European Council agreed a framework for the removal of
the  ban (8).  On  the  17  March  1998  the  Council  adopted

(4)  Commission  Decision  90/134/EEC  (OJ  L  76,  22.3.1990,  p.

23).

(5)  If  BSE  is  confirmed  the  animal  must  be  destroyed  under
Article  2  of  Commission  Decision  94/474/EC  (OJ  L  194,
29.7.1994,  p.  96).

(6)  Spongiform  Encephalopathy  Advisory  Committee  (SEAC)

Statement  on  maternal  transmission  (17  April  1997).

(7)  On  18  September  1997 

the  Commission’s  Advisory
Committee  on  Dangerous  Pathogens  (ACDP)  concluded  that
the  BSE  agent  should  be  classified  as  a  human  pathogen.
(8)  The  five  pre-conditions  are:  1.  implementation  of  a  selective
slaughter  programme;  2.  introduction  of  an  effective  animal
identification  and  movement  recording  system;  3.  legislation
for  the  removal  of  mammalian  MBM  from  feed  mills  and
farms;  4.  effective  implementation  of  the  OTM  rule;  5.
improved  methods  for  removing  SBM  from  carcases.

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a  Decision  allowing  for  the  partial  lifting  of  the  ban  in
respect  of  Northern  Ireland.

8. Beef  prices  throughout  the  EU  fell  as  consumers
stopped buying beef. In April 1996 the first of a series of
emergency  measures  was  taken  at  Community  level  in
order  to  alleviate  the  situation.  Broadly  speaking  the
measures  fall 
into  two  categories:  those  aimed  at
eliminating  animals/meat  regarded  as  ‘suspect’  for  one
reason  or  another  and  market  measures  in  the  form  of
producer  support  (additional  headage  payments  and
slaughter-based  compensation  for  income  losses)  and
production  control  via  the  slaughter  of  young  calves  and
an  early  marketing  premium.

its 

inquiries 

9. The  Court  previously  reported (9)  on  aspects  of  the
earlier  schemes  and  has  continued 
in
Belgium,  Germany,  France,  Ireland,  Italy,  Luxembourg,
the Netherlands, Portugal and the United Kingdom which
together account for 90 % of Community expenditure on
BSE related measures. All BSE related measures for which
expenditure  has  been  charged  to  the  Community  budget
in  1996  and  1997,  with  the  exception  of  public  storage
costs and export refunds, have been examined from both
a  legality/regularity  and  from  a  value-for-money  point  of
view (10).

10. The  total  Community  expenditure  on  BSE  related
measures  for  1996  and  1997  was  ECU  2 149  million  —
Table  2  gives  a  breakdown  by  Member  State.  This
represents  a  32 %  increase,  in  relation  to  the  normal
premium  scheme  expenditure  (i. e.  excluding  public
storage  and  export  refunds),  for  the  two  years.

11. The  huge  sums 
involved  attracted  considerable
attention  at  Member  State  and  Community  level.  During
the period from May 1996 to July 1998 the clearance of
accounts  unit  made  one  visit  to  six  Member  States,  two
to  France  and  three  to  Germany  to  audit  various  BSE
related  measures.  For  the  most  part,  attention  has
focused on the payments made under Council Regulation
(EC)  No  1357/96  and,  to  a  lesser  extent,  the  measures
taken  under  Council  Regulation  (EC)  No  2443/96.  In
addition, 
it  has  made  several  visits  to  the  United
Kingdom to audit the OTMS, SCS and latterly the CPAS.
Most  of  the  expenditure  under  the  EMP,  the  herd  cull
schemes,  destruction  of  exported  British  calves,  and
Council  Regulation  (EC)  No  2443/96,  has  not  been
subject  to  audit  by  the  Commission.  Despite  numerous

visits  to  the  Member  States  by  the  Commission’s
veterinary officers, recent inspections have shown that the
regulations are not being respected with regard to animal
Infringement
feed  and 
in
proceedings  against  13  Member  States  are  still 
progress (11).

treatment  of  MBM. 

the 

European  Parliament’s  Report

12. The  European  Parliament  set  up  a  temporary
committee  of  inquiry  into  BSE  on  18  July  1996 (12).  It
heard  evidence  from  a  wide  variety  of  sources,  including
Commissioners  and  Commission  officials,  scientific
experts,  and  national  representatives.  The  committee
reported  in  February  1997 (13).  Its  report  focused  on  the
period  up  to  the  start  of  the  crisis  in  March  1996,  with
an  emphasis  on  the  public  health  implications  of  BSE.

13. The  report  was  very  critical  of  both  the  EU
institutions  and  the  United  Kingdom  authorities.  In
addition to the report’s findings relating to public health,
it concluded that the Commission’s organisation structure
and  decision-making  system  were  ineffective  in  dealing
with  BSE.  The  Commission’s  controls  over 
the
manufacture  and  use  of  meat  and  bone  meal  (MBM)
were  found  to  be  ineffective,  and  the  Commission  was
criticised  for  not  carrying  out  BSE  related  inspections  in
the  United  Kingdom  between  June  1990  and  May  1994.
The  Council  was  criticised  for  not  dealing  specifically
with BSE between June 1990 and July 1994, and for not
taking  steps  to  enforce  the  United  Kingdom  export
bans.

the 

the  United  Kingdom, 

14. Regarding 
report
concluded  that  BSE  stemmed  from  the  introduction  into
the  United  Kingdom  of  revised  MBM  manufacturing
processes  which  did  not  destroy  the  infective  agent.  The
ban  on  feeding  MBM  to  ruminants  was  reported  to  be
ineffective,  and  the  United  Kingdom  was  criticised  for
failing  to  prevent  manufacturers  from  continuing  to
export  MBM  to  other  countries  after  it  had  already
banned its use for ruminant feed in the United Kingdom.
The report found that legislation and agreements at both
national and EU level — relating to animal identification
records,  use  of  MBM  and  the  beef  export  ban  —  were
not  complied  with  by  the  United  Kingdom  authorities.

15. Many  recommendations  were  made  in  the  Report.
In  addition  to  those  specifically  related  to  public  health
issues,  they  covered  areas  such  as  the  decision-making
process  within  the  Commission,  improvements  to  the
regulation  of  animal  feeds,  obliging  the  United  Kingdom

(9)  Court  of  Auditors  Annual  Report  1996,  paragraphs

4.61—4.75.

(10) The  enforcement  of  the  export  ban  has  not  been  examined.

(11) COM(98)  282.
(12) OJ  C  261,  9.9.1996.
(13) A4-0020/97.

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authorities  to  pay  for  the  crisis,  and  ensuring  that  all
cases  of  BSE  were  reported  in  the  EU.  A  follow  up
committee  of  enquiry  was  established  in  April  1997 (14)
to  monitor  progress  by  the  Commission  in  implementing
these  recommendations.  It  considered  several  progress
reports from the Commission, and reported in November
1997 (15).  The  Committee  reported  that  most  of  the
recommendations  had  been 
the
Commission.

acted  on  by 

PRINCIPAL  FEATURES  OF  THE  MARKET

16. The normal beef production cycle is five to six years.
Production  reached  an  all  time  high  in  1991  and  would
have peaked again in 1996 had it not been for the effects
of  the  measures  taken  to  mitigate  the  impact  of  the  BSE
crisis.  Measures  such  as  the  calf  processing  scheme  and
early  marketing  premium  coupled  with  the  United
Kingdom’s  over  thirty  months  scheme  have  held  overall
production in check just below the 8 million tonnes mark
(see  Table  3)  but  their  full  impact  will  not  be  felt  until
the  cycle  is  in  its  down  phase.

In  1995  consumption  was  7,5  million  tonnes,  it  fell
17.
by  more  than 500 000  tonnes  in  1996  largely  due  to  the
BSE  crisis  but  made  a  partial  recovery  in  1997  to  95 %
of  its  1995  level.  In  per  capita  terms  consumption
recovered  from  a  low  of  18,6  kg  in  1996  to  19,1  kg  in
1997  but  was  not  sufficient  to  offset  production  and  is
not  expected  to  reach  1995  levels  in  the  near  future.

18. The  fall  in  demand  for  beef  led  to  reduced  prices.
Between  January  and  June  1996,  prices  for  R3  quality
young bulls had fallen by an average of 10 %  in  the  EU.
Prices  recovered  by  September  1997  to  an  average  7 %
lower  than  they  were  at  the  beginning  of  1996.

19. EU  exports  of  beef  (excluding  live  animals)  have
been  falling  steadily  in  recent  years,  from  1,24  million
tonnes  in  1991  to  0,96  million  tonnes  in  1996.  Exports
for  1997  are  estimated  at  0,94  million  tonnes.  The  level
of  imports  has  varied  more,  and  has  fallen  from  0,45
million  tonnes  in  1991  to  0,36  million  in  1996.  The
scope  for  subsidising  exports  is  limited  under  the  GATT
agreement  and  preferential  access  must  be  given  to
imports  from  associated  countries  under  the  Europe
Agreements.

(14) OJ  C  150,  19.5.1997.
(15) A4-0362/97.

20. As  a  consequence  of  the  BSE  crisis,  the  intervention
ceilings initially set for 1996 and 1997 were increased by
150 000  tonnes  for  each  year.  From  a  situation  of
negligible  stocks  in  1995,  by  the  end  of  1996  the  level
had  reached  434 000  tonnes  and  as  at  December  1997
stood  at  629 000  tonnes  (see  Table  3).

21. BSE  had  serious  consequences  for  intra-Community
trade  and  third  country  exports,  in  particular  for  the
United Kingdom which has been subjected to a total ban
but  also  for  individual  Member  States  that  have  lost
major  customers.

ELIMINATION  MEASURES

Introduction

22. The  Community-financed  measures  taken  for  the
elimination  from  the  food  chain  of  animals/meat  deemed
to  pose  a  risk  to  public  health  were  as  follows:

(a)  The  United  Kingdom  Government 

introduced  a
scheme  to  remove  from  the  food  chain  all  meat  from
cattle over thirty months (OTMS) which were deemed
to  be  of  the  group  of  animals  most  at  risk  of
manifesting  the  disease  (Commission  Regulation  (EC)
No  716/96  of  19  April  1996);

(b) The  purchase  and  destruction  of  calves  which  had
been  exported  from  the  United  Kingdom  to  France,
Belgium  and  the  Netherlands  for  veal  production
prior  to  the  introduction  of  the  ban  (Commission
Regulation  (EC)  No  717/96  of  19  April  1996);

(c)  A  measure  was  introduced  in  the  United  Kingdom
providing  for  the  repurchase  of  former  intervention
beef  and  destruction  of  meat  in  intervention  which
had  been  purchased  prior  to  27  March  1996
(Commission  Regulation  (EC)  No  1757/96  of  10
September  1996);

(d) Cull  schemes  for  Portugal  and  the  United  Kingdom
(July  1996),  France  and  Germany  (early  1997)  and
Ireland  (June  1997).

23. The  total  cost  of  these  measures  for  the  EAGGF
budget years 1996 and 1997 was ECU 620 million, 85 %
of  which  relates  to  the  OTMS  (see  Table  2).  Unlike  the
premium  schemes  that  are  the  basis  of  the  traditional
market  support,  these  schemes  are  of  a  quasi-veterinary
character  and  are  only  part 
the
Community budget (70 %). By comparison, in the case of
classical  swine  fever,  slaughter  for  veterinary  purposes  is

financed 

from 

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co-financed  at  50 %.  For  the  selective  cull  there  would
seem to be more reason to treat the expenditure (ECU 26
million)  as  veterinary  rather  than  market  support.

The  United  Kingdom  over 
(OTMS)

thirty  months  scheme

Advisory 

Committee 

24. The  United  Kingdom  Government’s  Spongiform
Encephalopathy 
(SEAC)
recommended  in  March  1996,  that  cattle  over  thirty
months  old  be  deboned  in  licensed  plants  under  official
supervision but it did not suggest that the meat be treated
as  unfit  for  human  consumption.  Nevertheless  the
Government  decided (16)  to  remove  all  beef  from  OTM
cattle  from  the  human  and  animal  food  chains  on  the
grounds  of  rebuilding  consumer  and  market  confidence.

25. Cattle  with  BSE  are  slaughtered  before  symptoms
show  and  the  number  of  confirmed  cases  is  thereby
greatly  reduced.  Nevertheless,  it  has  been  treated  as  an
intervention  measure  to  stabilise  the  agricultural  market.
The  Commission  agreed  to  co-finance  the  compensation
aspect  of  this  measure  with  effect  from  29  April  1996,
and  has  spent  ECU  513  million  up  to  the  end  of  1997.
From  the  Community  point  of  view  it  represents  a
significant  burden  on  the  budget  and  one  that  will
continue.  The  United  Kingdom  recognises  its  failure  to
properly  enforce,  until  August  1996,  the  ruminant  feed
ban  introduced  in  July  1988 (17).  This  has  extended  the
period  where  BSE  infected  animals  (which  have  not  yet
developed  symptoms)  may  be  present  in  the  herd.  The
United  Kingdom  authorities  estimate  that  there  are  some
5,5  million  cows  born  before  1  August  1996  that  have
yet  to  be  entered  into  the  scheme.  At  current  rates  of
funding,  if  all  these  animals  were  processed  under  the
scheme,  it  would  cost  the  EU  budget  a  further  ECU  1,6
billion.

26. Under  Commission  Regulation  (EC)  No  716/96  of
19  April  1996  the  United  Kingdom  designated  authority
may  buy  cattle  aged  over  30  months  which  have  been
kept  on  farm  for  at  least  three  months  (this  period  was
increased  to  six  months  with  effect  from  25  November
1996 under Regulation (EC) No 2149/96 of 8 November
1996)  and  which  show  no  signs  of  BSE.  The  United
Kingdom  must  pay  the  producer  on  the  basis  of  the
animal’s weight whereas the Community pays the United
Kingdom  a  fixed  amount  per  animal  on  proof  of

(16) The  Beef  (Emergency  Control)  Order  1996.
(17) BSE  in  Great  Britain:  A  progress  report,  December  1997.

destruction.  The  rate  was  initially  set  on  the  basis  of  the
‘most  recently  observed  price  of  carcases  of  cows  on  the
United Kingdom market’ of ECU 1 per kg for a cow with
a  notional  weight  of  560  kg.  Community  financing  was
fixed  at  70 %  of  this  price  i. e.  ECU  392  and  has  been
reduced  twice  to  reflect  developments  in  market  prices.
As  regards  bulls,  steers  and  heifers,  co-efficients  to
convert  from  live  weight  to  dead  weight  were  adjusted
from 2:1 to 1,7:1 in August 1996. Differentiated aid rates
were  introduced  a  year  later.

27.
Implementation of the OTMS has been fraught with
difficulties due to the sheer number of cattle involved and
the  complicated  procedures  adopted  by  the  United
Kingdom  authorities.  Cattle  may  be  presented  through
some  200  livestock  markets  or  direct  to  some  60
abattoirs.  Producers  are  not  obliged  to  present  their  old
cows  for  slaughter  but  they  cannot  sell  them.  The  vast
majority  of  animals  submitted  under  the  scheme  have
been  cull  cows.  From  the  outset  there  was  a  backlog  of
150 000  cattle  (between  20  March  1996  and  the
introduction  of  the  scheme  such  cattle  were  not  being
processed)  which  could  not  be  cleared  until  December
1996. The rendering facilities did not have the capacity to
cope  with  the  abattoir  throughput  so  177 000  carcases
were sent to cold stores. The carcases were later removed
and  rendered  by  the  end  of  1997.  The  very  limited
incinerator  capacity  means  that  huge  quantities  of  MBM
and tallow have been put into store (328 000 tonnes and
170 000  tonnes  respectively  as  at  June  1998)  and  will
take  many  years  to  eliminate  unless  capacity  can  be
increased  and  or  the  material  is  used  as  landfill  and/or
exported  (currently  not  allowed).

28. The  Court  and  the  Commission  found  that,  during
the  early  months  of  the  scheme,  controls  were  not
operating  effectively.  At  various  stages  there  were
difficulties  reconciling  the  output  (weight)  from  the
abattoirs/cold stores to the rendering plants and thence to
the  stores  of  rendered  material.  Security  over  the  latter
was  particularly  weak.  The  Court  concludes  that  there  is
little  assurance  that  all  the  animals  submitted  under  the
OTMS  have  passed  through  to  incineration  or  storage  in
the  form  of  MBM  and  tallow.

29. Many  improvements  in  the  control  procedures  have
subsequently been made but some important cross-checks
have yet to be completed. The ear tag numbers of OTMS
cattle  and  individual  weights  were  not  entered  on  the
computer  database  until  4  August  1997  by  which  time
1,6  million  animals  had  been 
slaughtered.  Such
information  is  now  being  entered  but  had  not  been

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completed  as  at  April  1998.  A  partial  cross-check  has
been carried out between OTMS and the Beef Marketing
Payments  Scheme  (BMPS)  ear  tag  data.  This  revealed
some  5 000  cases  of  the  same  ear  tag  number  entered
under  each  scheme  or  appearing  twice  under  the  same
scheme.  Further  cross-checks  are  necessary  in  order  to
detect  possible  duplicate  payments  both  within  the
OTMS  and  vis-à-vis  other  schemes  such  as  the  selective
cull  and  in  order  to  substantiate  claims  for  Community
financing.

30. Under  Commission  Regulation  (EC)  No  716/96  the
United  Kingdom  could  only  claim  Community  aid  for
animals  destroyed  (incinerated).  The  Regulation  was
modified (18)  with  effect  from  26  September  1996  to
allow for an advance of 80 % on the basis of the number
of  carcases  rendered.  The 
to  record  vital
information  on  the  computer  database  from  the  outset
meant  that  claims  submitted  by  the  United  Kingdom
authorities  were  inaccurate  not  only  with  regard  to  the
number  of  carcases  rendered  but  also  concerning  the
number  destroyed  (casualty  animals  sent  direct  to
incinerators).

failure 

31. A  batch  system  has  been  introduced  whereby  all  2
million  animals  slaughtered  prior  to  4  January  1998  are
treated  as  batch  1  and  thereafter  weekly  batch  controls
come  into  effect.  For  batch  1  the  quantity  of  MBM  in
store  will  be  divided  by  the  total  number  of  animals
slaughtered  and  the  resulting  quantity  will  be  used  to
estimate the number of animals destroyed as the MBM is
incinerated.  This  will  form  the  basis  of  the  claim  for  the
20 %  final  balance  which,  as  at  the  end  of  1997,
represents some ECU 100 million. This estimate will also
be  inaccurate  to  the  extent  that  the  MBM  includes
non-scheme  material  such  as  specified  risk  material  from
sheep,  cull  scheme  carcases  and  rejected  OTMS  cattle.
Payments in respect of this first batch cannot therefore be
fully verified.

that  appropriate  systems 

32. Given 
to  ensure  an
adequate audit trail were not introduced from the outset,
the Commission has informed the United Kingdom that it
has  reserved  its  position  on  financing  the  first  250 000
animals  slaughtered  under  the  OTMS.  This  reserve

(18) Commission  Regulation  (EC)  No  1846/96  (OJ  L  245,

26.9.1996,  p.  9).

represents approximately ECU 80 million in terms of the
advance  already  paid  to  the  United  Kingdom.

British  calves  exported  before  20  March  1996

33. Commission  Regulation  (EEC)  No  717/96  of  19
April  1996  provided  for  the  purchase  and  destruction  of
calves imported from the United Kingdom and present on
a  holding  in  France,  the  Netherlands  and  Belgium  on  20
March  1996.  The  purchase  price  was  based  on  the
prevailing  market  price  for  calves,  70 %  of  which  was
financed  by 
the  Community.  This  measure  was
introduced  because  the  possibility  that  calves  imported
prior  to  the  export  ban  of  21  March  1996  might  enter
the  human  food  or  animal  feed  chains  had  led  to  a  lack
of  consumer  confidence.  The  measure  was  optional  for
the  Member  States 
the
Netherlands  destroyed  some  79 500  and  59 500  calves
respectively.

concerned.  France  and 

34.
In  France  the  Court  found  inadequate  controls  over
the  transport  of  carcases  (lorries  were  not  sealed)  to
rendering  plants  and  the  failure  to  systematically  stain
them.  Moreover,  proof  of  incineration  is  only  available
on  a  global  basis  —  the  carcases  formed  only  a  part  of
the  total  material  destroyed.  In  the  Netherlands  the
authorities  were  unable  to  reconcile  a  difference  of  872
calves  between  veterinary  records  and  the  identification
database.

35. Belgium  decided  not  to  adopt  the  measure  and  the
20 000  calves  concerned  were  slaughtered  and  sold  for
consumption 
through  normal  commercial  channels.
Given that there were no export restrictions, this reduced
the  effectiveness  of  the  measure.

Repurchase  of  ex-intervention  beef

for 

36. Commission  Regulation  (EC)  No  1757/96  of  10
the  repurchase  and
September  1996  provides 
destruction  of  beef  sold  from  intervention  before  the  27
March 1996 and the destruction of old stocks of boneless
beef  still  in  intervention  in  the  United  Kingdom.  Old
stocks  should  have  been  destroyed  by  31  March  1997
but  due  to  a  lack  of  incineration  capacity  the  deadline
was  extended  to  31  October  1997.  5 328  tonnes  of
residual  intervention  stock  were  destroyed  and  GBP  4,1
million  (ECU  5,4  million)  was  written  off.  Applications
for  repurchase  had  to  be  submitted  by  18  September
1996  and  was  voluntary.  In  total,  650  tonnes  of  meat
was  repurchased  at  a  cost  of  GBP  2,4  million  (ECU  3,2
million,  of  which  ECU  2,4  million  was  borne  by  the
Community  budget).

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37. The  deadlines  set  by  the  Commission  were  tight,
payment for the products taken over had to take place by
15  October  1996.  This  constraint  was  not  compatible
with  the  objective  to  buy  back  meat  that  might  have
come from animals over thirty months old at the time of
slaughter  in  order  to  remove  it  from  the  market (19).
According 
this  deadline  was
the  Commission, 
influenced  by  the  wish  to  avoid  the  risk  of  fraud.

to 

Cull  schemes

Herd  culls

38. Portugal,  France  and  Ireland (20)  have  implemented
whole  herd  cull  schemes  financed  by  the  Community.  A
slaughter  and  destruction  policy  for  all  animals  in  herds
where  cases  of  BSE  have  occurred  has  been  adopted.

39. The  slaughter  of  an  entire  herd  is  justified  on
scientific  grounds  if  all  the  animals  in  it  may  have  been
exposed  to  the  same  feed  as  the  BSE  case.  Other  reasons
not  connected  with  the  eradication  of  the  disease  have
also  motivated  such  an  approach.  For  example,  an
objective  stated  in  the  Irish  Plan  for  the  control  and
eradication  of  BSE  is  to  satisfy  the  requirements  of  third
country  markets  and  restore  consumer  confidence  by
depopulating  herds  in  which  BSE  occurs  and  destroying
animals  imported  from  the  United  Kingdom  thereby
acquiring a BSE free status as quickly as possible. Even if
the  BSE  infected  cow  has  only  been  on  the  holding  for  a
matter  of  weeks  and  could  not  possibly  have  been
infected  there,  the  entire  herd  is  slaughtered.  In  one
example  this  led  to  the  slaughter  of  738  cattle  for  which
the  herdowner  was  paid  ECU  570 000.

40. The  Regulations  permit  Portugal  and  France  (but
not  Ireland)  to  make  supplementary  payments.  In  the
case  of  Portugal  aid  is  paid  for  ‘lost  productive  value’,
and far exceeds the amount paid for direct compensation
whereas  for  France  the  contrary  is  true.  The  proportion
of the total compensation paid to the producer met from

(19) After the closing date for applications three traders contacted
the  United  Kingdom  intervention  agency  to  ask  them  to  buy
back  meat  (26  tonnes).  An  additional  450  tonnes  were
known  to  be  in  free  circulation  but  were  not  re-purchased
under  this  Regulation.

(20) Commission  Regulation  (EC)  No  1508/96  (OJ  L  189,
30.7.1996,  p.  86),  Commission  Regulation  (EC)  No  164/97
(OJ L 29, 31.1.1997, p. 1) and Commission Regulation (EC)
No  1112/97  (OJ  L  162,  19.6.1997,  p.  17),  respectively.

the  Community  budget  therefore  varies  considerably  —
from  27 %  for  Portugal  to  70 %  for  Ireland  (see  Table
4).

Germany

41. For  the  five  BSE  cases  reported  in  Germany  up  to
January  1997  the  whole  herd  has  been  slaughtered,  and
the  producers  have  been  compensated  from  national
funds.  The  BSE  cases  were  all  animals  originating  in  the
United  Kingdom.  Following  the  January  case  it  was
decided  to  slaughter  all  cattle  imported  from  the  United
Kingdom  and  Switzerland  in  order  to  eliminate  the  risk
of  these  animals  manifesting  the  disease.

42. Under  Commission  Regulation  (EC)  No  299/97 (21)
the  Community  co-finances  70 %  of  the  compensation
paid  subject  to  a  ceiling  of  ECU  735  per  animal.  The
Regulation  covers  cattle  born  in  the  United  Kingdom  or
Switzerland or direct descendants of such animals up to a
maximum  of  19 200  animals.  However,  since  March
1997  the  direct  descendants  have  only  been  subjected  to
surveillance  and  the  number  of  animals  destined  for
slaughter was thereby reduced to 5 633. More than 1 000
of these animals have been the subject of judicial appeals
by  the  producers  against  the  slaughter  notices.  These
appeals  are  founded  on  the  lack  of  proof  that  BSE  is
contagious.

43. The  Commission 
justified  the  Regulation  with
reference  to  Article  23  of  Commission  Regulation  (EEC)
No  805/68  according  to  which  ‘in  order  to  take  account
of  the  restrictions  on  free  circulation  which  may  result
from  the  application  of  measures  for  combating  the
spread  of  disease  in  animals,  exceptional  measures  of
support  for  the  market  may  be  taken’.  In  this  regard  it
should  be  noted  that:

(a)  the  ‘restrictions  on  free  circulation’  were  imposed  in
March  1996  on  cattle  imported  from  the  United
Kingdom (22),  long  after  the  importation  of  the  cattle
concerned,  which  were  not  therefore  subject  to  such
restrictions;

(b) no  such  ‘restrictions  on  free  circulation’  have  been

imposed  on  cattle  from  Switzerland  in  the  EU.

44. Compensation  payments  made  for  the  slaughter  of
animals  to  which  no  Community  restriction  on  free
circulation  applies  cannot  be  regarded  as  a  market
support  measure  in  this  context.  The  expenditure  under

(21) Commission  Regulation  (EC)  No  299/97  of  19  February
1997 adopting exceptional support measures for the beef and
veal  market  in  Germany  (OJ  L  50,  20.2.1997,  p.  16).

(22) See  first  ‘whereas’  of  Commission  Regulation  (EC)  No

299/97.

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Commission  Regulation  (EC)  No  299/97  (ECU  3,2
million)  lacks  a  valid  legal  basis.

The  United  Kingdom  selective  cull

authorised 

the  United  Kingdom 

45. Commission  Decision  96/385/EC  of  24  June  1996
approved  the  United  Kingdom  eradication  plan  and
Commission  Regulation  (EC)  No  1484/96  of  26  July
1996 
to  pay
compensation for animals slaughtered in accordance with
the  selective  cull  set  out  in  this  plan.  A  selective
compulsory  slaughter  of  animals  and/or  herds  in  birth
cohorts  born  in  1990/1991,  1991/1992  and  1992/1993
which  have  been  identified  as  being  most  likely  to  have
eaten  infected  MBM  was  specified  in  the  original  plan
but  was  modified  to  include  the  1989/1990  cohort  on  a
voluntary basis. More than 60 % of the 324 000 animals
identified  as  at  March  1998  were  born  in  the  voluntary
cohort year. To qualify, animals must be on farm as at 1
August  1996.

46. Compensation  to  farmers  is  based  on  the  objective
market  value  of  each  animal  concerned  and  is  70 %
financed  by  the  Community.  The  United  Kingdom  was
also  authorised  to  make  supplementary  payments  from
national  funds.

47. Article 2 of Decision 96/385/EC required the United
Kingdom to bring into force by 1 August 1996 the laws,
regulations  and  administrative  provisions  necessary  to
implement  the  plan.  Proposals  for  a  selective  cull  were
first  put  forward 
in  May  1996  and  were  based
exclusively  on  the  feed-borne  supposition.  The  cull  was
expected to start in September or October 1996 but on 1
August  1996  SEAC  advised  the  Government  to  consider
the implications of research findings concerning maternal
transmission  of  BSE  and  the  cull  was  put  on  hold.

48. Details  of  the  research  were  published  on  29
August (23).  According  to  this  research  the  epidemic
would  virtually  die  out  around  2001  irrespective  of  any
further  measures.  Nevertheless,  the  United  Kingdom  was
bound by the framework agreed by the European Council
on  21  June  1996 (8)  to  implement  a  selective  cull  as  a
precondition  for  lifting  the  export  ban  but  did  not
proceed  with  it  until  early  1997.

(23) Transmission  dynamics  and  epidemiology  of  BSE  in  British

49. Cohort definitions were modified in June 1997. The
new definition means that some animals that had already
been  culled  would  no  longer  be  included.  The  new  rules
have  not  been  applied  retrospectively  but  farmers  whose
herds  were  under  provisional  notice  at  the  time  could
request  reassessment,  some  200  did  so.  The  parameters
for  cohort  tracing  have  also  been  modified  and  an
amendment  to  the  Eradication  plan  was  approved  in
December  1997 (24).  These  changes  have  further  delayed
the  completion  of  the  cull.

In  Great  Britain (25)  by  June  1998,  229 000 animals
50.
had  been  slaughtered,  of  which  71 000  under  the
selective cull, and 158 000 prior to its introduction. For a
further  65 000  animals  the  absence  of  a  full  traceability
system  and  inadequate  farm  records  meant  that  they
could  not  be  traced (26).

51. The  purpose  of  the  SCS  is  similar  to  that  of  the
OTMS  in  that  it  aims  to  prevent  BSE  cases  appearing,
although it is more selective. The two schemes overlap in
the  sense  that  many  potential  cull  animals  have  already
been  eliminated  under  the  OTMS  (21 500  as  at  April
1998). Given that the average level of compensation paid
to  the  producer  is  three  times  higher  under  SCS  than
under  OTMS  and  the  Community  contribution  is  more
than twice as high [ECU 790 against ECU 370 (see Table
4)],  this  has  saved  the  Community  an  estimated  ECU  9
million.  Conversely,  producers  that  think  they  will  be
included  in  the  SCS  are  unlikely  to  put  forward  eligible
animals  under  the  OTMS.

52.
In  practice,  compensation  for  cows  of  any  age  is
based  on  the  replacement  value  of  young  cows.  Cows
culled  under  the  SCS  are  generally  old  and  are  worth  on
the  market  on  average  only  50 %  of  such  a  value.
Compensation  has  been  relatively  high  (see  Table  4),  on
average  ECU  2 000  per  head  (and  as  much  as  ECU
250 000  for  a  pedigree  bull).  The  necessarily  voluntary
nature of the 1989/1990 cohort and the lack of adequate
records  reduce  the  effectiveness  of  the  SCS.

Compensation  for  BSE  cases

53. Community  legislation (5)  requires  that  the  carcases
of  BSE  cases  be  destroyed  but  this  has  not  always
happened; the first Belgian and Luxembourg BSE carcases

(24) Commission  Decision  97/870/EC.
(25) In  Northern  Ireland  all  1  461  animals  still  alive  were  traced
and  have  been

computerised 

system 

the 

through 
slaughtered.

cattle  by  Anderson  et  al,  Nature,  29  August  1996.

(26) BSE  in  Great  Britain,  B  June  1998,  Progress  Report.

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were  rendered  (in  September  and  October  1997)  into
bonemeal  that  was  sold  in  several  Member  States  and
exported  to  third  countries.  In  both  cases  the  suspect
animals  were  initially  tested  for  rabies,  the  results  of
which  proved  negative.  The  heads  of  the  animals
concerned  were  subsequently  tested  for  BSE.  The  latter
test  results  were  positive  but  were  not  available  until
several  weeks  after  the  carcases  had  been  rendered.  The
other  animals  in  the  infected  herds  were  destroyed.

lower 

54. All  Member  States  have  a  system  of  compensation
for  cattle  killed  as  BSE  suspects.  Compensation 
is
for  confirmed  cases  and  differs
generally 
considerably  by  Member  State  (see  Table  5).  In  France
the  average  paid  is  half  that  paid  in  Ireland.  Italy  does
not  pay  compensation  for  animals  that  contracted  BSE
before  they  were  imported.  The  Community  does  not
contribute  towards  the  cost  of  compensation  for  BSE
infected animals.

imported 

from  Denmark.  According 

55. The  lack  of,  or  low  level  of,  compensation  for
diseased animals may explain why so few cases have been
reported in some Member States (see Table 1). According
to  the  Irish  authorities  BSE  has  been  found  in  cattle
imported  not  only  from  the  United  Kingdom  but  also  in
two  mature  cows  within  months  of  their  importation
from the Netherlands (which had only declared two cases
up  to  31  December  1997)  and  similarly  for  one  mature
cow 
to  one
analysis (27), during the period 1985 to 1989, the number
of  potential  BSE  cases  imported  by  other  Member  States
from  the  United  Kingdom  should  have  been  around  1
600 whereas by the end of 1997 only 400 cases had been
reported.  This 
is  partly  due  to  the  absence  of  a
standardised  surveillance  system  and  varying  levels  of
awareness of BSE which may result in underdetection and
misdiagnosis  as  illustrated  in  paragraph  53.  Moreover,
many  of  the  reported  cases  in  the  Member  States  do  not
relate to cattle born in the United Kingdom. For the most
part  the  animals  developed  BSE  apparently  as  a  result  of
eating  contaminated  feed.

MARKET  MEASURES

Introduction

to 

In  parallel 

the  elimination  measures, 

56.
two
Regulations  were  adopted  by  the  Council  to  provide  a
total of ECU 1 350 million by way of market support. In
addition,  ECU  16,7  million  were  spent  on  private

(27) ‘Risk  of  BSE  from  the  import  of  cattle  from  the  UK  into
countries  of  the  EU’  by  B. E. C.  Schreuder  et  al,  The
Veterinary  Record,  23  August  1997.

storage  for  veal.  In  order  to  reduce  the  anticipated
overproduction  of  beef,  controls  were  introduced  in  the
form  of  an  early  marketing  premium  and  calf  processing
aid  (ECU  200  million).

Producer  support

57. Council  Regulation  (EC)  No  1357/96  provides  for
additional  payments  to  be  made  in  1996  with  the  beef
special  premium  (BSP)  and  suckler  cow  premium  (SCP)
as  well  as  allocating  specific  amounts  to  Member  States
(ECU  261  million).  The  aid  is  for  producers  in  the  beef
and veal sector who are ‘facing acute problems as a result
of  the  market  situation. . .’.  Member  States  could  choose
either:

(a)  To  make  standard  headage  payment  supplements
(Articles  1  and  4(a))  of  ECU  23  per  animal  for  beef
special  premium  and  ECU  27  per  animal  for  suckler
cow  as  well  as  distributing  the  specific  amount  on  a
similar  or  different  basis  or;

(b) Under  Article  5,  to  use  the  total  amount  that  would
have  been  paid  using  these  standard  rates  together
with the specific amount to make payments according
to  objective  criteria,  provided  that  the  total  amount
income  or  distort
did  not  exceed  the 
competition (Article 5). All payments had to be made
by  15  October  1996 
in  order  to  qualify  for
Community  finance.

loss  of 

Disparity  of  aid  rates

58. With regard to supplements to the standard BSP and
SCP  payments,  Table  6  shows  that  there  is  an  enormous
variation  between  Member  States,  ranging  from  zero  in
Italy to ECU 46 per head in France for male bovines and
ECU  7,5  in  Germany  to  ECU  81,6  in  Belgium  for  SCP.

income 

59.
Information  obtained  from  Member  States  shows
that  some  payments  were  made  to  producers  for  animals
that  would  not  normally  qualify  for  the  standard  beef
special  premium  and  suckler  cow  premium  on  the  basis
loss  was  not  confined  to  the  sectors
that 
traditionally supported by the Community. In some cases
this meant that producers received payments in respect of
animals in excess of the 90 head limit applied for the beef
premium  scheme  or  where  the  stocking  density  criteria
were not met (ECU 11 million in France). Payments for a
different category of animal such as dairy cows (ECU 11
million in Belgium) and veal calves (ECU 7 million in the
Netherlands)  and  supplementary  payments  in  respect  of

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animals  already  slaughtered/sold  (ECU  16  million  in
Ireland and ECU 64 million in Italy and ECU 34 million
in  the  United  Kingdom (28)  were  also  made.

60. Consequently  the  aid  was  paid  to  a  wider  base  of
producers  in  these  Member  States.  For  example,  if
compensation  had  been  paid  solely  on  the  basis  of
entitlement  to  premiums,  in  the  Netherlands  only  30 %
of producers would have received compensation for their
loss  of  income.  Member  States  were  not  told  how  to
calculate  income  loss  and  produced  calculations  using
different  assumptions.  It  is  therefore  not  possible  to
compare  the  figures  or  test  their  validity  in  any  detail.
Whilst  there  is  some  evidence  to  suggest  that  certain
sectors may have been overcompensated, several Member
States  updated  their  assumptions  and  produced  radically
different  figures  to  demonstrate  that  overall 
losses
exceeded  any  compensation  granted.  The  situation  was
further  complicated  by  the  fact  that  other  measures  later
introduced  by  the  Commission  had  an  effect  on  prices
that  could  not  be  foreseen  when  the  ex  ante  estimate  of
losses  was  carried  out.

61. Some  Member  States  avoided 
the  problems
associated  with  the  sectoral  analysis  of  estimated  income
loss  by  paying  a  flat  rate  across  the  board.  For  example,
Germany paid ECU 7 for each animal registered with the
‘Tierseuchenkasse’  (animal  sickness  fund)  for  1996.

Controls

62. The  Court’s  audit  of  Regulations  (EC)  No  1357/96
and (EC) No 2443/96 did not include the systems used to
make  standard  headage  payments  under  the  premium
schemes  which  were  examined  and  reported  on  in  its
Annual  Report  for  1996  (see  paragraphs  4.45—4.60).

63. Many of the schemes adopted by the Member States
fall  outside  the  scope  of  the  integrated  administrative
control  system  (IACS)  which,  as  far  as  animals  are
concerned,  relates  to  premium  schemes  (beef  special,
transformation  and  early  marketing,
suckler  cow, 
deseasonalisation  and  extensification  —  to  which  Article
4(a)-(k)  of  Regulation  (EEC)  No  805/68  refers).  The
extent  to  which  beneficiaries  are  subject  to  inspection  is
therefore  left  to  the  discretion  of  the  Member  States.

(28) For  observations  on  the  application  of  this  measure  in  the

United  Kingdom  see  the  1996  Annual  Report.

aims 

64. Council  Regulation  (EC)  No  820/97  of  21  April
1997  was  introduced  in  recognition  of  the  need  to
improve  traceability  given  that  the  implementation  of
Council  Directive  92/102/EEC  of  27  November  1992
concerning  the  identification  and  traceability  of  bovines
proved  unsatisfactory.  The  Regulation 
to
re-establish stability in the beef and beef products market
in  the  wake  of  the  BSE  crisis  but  the  deadlines  for  the
introduction  of  certain  key  elements  are  distant.  For
example,  the  computerised  databases  must  be  fully
operational  by  1  January  2000  and  double  ear  tagging
applies  only  to  animals  born  after  January  1998.  Such
animals  must  also  be  identified  in  a  passport.  It  is
therefore  too  soon  to  see  the  benefits  of  the  new  system
taking  effect  although  some  Member  States  have  already
introduced  some  of  the  controls  foreseen.  In  the  United
Kingdom  for  example,  cattle  passports  were  made
compulsory  with  effect  from  1  July  1996.

Recoveries

65. Member  States  that  have  made  payments  under  the
terms  of  Article  1,  i. e.  based  on  1995,  must  recover
overpayments  from  producers  who  did  not  apply  for  the
BSP  and/or  SCP  in  respect  of  the  1996  calendar  year  or
whose  claims  are  for  fewer  animals  than  the  previous
year.  Article  3  states  that  with  the  money  so  recovered,
Member  States  should  make  further  additional  payments
to  those  whose  claims  for  1996  relate  to  more  animals
than  for  1995.

66. The  requirement  to  recover  payments  made  has
proved  to  be  an  administrative  burden;  for  example,
matching  claims  in  cases  where  holdings  have  been
restructured  and  dealing  with  retired,  deceased  and
bankrupt  cases.  France,  as  at  the  time  of  audit  (July
1997), had only recovered 60 % of the invoiced amount.
The United Kingdom recovered 96 %  of  the  amount  due
and  has  redistributed  the  money  to  qualifying  producers.
No  further  redistribution  is  envisaged.  It  is  therefore
unlikely  that  Member  States  will  be  able  to  recover
100 %  of  the  amount  due.  To  the  extent  that  recoveries
fall  short  it  may  not  be  possible  to  pay  in  full  all
producers  whose  entitlement  to  premiums  in  respect  of
the  calendar  year  1996  relates  to  more  animals  than
1995.

67. Member  States  that  have  applied  Article  5  consider
that  they  do  not  need  to  make  recoveries  even  though
they  have  paid  aid  on  the  basis  of  1995  claims.  For
example Luxembourg paid ECU 0,6 million to producers
on  the  basis  of  1995  BSP  claims  and  Belgium  paid  ECU

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28,5 million on the basis of 1995 claims for the BSP and
SCP.  This  constitutes  a  further  example  of  the  inequality
of  treatment  of  producers  in  the  Member  States.

according  to  regional  priorities  whereby  farms  in  close
proximity  are  paid  different  rates  of  compensation.

Direct  support

68. Council  Regulation 
(EC)  No  2443/96  of  17
December  1996  allocated  a  total  of  ECU  491,63  million
to  Member  States  on  the  basis  of  the  size  of  national
herds  in  order  to  make  payments  according  to  objective
criteria  to  support  producers’  incomes  or  the  beef  and
veal  sector,  providing  these  payments  do  not  distort
competition.  The  Regulation  did  not  specify  how  the
payments  were  to  be  made  but  stipulated  a  deadline  of
15  October  1997.  Unlike  Regulation  (EC)  No  1357/96
there  was  no  requirement  for  income  loss  to  be  taken
into  account.

69. Member  States  had  more  time  to  prepare  measures
under  this  Regulation  than  they  had  for  Regulation  (EC)
No  1357/96.  This  is  reflected  in  the  greater  variety  of
schemes  adopted.  In  some  cases,  such  as  Germany,  no
attempt  was  made  to  target  the  aid  at  particular  sectors:
the same blanket approach was used as under Regulation
(EC) No 1357/96 but the rate of aid was lower (ECU 6).
Certain  Member  States  chose  to  use  some  of  their
allocation  for  quality  control/improvement  initiatives  —
for  example  Belgium  (ECU  0,5  million)  and  the  United
Kingdom  (ECU  3,5  million).  Once  again  supplementary
headage  payments  were 
form  of
assistance.  For  example,  the  United  Kingdom  applied  a
single  headage  payment  (ECU  40)  for  all  1996  suckler
cow  claimants  whereas  Ireland,  for  example,  paid  ECU
7,8  per  BSP  and  ECU  15,6  per  SCP.  Slaughter-based
schemes were also used to a greater extent. Some schemes
were  more  structural  in  nature  —  Luxembourg  paid  on
the  basis  of 
calculate
compensatory  aid  and  Belgium  introduced  a  cessation
premium  designed  to  encourage  beef  producers  to  retire.
Italy and the Netherlands gave further support to the veal
industry.

livestock  units  used 

the  commonest 

to 

Effectiveness

71. Council Regulations (EC) No 1357/96 and (EC) No
2443/96  have  been  applied  very  differently 
in  the
Member States. Failure to link aid under Regulation (EC)
No  2443/96  to  income  losses  increases  the  likelihood  of
inequitable distribution of aid and overcompensation. To
this  extent  the  French  decision  to  make  this  link  is  to  be
welcomed. The proliferation of measures and variation in
the  amounts  paid  partially  reflect  the  different  reactions
of  consumers  in  the  Member  States  but  do  not  fully
explain  them.

Production  control

Introduction

72. Council  Regulation 
(EC)  No  2222/96  of  18
November  1996  required  Member  States  to  implement
either  the  calf  processing  aid  scheme  (CPAS)  and/or  the
early marketing premium (EMP) by 1 December 1996 for
the period ending 30 November 1998. In response to the
BSE  crisis,  the  United  Kingdom  and  Portugal  already
applied  the  CPAS  with  effect  from  April  and  May  1996
respectively. France had also decided to apply the scheme
from  October  1996.  Ireland  was  the  only  Member  State
to  adopt  it  as  a  direct  result  of  the  requirements  of  the
Regulation  but  it  did  so  two  months  after  the  deadline.
Approximately  1,5  million  calves  had  been  processed
under  each  scheme  by  the  end  of  1997  (Tables  7  and
8).

73. The  purpose  of  the  two  schemes  was  to  reduce  the
number  of  calves  going  into  red  meat  production  by  1
million  per  annum.  The  CPAS  was  the  more  drastic  of
the  two,  since 
it  amounted  to  the  slaughter  and
destruction  of  calves  less  than  20  days  old,  whereas  the
EMP  encouraged  producers  to  slaughter  veal  calves
slightly  younger  and  thereby  lighter  so  increasing  the
number  of  calves  used  to  produce  a  given  quantity  of
veal. The extra calves used would not then enter red meat
production.

70.
In France the aid was distributed on a Departmental
basis.  In  setting  aid  rates,  Departments  had  to  take  into
account  aid  already  paid  under  Regulation  (EC)  No
1357/96  and  target  this  aid  on  recent  losses  which  had
not  already  been  compensated.  This  decentralised
approach  enabled  each  Department  to  distribute  aid

74. The United Kingdom OTMS has a significant impact
on  production  in  the  sense  that  the  equivalent  of  some
300 000  tonnes  per  year  are  removed  from  the  food
chain.  The  herd  cull  schemes  would  also  have  had  a
minor  impact  on  1997  production  (30 000  tonnes).

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The  calf  processing  aid  scheme  (CPAS)

less than 120 kg are unusual in terms of veal production,
differentiated  rates  of  aid  were  introduced (29).

75. Table  7  shows  that  70 %  of  all  calves  under  the
scheme  are  processed  in  the  United  Kingdom.  This  is  to
be  expected  given  that  there  is  no  possibility  to  export
calves  to  other  Member  States  that  have  traditionally
bought  them  for  fattening.  The  Regulations  do  not
specify  the  origin  of  the  calves,  merely  that  they  were
born  in  the  EU.  The  rate  of  aid  was  ECU  120  per  male
dairy  calf  and  ECU  150  for  other  breeds,  reduced  by
ECU 5 in May 1997 and harmonised at ECU 115 for all
breeds  in  December  1997.

76. The  Court  has  commented  on  the  introduction  of
the  scheme  in  Portugal  and  the  United  Kingdom  in  its
1996  Annual  Report.  Its  main  concern  was  the  lack  of
assurance that all the calves slaughtered were eligible and
properly  disposed  of.

In  France  approximately  40 %  of 

77.
the  calves
slaughtered  are  from  Member  States  such  as  Italy,  the
Netherlands  and  Germany  that  do  not  apply  the
scheme.

78. The  CPAS  was  introduced  in  Ireland  in  February
1997  almost  one  year  after  it  had  been  introduced  in
Northern Ireland. In Ireland the relatively high prices for
calves make the scheme unattractive for all but pure dairy
calves  for  which  there  is  little  or  no  demand.  Moreover
the  system  for  recording  dates  of  birth  is  open  to  abuse
enabling  farmers  to  enter  poor  quality  calves  for  the
scheme  even  though  they  are  over  age.

81. Within  the  main  veal  producing  Member  States
there  is  a  heavy  concentration  of  production  resulting  in
most  of  the  aid  being  paid  to  a  small  number  of  large
scale  specialised  producers.

82. The  scheme  is  relatively  easy  to  administer.  The
main  difficulty  relates  to  the  individual  weighing  of
carcases.  There  is  a  degree  of  flexibility  allowed  within
Member  States  as  to  exactly  how  the  carcases  are
presented.  Few  abattoirs  are  equipped  with  electronic
scales that produce a printout of the actual weight and it
is  therefore  seldom  possible  to  perform  an  ex  post  check
on  the  actual  weights  of  animals  claimed.

83. The  audit  trail  from  the  claims  back  to  the  farm
records is in most cases broken due to the fact that there
is  no  clear  link  between  the  claims  and  the  individual
calves  because  the  ear  tag  numbers  are  not  recorded.
Evidence  that  the  calves  meet  the  residency  requirements
(initially 60 days in the EU but increased to 90 days with
effect  from  8  January  1997)  is  often  lacking.  In  France
there  was  no  clear  audit  trail  from  the  farm  register  to
the  claim.  In  Italy  procedures  varied  between  abattoirs
and  regions  and  in  some  cases  there  is  no  clear  proof  of
the  weights  declared  given  that  the  record  of  actual
weights  is  not  retained.

Effectiveness  of  the  calf  schemes

The  early  marketing  premium  (EMP)

79. The  maximum  carcase  weights  allowed  in  order  to
qualify  for  the  EMP  were  set  per  Member  State  on  the
basis  of  Eurostat  statistics  for  1995  (or  Commission
approved  alternatives)  less  15 %.  The  range  of  resulting
weights  is  wide  with  significant  differences  between  the
principal  veal  producing  Member  States  — 
the
Netherlands,  France  and  Italy  with  33 %,  21 %  and
18 %  of  applications  respectively  (see  Table  8).  France,
for  example,  has  a  weight  limit  of  108  kg  whereas  the
Netherlands  has  one  of  138  kg.

80. The  basic  rate  of  aid  was  set  at  ECU  65  per  calf
slaughtered 
in  December  1996  and  January  1997,
thereafter  it  was  reduced  to  ECU  60  and  later  to  ECU
45.  In  recognition  of  the  fact  that  carcases  weighing

84.
In  accordance  with  Article  1(6)  of  Regulation  (EC)
No  2222/96,  the  Commission  made  an  interim  report
concerning  the  application  of  the  two  measures  (April
1997) (30)  and  concluded  that,  as  far  as  the  EMP  is
concerned,  for  the  Netherlands,  France,  Germany  and
Austria,  75 %  of  the  payments  were  in  respect  of  calves
that  would  have  been  slaughtered  at  or  below  the
qualifying  weight  regardless  of  the  premium.  In  a  second
Report produced at the behest of the Council (September
1997) (31), different assumptions were made and 40 % of
all  the  calves  were  estimated  to  have  gratuitously
benefited from the EMP. Using actual data for 1997 and
using the same assumptions, 42 % of calves fall into this

(29) ECU  50/65/80  for  (cid:46)  120  kgs/120-110  kgs/110  or  less
respectively  up  to  June  1997  and  50/57,5/65  for  the  rest  of
the  year.  These 
further  modified  under
Commission  Regulation  (EC)  No  2502/97.

rates  were 

(30) COM(97)  165  final,  18.4.1997.
(31) COM(97)  461  final,  22.9.1997.

C  383/16

EN

Official  Journal  of  the  European  Communities

9.12.98

category.  The  implied  cost  to  the  Community  budget  of
this  expenditure  is  ECU  23  million  for  1997  and,  ceteris
paribus,  the  same  for  1998.

85. The Commission calculates that the CPAS will result
in  net  savings  for  the  Community  budget  of  some  ECU
559  million  per  annum  over  the  two  year  period  due  to
lower  intervention  in-take.

86.
In France there is no evidence that the EMP has had
an  effect  on  production  practices.  The  average  slaughter
weight for the first six months of 1997, which was 124,8
kg,  is  well  above  the  maximum  weight  for  the  early
marketing  scheme,  consequently  only  about  15 %  of
calves  slaughtered  qualify  for  the  premium.  This  is
significantly lower than in the other main veal producing
Member  States  (see  Table 8).  In  Belgium,  however,  some
producers  have  reduced  the  fattening  cycle  for  some
breeds of calves in order to increase the number of calves
that qualify for the EMP. In Belgium and the Netherlands
the average slaughter weight for the first half of 1997 has
decreased  by  some  9 %  compared  with  the  average  for
1996. The Community average declined  by 5 %  between
1996 and 1997 (139,1 kg to 131,5 kg). The total number
of  calves  used  for  veal  production  increased  by  4 %
during  the  same  period,  after  having  decreased  each  year
since  1992.  Veal  production  was  stable  over  the  period
1995  to  1997  at  some  790 000  tonnes.

87. The  objective,  as  stated  in  the  preamble  to  Council
Regulation  (EC)  No  2222/96,  of  reducing  by  1  million
the  number  of  calves  used  for  beef  production,  has  been
achieved.  However,  Table  3  shows  that  total  red  meat
production  (after  adjusting  for  the  effects  of  the  OTMS
etc.)  has  only  fallen  by  2 %  in  1997,  most  of  which  can
be  explained  by  the  production  cycle.  The  full  impact  of
the  CPAS  will  not  be  felt  until  1998/1999.

88. Compared with the CPAS, the EMP is less successful
and  the  results  achieved  represent  poor  value  for  money
—  234 000  additional  calves  used  for  veal  production  at
a  cost  of  ECU  55,6  million,  equivalent  to  ECU  237  per
calf  or  four  times  the  premium  rate.  The  EMP  should
therefore either be abandoned or modified so as to ensure
that  the  risk  of  ‘free’  calves  receiving  the  premium  is
minimised.

the 

together  with 

measures, 
implementation  of
‘production control’ measures, have been accompanied by
a partial recovery of beef consumption and they have had
a  positive  impact  on  producers’  income  (see  paragraph
17).

90. The  degree  to  which  the  Community  budget  should
bear the financial cost of such emergencies merits further
consideration,  given  the  quasi  veterinary  nature  of  many
of  the  measures  taken 
in  such  circumstances  (see
paragraph  23).

the 

91. The  BSE  crisis  underlines 
importance  of
establishing  comprehensive  and  reliable  registers  of
animals  in  the  Member  States.  The  Court  has  repeatedly
referred  to  this  need,  most  recently  in  its  1996  Annual
Report  in  its  observations  on  the  management  and
control  of  EU  premiums  in  favour  of  certain  bovine
the
producers. 
effectiveness  of  any  action  relating  to  animal  herds  is
compromised.  The  consequence  is  a  lack  of  traceability,
manifesting  itself  most  acutely  in  the  case  of  the  United
Kingdom 
the
destination  of  some  65 000  cattle  cannot  be  ascertained
(see  paragraph  50).

the  absence  of  such  registers, 

scheme  under  which 

selective  cull 

In 

92. The  failure  to  adequately  monitor  the  feed  ban  in
the  United  Kingdom  meant  that  a  large  number  of
animals  which  developed  BSE  (36 000)  were  born  after
the  ban  had  been 
introduced  (see  paragraph  25).
Different  approaches  were  adopted  by  Member  States
with  regard  to  the  culling  of  herds  in  which  BSE  had
arisen and exported British calves (see paragraphs 35, 38
and  45).

In 

visits  by 

93. The controls performed by the clearance of accounts
unit  focused  primarily  on  the  United  Kingdom  and
payments  made  under  Council  Regulation  (EC)  No
1357/96. 
the
addition,  numerous 
Commission’s  veterinary  officers  were  made  to  the
Member  States  (see  paragraph  11).  Nevertheless  there
was  a 
the
implementation of measures within and between Member
States,  in  areas  such  as  the  slaughter  of  British  calves
exported 
of
ex-intervention  beef,  cull  schemes,  compensation  to
farmers under Regulation (EC) No 2443/96, and the calf
schemes.

rigour  and  consistency 

repurchase 

lack  of 

before 

ban, 

the 

the 

in 

CONCLUSION

89. The audit has shown that expenditure of ECU 2 149
million  on  ‘animal  elimination’  and  ‘market  support’

94. The  inconsistencies  in  approach  undermined  the
measures  taken  to  compensate  farmers  equitably.  This
was due primarily to the fact that the two main measures
(Council  Regulations  (EC)  No  1357/96  and  (EC)  No
2443/96)  enabled  Member  States  to  make  payments

9.12.98

EN

Official  Journal  of  the  European  Communities

C  383/17

not linked to the traditional beef special and suckler cow
premia  schemes  and  therefore  outside  the  scope  of  the
IACS  controls  (see  paragraphs  60  and  63).

subsidised  exports  imposed  under  the  GATT,  there  may
be  a  build  up  of  stocks  which  could  reach,  according  to
the  Commission,  1,5  million  tonnes  by  2005 (32).

95. The  production  controls  introduced  are  short  term
by definition and will, in any case, cease to have much of
an  impact  in  the  event  of  the  export  ban,  currently
lifted.  Similarly,  any
affecting  Great  Britain,  being 
decision  to  dismantle  the  OTMS  will  effectively  increase
production  (see  paragraph  74).  Given  the  limitations  on

96. The  occurrence  of  BSE  and  its  aftermath  have
underlined  the  urgent  need  for  the  EU  to  design  and  to
in  a
adopt  a  strategy  (i. e.  Action  Plan)  to  deal, 
coordinated,  effective  and  timely  manner,  with  this  kind
of  crisis.

This  report  was  adopted  by  the  Court  of  Auditors  in  Luxembourg  at  its  meeting  of  7  October
1998.

For  the  Court  of  Auditors

Bernhard  FRIEDMANN

President

(32) Situation  and  Outlook  —  Beef  Sector  SEC(97)  819.

C  383/18

EN

Official  Journal  of  the  European  Communities

9.12.98

Table  1

Confirmed  Cases  of  BSE  in  the  EU  and  Switzerland

Totals

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

B

DK

D

F

IRL

I

L

NL

P

UK

1

1

6

31

265

2

1

2

90

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

5

0

1

1

0

0

0

0

1

0

0

3

4

0

0

0

3

15

14

17

18

16

19

16

0

0

0

0

0

0

0

1

0

0

0

1

0

0

0

0

0

0

0

3

2

0

0

0

0

0

0

0

0

12

73

0

0

0

1

0

2

6

77

0

1

2

12

14

29

30

170 986

2 188

7 166 14 294 25 202 37 057 34 830 24 289 14 473

8 091

3 396

Totals

171 385

2 188

7 181 14 309 25 225 37 077 34 850 24 329 14 506

8 205

3 515

Switz

260

0

0

2

8

15

29

64

68

45

29

Sources:

For  the  United  Kingdom:  45th  weekly  report  of  9  January  1998  by  United  Kingdom  authorities  to  the  Commission.
For  EU  countries  except  United  Kingdom  up  to  1996,  and  for  Switzerland  up  to  30  September  1997:  Final  Consolidated
Report  to  the  Temporary  Committee  of  Enquiry  on  BSE,  by  the  Commission,  p.  83.
For  EU  countries  except  United  Kingdom  for  1997:  Commission’s  Animal  Disease  Notification  System.

Table  2

BSE  related  expenditure  by  EAGGF  in  1996  and  1997

Total

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

(Ecu  in  million)

Relevant
Regulations

1.  Elimination  Measures:

Over  Thirty  Months  Slaughter
scheme

United  Kingdom  selective  Cull

Repurchase  of  ex-intervention  beef

British  calves  exported  before
20.3.1996

Herd  culls  in  France,  Portugal  and
Ireland

Slaughter  of  United  Kingdom/Swiss
cattle  in  Germany

523,5

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

523,5 716/96

26,0

2,4

52,1

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

30,9

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

21,2

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

26,0 1484/96

2,4 1757/96

0,0 717/96

12,6

0,0

0,0

0,0

0,0

0,0

1,1

10,6

0,0

0,0

0,0

0,0

0,9

0,0

0,0

0,0 164/97  (F);  1508/96

(P);  1112/97  (IRL)

3,2

0,0

0,0

3,2

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0

0,0 299/97

Sub-total:

619,8

0,0

0,0

3,2

0,0

0,0

32,0

10,6

0,0

0,0

21,2

0,0

0,9

0,0

0,0

551,9

100,0 % 0,0 % 0,0 % 0,5 % 0,0 % 0,0 % 5,2 % 1,7 % 0,0 % 0,0 % 3,4 % 0,0 % 0,1 % 0,0 % 0,0 % 89,0 %

2.  Market  Support  Measures:

Producer  support

Private  storage  of  veal

1 309,9

50,2

26,9 213,2

17,5

0,4

1,0

1,1

Sub-total:

1 327,4

50,6

27,9 214,3

9,2

0,0

9,2

91,2 335,8

126,9

98,3

0,0

0,7

0,0

3,1

91,2 336,5

126,9

101,4

3,4

0,0

3,4

52,6

11,2

35,2

19,9

14,9

27,2 205,0 1357/96;  2443/96

0,0

0,0

0,0

0,0

0,0 830/96

63,8

35,2

19,9

14,9

27,2 205,0

100,0 % 3,8 % 2,1 % 16,1 % 0,7 % 6,9 % 25,4 % 9,6 % 7,6 % 0,3 % 4,8 % 2,7 % 1,5 % 1,1 % 2,0 % 15,4 %

3.  Production  Control:

Calf  Processing  Scheme

Early  Marketing  Premium  Scheme

Sub-total:

Total  BSE  related  expenditure  in
1996  and  1997:

146,0

55,6

201,6

0,0

3,0

3,0

0,0

0,1

0,1

0,0

4,9

4,9

0,0

0,0

0,0

0,0

0,0

0,0

33,1

14,3

47,4

1,9

0,0

1,9

0,0

9,6

9,6

0,0

0,0

0,0

0,0

17,2

17,2

0,0

4,6

4,6

5,6

0,1

5,7

0,0

0,4

0,4

0,0

1,4

105,4 2222/96

0,0 2222/96

1,4

105,4

100,0 % 1,5 % 0,0 % 2,4 % 0,0 % 0,0 % 23,5 % 0,9 % 4,8 % 0,0 % 8,5 % 2,3 % 2,8 % 0,2 % 0,7 % 52,3 %

2 148,8

53,6

28,0 222,4

9,2

91,2 415,9

139,4

111,0

3,4

102,2

39,8

26,5

15,3

28,6 862,3

100,0 % 2,5 % 1,3 % 10,3 % 0,4 % 4,2 % 19,4 % 6,5 % 5,2 % 0,2 % 4,8 % 1,9 % 1,2 % 0,7 % 1,3 % 40,1 %

9
.
1
2
.
9
8

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

C

3
8
3

/

1
9

 
 
 
 
 
 
Total

B

DK

D

EL

E

F

IRL

I

L

NL

A

P

FIN

S

UK

1 596,9

53,6

28,0 222,4

9,2

91,2 415,9

139,4

111,0

3,4

102,2

39,8

26,5

15,3

28,6 310,4

(Ecu  in  million)

Relevant
Regulations

100,0 % 3,4 % 1,8 % 13,9 % 0,6 % 5,7 % 26,0 % 8,7 % 7,0 % 0,2 % 6,4 % 2,5 % 1,7 % 1,0 % 1,8 % 19,4 %

84 450 3 147

2 094 15 890

550

5 432 20 662

6 531

7 128

204

4 558

2 323

1 317

1 179

1 762 11 673

100,0 % 3,7 % 2,5 % 18,8 % 0,7 % 6,4 % 24,5 % 7,7 % 8,4 % 0,2 % 5,4 % 2,8 % 1,6 % 1,4 % 2,1 % 13,8 %

13 362,6 434,6

278,3 2 006,8

98,3 899,1 2 997,1 2 269,5

599,5

15,6 513,6

323,9 193,3

99,7 167,4 2 465,9

16,1 % 12,3 % 10,1 % 11,1 % 9,4 % 10,1 % 13,9 % 6,1 % 18,5 % 21,8 % 19,9 % 12,3 % 13,7 % 15,3 % 17,1 % 35,0 %

Total  BSE  related  expenditure  in
1996  and  1997:  (excluding
elimination  measures  specific  to  the
UK)

Size  of  cattle  herd  (in  ‘000’s)  at
1.1.1996

Total  expenditure  on  beef  and  veal
in  1996  and  1997  (including  BSE
related  expenditure)

BSE  expenditure  as  percentage  of
total  expenditure  on  beef  and  veal

Sources:  Evolution  of  EAGGF-Guarantee  payments  for  1996  and  1997.

Agricultural  Situation  Report  1996.

Note: 

Export  refunds  and  public  storage  costs  are  excluded.

C

3
8
3
2
0

/

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

9
.
1
2
.
9
8

 
 
 
 
 
 
9.12.98

EN

Official  Journal  of  the  European  Communities

C  383/21

Table  3

Beef  and  Veal  Consumption  Patterns  (in  1 000  tonnes  carcase  weight  equivalent)

European  Community
(EC-12)

European  Union  (EC-15)

1991

1992

1993

1994

1995

1996

1997

1998(e) 1999  (e)

Production  (gross)

8 705 8 378 7 824

7 445 8 115 8 057

7 911 7 643

7 911

Production  net  (adult)
Production  net  (veal)
Production  net  (total  bovines)

7 881 7 557 6 932
812
839
8 723 8 396 7 744

842

6 565 7 168 7 155
795
796
7 371 7 964 7 950

806

7 871 7 603

7 466

+  meat  imports 
−  meat  exports
Change  in  stocks
Stocks  at  end  of  year

Consumption
Self  sufficiency  (%)

447

419
480
1 244 1 239 1 085
155 − 448
718

1 011 1 166

373

456

377
1 073 1 006
− 556 − 145
18

163

364
965
416
434

400
383
942
900
195 − 139
490
629

400
836
− 253
237

7 553 7 482 7 526
7 283
7 310 7 480 6 933
115 % 112 % 104 % 102 % 109 % 117 % 111 % 106 % 103 %

7 117 7 242

Animal  numbers  (1 000)

84 675 81 435 79 320 78 650 84 561 84 875 84 508 83 080 82 500

Consumption  per  capita

21,8

21,6

21,6

20,9

20,1

18,6

19,1

19,4

19,5

Intervention  storage:
—  purchases  to  store
—  sales  from  store

Notes:

1 027
766

890
684

165
778

0
393

0
73

415
9

240
61

50
189

0
253

Production  (gross)  =  production  of  meat  from  animals  raised  in  the  EU.
Production  (net)  =  production  of  meat  in  the  EU,  after  taking  into  account  trade  in  live  animals.
Consumption  =  production  (net)  +  meat  imports  −  meat  exports  −  change  in  stocks.
Animal  numbers  are  at  1  January  each  year.
Consumption  figures  are  kg  per  person  per  year.
BSE  measures  are  estimated  to  have  reduced  production  by  320 000  tonnes  in  1996  and  237 000  tonnes  in  1997.

Source:  DG  V  D2  document  ref.  PDW/LF/If/BILAN/98001.xls;  Eurostat,  Animal  Production  Statistics.

C  383/22

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Official  Journal  of  the  European  Communities

9.12.98

,,,,,,,

Table  4

Compensation  paid  and  animals  killed  under  cull  schemes

Direct  compensation

EU

National

Total

%  EU

Other
compensation
National

Total
Compensation

Total  %  EU Animals culled

688

970

660

335

790

370

512

410

280

145

1 200

1 380

940

480

1 260

2 050

310

680

57

70

70

70

39

54

0

680

0

780

0

0

1 200

2 060

940

1 260

2 050

680

57

47

70

27

39

54

5 417

1 390

18 080

3 566

56 934

1 983 636

Germany

France

Ireland

Portugal

United  Kingdom  —  SCS

United  Kingdom  —  OTMS

Notes:

Compensation  figures  are  average  amounts,  paid  in  ECU  per  animal.
‘Other’  losses  cover  indirect  losses  in  France,  and  lost  productive  value  in  Portugal.  These  losses  are  not  EU  funded.

Exchange  rates  used:

DEM/ECU: 
FRF/ECU: 
PTE/ECU: 
IEP  and  GBP/ECU: 

1,95
6,5
197
0,75

‘Animals  culled’  are  up  to  31.12.1997.

Source:  information  provided  by  Member  States.

Table  5

Compensation  paid  for  suspected  and  confirmed  BSE  cases

Member  State

Time  period

Confirmed  cases
(ECU)

Suspect  cases
(ECU)

Basis  for  compensation  of  confirmed  BSE  cases

Basis  for  compensation  of  unconfirmed  cases

Belgium

Germany

France

Ireland

Italy

Portugal

—  August  1991

8/1991  —  1993

2 500

3 075

310

2 500 full  value 

subject 

to  maximum  of  BEF

100 000

3 075 full  value  subject  to  maximum  of  DEM  6 000

310 75 %  of  lost  value  (maximum  FRF  2 000)

FRF  2 000  for  each  suspect  case

310  or  620

310 (a) FRF  2 000  if  slaughtered  within  a  year  of

FRF  2 000  for  each  suspect  case

serving  the  restriction  order

(b) FRF  4 000  if  slaughtered  within  3  months

of  serving  the  restriction  order

1994  — 

see  note

310 Market  value  (no  upper  limit).  Producers  may

FRF  2 000  for  each  suspect  case

also  be  compensated  for  indirect  costs

April  1990  —

700

700 Market  value,  or  the  average  market  value  two

Market  value

see  note

see  note No  compensation  for  imported  animals  which
were  infected  in  the  country  of  origin

months  before,  if  less

1 200  or  1 700

1 200  or  1 700 Market  value

Market  value

United  Kingdom

8.8.1988  —  13.2.1990

14.2.1990  —  31.3.1994

1.4.1994  —  22.5.1996

23.5.1996  —  23.1.1997

24.1.1997  — 

Notes:

Amounts  are  translated  from  national  currencies  to  ecus.
This  compensation  is  not  EU  funded.

Source:  information  provided  by  Member  States.

500

1 070

850

740

880

1 000 50 %  of  the  lower  of  market  value  and  125 %

of  average  market  price  two  months  before

The lower of market value and 125 % of average
market  price  two  months  before

1 340 Market  value,  or  average  market  price  two

months  before,  if  less

1 050 Market  value,  or  indicative  market  price,  if

less

925 Market  value,  or  indicative  market  price,  if

less

1 100 Market  value,  or  indicative  market  price,  if

less

Market  value,  or  125 %  average  market  price
two  months  before,  if  less

Market  value,  or  125 %  indicative  market  price,
if  less

Market  value,  or  125 %  indicative  market  price,
if  less.

Market  value,  or  125 %  indicative  market  price,
if  less

9
.
1
2
.
9
8

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n

C
o
m
m
u
n
i
t
i
e
s

C

3
8
3

/

2
3

 
 
 
 
 
 
C  383/24

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Official  Journal  of  the  European  Communities

9.12.98

Table  6

Payments  under  Regulation  (EC)  No  1357/96

Member  State

Male  bovines
(ECU/head)

Suckler  cows
(ECU/head)

National aid
(ECU  in  million)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United  Kingdom

TOTAL

38,7

27,2

7,5

23

30,2

46

23

0

25,3

34,7

39,8

34,2

23

34,4

23

81,6

13,6

7,5

27

33,9

27

27

16

30,3

25,3

39,8

31,1

27

38,4

27

28,5

0

0

0

0

74,3

0

11,2

1,9

0,5

0

0

0

0

0

116,4

Source:  DG  VI  document  reference  VI/7915/96.

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C  383/25

Animals  processed  under  the  Calf  Processing  Aid  scheme  to  31.12.1997

Table  7

Member  State

Start  date

Dairy calves

Non-dairy calves

Total

Percentage

France

Ireland

October
1996

February
1997

Portugal

May  1996

United  Kingdom

April  1996

287 116

66 970

354 086

18 324

61 813

935 788

953

812

19 277

62 625

72 541

1 008 329

25 %

1 %

4 %

70 %

Totals

Percentage

1 303 041

141 276

1 444 317

90 %

10 %

Source:  DG  VI  D.2  document  ref.  RL/av  D(96)  (notes/056).

Table  8

Animals  processed  under  the  Early  Marketing  Scheme  in  1997

Member  States

Animals

%  of  EU  total

(%)  Calf  slaughters

Maximum weight
(kg)

Belgium

Germany

France

Italy

Netherlands

Sub-total

Total  EU

Note:

132 497

146 357

331 800

278 773

526 097

1 415 524

8 %

9 %

21 %

18 %

33 %

90 %

39 %

28 %

15 %

22 %

35 %

24 %

1 579 206

100 %

136

112

108

117

138

The  scheme  started  in  late  1996;  an  additional  37 194  calves  were  processed  by  31.12.1996.

Source:  DG  VI  D.2  document  ref.  VI/2847/97(37).

C  383/26

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Official  Journal  of  the  European  Communities

9.12.98

COMMISSION  REPLIES

EXECUTIVE  SUMMARY

Elimination  measures

The  Commission  does  not  agree  with  the  Court  about  the  ‘quasi-veterinary’  nature  of  the
measures. Both the nature of these measures and the percentage of the Community contribution
to  them  were  laid  down  by  the  Council  at  its  extraordinary  meeting  early  in  April  1996.  The
rate  of  part-finance  is  normal  for  market  measures  (70 %,  the  same  as  that  used  on  many
occasions  in  the  pigmeat  sector).

(a)  Corrections  for  the  ‘over  30  months’  scheme  (OTMS)  are  envisaged  under  the  clearance  of
accounts  procedure  as  a  result  of  the  weaknesses  detected  by  the  Commission  during  the
seven  missions  conducted  to  evaluate  the  implementation  and  application  of  this  scheme.

(b) The Commission considers that, until a full assessment of the measure is available, it cannot
be proven that failure to apply the measure in Belgium has made it less effective in terms of
restoring  the  confidence  of  consumers  in  France  and  the  Netherlands  (see  reply  to  point
34).

(c)  The  short  period  for  payments  allowed  by  the  rules  was  fixed  deliberately  in  view  of  those
at whom the measure was aimed and the need to send a clear message to consumers in order
to  increase  the  effectiveness  of  the  measure  while  also  avoiding  fraud  (see  reply  to  point
37).

(d) It  should  be  noted  that  most  of  the  65 000  untraceable  cattle  in  the  United  Kingdom
originate  in  the  1989/90  ‘voluntary’  cohort.  When  this  cohort  was  included  in  the  selective
cull, it was recognised that many of the animals would be untraceable because the necessary
(national  or  Community)  legislation  on  tracing  did  not  exist  at  that  time.  It  should,
however,  be  noted  that  no  untraced  animals  from  the  selective  cull  could  legally  enter  the
human or animal food chains because they would all be over 30 months old, and would be
destroyed  under  the  OTMS.

Market  measures

The  Commission  considers  that  the  Council  deliberately  allowed  greater  flexibility  to  take
account  of  the  different  situations  across  the  Member  States,  producers  and  consumers.  This
meant  that  different  amounts  were  paid  to  different  beneficiaries.  It  should  also  be  noted  that
milk  producers  and  those  raising  calves  also  suffered  losses  as  a  result  of  the  BSE  crisis.  The
important  point  in  this  operation  was  that  each  Member  State  should  adopt  the  most  effective
solutions to deal with the difficulties it was facing, without distorting competition (see replies to
points  58  to  71).

The  Commission  would  recall  that  the  seriousness  of  the  crisis,  probably  the  greatest  ever
known  in  the  beef/veal  sector,  required  urgent  measures  and  that  the  recovery  of  payments
wrongly  made  was  absolutely  essential  if  compensation  was  to  be  granted  fairly  (see  replies  to
points  66  and  67).

The  Commission  considers  that  the  two  measures  concerning  young  calves  should  be  seen  as
part  of  a  single  package  since  politically  neither  measure  could  be  adopted  without  the  other.
Their  effectiveness  should  therefore  also  be  judged  jointly  (see  replies  to  points  84  to  88).

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The  Commission  is  closely  following  the  recovery  of  amounts  wrongly  paid  through  the
clearance procedure.

Conclusion

The  nature  of  the  measures  was  clearly  specified  by  the  Council  when  they  were  introduced  in
April  1996.  The  percentage  part-financed  is  therefore  normal  for  market  measures.

There  was  no  legal  basis  for  the  Commission  to  monitor  the  UK  meat  and  bone-meal  ban  in
1988/89, which was the most sensitive period for any spread of BSE outside the UK. In fact, the
Commission  warned  of  the  possible  risk  in  the  Standing  Veterinary  Committee  and  advised
other  Member  States,  in  the  absence  of  a  Community  legal  basis,  to  take  their  own  measures.

The  Commission  must  emphasise  that  if  the  Member  States  have  not  implemented  the  BSE
measures in accordance with the Regulations, consequences will be drawn during the clearance
of accounts. As was pointed out in the reply to point 4.75 of the Court’s annual report for the
1996  financial  year,  and  has  been  stressed  in  the  reply  to  previous  points  of  this  report,  the
Commission has undertaken numerous missions to a majority of Member States to evaluate the
implementation  of  Regulations  (EC)  Nos  1357/96  and  2443/96  (supplementary  payments  to
bovine  producers),  the  calf  processing  aid  scheme  and  the  early-marketing  premium.

The  desire  to  enable  the  Member  States  to  exercise  a  degree  of  subsidiarity  in  no  way
undermined the checks carried out under the IACS. Rather it enabled the Member States to use
the  most  effective  means  of  achieving  the  goals  of  this  aid  scheme.  The  Commission  considers
that, although checks under the IACS were not carried out for the measures under Regulations
(EC) No 1357/96 and (EC) No 2443/96 by all Member States, it has been possible to check the
measures  by  other  means,  for  example  where  payments  were  made  on  the  basis  of  animal
sickness  insurance  (Germany)  or  accompanying  measures  claims  (Austria).

The Community already has the legal basis to deal with outbreaks of animal diseases, including
those which affect humans. In the case of transmissible spongiform encephalopathies, a specific
regulation  of  the  Council  and  Parliament  is  being  prepared  which  will  replace  most  of  the
current  safeguard  measures.  Furthermore,  in  the  priorities  for  the  1999  preliminary  draft
budget, the Commission announced that it would launch a debate on how to make the various
parties  involved  in  combating  outbreaks  of  disease,  the  producers,  the  Member  States  and  the
Union,  more  responsible.  Consideration  has  not  yet  begun  and  it  is  premature  to  state  that  an
insurance  fund  should  be  set  up.

GENERAL  STATEMENT

1. All  in  all,  the  Commission  considers  that  rapid  and  efficient  action  was  taken  to  ensure  a
proper  Community  response  to  the  unprecedented  crisis  following  the  UK  Government’s
announcement  on  20  March  1996.  The  Community  beef  market  was  pushed  to  the  verge  of
collapse  almost  overnight  as  consumer  confidence  plummeted.

The Council’s aim was to act quickly to protect human and animal health and to support beef
producers.  Within  a  very  short  time  the  Commission  and  the  Council  introduced  measures
intended  to  fulfil  this  aim.

The  measures  varied  in  objective  and  form  to  ensure  that  as  many  aspects  of  the  crisis  as
possible  were  dealt  with  in  a  quick  and  efficient  way.  For  example,  the  ‘Over  Thirty  Months
Scheme’ (OTMS) served to protect human health, restore consumer confidence and support beef

C  383/28

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9.12.98

producers,  while  the  additional  direct  payments  to  beef  producers  (Regulations  (EC)  No
1357/96 and (EC) No 2443/96) ensured that payments were made to producers on the basis of
objective criteria defined by each Member State to take account of their specific situation. These
allowed  for  an  element  of  subsidiarity  which  is  often  called  for  but  rarely  possible  within  the
framework  of  the  common  agricultural  policy.

In  addition  to  EAGGF  funding,  measures  such  as  improvements  in  beef  labelling  and  animal
identification  were  introduced  to  restore  consumer  confidence  and  protect  human  and  animal
health.

Furthermore, the Commission acted on recommendations put forward by Parliament as regards
both  the  organisation  of  the  Commission  services  and  improvements  in  Regulations,  as
recognised  by  the  European  Parliament’s  Temporary  Committee  on  the  Follow-up  of
Recommendations  on  BSE.

With  respect  to  the  efficiency  of  the  measures  introduced  to  restore  the  markets,  the
Commission  agrees  with  the  Court  that  it  is  too  early  to  evaluate  the  full  impact  of  measures
such as the calf processing aid scheme and the early marketing premium scheme, but there can
be  no  doubt  that  beef/veal  production  has  been  reduced  as  a  result  of  these  schemes  and  of
other  BSE  measures,  in  particular  the  OTMS  in  the  UK.

2. The  Commission  has  closely  monitored  the  application  of  the  BSE  measures  from  the
start.

The  Clearance  of  Accounts  Unit  has  carried  out  a  number  of  missions  to  the  main  Member
States concerned to evaluate the control procedures necessary to ensure correct payment of BSE
subsidies and proper destruction of material which must not enter the human food chain. These
missions  have  resulted  in  a  number  of  recommendations  for  improvements  in  the  control
procedures. It is important to stress that their objective has been twofold, namely to make sure
that Member States comply with Community rules and to refuse Community financing if this is
not the case, but also to ensure that risk material is kept separate from all other material and is
properly  controlled  and  disposed  of.

Other  Commission  services  have  also  carried  out  a  number  of  missions  to  monitor  Member
States’  actions  to  eradicate  BSE  and  to  respect  the  UK  export  ban.  The  veterinary  services  and
UCLAF have been involved in this considerable effort (see Annex listing the missions carried out
by  the  Commission  services).

INTRODUCTION

The  Commission  therefore  considers  the  Court’s  remark
about  this  measure  premature.

11.
In  addition  to  the  visits  mentioned  by  the  Court,  a
visit  was  also  carried  out  in  the  Netherlands,  the  most
important  Member  State  in  terms  of  expenditure  under
the early marketing premium (EMP), at an early stage of
the  implementation  of  the  scheme,  to  ensure  that  proper
control  procedures  were  being  applied.  The  calf
processing  aid  scheme  (CPAS)  has  been  audited  in  both
the  UK  and  France,  representing  more  than  93 %  of  all
animals  slaughtered  under  the  scheme.  As  regards
Regulation  (EC)  No  2443/96,  some  Member  States  were
visited even before payment had taken place and so audit
of this expenditure can only be concluded at a later stage.

The Commission has carried out a number of missions in
relation  to  the  BSE  measures  and  considers  its  coverage
to  be  adequate.  In  planning  the  audit  of  the  BSE
measures, the Commission’s risk analysis took account of
the inquiries planned by European Court of Auditors and
so  decided  to  rely  on  the  Court’s  audit  of  Regulation
(EC) No 717/96 (destruction of calves imported from the
United  Kingdom)  and  the  herd  cull  schemes  in  Member
States  other  than  the  UK  in  order  to  avoid  duplicate

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work,  particularly  since  these  measures  only  applied  to  a
limited  number  of  animals  and  so  had  a  limited  time
span.  Instead  the  Commission  concentrated  its  time  and
effort  on  measures  involving  greater  expenditure.

The Commission considers that consumer confidence can
only  be  restored  if  the  European  Parliament,  the  Council
and the Commission work closely together with Member
States  on  the  basis  of  a  commitment  to  protect  public
health.

With  a  view  to  coordinating  missions  carried  out  by  the
Commission  and  the  Court  of  Auditors,  the  Commission
may  decide  not  to  undertake  an  inquiry  into  measures
which will be covered by a Court inquiry as in the case of
the British calf scheme and the herd cull schemes. In such
cases,  the  Commission  draws  the  appropriate  financial
conclusions from the Court’s findings, and so there is no
need  to  carry  out  its  own  missions.

European  Parliament’s  report

12-15. The  Commission  has  replied  in  full  to  the
criticisms  referring  to  the  Commission  contained  in  the
reports of both the Temporary Committee of Inquiry and
the  Follow-up  Committee.  The  latest  communication
from  the  Commission  to  the  Parliament  setting  out  the
actions  undertaken  in  response  to  the  Parliamentary
reports and further planned measures was submitted on 6
May  1998  (COM(1998)  282  final).

Since  the  publication  of  the  Report  of  the  Temporary
Committee  of  Inquiry  in  February  1997,  there  has  been
close and constructive cooperation between the European
Parliament  and  the  Commission.  This  has  put  consumer
health  and  safety  at  the  centre  of  a  major  joint  political
effort. The foundations for restored consumer confidence
in food safety have been laid through a number of major
achievements  since  February  1997.

Several  of  these  achievements  have  a  general  bearing  on
food  safety  and  consumer  protection,  in  particular  the
adoption  of  new  approaches  in  the  fields  of  scientific
advice,  risk  analysis,  animal  identification  and  control
and  inspection,  based  on  the  principles  of  excellence,
independence  and  transparency.  There  have  also  been
some important developments focusing specifically on the
fight  against  BSE.  Financial  decisions  have  been  taken  to
support  BSE  research.  Legislation  has  been  adopted  to
prevent the spread of BSE and to protect public health, in
particular to strengthen the rules on BSE surveillance and
regulate  the  trade  in  and  use  of  meat  and  bone  meal.
Furthermore,  the  Commission  has  taken  action  to  ensure
compliance  with  Community  legislation  in  the  field  of
BSE.  A  high  number  of  veterinary  inspections  have  been
carried  out.  Infringement  procedures  have  been  opened
against  offending  Member  States  as  a  result  of
unsatisfactory  implementation  of  Community  rules.

PRINCIPAL  FEATURES  OF  THE  MARKET

the  measures 

17. As  a  result  of 
the
Commission,  above  all  in  the  veterinary  sector  and  with
respect  to  promotion  measures  and 
labelling,  beef
consumption  is  forecast  to  recover  fully,  perhaps  even
making  up  the  consumption  lost  as  a  result  of  the  BSE
crisis  by  2001 (1).

taken  by 

ELIMINATION  MEASURES

Introduction

The Commission does not agree with the Court about the
‘quasi-veterinary’ nature of the measures. Both the nature
of  these  measures  and  the  percentage  of  the  Community
contribution  to  them  were  laid  down  by  the  Council  at
its extraordinary meeting early in April 1996. The rate of
part-finance  is  normal  for  market  measures  (70 %,  the
same  as  that  used  on  many  occasions  in  the  pigmeat
sector).

The  UK  ‘Over  Thirty  Months  Scheme’  (OTMS)

26. When  this  scheme  was  first  introduced,  for  the  sake
of  simplicity  a  fixed  amount  of  compensation  (per
animal)  was  set  on  the  basis  of  the  market  price  of  a
cow,  which  covered  most  culled  cattle  over  30  months
and  for  which  the  price  was  well  below  that  of  male
bovines and heifers. Later, when the Commission noted a
significant change in market prices, the fixed amount per
animal  was  reduced  (in  two  stages)  and  ultimately
separate prices were set for male bovines and heifers at a
level  high  enough  to  ensure  the  scheme’s  effectiveness.

‘Over  thirty  months  scheme’, 

27-32. As  stated  by  the  Court,  the  Commission  has
detected  a  number  of  weaknesses  in  the  UK  application
including  the
of  the 
deficiencies  in  the  audit  trail,  in  the  control  over  scheme
material  after  slaughter,  the  delay  in  cross  checking
within the scheme and with other schemes, and the delay
in  destruction  of  material.

(1)  Commission  working  paper  of  April  1997 

the
Directorate-General  for  Agriculture:  ‘CAP  2000,  situation
and  outlook,  beef  sector  ,  pp.  25  to  26.

from 

C  383/30

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9.12.98

These  problems,  along  with  a  number  of  other
Commission  findings,  are  being  followed  up  in  the
clearance  of  accounts  procedures.  Corrections  are
envisaged  for  financial  years  1996  and  1997,  and  a
reserve  on  the  1998  expenditure  has  been  notified  to  the
UK  authorities.

British  calves  exported  before  20  March  1996

34. The  findings  of  the  Court  and  the  Commission  and
the  Member  States’  replies  are  being  followed  up  within
the  clearance  of  accounts  procedure.

35. The  destruction  of  calves  imported  from  the  United
Kingdom  was  a  market  measure  designed  to  restore
consumer  confidence,  and  not  a  health  measure.  Clearly
the 
for
individual  Member  States  are  responsible 
implementing  such  a  measure  as  they  are  best  placed  to
judge  consumer  reactions.  The  Commission  considers
that, until a full assessment of the measure is available, it
cannot  be  proven  that  there  has  been  a  reduction  in  its
effectiveness  in  terms  of  restoring  consumer  confidence.

Repurchase  of  ex-intervention  beef

37.
It  must  be  borne  in  mind  that  the  primary  objective
of this measure was to destroy old beef stocks, as set out
in  the  recitals  to  Commission  Regulation  (EC)  No
1757/96,  in  a  context  of  market  crisis  which  required
immediate measures to  restore  consumer confidence. The
short  period  for  payments  allowed  by  the  rules  was
therefore fixed deliberately in view of those at whom the
measure was aimed and the need to send a clear message
to  consumers  in  order  to  increase  the  effectiveness  of  the
measure  while  also  avoiding  fraud.

Cull  schemes

Herd  culls

Germany

43-44. As  stated  in  the  first  recital  of  Commission
Regulation (EC) No 299/97, animals born in the UK had
been  exported  to  other  Member  States  prior  to  the
introduction of the export ban. The possibility that those
animals,  as  well  as  animals  imported  from  Switzerland,
or  their  descendants,  might  enter  the  human  or  animal
food  chains  had  led  to  a  lack  of  consumer  confidence  in
beef  and  a  disturbance  of  the  market  in  Germany.  As  a
result  of  the  subsequent  export  ban  this  produced  a
general  decline  in  consumer  confidence  in  all  beef,  no
matter  where  it  came  from,  thus  necessitating  these
exceptional  market  support  measures.

Article  23  of  Regulation  (EEC)  No  805/68  refers  to
situations  in  which  restrictions  on  free  circulation  may
result from the application of measures for combating the
spread  of  diseases.  This  was  the  risk  in  Germany.  The
compensation  payments  for  the  destruction  of  the
animals  concerned  had  the  desired  effect  and  helped
avoid  situations  in  which  more  extreme  measures  would
have  been  necessitated.

The  UK  selective  cull

50.
It  should  be  noted  that  most  of  the  65 000
untraceable cattle in the United Kingdom originate in the
‘voluntary’  cohort.  When  this  cohort  was
1989/90 
included in the selective cull, it was recognised that many
of  the  animals  would  be  untraceable  because  the
necessary  (national  or  Community)  legislation  on  tracing
did  not  exist  at  that  time.  It  should,  however,  be  noted
that  no  untraced  animals  from  the  selective  cull  could
legally  enter  the  human  or  animal  food  chains  because
they  would  all  be  over  30  months  old,  and  would  be
destroyed  under  the  OTMS.

40. The  Member  States,  with  the  exception  of  Ireland,
had  asked  to  be  given  the  possibility  of  supplementing
the  Community  contribution  with  national  aid  (over  and
above the 30 % normally charged to the national budget)
where  necessary  (i.e.  where  the  Member  State  considered
that  the  overall  amount  of  aid  was  not  enough  to
guarantee the effectiveness of the measure). This produces
differences  in  the  share  of  compensation  paid  to  the
Member  States  from  the  Community  budget  compared
with the total amount per animal, which clearly responds
to  the  flexibility  desired  by  and  granted  to  the  Member
States.

51. The two schemes have quite different purposes. The
OTMS is a general scheme, intended to assure consumers
that  animals  of  a  certain  age  that  might  potentially
develop  BSE  have  been  destroyed  and  excluded  from  the
human  food  chain.  The  SCS  is  a  specific  measure
applying  to  animals  which,  from  1989,  have  been  reared
together with animals infected with BSE; animals targeted
by  the  selective  cull  also  pose  a  much  greater  health  risk
and  therefore  have  to  be  handled  differently.  Unlike  a
large  proportion  of  animals  submitted  under  the  OTMS,
animals  slaughtered  under  the  SCS  are  as  a  rule  fully

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productive,  which  accounts  for  their  higher  market  value
and  the  need  to  pay  a  higher  premium  to  producers.

52. The  Commission  contributes  70 %  of  the  market
value only of animals slaughtered under the SCS, with the
UK  paying  the  difference  between  this  amount  and  the
cost  of  replacing  the  animal.  To  ensure  an  accurate
replacement  value  are
estimate, 
determined  by  professional  independent  valuers.  The
Commission  is  monitoring  the  established  market  values
within  the  framework  of  the  clearance  of  accounts
procedure

the  market  and 

Compensation  for  BSE  cases

53. Under  Community  law  all  bovine  animals  which,  at
ante-mortem examination, show clinical suspicion of BSE
must  be  retained  and  slaughtered  separately  and  their
brains examined for BSE. If BSE is confirmed, the carcase
and  offal  must  be  destroyed  (Article  2  of  Commission
Decision  94/474/EC,  OJ  L  194,  29.7.1994,  p.96).  In  the
Belgian  and  Luxembourg  cases  referred  to  there  was  no
clinical  suspicion  of  BSE,  but  all  suspect  rabies  cases  are
examined  for  BSE  as  part  of  a  routine  surveillance
programme.

they  were  disputed  by 

55. This  paragraph  presents  as  fact  a  number  of
allegations  concerning  the  supposed  origin  of  some  BSE
cases 
in  Ireland.  These  allegations  have  not  been
substantiated  and  are  disputed  by  the  Netherlands  and
Denmark.  In  addition,  this  point  refers  to  estimates  of
‘lost’ BSE cases exported from the UK but never reported
in  the  importing  Member  States.  When  these  estimates
were  published  in  an  article  in  the  Veterinary  Record  in
1997, 
the  Member  States
concerned  (Germany,  Ireland  and  Denmark).  In  the  face
of  objections  from  those  Member  States,  the  authors
replied  (Veterinary  Record,  13.9.1997,  p.  287)  that  their
article  was  not  meant  to  be  inflammatory  or  critical.  It
was intended to draw the attention of the other Member
States  to  the  risk  of  importing  infective  material,  which
may  then  be  re-cycled,  rather  than  to  make  claims  about
the  number  of  clinical  cases  which  have  or  should  have
occurred  in  their  countries.  They  accepted  that  the
statistics on which they based their estimates contained a
significant  margin  of  error.

MARKET  MEASURES

Disparity  of  aid  rates

58-61. The  Commission  considers  that  the  Council
deliberately  allowed  greater  flexibility  to  take  account  of

the  different  situations  across  the  Member  States,
producers  and  consumers.  This  meant  that  the  most
effective  solution  could  only  come  from  the  Member
States  themselves,  which  resulted  in  different  amounts
being  paid  to  different  beneficiaries.  It  should  also  be
noted  that  milk  producers  and  those  raising  calves  also
suffered losses as a result of the BSE crisis. The important
point  in  this  operation  was  that  each  Member  State
should adopt the most effective solutions to deal with the
difficulties  it  was  facing,  without  distorting  competition.

58. There  is  nothing  to  suggest  that  this  variation
distorted  competition.

59. The Commission considers that the examples quoted
by  the  Court  comply  with  the  provisions  of  Council
Regulation  (EC)  No  1357/96.

60. The  Commission  does  not  consider  that  there  is
some  evidence  to  suggest  that  certain  sectors  may  have
been  overcompensated.  The  Court’s  report  does  not
contain  any  evidence  to  support  its  suggestion.

Controls

Council  Regulation  (EC)  No  820/97  is  one  of  the  many
Commission  initiatives  taken  after  the  outbreak  of  the
BSE  crisis  to  improve  veterinary  controls  and  thereby
protect  public  health.  It  aims  to  improve  traceability,
which  will  also  improve  control  over  animal  premium
schemes  financed  under  the  EAGGF  Guarantee  Section.

Recoveries

66. The  Commission  has  included  this  measure,  and
particularly  the  requirement  to  recover  payments,  in  all
missions  conducted  as  part  of  its  inquiry  into  bovine
premiums. Non-recovered amounts are being followed up
within  the  clearance  of  accounts  procedure.

laid  down 

67. The  different  procedures  are 
in
Regulation  (EC)  No  1357/96.  Given  that  the  only
information  available  on  payment  of  premiums  was  for
1995,  and  that  the  crisis  developed  in  March  1996,  the
fairest way of compensating producers appeared to be to
set  off  payments  against  producers’  entitlement  to
premiums  in  respect  of  1996.  The  Regulation  finally
adopted by the Council allowed flexibility on the part of
to  other  sources  of
Member  States  with  access 
information  that  allowed  them  to  realise  the  aims  of  the
Regulation. The result of a subsidiarity-based approach is
that  the  solutions  proposed  for  one  and  the  same
problem  may  vary  from  one  place  to  the  next.

C  383/32

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9.12.98

Direct  support

68-71. There  are  good  reasons  for  the  differences
between the two Regulations providing for compensation
for  income  loss.  The  first  aid  package  (Regulation  (EC)
No  1357/96)  had  demonstrated 
in
the  difficulties 
evaluating 
loss,  and  the  Council
income 
individual 
therefore  gave  the  second  aid  package  wider  scope  than
the  first  by  allowing  Member  States  to  make  additional
payments  to  support  producers’  incomes  and/or  the  beef
and  veal  sector  in  their  territory,  provided  that  these
payments  did  not  cause  distortion  of  competition.

There  is  nothing  to  suggest  that  the  variety  of  measures
taken  by  the  Member  States  has  caused  distortion  of
competition.

Production  control

The  calf  processing  aid  scheme  (CPAS)

76. The  Commission  has  made  similar  findings  in  the
UK  in  relation  to  this  scheme,  as  well  as  a  number  of
other discoveries. The UK authorities have undertaken to
improve  control  over  the  disposal  of  calves.  Corrections
for  previous  shortcomings  are  envisaged  within  the
clearance  of  accounts  procedure.

two  schemes 

78. There is no real production of veal calves in Ireland
and  so  it  made  sense  to  opt  for  the  processing  premium.
The 
(processing  premium  and  early
marketing  premium)  are  part  of  one  package  and
Member  States  were  required  to  implement  at  least  one
of  the  two.

the  risk  of  opportunism  (whereby  a  number  of  animals
might  benefit  gratuitously  from  the  EMP  without  any
reduction 
in  weight),  which  the  Council  and  the
Commission  regarded  as  inevitable  if  they  were  to  attain
the desired goal. However, this effect does not cast doubt
on  the  effectiveness  of  the  package  of  measures  that  has
been  introduced.  The  Commission  takes  account  of  this
in  its  reports  to  the  Council,  reflecting  the  objectiveness
of  the  work  carried  out.

86. A look at forecast production shows that the impact
is  even  greater  than  that  expected  by  the  Court  (see
Tables  1  &  2  annexed).  These  tables,  based  on  Eurostat
figures,  show  a  5,8 %  reduction  in  average  slaughter
weight (8,2 kg less per animal) and a 7 % increase in the
number  of  animals  excluded  from  red  meat  production
two
(372 330  head) 
schemes).

(application  of 

in  1997 

the 

87. When it was decided to introduce these two schemes
(processing  premium  and  early-marketing  premium),  it
was  clear  that  each  one  was  going  to  operate  differently
with  different  time-scales.

84-88. The  two  measures  are  part  of  a  single  package
since  politically  neither  measure  could  be  adopted
without  the  other.  Their  effectiveness  should  therefore
also  be  judged  jointly,  taking  into  account  the  fact  that
application of one measure is essential to apply the other,
and  vice  versa.

The  findings  of  the  Court  and  of  the  Commission  are
being  followed  up  within  the  clearance  of  accounts
procedure.

CONCLUSION

The  early  marketing  premium  (EMP)

In view of the above the Commission considers that

89.
the  market  measures  have  been  extremely  effective.

81. The  Court’s  finding  does  not  cast  doubt  on  the
scheme’s  effectiveness.

82-83. The  Commission  has  carried  out  a  number  of
on-the-spot  checks  in  relation  to  the  early-marketing
premium (EMP) in France, Germany and the Netherlands
(see  paragraph  11  and  Commission  reply).  The  findings
from  these  checks  and  the  Court’s  findings  in  the
Member  States  are  being  followed  up  within  the
clearance  of  accounts  procedure.

Effectiveness  of  the  calf  schemes

84.
In  view  of  the  structure  of  calf  production,  it  was
clear that the introduction of this premium would involve

90. The  nature  of  the  measures  was  clearly  specified  by
the Council when they were introduced in April 1996 to.
The  percentage  part-financed  is  therefore  normal  for
market  measures.

to 

is  striving 

91. The  Commission 
introduce  an
optimum  system  of  identification  and  registration  of
bovine  animals.  In  May  1992  the  Commission  submitted
to  the  Council  a  proposal  for  a  Regulation  covering  the
need to trace animals for veterinary purposes and for the
administration  and  control  of  Community  aid  schemes.
The Council subsequently adopted Directive 92/102/EEC.
In  October  1996,  having  found  that  this  Directive  was
not  being  implemented  satisfactorily,  the  Commission
submitted  a  new  draft  Regulation  which  resulted  in  the

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Council  adopting  Regulation  (EC)  No  820/97.  The
Commission 
the  Court’s
encouragement  to  continue  with  these  efforts.

very  pleased  with 

is 

It  should  be  noted  that  most  of  the  65 000  untraceable
cattle  in  the  United  Kingdom  originate  in  the  1989/90
‘voluntary’ cohort. When this cohort was included in the
selective cull, it was recognised that many of the animals
would  be  untraceable  because  the  necessary  (national  or
Community)  legislation  on  tracing  did  not  exist  at  that
time.  It  should,  however,  be  noted  that  no  untraced
animals  from  the  selective  cull  could  legally  enter  the
human  or  animal  food  chains  because  they  would  all  be
over  30  months  old,  and  would  be  destroyed  under  the
OTMS.

92. There  was  no  legal  basis  for  the  Commission  to
monitor the UK MBM ban in 1988/1989, which was the
most  sensitive  period  for  any  spread  of  BSE  outside  the
UK.  In  fact,  the  Commission  warned  of  the  possible  risk
in  the  Standing  Veterinary  Committee  and  advised  other
Member  States,  in  the  absence  of  a  Community  legal
basis,  to  take  their  own  measures.

93. The  Commission  must  point  out  that  if  Member
in
States  have  not 
accordance  with  the  Regulations,  action  will  be  taken
within  the  framework  of  the  clearance  of  accounts.

implemented  the  BSE  measures 

for 

As  pointed  out  in  the  reply  to  point  4.75  of  the  Court’s
annual  report 
financial  year,  and
the  1996 
emphasised in the reply to previous points of this report,
the Commission has carried out a number of missions to
a  majority  of  Member  States 
the
implementation  of  Regulations  (EC)  No  1357/96  and

evaluate 

to 

(EC)  No  2443/96  (supplementary  payments  to  bovine
producers),  the  calf-processing  aid  scheme,  and  the  early
marketing  premium, 
the  controls
mentioned  by  the  Court.

in  addition 

to 

94. The desire to enable the Member States to exercise a
degree  of  subsidiarity  in  no  way  undermined  the  checks
carried  out  under  the  IACS.  Rather  it  enabled  the
Member  States  to  use  the  most  effective  means  of
achieving the goals of this aid scheme (see reply to points
58  to  61).

The  Commission  considers  that,  although  checks  under
the  IACS  were  not  carried  out  for  the  measures  under
Regulations  (EC)  No  1357/96  and  (EC)  No  2443/96  by
all  Member  States,  it  has  been  possible  to  check  the
measures  by  other  means,  for  example  where  payments
were  made  on  the  basis  of  animal  sickness  insurance
(Germany)  or  accompanying  measures  claims  (Austria).

95. The  measures  taken  with  respect  to  BSE  and  those
designed 
imbalance  are
examined  in  Agenda  2000  and  form  the  basis  of  the
proposed  reform  in  the  sector.

the  structural 

to  counter 

96. The  Community  already  has  the  legal  basis  to  deal
with outbreaks of animal diseases, including those which
affect  humans.  In  the  case  of  transmissible  spongiform
encephalopathies,  a  specific  Regulation  of  the  Council
and Parliament is being prepared which will replace most
of  the  current  safeguard  measures.

Furthermore,  in  the  priorities  for  the  1999  preliminary
draft  budget,  the  Commission  announced  that  it  would
launch  a  debate  on  how  to  make  the  various  parties
involved 
the
producers,  the  Member  States  and  the  Union,  more
responsible.  Consideration  has  not  yet  begun  and  it  is
premature  to  state  that  an  insurance  fund  should  be  set
up.

in  combating  outbreaks  of  disease, 

C  383/34

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ANNEX

LIST  OF  COMMISSION  MISSIONS  CARRIED  OUT  IN  RELATION  TO  BSE

1.  JOINT MISSIONS IN RELATION TO THE ‘OVER THIRTY MONTHS SCHEME’ (OTMS) IN THE

UK

Date

Participating services

May  1996

(OICVP)  DG  V  and  DG  VI  including  clearance  of  accounts

January  1997

(OICVP)  and  DG  VI  including  clearance  of  accounts

February  1998

FVO,  DG  VI  clearance  of  accounts  and  DG  XX

2.  CLEARANCE  OF  ACCOUNTS  MISSIONS,  DG  VI.A.I.3

2.1.  BSE  measures  specific  to  the  UK:

‘Over  Thirty  Months’,  selective  cull  and  intervention  buy-back  schemes

Date

Member  State

Other  participating  services

July  1996

United  Kingdom

European  Court  of  Auditors

April  1997

United  Kingdom

November  1997

United  Kingdom

UCLAF

May  1998

United  Kingdom

See  also  joint  missions  with  DG  XXIV

2.2.  Bovine  premiums  inquiry  with  BSE  measures  incorporated:

Regulation 
early-marketing premium

(EC)  No  1357/96, 

(EC)  No  2443/96,  calf-processing  aid  scheme  and/or

Date

Member  State

September  1997

Germany

January  1998

Germany

July  1998

Germany

May  1997

June  1997

Greece

France

September  1997

France

December  1997

Ireland

July  1998

Italy

March  1997

Austria

April  1997

June  1997

Finland

Sweden

July  1997

United  Kingdom

October  1997

Unidet  Kingdom

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2.3.  Other  missions  relating  to  BSE  measures

Date

Member  State

Measures

April  1997

Netherlands

Preventive  audit  early-marketing  premium

See  also  July  1996  mission  to  Portugal  with  OICVP.

3.  MISSIONS  CARRIED  OUT  BY  THE  OICVP  (VETERINARY  AND  PHYTOSANITARY  OFFICE)
FROM  APRIL  1996  TO  MARCH  1997  AND  THE  FOOD  AND  VETERINARY  OFFICE,  DG  XXIV
FROM  APRIL  1997  TO  JULY  1998

3.1.  United  Kingdom

Date

Member  State

Main  topic

Other  participating
services

April  1996

July  1996

United  Kingdom

BSE general

DG  III,  DG  VI

United  Kingdom

Decision  96/239/EC

DG  III

DG  III

October  1996

United  Kingdom

Decision  96/239/EC

March  1997

United  Kingdom

Selective cull
programme

April  1997

June  1997

United  Kingdom

Gelatine

United  Kingdom

Preconditions  of
Florence  Agreement

June  1997

United  Kingdom

Decision  96/239/EC

October  1997

United  Kingdom

November  1997

United  Kingdom

United  Kingdom

Decision  96/239/EC
Animal waste

ECHS

ECHS

United  Kingdom

Decision  98/256/EC

April  1998

June  1998

3.2.  Other  Member  States

Date

Member  State

Main  topic

July  1996

Portugal

Eradication  of  BSE

Other  participating
services

including

DG  VI 
Clearance  of
Accounts

October  1996

Belgium

BSE surveillance

October  1996

Luxembourg

BSE surveillance

October  1996

Austria

October  1996

Finland

October  1996

Spain

November  1996

France

November  1996

Italy

BSE surveillance

BSE surveillance

BSE surveillance

BSE surveillance

BSE surveillance

November  1996

Germany

BSE surveillance

November  1996

Greece

November  1996

Sweden

December  1996

Ireland

BSE surveillance

BSE surveillance

BSE surveillance

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Date

Member  State

Main  topic

Other  participating
services

December  1996

Denmark

BSE surveillance

December  1996

The  Netherlands

BSE surveillance

March  1997

March  1997

Ireland

France

June  1997

Portugal

BSE surveillance

BSE surveillance

Animal  waste,  BSE
surveillance

July  1997

Denmark

Animal waste

August  1997

Finland

Animal waste

September  1997

The  Netherlands

September  1997

Austria

September  1997

Belgium

September  1997

Ireland

Animal waste,
surveillance

Animal waste

Animal waste

Animal waste

September  1997

Germany

Directive  89/662/EEC

October  1997

Spain

October  1997

Italy

October  1997

Greece

November  1997

Germany

November  1997

Sweden

December  1997

France

January  1998

Ireland

February  1998 

Belgium

Animal waste,
surveillance

Animal waste,
surveillance

Animal waste,
surveillance

Animal waste,
surveillance

Animal waste,
surveillance

Animal waste

Animal waste

Animal waste

February  1998

Denmark

Animal waste

April  1998

Finland

Animal waste

May  1998

Portugal

Animal waste,
surveillance

May  1998

The  Netherlands

Animal waste

July  1998

France

Animal waste

3.3.  Switzerland

Date

Country

Main  topic

April  1996

Switzerland

Animal waste, surveillance

June  1997

Switzerland

Animal waste, surveillance

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4.  MISSIONS  CONCERNING  ILLEGAL  TRAFFIC  IN  UK  BEEF  CARRIED  OUT  BY  UCLAF  AND  DG

XXIV  FVO

Date

Member  State

Participating services

May  1997

The  Netherlands

UCLAF

Belgium

UCLAF,  FVO

United  Kingdom

UCLAF,  FVO

France

Ireland

UCLAF,  FVO

UCLAF,  FVO

United  Kingdom

UCLAF,  FVO,  DG  VI  Clearance  of  Accounts

United  Kingdom

UCLAF,  FVO

July  1997

July  1997

July  1997

July  1997

July  1997

July  1997

July  1997

August  1997

Germany

Germany

FVO

UCLAF

FVO

September  1997

Spain

September  1997

United  Kingdom

UCLAF,  FVO

September  1997

Belgium

UCLAF,  FVO

September  1997

December  1997

Ireland

France

February  1998

The  Netherlands

March  1998

Ireland

FVO

UCLAF,  FVO

FVO

FVO

May  1998

The  Netherlands

UCLAF,  FVO

C  383/38

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Figure 1

Average weights for calf slaughtering in the European Union

139,1
139,1

137,9
137,9

136,7
136,7

trend line projection

139,7
projected

– 8,2 kg.
(– 5,8 %)

131,5
observed

weight
(kg)

142
142

135,6
135,6

140
140

138
138

136
136

134
134

132
132

130
130

1993 
93

1994 
94

1995 
95

1996 
96

1997 
97

år

1998 Year

98

Figure 2

Annaul calf slaughtering — Number of head, EU12

head

6.100.000
6 100 000

6.000.000
6 000 000

5.900.000
5 900 000

5.800.000
5 800 000

5 700 000
5.700.000

5 600 000
5.600.000

5 500 000
5.500.000

5 400 000
5.400.000

5 300 000
5.300.000

5 200 000
5.200.000

1993
1993

Observed:
5 727 940

Difference:
(+7 %)
372 330

Projected:
5 355 610

trend-line projection

1994
1994

1995
1995

1996
1996

1997
1997

1998
1998

1999

1999 years