Volume 10: Economic Impact and International Trade
4. Where did the economic consequences of BSE finally fall?
Slaughterhouses and meat-packers

4.15 We discussed in Chapter 3 how slaughterhouses incurred certain quantifiable additional costs when the SBO ban was introduced, as a result of the special handling required for SBO materials. They also incurred certain quantifiable losses through having to pay, after the introduction of the ban, for the disposal of certain waste by-products that they had previously been able to sell to renderers, head boners and MRM producers. These additional expenses were clearly attributable to BSE.

4.16 It is also clear that slaughterhouses would have felt the impact of the decline in demand for beef. Since the fixed costs of slaughterhouses are high relative to their unit costs, a decline in volume of throughput would have had a significant impact, and probably accelerated the ongoing trend towards consolidation in the industry. However, for reasons previously discussed, it is less than obvious that the decline in demand for beef can necessarily be attributed to BSE.

4.17 Since, in cash terms, the price of cattle was rising more slowly than the retail price of beef, it would appear that the slaughterhouses were able to pass back to the farmers some, if not all, of the costs that they incurred in responding to BSE, by buying at lower prices.