Volume 10: Economic Impact and International Trade
6. The export of live cattle, beef, and bovine semen and embryos
Live cattle
Exports to EU Member States
Exports to non-EU countries

Exports to EU Member States

6.2 In January 1988 the British Embassy in Portugal reported to MAFF that it had learned of the reluctance on the part of at least one local farmer to purchase British dairy cattle because of fears about BSE. ¹ Later, in July 1988, the Dutch delegation to the Standing Veterinary Committee expressed concern about importing cattle from Great Britain. The British delegation offered an assurance that the UK would not export to the Netherlands any bovine animal from a herd in which BSE had been officially confirmed. ² This led to the establishment of a bilateral agreement intended to ensure that no animals from herds in which BSE had been confirmed were exported from the UK to the Netherlands. Similar arrangements were later introduced for exports to Germany, the Republic of Ireland and Denmark.

6.3 The first EU legislation passed directly in response to BSE was Commission Decision 89/469/EEC. ³ It was agreed at a meeting of the SVC on 18 and 19 July 1989 and adopted on 28 July. The Decision banned the export from the UK of live cattle born before 18 July 1988 ⁴ or born to dams in which BSE was suspected or officially confirmed. In reporting the Decision to Ministers, Mr Alan Lawrence of MAFF's Animal Health Division said:

This is a more satisfactory outcome than might have been; on the second day [of the SVC meeting] a number of Member States seemed inclined towards a ban on cattle from herds in which BSE has occurred which, incidentally, four Member States (Germany, Netherlands, ROI and Denmark) currently require under bilateral arrangements. However, the UK, with support from the Commission, managed to persuade them that there was no veterinary logic in this approach. ⁵

One other potentially serious problem emerged. The Minister's announcement about a ban on the use of specific bovine offal has clearly had a major impact on the Community's interest in BSE. This being so, a number of Member States, including Germany, indicated that if we go ahead as planned they will take action to avoid 'political problems'. The difficulty is to avoid this. Live cattle will continue to be exported from the UK under the new Commission decision. When these animals are slaughtered in other Member States the offals will be available for human consumption, unlike in the UK where such material is banned. Thus the Community reaction could be to stop all cattle exports from this country . . . ⁶

6.4 Responding to this concern in October 1989 Mr John Cowan, Head of the Beef Division in MAFF, provided a briefing to Mr David Curry, the Parliamentary Secretary, assessing the consequences for the UK beef and dairy industries of a total ban on the export of live cattle from the UK. ⁷ The briefing noted that there was likely to be a difficulty in identifying animals originating in the UK which were slaughtered at abattoirs in mainland Europe. Given the perceived risk from the offal of such livestock, it was thought that the EU might prohibit all UK exports of live cattle and calves.

6.5 The briefing identified three categories of UK exports which would be affected by such a prohibition: live cattle for slaughter, breeding cattle and calves. In each case, Mr Cowan's paper argued that 'the broad thrust' of the effect on UK exports would be to divert livestock exports to the UK market, thereby increasing supply and tending to depress prices for calves, cattle and meat.

6.6 In the case of the export of live cattle for slaughter, the paper concluded that the economic impact of an export ban on the industry as a whole would be small. In 1988 approximately 10,000 head of cattle - more than twice the number in each of the previous two years - had been exported at a value of £5 million. The paper concluded that this was 'equivalent to some 3,000 tonnes of beef, which could easily be absorbed on the home market'.

6.7 Similarly, exports of purebred breeding cattle were approximately 7,000 head in 1988, with a value of £5.5 million. Exports to third countries (ie, outside the EU) accounted for £1 million of the total. The paper concluded:

While it is possible that the third country trade could continue, or possibly expand, it seems certain that UK prices for pure-bred cattle would fall. The impact would be borne by a small number of specialist breeders and UK buyers would benefit from cheaper breeding stock and the economic impact on the industry as a whole would be small.

6.8 The impact of a ban on the export of calves was considered to be far more substantial, with an overall decrease of returns to producers of about £120 million. The greatest projected losses were forecast for the dairy and suckler herds. ⁸ It was estimated that dairy enterprises would suffer a loss in the region of £68 million, and the suckler herds approximately £35 million. However, in proportionate terms the loss to the dairy sector would be less significant, representing only 3-4 per cent of gross profit margin per cow, and it was suggested that in practice this would probably be more than offset by expected growth in returns from milk sales. By contrast, suckler cow producers were expected to experience a reduction of 10-15 per cent in gross margins. ⁹

6.9 In the event a total ban on the export of cattle from the UK was not imposed by the EU until after March 1996. However, the scope of the ban introduced in July 1989 was increased as a result of the adoption on 7 February 1990 of Decision 90/59/EEC, ¹⁰ amending Decision 89/469/EEC. ¹¹ The Decision banned the export of 'live cattle other than those aged under 6 months and bearing a special mark' and 'live cattle born to females in which bovine spongiform encephalopathy is suspected or is officially confirmed'. ¹² It also required that the importing Member State ensure that all imported animals were slaughtered before reaching the age of six months. This Decision came into force on 1 March 1990.

6.10 Decision 90/59/EEC does not appear to have had any significant overall impact on exports of live cattle from the UK after its introduction in March 1990. As MAFF noted in a press release, had the same Decision been in place in 1988, when the UK exported 266,000 live cattle, 94 per cent (249,000) would have met the new, under-six-month, export criterion. ¹³ In large part this was due to the fact that the vast majority of the live cattle exports were young calves destined for veal production in the Netherlands and France. ¹⁴ However, the requirement that importing Member States ensure that all imported animals were slaughtered before reaching the age of six months will have ended the export to the EU of UK cattle for breeding.

6.11 Overall, however, the impact of EU action to restrict the export of cattle from the UK appears to have been limited in the period up to March 1996. Figure 6.1 below shows that the value of live cattle exports to EU countries actually rose pretty steadily between 1988 and 1995.

Figure 6.1: Exports of live cattle to the EU, 1986-96

Exports to non-EU countries

6.12 Israel was the first country to take action, in the light of BSE, to prevent imports from the UK. Ministers were informed in June 1988 that:

[Israel has] stopped imports of live cattle from this country. Unfortunately they have also stopped imports from other Member States, on the basis that cattle can move from here to the rest of the Community. This may trigger possible Community discussion on the subject. In addition the Australian and Northern Irish authorities are showing some concern about trade in cattle and the Netherlands on the export of meat and bone meal. ¹⁵

6.13 By July 1988 Australia had suspended all imports of live cattle, semen and embryos and it was reported that 'it looked increasingly as though other countries would follow suit'. ¹⁶ In July 1989 Sir Richard Southwood was informed that New Zealand, Sweden and the USA had joined Israel and Australia in imposing a ban on all imports from the UK of live cattle. In addition, Japan, Morocco, Canada and South Africa had all introduced requirements that live cattle imported from the UK be from herds certified as free of BSE. ¹⁷

6.14 The overall impact of the closure of these export markets for live cattle was small. In 1986, 1987 and 1988 exports of live cattle to non-EU countries did not exceed 5 per cent of the total value. As the various bans on exports implemented by the countries mentioned above began to come into force, the small market for the export of cattle to non-EU countries gradually disappeared. As shown in Figure 6.2 below, the value of exports to non-EU countries was approximately £1.7 million in 1987, but had fallen to £21,000 by 1995. However, as we have noted, exports to EU countries steadily increased after 1989. Overall this increase will have more than offset the loss caused by the closure of markets further afield. The impact on those who produced breeding stock for export will nevertheless have been significant.

Figure 6.2: Exports of live cattle to non-EU countries, 1986-95