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

4.1 There remains the question of who ultimately suffered the economic consequences of the BSE epidemic. We know that the taxpayer bore the cost of the BSE-related expenses in the public sector.

4.2 When we turn our attention to the private sector, we know through our discussion in the previous chapter that the actors in every commercial sector of the beef and cattle industry were faced with additional costs to bring their businesses into compliance with new government Regulations made in response to the emergence of BSE. Furthermore, some businesses lost some of their product line or had to pay to dispose of by-products that they once used to sell to others.

4.3 However, depending on the circumstances, additional costs might be passed back to a supplier by way of insisting on lower prices for inputs, or passed forward to buyers by way of higher prices for outputs. In other instances, a business might be forced to absorb the costs out of existing profits.

4.4 Ultimately, the question is not where the additional expenses arose but where they settled. This question becomes far more difficult to answer because a large number of factors, other than BSE, may have impacted on the financial health of the various segments of this industry.

4.5 These other factors included privatisation of smaller slaughterhouses previously operated by local authorities, and consolidation within farming, slaughtering, rendering, meat-packing and retailing. Consolidation went so far as to produce monopoly conditions in the rendering industry. ¹ This period also saw significant moves towards vertical integration among slaughterhouses, meat-packing houses and large food retailers and the decline of the high street butcher.

4.6 Factors largely external to the industry impacted on it as well. EU Directives, price supports and subsidies, quotas, compensation schemes and changes in consumer preferences also make it difficult to attribute specific economic events to BSE.