Consultation outcome

Summary of responses

Updated 15 November 2018

1. Introduction

In response to the Groceries Code Adjudicator (GCA) Call for Evidence that closed on 10 January 2017 , the government announced that it would consult on introducing measures to improve fairness and price transparency for producers in the livestock sector.

The consultation proposed to mandate the use of a carcase classification and price reporting system for sheep in England. This would require abattoirs to use a standard grid to classify sheep carcases for the purposes of calculating the price paid to the producer. Classification will need to be undertaken by a qualified assessor. Producers would see the results of the classification process. This will help ensure that producers receive consistent information on the classification of their livestock, and are paid per animal in a transparent manner. Licensing of classifiers and monitoring in abattoirs would be carried out by the Rural Payments Agency. Prices would be reported to the AHDB.

Under EU rules, carcase classification has been mandatory in commercial-scale abattoirs in the beef and pigs sectors for some time. However, for sheep, classification is non-mandatory and to date has not been introduced.

The consultation also sought views on a requirement for abattoirs to publish schedules of charges and prices for all livestock sectors (beef, pigs and sheep).

The consultation was for England. The Scottish Government has already consulted and published the outcome in April 2018. The Welsh Government ran a parallel consultation. The Northern Ireland Executive has not yet consulted and with no immediate intentions whilst the collapse of the devolved government is being addressed.

2. Consultation activity

Defra undertook a 12 week formal consultation that ran from 30 May 2018 to 23 August 2018. This was available on Citizen Space (an online survey platform), and a dedicated email address was established to receive responses. The main industry groups were emailed to announce the consultation. The consultation was also announced by Minister Eustice at the Royal Bath and West Show and promoted by a press release on gov.uk .

3. Respondents

3.1 Question 1 of consultation questionnaire

Are you, or do you represent:

• a livestock farmer
• a livestock market
• an abattoir
• a cutting plant not connected to an abattoir
• a trader in livestock or meat
• other (please specify)

In total we received 18 responses; 10 were submitted to the online survey hosted on Citizen Space and 7 were via letter or email. We have removed one online response as it was unrelated to the topic of this consultation.

Producers and abattoirs

We received 7 online survey responses - 4 represented livestock farmers and 3 represented abattoirs. We also received a response from an abattoir representative via email.

Industry bodies

The two remaining online survey responses were sent by the National Sheep Association (NSA) and the National Farmers Union, Scotland (NFUS).

We received 6 responses from organisations via email or letter. They were:

• British Meat Processors Association (BMPA)
• The Livestock Auctioneers Association Limited (LAA)
• Meat and Livestock Commercial Services Ltd (MLCSL)
• National Farmers Union (NFU)
• Agriculture and Horticulture Development Board (AHDB)
• Beef + Lamb New Zealand Ltd and Meat Industry Association Inc. (B+L NZ & MIA)

Of the responses we received, some organisations aimed at providing us with more context and information on the subject, rather than a definitive opinion on the subject. These organisations were:

• Agriculture and Horticulture Development Board (AHDB)
• Beef + Lamb New Zealand Ltd and Meat Industry Association Inc. (B+L NZ & MIA)
• National Farmers Union, Scotland (NFUS).

Respondent categories

We have grouped the respondents into two categories for analysis;

1. Farmer and abattoir representatives (8 respondents)
2. Other organisations (5 respondents) ^{[footnote 1]}

We are grateful for all the responses we received, and hope to continue the conversation as this policy is developed further.

4. Current use of sheep carcase classification

4.1 Question 2 of consultation questionnaire

If you represent, or work for an abattoir, do you currently use a sheep carcase classification system?

• Yes, (S)EUROP
• Yes, another system (please specify in “comments”)
• No
• Comments

Producers and abattoirs

Of the abattoirs that responded 3 (100%) use the EU (S)EUROP grid as a sheep carcase classification system. One abattoir did not provide an answer to this question.

Industry bodies

Some of the responses we received from organisations on this question are as follows:

Preferred system of carcase classification
British Meat Processors Association	N/A did not make a statement on this
The Livestock Auctioneers Association Limited	N/A because they do not represent abattoirs
Meat and Livestock Commercial Services Ltd	YES, they use a similar system to (S)EUROP
National Farmers Union	N/A because they do not represent abattoirs
National Sheep Association	N/A because they do not represent abattoirs

Notable comments

The main point from the only comment received is summarised below, it is not copied verbatim.

MLCSL: Following the introduction of the EC Sheepmeat Regime in the early 1980’s, both the nomenclature and the definitions of the carcase characteristics used within the existing MLC system were revised so that it shadowed the EU system. This ‘shadowing’ has continued to this day, so that when the EU system is adopted there should be a seamless transition.

5. Support for mandatory sheep carcase classification

5.1 Question 3 of consultation

Are you in favour of mandatory sheep carcase classification in England?

• Yes
• No
• Comments

Producers and abattoirs

Of the farmers and abattoirs representatives who responded 6 (100%) were in favour of the introduction of mandatory sheep carcase classification, no one was against it. There were 2 correspondents who did not respond to this question.

Industry bodies

Some of the responses we received from organisations on this question are as follows;

Are you in favour of mandatory sheep carcase classification?
British Meat Processors Association	Yes
The Livestock Auctioneers Association Limited	Yes [footnote 2]
Meat and Livestock Commercial Services Ltd	Yes
National Farmers Union	Yes
National Sheep Association	Yes

Notable comments

The main points from the comments received are summarised below, they are not copied verbatim.

The majority of stakeholders are in favour of mandatory sheep carcase classification as it represents a major step in enhancing a more transparent and competitive sheep market place.

Stakeholders highlight the need to adopt a uniform regime throughout GB because there is movement of sheep between England and the devolved administrations and it would cause considerable cost and confusion if the same system is not adopted across the GB.

A transitional period to adapt to the new regulation should be considered. This should be combined with an education and training to strengthen stakeholders understanding

AHDB - Mandatory classification, with the associated elements of standard dressing specification and weighing, enables a fair comparison of the price being offered by different processors for sheep and thus providing transparency. This would provide stronger market signals for those carcases that better fit the supply chain needs and lead to improved supply chain efficiency. The value of introducing mandatory classification would be enhanced by ensuring information is passed back to the farmer.

6. Preferred system of sheep carcase classification

The consultation considered two possible methods of classifying sheep carcases, if it were to be implemented.

The first option would be to utilise the EU method^{[footnote 3]} . This method has already been designed and legislatively would be relatively simple to implement. It would reflect the systems used in the beef and pig sectors, and is what the Scottish and Welsh Government’s consulted on.

The second option would be to design a system that is bespoke to England, and includes variables that are not in the EU system, such as eating quality. However, it should be noted that the devolved administrations are not considering this approach and it is also something that could take years to design.

6.1 Question 4 of consultation

Which system of carcase classification should be used?

• The EU’s (S)EUROP Grid (outlined in Annex A)
• A bespoke system (to be developed in future)
• Comments

Producers and abattoirs

Of the farming and abattoir workers who responded 7 (88%) supported the use of the EU method whilst 1 (12%) supported creating a bespoke system.

Industry bodies

Some of the responses we received from organisations on this question are as follows. The preferred system of carcase classification was EU grid for:

• British Meat Processors Association
• The Livestock Auctioneers Association Limited
• Meat and Livestock Commercial Services Ltd
• National Farmers Union
• National Sheep Association

Notable comments

The main points from the comments received are summarised below, they are not copied verbatim.

The S component of the (S)EUROP grid is not widely used amongst sheep classifiers in England as it is optional.

The EU grid is well understood, and there has been significant investment and training to date in response to it.

There are aspects of the EU grid that can be improved upon, but stakeholders consider the best approach to be to implement the EU grid, and bolt on improvements if they are deemed appropriate, as opposed to redesigning the system from scratch.

Carcase classification should relate to changing consumer habits and market demand, and we should continue to explore new ways to measure quality. However, in the foreseeable future the EU grid will still have a valuable role.

Farmers and abattoirs are familiar with the EU grid and changing this would cause unnecessary issues.

A number believed the EU grid does not go far enough to establish eating quality nor does it offer enough flexibility to abattoirs supplying niche markets.

The EU grid is well understood by most producers of finished livestock and is used by almost all deadweight buyers and most export customers.

The EU system is understood by most sheep farmers selling deadweight and has been used by AHDB to help deliver producer productivity messages. It offers an effective method of communication to the industry. It also provides a recognisably accepted guide to the ability of a carcase to yield saleable meat.

7. Aspects to be considered in a bespoke system

7.1 Question 5 of consultation

If we were to move to a bespoke system of carcase classification, what would be the most important aspects?

Notable comments

The main points from the comments received are summarised below, they are not copied verbatim.

MLCSL: A bespoke system should enable an assessment of yield, ideally by cuts across the carcase. It should have the flexibility to incorporate other elements of carcase and meat quality when tools are developed to enable this. Currently the whole carcase is assessed, however some abattoirs may want there to be more focus on the hind quarter, whilst others may wish to focus on the loin. Any future system needs to be simple enough to be delivered at high line speeds, as some classification officers only have seconds to make a classification decision.

NFU: Any additional features, such as meat eating quality should be driven by the market and should act as commercial additions to the EU grid.

NSA: Would only see a bespoke system working as an addition to the EU grid. Important useful additional aspects could include; percentage of carcase meat yield, skin quality, offal quality, eating quality (such as tenderness and texture).

B+L NZ & MIA: A classification system based on weight and fat thickness has merit when the value of an animal is almost entirely determined by the meat yield. Depending on market conditions, however, offal, skin, slipe wool, meat meal and other co-products can make useful contributions to the overall value of a lamb. Likewise, variations in prices between different components (cuts, offal) in different markets can mean that a tongue is worth more than, say, leg chops or that a wool on skin is worth more than a shoulder. In other words, weight and fat cover may only be one driver in overall value.

NFUS: Producers must be confident the feedback they receive from a carcase classification system is wholly accurate to use this information for farm productivity improvements. A classification system should encourage farmers to produce what the market requires.

NFUS: (The) current grading does not go far enough to establish eating quality nor offer the flexibility to abattoirs which supply niche markets.

Dressing specification consistency is important, and any new system should be easily understood by producers and assessors alike. There should be extensive training so all producers are aware of the parameters of a new system.

The merits of automation should be considered. Uniformity between all UK plants is important.

8. Throughput exemption levels

In 2017, there were 151 abattoirs registered to slaughter sheep in England and of these, 34 accounted for more than 90% of all throughput^{[footnote 4]}. An exemption to mandatory classification and price reporting was suggested by Defra for abattoirs slaughtering fewer than 1,000 sheep per week (as an annual average)^{[footnote 5]}.

8.1 Question 6 of consultation

Is the throughput exemption set at the right level?

• Yes
• No
• Comments

Producers and abattoirs

Of these respondents, 2 (29%) supported the suggested exemption level whilst 5 (71%) were not in favour and suggested that the level should be lower. 1 respondent did not answer this question.

Industry bodies

The responses we received from organisations on this question are as follows:

Is the throughput exemption set at the right level?
British Meat Processors Association	No (lower)
The Livestock Auctioneers Association Limited	Yes
Meat and Livestock Commercial Services Ltd	-
National Farmers Union	Yes
National Sheep Association	Yes

Notable comments

The main points from all the comments received are summarised below, they are not copied verbatim.

Several stakeholders believe that the exemption level should be lower and offered 500 sheep per week as an alternative. The BMPA cited capturing a true market picture as the reason for this. It was also suggested that the business is seasonal to some extent and numbers may fluctuate throughout the year.

Whilst some stakeholders agree with the exemption level, they believe that voluntary inclusion may also be taken up by smaller abattoirs.

One stakeholder sought clarity regarding the recording of numbers and questioned whether they would be counted by the total number of sheep slaughtered or by whom an abattoir slaughters them for.

It was suggested by one stakeholder that sheep sold though market liveweight should be included in order to improve data and transparency.

Market demand could result in lower throughput plants adopting the classification service voluntarily.

9. Preferences for published information

Defra believe that greater transparency of information can lead to productivity improvements. We are proposing that abattoirs report deadweight prices weekly to Agriculture and Horticulture Development Board (AHDB) in an approved format for subsequent publication in an aggregated format that preserves commercial confidentiality. AHDB currently collect deadweight price information directly from abattoirs in the beef sector. This fulfils legislative price reporting requirements, but primarily it provides timely, relevant and accurate pricing data for the UK industry. For sheep, this is currently done on a voluntary basis.

9.1 Question 7 of consultation

What information should AHDB be publishing, under what categories?

Notable comments

The main points from the comments received are summarised below, they are not copied verbatim.

Stakeholders generally agree that the information should be reported using the EUROP grid, with weight alongside classification.

There is support for seasonal categories.

Stakeholders supported the reporting of liveweight sheep prices in addition to those for deadweight.

One stakeholder believed that ‘Premium’ price categories, such as organic or grass-fed, should be reported.

Favourable comparisons have been made to the reporting system in the beef sector, and the oversight provided by the RPA.

10. Impacts on businesses

To deliver the benefits of a classification system, the regulation may introduce some administrative and resource costs on affected abattoir businesses, who will be required to organise classification, and record and report results and prices. We anticipate that the main costs to affected abattoirs will be in terms of staff training and undertaking classification, and the limited time costs from mandatory inspections. However, the exemption means only the larger abattoirs will be affected and that the majority of these already have recording systems in place that could be adapted.

10.1 Question 8 of consultation

What impact, in terms of administration and other costs, do you expect mandatory sheep carcase classification regulation to have on your business? Please provide reasons and evidence where possible for your answer.

Notable comments

The main points from the comments received are summarised below, they are not copied verbatim.

The majority of stakeholders agreed that there would be a financial impact involved in introducing the classification system, but that this would be fairly minimal due to recording systems/ staff already in place.

Most respondents stated that the additional costs would be passed back to the producers.

One stakeholder suggested that the dressing specifications may mean structural changes are required, which would be very expensive. Several stakeholders suggested that the additional costs should be supported by extra funding.

11. Published schedules of charges

In the interests of improving fairness in the supply chain and to make clear the conditions on which animals are delivered to the abattoir, the government is considering requiring commercial scale abattoirs to publish their schedule of charges for services connected with slaughtering of livestock (beef, pigs and sheep). For example, the cost of cleaning animals, classification charges and insurance. In addition, all abattoirs would have to provide suppliers with pricing information based on the standard specification if requested.

11.1 Question 9 of consultation

What elements should be included in the published schedule of charges?

Producers and abattoirs

Of the 8 farmer and abattoir worker survey responses, 4 (67%) stated that all aspects of information should be published. 2 (33%) did not believe that any information in the schedule of charges should be published. 2 did not answer this question.

Industry body responses

In favour of a published schedule of charges?
British Meat Processors Association	No
The Livestock Auctioneers Association Limited	Yes
Meat and Livestock Commercial Services Ltd	Yes
National Farmers Union	Yes
National Sheep Association	Yes

Notable comments

The main points from the comments received are summarised below, they are not copied verbatim.

MLCSL: the cost of classification is put as a separate charge to the producer, to enable them to have transparency and see a true cost of the independent service.

The majority of stakeholders were in favour of publishing schedules of charges and believed that more information was preferable.

Specific elements suggested included: classification, meat hygiene inspection, ante-mortem inspection, levy charges, waste disposal charges, insurance, sundry costs, cleaning and clipping, splitting and SRM removal, haulage and transportation and condemnation.

Further points were made regarding a breakdown of fees where deductions for quality or grid specification are made.

Some stakeholders who were in favour often held a preference that the published costs should be readily available on the abattoir’s website.

Stakeholders who were against the publishing of charges stated that abattoirs made this information available to producers who engaged in a meaningful way.

The point was also made that the terms and conditions of trade are commercially sensitive and therefore should not be published.

12. Other comments raised by stakeholders

12.1 Dressing specifications and presentation

A dressing specification is an agreed way of presenting a carcase for classification and weighing. For a carcase classification system to work, and provide the necessary market transparency, a dressing specification is necessary. This dressing specification must be consistent across all abattoirs^{[footnote 6]} as further dressing performed before the weighing leads to unfair comparisons of data. The specification must also allow for fast and efficient processing of the carcases.

Common dressing specifications

The EU classification presentation requires that carcasses and half-carcasses shall be presented without the head (severed at the atlantooccipital joint), the feet (severed at the carpometacarpal or tarso-metatarsal joints), the tail (severed between the sixth and seventh caudal vertebrae), the udder, the genitalia, the liver and the pluck. Kidneys and kidney fat are included in the carcass.

Notable comments

Some abattoir respondents to the consultation, because of the layout of facilities, suggested a specification where the kidney knob and channel fat (KKCF) is excluded at the point of presenttaion and weighing.

Defra will explore the implications of the different systems further with representatives of the slaughtering sector, as well as with the sector more widely.

12.2 Weighing carcasses

The weight of a carcase must be established on a warm weight. The consultation document suggested that cold weight of a carcase must correspond either to the warm weight less 2% (as per beef/pigs) or by a rebate system depending on the weight of the carcase.

Notable comments

The Hot Weight Rebate should be a straight 0.5kg off the carcase weight and one of the main reasons is that the Republic of Ireland use this and are competition with our business and members in Northern Ireland… It is extremely important to minimise any confusion in the market place so that we are not uncompetitive.

Defra is considering the issue with representatives of the industry.

12.3 Liveweight sales

Carcase classification should aid market efficiency as it provides for information to be passed back to the producer on the characteristics that are valued by the market and which can then be taken into account in future stock management decisions.

The sheep sector differs from the beef or pig sectors in that a large proportion (around 50%) of animals are sold through auctions on a liveweight bases.

Notable comments

Stakeholders have raised concerns that it is an unnecessary cost to classify sheep that have been sold liveweight. Others have pointed to the additional organisation necessary in an abattoir to classify some sheep and not others, and therefore all sheep should be classified.

Defra will discuss these issues further with representatives of the sheep sector.

12.4 Scrutiny committee

Stakeholders are keen to ensure that carcase classification moves with technological change, and to this end have proposed a carcase classification scrutiny committee. The idea being that this committee could monitor carcase classification and suggest improvements^{[footnote 7]} . Defra understands these discussions are taking place between the various representatives of the sector and the classification service providers.

12.5 UK wide consistency

Stakeholders have emphasised the importance of having a consistent classification system throughout the UK, as during their lifetime sheep move between the different countries for fattening and eventual slaughter. Defra is in close contact with the devolved administrations on this issue.

12.6 Weighing

We proposed that the animal weight should be established to the nearest 100g. With advancements in weigh technology, this proposal was supported by respondents to the consultation.

13. Conclusions

There is strong support for bringing in mandatory sheep carcase classification, and the strong preference is to use the EU grid to do so. When doing so we will bear in mind the burden on industry and the costs of inspections and enforcement. We do not intend to overcomplicate it, or hinder production. We would aim to keep sheep carcase classification proportional to beef and pig classification.

We have observed a strong preference for publishing schedules of charges across all livestock sectors. We note that many abattoirs do this already, and some have it available on password protected websites for their customers. The main message received is that this information would be very helpful if available without cost or hindrance to all current or potential customers. However, we will develop this policy carefully considering commercial confidentiality laws.

We also received a wide range of comments on other issues, some for which there was a general consensus, such as accurate weighing and having consistency across the UK. Other elements of the debate are more complex, such as the dressing specification, whether liveweight sold sheep should also be classified and throughput exemption levels. We will discuss these issues further with the sector and when doing so will bear in mind the burden on industry and the costs of inspections and enforcement. We would aim to keep sheep carcase classification proportional to beef and pig classification.

We have collected responses on what information should be published by AHDB, and understand there is a desire for this information to reflect that which is published for beef and pigs. There were some interesting suggestions made, which will be discussed with AHDB to see what is possible.

We are grateful for all the responses we have received to this consultation, and the engagement and discussions we were able to have whilst it was open. We have had engagement from both the farming and processing sides of the industry, and feel that this has allowed us to come to a balanced view. We intend to continue to engage with industry bodies on these issues to come to the best solution.

1. The three organisations who did not submit an answer as such are excluded but their comments are quoted throughout the report. ↩

2. Yes, for those sheep sold directly to an abattoir on a deadweight basis. But the LAA do not believe that sheep sold liveweight also need to be classified as a carcase. ‎ ↩

3. This is the (S)EUROP grid, although the S grade is not widely used in England. ↩

4. The current throughputs used for pigs and cattle ensure we inspect abattoirs that account for at least 90% of slaughters. ↩

5. The Scottish consultation had suggested a throughput exemption of 500 sheep per week (as an annual average). ↩

6. If not consistent across all abattoirs agreed coefficients must be used. There are currently no accredited coefficients and AHDB do not apply coefficients to the prices they receive before they submit sheep prices to the Commission. ↩

7. It should be noted that the EU does to an extent provide this function through its expert groups on carcase classification for beef and pigs. ↩