Ministry of Agriculture, Fisheries and Food and the Intervention Board : BSE, the cost of a crisis report / by the Comptroller and Auditor General.

  • National Audit Office
Date:
1998
Catalogue details

Licence: Open Government Licence

Credit: Ministry of Agriculture, Fisheries and Food and the Intervention Board : BSE, the cost of a crisis report / by the Comptroller and Auditor General. Source: Wellcome Collection.

    39/130 (page 33)
    Allocation of work to renderers EJ In securing the participation of the rendering industry, where there was limited capacity, the Board was faced with an opposite situation to the slaughtering industry, where there was overcapacity. Initial discussions with rendering firms in the United Kingdom indicated that rendering capacity was sufficient to process 25,000 animals a week - only 10,000 more than the estimated weekly increase in animals awaiting slaughter and not enough to reduce quickly the backlog of between 100,000 and 300,000 animals. In this situation, the main objective of the Board was to make optimum use of the limited rendering capacity available in order to maximise throughput rather than to select which rendering facilities to use. Competitive tendering would not have assisted in achieving this objective. The allocation of work to the eleven rendering companies involved in the scheme was managed in England and Wales by the Board identifying available capacity each week and allocating this to participating abattoirs. Determination of rendering fees PExI At the outset of the Over Thirty Month scheme in April 1996, the Intervention Board negotiated with renderers an initial fee of £105 per tonne (£110 in Northern Ireland), subject to a similar determination of costs as in the case of abattoirs. The review, carried out by Coopers and Lybrand and submitted in September 1996, found that historic rendering costs (excluding raw material costs) ranged from £22.46 to £79.03 per tonne, with an average of £51.59 per tonne. In the light of these historic cost data, Coopers and Lybrand concluded that there was scope for a reduction in the fee. Coopers and Lybrand were not asked to take account of the cost of collecting carcass material from the abattoir; nor to estimate the additional costs of the extensive control and documentation requirements at the rendering plant including the need to divert non-scheme material to other plants; enhancement of effluent disposal facilities to cope with increased throughput; and the accelerated wear and tear on the plant as a result of the round the clock working required to overcome the backlog. The Coopers and Lybrand review covered only direct costs and therefore did not include any judgement of what might be a reasonable profit margin in the circumstances. EEF] However, with the results of the review, the Intervention Board negotiated a new agreement with the renderers in October 1996. The Board’s objective was to maximise throughput of Over Thirty Month material by providing the renderers with an incentive to: