Cattle Exports and Trade in Bovine Embryos: Funding Request from Economic Development Department

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A decision made 28 April 2014:

Decision reference: MD-TR-2014-0036
Decision Summary Title:	Central Contingency funding for financial Support for cattle exports and trade in bovine embryos		Date of Decision Summary:	24 April 2014
Decision Summary Author:	Head of Decision Support		Decision Summary: Public or Exempt?		Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:		N/A
Written Report Title:	Central Contingency funding for financial Support for cattle exports and trade in bovine embryos		Date of Written Report:		24 April 2014
Written Report Author:	Business Manager		Written Report : Public or Exempt?		Public
Subject: Contingency funding allocation from Central Contingency (One-Off) to the Economic Development Department (EDD) for Financial Support for cattle exports and trade in bovine embryos.
Decision(s): The Minister approved a budget transfer from Central Contingency (one-off) to the EDD revenue head of expenditure of £267,030 in 2014 and £71,515 in 2015 for Financial Support for cattle exports and trade in bovine embryos.
Reason(s) for Decision: Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources (T&R) is authorised to approve the transfer from contingency expenditure to heads of expenditure of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year. The Council of Ministers agreed this proposal and requested the Minister for Treasury and Resources to provide the allocation from Contingency.
Resource Implications: The EDD revenue head of expenditure will increase by £267,030 in 2014 and £71,515 in 2015 with Central Contingency (one-off) decreasing by an identical amount in the corresponding years. This decision does not change the total amount of expenditure approved by the States for 2014 and 2015. Funding for 2016 onwards will be considered in the next MTFP period 2016 to 2019.
Action required: Business Manager to inform the Head of Financial Planning, the Financial Performance Reporting Manager and the Finance Director, EDD that this decision has been approved.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Cattle Exports and Trade in Bovine Embryos: Funding Request from Economic Development Department

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Treasury & Resourses

Ministerial Decision Report

Central Contingency Funding for financial Support for cattle exports and trade in bovine embryos

Purpose of Report

To enable the Minister for Treasury and Resources (T&R) to approve a budget transfer from Central Contingency (one-off) to the EDD revenue head of expenditure of £267,030 in 2014 and £71,515 in 2015 for Financial Support for cattle exports and trade in bovine embryos.

Background

EU trade in live cattle is governed by Directive 64/432 adopted in 1964. The diseases for which there are specific requirements to be met for cattle trade are, Foot and Mouth (FMD), Rabies, Contagious Bovine Pleuro Pneumonia (CBPP) bovine tuberculosis (bTB), Brucellosis (B abortus), Enzootic Bovine Leucosis (EBL) and Anthrax.

Only cattle from officially bTB, Brucellosis and EBL free herds may be traded.

Trade in embryos is linked by virtue of the herd of origin having to be officially free of the three diseases. The third country certificates agreed between Jersey and importing countries include reference to this standard.

EU Official Freedom

There is a mechanism in the EU Directive to recognise official area disease freedom (distinct from herd freedom) when all herds have maintained officially free status for specified periods. There are other requirements to fulfil for trade e.g. concerning residency period on the holding, individual tests pre-export and identification.

Application for EU official Freedom

In 2011, it was agreed with the cattle industry that Jersey would submit evidence to the EU Commission, via the CVO UK, for zone or area (the terms are synonymous) freedom recognition, although non-compliance with Directive requirements was identified by the States Veterinary Officer (SVO) before submission.

The submission was considered in Defra and subsequently submitted to the EU Commission veterinary legal expert early in 2012, for an informal view. In the 1990s former MAFF, UK recognized the disease free status of the island herd and cattle were regularly exported to UK.

The Commission veterinary expert’s view is that official disease free status cannot be granted because the Directive testing regime has not been followed. Records show all herds attained official free status for both bTB and B abortus in 1984 and for EBL in 1991, however, subsequent testing did not follow the Directive and status was not maintained.

In October 2013 Jersey was also officially informed by DEFRA that the import conditions for cattle from Jersey had been amended requiring exporting herds in Jersey to demonstrate compliance with the EU Directive.

The current status is therefore that Jersey can only export live cattle, bovine embryos or semen after the necessary testing programme has been carried out in the Island. This situation could also have, it is perceived, a negative impact on diary product exports from Jersey and the reputation of the islands dairy industry.

Welfare Impact of Holding Cattle reared for Export

Cattle reared for export which cannot leave the island are surplus to requirements and if insufficient market for products from the live animals or for meat, is unavailable, there may be calls for a planned cull on welfare grounds with consequent reputational damage and potentially compensation.

EU milk quotas will be removed in 2015 and this coupled with the positive outlook for the world trade in dairy products suggests that the export trade in quality Jersey cattle will be very positive as the milk from high health status, high genetic merit Jersey heifers and cows acquired at a reasonable price will be very attractive to UK the UK dairy industry.

To promote the above trade Kivells and the RJA&HS are hosting a visit to Jersey of 26 members of the UK Jersey Breed Society Senior Youth Section to view herds in the Island over the weekend 12th April 2014.

Funding and payback

The following table illustrates the potential financial consequences to Jersey of not complying with the EU Directive.

Year	EU Compliance testing	Loss of the value of previous CHeCS testing costs	Loss cattle exports	Loss of bovine embryo exports	Loss of milk sales
2014	267,030	£149,253	120,000
2015	71,515	0	150,000		890,000
2016	71,515	0	200,000	75,000	890,000
2017	117,000	0	200,000	75,000	890,000
2018	15,557	0	200,000	75,000	890,000
Total	542,617	£149,253	870,000	225,000	3,560,000

Conclusion

The draft five year bovine disease testing and monitoring programme will cost approximately £542,000, with approximately 50% of which being spent in the first year (2014).

The dairy industry estimated potential losses over the course of the five year testing programme would amount to approximately £4.8m, with the loss of live cattle and embryo exports over this period alone being worth £1.1m.

Economic Development have stated that their budget is fully committed, including those funds from carry forwards and OFCOM income and have therefore requested an allocation from Central Contingency (one-off). This request was supported by the Council of Ministers at their meeting of 25 April 2014

4. Recommendation

The Minister is recommended to approve a budget transfer from Central Contingency (one-off) to the EDD revenue head of expenditure of £267,030 in 2014 and £71,515 in 2015 for Financial Support for cattle exports and trade in bovine embryos. Subsequent funding for 2016 onwards will be requested as a growth bid from the next Medium Term Financial Plan (MTFP) 2016 to 2019.

6. Reason for Decision

Article 17(2) of the Public Finances (Jersey) Law 2005 states that the Minister for Treasury and Resources (T&R) is authorised to approve the transfer from contingency expenditure to heads of expenditure of amounts not exceeding, in total, the amount available for contingency expenditure in a financial year.

7. Resource Implications

The EDD revenue head of expenditure will increase by £267,030 in 2014 and £71,515 in 2015 with Central Contingency (one-off) decreasing by an identical amount in the corresponding years. This decision does not change the total amount of expenditure approved by the States for 2014 and 2015.

Funding for 2016 onwards will be considered in the next MTFP period 2016 to 2019.

Report author : Business Manager	Document date : 24 April 2014
Quality Assurance / Review : Head of Decision Support	File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DSs, WRs and SDs\2014-0036 - xxx\WR - Central Contingency Funding for Prince's Trust.docx
MD sponsor : Treasurer of the States