Cost of levy to help fund TB control

Introduction

This page calculates what farmers will need to pay each year in order to fund a levy which covers a major share of the budget to control bovine TB in England. This budget includes costs due to testing, compensation, research & development, and administration. Another words it covers all costs associated with bovine TB control.

The reason why the cost of a major share is being calculated is because payment of such a share should give farmers priority when setting policy. Payment of a minor share will result in responsibility to set such policy remaining with government ministers who have a responsibility to allocate funds from the public purse.

Budgets

It would appear that total expenditure to control bovine TB in England for the financial years 2010/2011¹ and 2013/2014² was about £100 million pounds each year.

Number of cattle

The number of cattle and calves in England in 2013 was 5.4 million³.

The cost

In order to pay 55% of the current total cost of controlling TB in England each year, each farmer will need to pay about

£100,000,000 x 0.55 / 5,400,000 on each bovine each year.

This comes to about £10 on each bovine each year. This assumes no levy collection cost and no cost trimmings.

How does this compare with the cost of what farmers currently pay into the AHDB levy?

Cattle farmers (dairy, beef and lamb) currently pay about £22 million each year to the Agriculture and Horticulture Development Board (AHDB)⁴. The cost of collecting the levy ranges from about 0.5% to 2.5% of the amount collected⁵. Dairy producers currently pay 0.06p per litre of milk produced and beef farmers pay about £4 per head⁶.

What do other countries pay?

Regarding the AHDB levy, what does "per head" mean? According to Ref 7, New Zealand collects £6 on slaughtered adult cattle and about 0.5p per kg of milk solids. As such it would appear that the levy for New Zealand beef farmers is only applied to adult cattle when slaughtered. In Ireland too the levy is payable in respect of bovines slaughtered, and also bovines exported live⁹.

Collection of payment

One option for collection of payment would be to introduce an annual fee for cattle perhaps triggered by the holding of a current British Cattle Movement Service (BCMS) cattle passport.¹¹ This would not only cater for native cattle but also cattle imported from within and outside the European Union. Unless payment is tied in with the annual release of Single Farm Payment, the disadvantage with this method over collecting payment when cattle are slaughtered or exported is that a payment system will need to be introduced directly onto farmers where one did not already exist. The advantage is that payments will be closely aligned to TB risk incurred and as such the burden of payment will be more evenly spread. TB control costs per animal are currently (Jan 2015) significantly higher in England and Wales than they are in New Zealand and the Irish Republic.

References

1. Bovine TB: Expenditure for 2010/11 in England
2. Bovine TB Control Costs for 2013. DEFRA. RFI 6505. Dated: 09 May 2014.
3. Cattle and Calves dataset
4. AHDB Corporate Plan 2014/17. Agriculture and Horticulture Development Board. April 2014.
5. Effort targeted at controlling bovine TB and how such work is accountable to farmers. DairyCo, AHDB. Email dated: 30th July 2014.
6. AHDB Levy Rates 01/04/14 to 31/03/15
7. Defra drawing up plans for new national TB fund in England. Farmers Guardian. 31 January 2014. Alistair Driver.
8. OPINION: Anthony Gibson discusses how paying the price may not bring control. Western Morning News. Posted: February 05, 2014.
9. Responsibilty and Cost Sharing for Animal Health - Arrangements in certain other countries. DEFRA.
10. TB levy could top £60/head. Farmers Weekly. Friday 30 April 2004.
11. Cattle identification, registration and movement - Detailed guidance - GOV.UK. DEFRA. First published: 23 August 2012. Last updated: 12 November 2013.