Preparatory work to support the impact assessment on ... · E.3 The analysis suggests that the problems with the Regulation would best be remedied by improving the current system,

Preparatory work to support the impact assessment on reviewing the rules on the financing of official controls A final report to DG SANCO

20 September 2011

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Preparatory work to support the impact assessment on reviewing the rules on the financing of official controls - Final report

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Preparatory work to support the impact assessment on reviewing the rules on the financing of official controls A final report to DG SANCO

A report submitted by GHK

in association with

ADAS, UK

Date: 20 September

Job Number 30258474

Elta Smith

GHK 2nd Floor, Clerkenwell House 67 Clerkenwell Road London EC1R 5BL

T +44 (0)20 7611 1100 F +44 (0)20 3368 6960

www.ghkint.com


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Document control

Document Title Preparatory work to support the impact assessment on reviewing the rules on the

financing of official controls – final report

Job number 30258474

Prepared by Elta Smith, Eoghan Daly, Ali Erbilgic, Dick Groothuis, Alan Lyne

Checked by Andrew Jarvis

Date 20 September 2011


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Contents

Executive Summary ......................................................................................................... 1

1 Introduction ........................................................................................................ 7 1.1 Study work programme ............................................................................................................ 7 1.2 Methodology ............................................................................................................................. 7 1.3 Structure of the report .............................................................................................................. 8

2 Problem definition ............................................................................................ 10 2.1 Overview of the system for financing official controls ............................................................ 10 2.2 Articles 26-29 of the Regulation are designed to ensure consistency in the financing for

official controls across Member States and to ensure that adequate financing is available

for these controls .................................................................................................................... 13

3 Policy objectives and policy options ................................................................. 17 3.1 Policy objectives of the proposed revisions to Articles 26-29 of the Regulation are set at

three levels ............................................................................................................................. 17 3.2 Policy options have been identified to achieve the objectives of the proposed revisions to

Articles 26-29 of the Regulation ............................................................................................. 18 3.3 The options are assessed against a ‘do nothing’ reference scenario .................................... 21

4 Appraisal of the policy options ........................................................................ 27 4.1 Option evaluation criteria are set to assess opportunities to develop a clearer, simpler

and more transparent system ................................................................................................ 27 4.2 Option assessment ................................................................................................................ 30 4.3 From independent components to an integrated package – building a sustainable solution

with Option A .......................................................................................................................... 78 4.4 Monitoring .............................................................................................................................. 84

5 Conclusions ...................................................................................................... 87

Annex 1 Detailed assessment of options and their impacts ............................... 89

Annex 2 Member State case studies .................................................................. 188

Annex 3 Responses from EU level industry stakeholders ................................ 241

Annex 4 Administrative burdens ...................................................................... 249

Annex 5 Control activity and associated industry data .................................... 263

Annex 6 Reporting cost estimates regarding financing of official controls ..... 359

Annex 7 Participants in the consultation .......................................................... 363

Annex 8 References ........................................................................................... 369


1 GHK Consulting with ADAS

Executive Summary

E.2 This report examines the impacts of proposed changes to Regulation (EC) 882/2004 regarding the rules on financing official controls

This is the final report of a study to assess the impacts of potential revisions to Regulation (EC) 882/2004

regarding the rules on financing official controls. The report presents results of the research conducted and

impact analysis on options proposed by the Directorate-General for Health and Consumers (DG SANCO)

to change the current system in order to improve shortcomings identified in an evaluation of the Regulation

conducted in 2008. The study was led by GHK Consulting Ltd working with ADAS UK Ltd.

This study contributes to the preparation of an impact assessment of proposed revisions to Regulation

882/2004/EC regarding the rules on financing official controls. The objective of the study was to provide

the Commission with:

▪ Data that substantiate the problems in the current operation of the legislation with respect to

financing official controls; and

▪ An assessment of the impacts of policy options identified by the Commission to address

these problems.

The analysis demonstrates that there are options available that, when suitably packaged and with careful

implementation, could mobilise the resources needed to finance efficient controls at the same time as

fostering the development of a system that is fairer, more transparent, and does more to encourage

efficient management of risk by both food business operators and competent authorities.

E.1 The objectives of the existing legislation are not being met

The objective of Articles 26-29 of the Regulation is to ensure that the approach to financing official controls

is consistent across Member States (MS). The Regulation describes the general approach that should be

taken by MS, and the principles that should be adopted by the relevant authorities. Articles 26-29 of the

Regulation outline the provisions related to the financing of official controls. They specify that:

▪ Member States must ensure that adequate financial resources are made available for official

controls (Article 26);

▪ Where inspection fees are imposed on feed and food business operators, common principles

must be observed for fee-setting and the methods and data used for calculating the fees

must be published or otherwise made available to the public (Article 27); and

▪ When official controls reveal non-compliance with feed and food law, the extra costs that

result from more intensive controls must be borne by the feed and food business operator

concerned (Article 28).

Previous analysis of the implementation of Articles 26-29 has identified four main problems with the

legislation and its implementation: a lack of clarity and uniformity, a lack of transparency in the calculation

of costs by competent authorities, the fact that in most instances fees do not cover inspection costs, and a

lack of flexibility in the current legal framework. The reforms are intended to address those issues.

E.1.1 There is a lack of clarity and uniformity in the Regulation, which results in diverging interpretations in EU Member States

Text of the Regulation is imprecise in places. This has resulted in differences of interpretation by Member

States and led, in turn, to significantly different fee charging systems in which Member States calculate

fees on different bases. Fees that, according to EU law, are compulsory are not always collected. The level

of cost recovery achieved varies widely. Article 3 specifies criteria that Member States should follow in the

design of their official control fees systems. These are particularly relevant where Member States adapt

their controls systems in light of risk factors, the degree of businesses’ past compliance and own checks,

the presence of small businesses and issues related to the location of remote businesses. The way in

which these criteria are described in the legislation makes them difficult to implement.



E.1.2 There is a lack of transparency in the calculation of costs at Member State level

Many Member States calculate fees in breach of the terms set out in Article 27 of the Regulation. Many

also fail to provide the Commission with the calculation method they use as required by Article 27.12.

Where the calculation method has been made available it has often not been transparent: the cost

categories included and the Competent Authority that has incurred them are unclear, as are the time

periods to which the costs relate. Furthermore, under Annex VI of the Regulation fees can be used to

recover ‘staff salaries’, ‘staff costs’ and ‘laboratory analysis and sampling’. But the wording of the Annex is

insufficiently precise and has proven to be open to various interpretations – resulting in a lack of

consistency of approach across and even within Member States.

E.1.3 Fees do not cover inspection costs

The general principle of financing official controls is that funding should be made available to Competent

Authorities for control activities and that for some controls a fee must be levied. Where fees must be levied,

these should cover the costs of carrying out the specified control activities. In the majority of Member

States, however, the fees collected do not cover the inspection costs. Fees collected are often

incorporated into a Member State’s general revenues (either in entirety or in part), with no restrictions or

conditions regarding how they should be used subsequently.

E.2 The Commission has developed proposals for revision of the legislation that are intended to address these problems

The legislative revision is intended to develop a clearer, simpler and more transparent system, while taking

into account the principles of proportionality and subsidiarity and the need to avoid disturbing the internal

market. Embedded in the general objectives are principles of proportionality, subsidiarity and food

business operator responsibility that to be taken into account by Member States when considering the

scope and specification of fees. The specific objectives for the reforms are to ensure:

▪ Mobilisation of resources for efficiently delivered controls: ensuring that Member State official

bodies have adequate financial means to efficiently perform official controls to ensure food

safety;

▪ Simplification: providing a clearer and simpler legal framework;

▪ Comparability: avoiding disturbance of the internal market while accounting for different cost

structures across Member States;

▪ Streamlining: reducing the administrative burden on Member States and stakeholders as far

as possible; and

▪ Accountability: ensuring that stakeholders have access to information on how resources are

collected and used.

DG SANCO has identified three policy options, drawing on an evaluation conducted in 2008 and further

evidence collected from stakeholders and the Food and Veterinary Office. These options are:

▪ Option A: Improve the current system;

▪ Option B: Harmonise inspection fees; and

▪ Option C: Implement full subsidiarity of inspection fees.

Option A includes a number of distinct sub-options. In this analysis interactions between sub-options have

been considered with a view to the development of a coherent ‘package’ of complementary and mutually

reinforcing measures. Options have been assessed against a reference ‘do nothing’ scenario represented

by the Member States’ current arrangements for financing official controls.



E.3 The analysis suggests that the problems with the Regulation would best be remedied by improving the current system, rather than moving to a model based on full harmonisation or on full subsidiarity

Option A – improvement of the current system – is the most promising reform option. The various potential

components of the option have each been assessed on their own merits, and the way in which they might

best be ‘packaged’ also considered. The paragraphs below summarise that analysis.

E.3.1 Extend the scope of mandatory fees

This sub-option specifies an extension in the scope of the mandatory fees (i.e. increasing the number of

official controls for which Member States are obliged to collect fees). In simple terms, it shifts the financing

of controls from tax revenue to the businesses that are subject to controls but do not currently pay fees.

Managed appropriately and in combination with other sub-options, this sub-option could encourage

processes that improve Competent Authority efficiency and improve comparability, creating a level playing

field across the EU and the food chain. The measure would result in new costs for those sectors that are

not currently charged. It could also increase administrative costs to Competent Authorities in the additional

assessment and collection of fees (though such costs could themselves be covered by fees if the

legislation was appropriately worded). The controls for which fees are mandatory should be clearly stated.

Clearer definitions of cost should be considered in conjunction with potentially extending the scope of fees.

Some of the industry which pays fees today believes that extension of mandatory fees across the food

chain would reduce the cost of controls to those businesses.

E.3.2 Require full cost recovery

This sub-option would impose a legal requirement on Member States to achieve full cost recovery of the

(eligible) costs of official controls where mandatory fees apply. This is likely to have a positive impact on

mobilisation of resources to finance controls, and therefore meets the primary objective that this sub-option

is designed to achieve. Most Member States do not achieve full cost recovery at present, and a

requirement would enable Member States to put systems in place to do so. It would shift the financing

burden from general taxation to the food chain, increasing costs to FBOs. A year-by-year staged increase

in cost recovery rates (where these are currently less than 100%) would provide time for adjustment both

by FBOs and by Competent Authorities. If businesses are being asked to pay more it is important that the

system is seen to be fair, transparent and efficient therefore this option would best be combined with

complementary measures on transparency, governance and clear definition of eligible costs. The sub-

option that gives Member States the option to provide fee exemptions to micro-enterprises would also

enable Member States to mitigate impacts of full cost recovery on very small businesses where necessary.

E.3.3 Clearly define eligible costs

This sub-option would change Annex VI of the Regulation in order to define more clearly the costs that can

be recovered via fees linked to performing official controls. A precise definition of eligible costs is required.

Definitions that leave scope for differences of interpretation (e.g. on the recovery of overheads and

administrative costs) are unlikely to solve the present problems. An alternative list of eligible costs

proposed by the Commission provides a solid basis for discussion. It would be helpful to have clear rules

on recovery of competent authorities’ overheads and administrative costs, such as by setting a ceiling on

such recovery that is set at a given percentage of eligible staff costs.

E.3.4 Introduce time-based fees

This sub-option would require that time-based fees (rather than flat fees) are used for official controls that

require continuous or systematic presence of officials, and potentially for other controls too. Time-based

fees can be aligned to efficient, risk-based inspection strategies. A shift from flat fees to time-based fees

where continuous/systematic presence of officials is needed can affect the distribution of payments within

a sector. Larger operations with high throughput may pay less under a time-based fee regime while small

operations with low throughputs may find that charges increase. The potential risks to FBOs of time-based

fees – that is, of excess payments for inefficiently delivered inspections – can be mitigated by other sub-

options on governance, transparency, clear definition of eligible costs and the option for micro-enterprise

exemptions. The extension of time-based fees to controls where continuous presence is not required

warrants careful consideration on a case-by-case basis.



E.3.5 Require ring-fencing of resources

Under this sub-option the Regulation would introduce a requirement that fee revenue be used exclusively

to cover the costs of the official controls for which they are being charged. This sub-option could have

significant positive impacts on mobilisation of resources for official controls and result in improved

accountability and comparability of official controls systems.

E.3.6 Incorporate bonus-malus principles

This sub-option would introduce new wording into the Regulation that supports the incorporation of bonus-

malus principles in the fee system for official controls such that best performers are rewarded while the

worst performers are penalised. Bonus-malus principles are likely to have a positive impact on the

efficiency of official controls systems by encouraging risk-minimising behaviour. They can reinforce risk-

based controls strategies in which resources are used to target establishments that pose greater risks to

the food chain. It may be difficult to provide specific measures within the Regulation’s text on the financing

of official controls but Articles 26-29 should be screened to ensure that they do not inadvertently inhibit use

of such strategies and application of bonus-malus principles. The specification of minimum fees in EU

legislation, for instance, can inhibit the application of fee schedules that reward good performance with

lower fees.

E.3.7 Introduce transparency and reporting requirements

In this sub-option the Regulation would require Member States to provide information to the Commission

regarding the financial resources devoted to official controls each year, and to the public regarding fees,

modes of payment and other administrative procedures. Providing information to the public regarding fees

for official controls will have positive impacts on accountability and the additional administrative costs are

expected to be modest. A requirement to report to the Commission on resources devoted to official

controls will have similarly positive impacts on accountability, but comes with greater administrative cost

burdens to Competent Authorities, particularly in Member States with decentralised systems. The scale of

that burden will vary depending on exactly what data or indicators are required and on whether existing

reporting requirements are rationalised and clarified. Increased transparency will contribute to the creation

of a fairer, more efficient system and thus has significant indirect positive impacts for FBOs.

E.3.8 Provide for industry participation

In this sub-option the Regulation would provide FBOs with the right to participate in the process of setting

the structure of fee rates (though not in determining the fee levels). More participatory governance

arrangements should have positive impacts on accountability, giving industry a voice in the fee setting

process. Industry participation could provide opportunities for FBOs and Competent Authorities to work

together to pursue common objectives. Fee acceptance is also likely to be higher where industry can

participate in the process. Enhancing provisions for consultation, together with improved transparency,

ought to promote efficiency in the application of official controls and the emergence of a fairer system.

E.3.9 Introduce exemptions and reductions for micro-enterprises

Under this sub-option the Regulation would provide reduced fees or fee exemptions for micro-enterprises

(or provide an option for Member States to apply such exemptions). Where this sub-option is made a

requirement, it may reduce cost recovery in Member States, particularly for those with a large number of

such businesses. Respondents indicated a clear preference for having an option to provide such an

exemption or no provision of such an exemption, rather than a requirement to provide universal

exemptions or reductions. Providing Member States with the option to determine whether or not to provide

an exemption or reduction would allow this decision to be made on a case-by-case basis in each Member

State. This would also enable Member States to make judgements about how to mitigate impacts of other

sub-options (e.g. full cost recovery) on their smallest food businesses.

E.4 A policy ‘package’ built from the proposed sub- options under Option A has the potential to significantly reduce administrative burdens, improve cost recovery and create greater efficiencies in the system, if the potential for positive interactions between the sub-options is exploited

It is clear from the consultations and analysis that the sub-components of Option A need to be considered

as a ‘package’. The individual components deal with different elements of the ‘system’ and have a



cumulative and collective impact on the problems that the reforms are intended to address. The

interactions between sub-options are mostly positive but sometimes negative.

The core purpose of the reforms is to ensure that the official controls are properly resourced but also

efficiently delivered and that charges that are fair, transparent and based on principles common to all

within the EU. Several of the core sub-options would increase payments made by food business operators

for the financing of official controls, shifting the financial burden from pressurised public finances to the

food chain. In some cases this represents a shift in approach, moving away from controls being a free

public service. If the scope and level of fees for business is to increase then there needs to be counter-

veiling pressures on competent authorities to discharge their responsibilities efficiently, not least to reduce

the financial impact to FBOs. This can be done through, for instance, enhanced transparency, industry

participation, a clearer definition of what costs can be included. Risk-based control strategies that result in

efficient use of authorities’ resources and focus effort on FBOs which pose greater risk will also help

relieve burdens on well-run businesses. A coherent reform package can thus encourage a restructuring of

the cost base (where needed) at the same time as addressing fees and revenues.

E.5 Full harmonisation of inspection fees for official controls is unlikely to be feasible

There are valid questions about the feasibility of full harmonisation of inspection fees for official controls

throughout the EU, as proposed in Option B. Developing a cost model or set of pricing principles for each

official control that was seen by stakeholders to be fair and appropriate (given control costs) would be an

extremely challenging exercise. Due to the significant differences in the organisation of official controls

systems, variation in cost factors, etc. amongst Member States it would be impossible to identify a fee level

that would be appropriate for every country. Harmonised fees would also be politically difficult to

implement in Member States with highly decentralised decision making and governance structures. In

Member States with decentralised control systems, it may not be possible to specify the fee rates under

existing national legislative arrangements. There are cases where new national legislation would be

needed.

E5.1 Introduce unified fees for the EU-27

In this sub-option fees for the provision of controls are determined on a unified basis for the EU as a whole

(i.e. the same fee rates apply in each Member State). This is likely to have a negative impact on official

controls systems across the EU-27. Full harmonisation, applying a unified rate across the EU-27, is likely

to reduce the efficiency of the official control system. The distribution of impacts is affected by the level at

which harmonised fees are set. If fees were harmonised at the level of the highest prevailing fee in Europe

then aggregate payment by industry would rise substantially. If the fees were harmonised at the level of the

lowest prevailing fee then industry would, on balance, gain but there would be a corresponding deficit in

government income and in the overall cost-recovery rate. If fees were set in the middle of the current range

then there would be ‘winners’ and ‘losers’ on a state-by-state basis.

E.5.2 Adjust unified fees using a cost of living index

This sub-option is a modified version of the above, in which harmonised fees are adjusted for each

Member State using a cost of living index. Indexation of rates according to the cost of living would mitigate

some of the impacts of harmonisation on a unified basis but the process of setting an appropriate

harmonised fee would remain burdensome and is very unlikely to result in a schedule of fees that reflects

the actual costs of inspecting individual FBOs or even whole sectors at a Member State level. Although the

sub-option could result in positive impacts on comparability and streamlining, these are likely to be

outweighed by the significant negative impacts on efficiency and also of fairness and adherence to

principles of cost recovery.

E.5.3 Introduce EU harmonised fees only for certain import controls

Under this sub-option the Regulation would require that certain import controls are subject to harmonised

fees, particularly those controls where there is a higher degree of harmonisation (e.g. BIPS and DPEs). A

single, uniform price would apply to any EU border point. As with the other sub-options for harmonised

fees, harmonisation of fees for import controls is likely to have a negative impact on the official controls

systems across the EU-27. Development of a cost model or set of pricing principles for import controls

would be an extremely challenging exercise, and due to variance in the current controls systems it would

be impossible to identify a fee level that would be appropriate for every country.



E.6 Repealing Articles 26-29 of the Regulation and moving to full subsidiarity is expected to increase problems associated with lack of coherence and consistency in the application of fees for official controls

Option C considers the possibility that Member States are obliged to allocate ‘sufficient resources’ to

official controls but that each Member State will be free to determine the approach they follow. Option C

requires repeal of Articles 26-29 in Regulation 882/2004/EC. This option is likely to have a negative impact

on the coherence and consistency of the financing of official controls system in the EU. It is likely to widen

disparities between Member States. Some Competent Authorities may be pressured to lower fees in order

to maintain industry’s competitive advantage which would constrain the resources available for proper

delivery of official controls. Other CAs may increase fees and/or expand fee collection for control activities

in order to achieve full cost recovery.

E.7 Monitoring indicators should be collected in order to assess the effectiveness and impact of the legislative revision

In order to assess whether the legislative revision is achieving its objectives, and whether there are any

unexpected impacts, the European Commission will need to collect, review and publish monitoring

indicators. It will also be necessary to undertake a more detailed evaluation exercise once sufficient time

has elapsed, in order to thoroughly review the performance of the revised legislation.

Two sets of indicators can be considered. Macro indicators linked to strategic objectives can be used to

track progress of the system as a whole, using aggregate data reported by Member States. Alongside that

a set of micro indicators can be used to identify impacts on specific groups of actors within the system,

particularly food business operators and competent authorities. These impacts could be identified and

tracked through following a cohort over time and/or through periodic sampling of the population of FBOs

and authorities.

Work by the Commission, previous evaluations, and this study have all demonstrated the challenges of

mapping the situation in Member States in a context where arrangements for the financing of controls vary

widely, interpretation of the legislation varies and there has not always been timely compliance with

European legislation. In Member States, the central Competent Authorities themselves often have limited

visibility of the situation in different parts of their own countries due to the devolution of powers of control to

local and regional authorities and limited pass-through of information back up to the centre.

Changes in the financing of official controls could be tracked more easily if two changes are made. First,

the annual reports produced by Member States under Regulation 882/2004/EC need to be improved in

terms of their consistency, coverage and clarity. There is a case for reviewing the existing system of

reporting under the Regulation so that the performance of the overall system can be monitored more

effectively and efficiently against a set of key indicators without imposing undue burden on Member States.

Second, adoption of sub-option A7 on publication of cost data (and/or the second component of sub-option

A7 on reporting to the Commission) would ensure that information is made available to track changes over

time.



1 Introduction

This is the final report of a study to assess the impacts of potential revisions to Regulation (EC)

882/2004 regarding the rules on financing official controls. The study was commissioned by DG

SANCO from GHK Consulting Ltd, working in association with ADAS, UK Ltd. The contract was

awarded following a tender process through Lot 3 of DG SANCO’s Food Chain framework

contract for evaluation and impact assessment services.

This is a final report of the study findings and follows an inception report submitted in February

2011, a progress report submitted in April 2011, and a draft final report submitted in May 2011.

The final report presents the results of the research and impact analysis.

1.1 Study work programme

The work programme and methodology for the study were set out in the proposal submitted by

GHK in October 2010 in response to the terms of reference issued by DG SANCO. Figure 1.1

illustrates the work programme followed for the study. A detailed description of the main stages of

the study is set out below.

Figure 1.1 Overview of the study work programme

Options analysis

•Purpose: Identify key issues and conduct data classification, review and mapping exercise of existing data.

Presentation of findings

•Purpose: Conduct gap analysis based on existing data, case studies in six Member States, and questionnaires and interviews with EU level stakeholders and CAs and national-level industry associations in the case study countries.

Definition

•Purpose: Draw together research phase results into a set of option appraisals. Examine extent to which options respond to stated study objectives. Profile the scale and distribution of impacts. Conduct a comparative assessment for Options A, B and C

Data collection

•Purpose: Reporting, which brings together the study results into a presentation and assessment of findings for the European Commission

Inception report

Draft final report

Final report

PROJECT WORK PROGRAMME DELIVERABLES

Progress report

1.2 Methodology

This section provides an overview of the method adopted for the study.

Stage 1 Problem Definition

The first stage of the study involved an inception phase and development of the problem

definition. Inception and problem definition phases took place over six weeks in January and

February 2010. The purpose of this stage of the study was to collect information on the nature of

the problem facing the legislative framework for the financing of official controls, and to determine

the available data for the study. Section 2 of this report provides the problem definition.



Stage 2 Data Collection – Stakeholder Consultation and Data Analysis

The purpose of this stage was to collect quantitative and qualitative data on the current situation

in EU Member States and on the impacts of each of the policy options, and to review issues and

challenges with the implementation of the proposals. It involved the following activities:

▪ First, the study team developed a detailed mapping of the options to determine what

information would be required to inform the study. DG SANCO had already defined the

options at a fairly detailed level prior to study initiation. Based on further discussion with the

study Steering Group, the options were further refined. The set of options assessed for this

study is described in Section 3.2.

▪ The second stage of the study also involved assessing the available data to determine what

information might be used to support the empirical analysis.

▪ The consultation component involved several strands and included surveys and interviews of

Competent Authorities and industry stakeholders. The consultation stage of the study ran

from February to April 2011. The consultation exercise involved:

– A vertical component, to obtain in-depth information on impacts on individual

Member States, comprising six case studies across Belgium, Finland, France, the

Netherlands, Poland and the United Kingdom. The case studies involved consultation

(interviews and surveys) with Competent Authorities and industry representatives across

the food chain from businesses relevant to the official controls within the scope of this

study. The results of the case studies are presented in Annex 2; and

– A horizontal component, to obtain additional information at EU level and across

additional Member States where possible, through EU-industry stakeholder interviews

and surveys, and surveys returned by Competent Authorities in non-case study countries.

The EU-level stakeholder results are presented in Annex 3.

▪ The option assessment was conducted in relation to a baseline or ‘do-nothing’ scenario,

using the available baseline information provided by DG SANCO, as well as information

provided by the Regulation 882/2004 Annual Reports, FVO country reports, EUROSTAT data

and information provided by CAs and industry stakeholders (evidence from which is provided

in Annex 4).

Stage 3 Options Analysis

Drawing on the information collected through the consultation exercise, and referencing this to

the baseline scenario, the study team carried out an appraisal of the impacts of each of the policy

options. Section 4 sets out an option-by-option summary of the impact assessment results, with

supporting material provided in Annex 1.

Stage 4 Presentation of findings

The final stage commenced in May 2011 with the preparation of a Draft Final Report presenting

the study findings. Submission of the Draft Final Report was followed by a Steering Group

meeting to discuss the results, which was held on 10 August. Comments received have been

incorporated into this revised Final Report. The Final Report was submitted on 19 September

2011, incorporating further comments from the Steering Group.

1.3 Structure of the report

The remainder of this report is structured as follows:

▪ Section 2 sets out the problem definition for the study;

▪ Section 3 details the policy objectives for the legislative revision of Regulation (EC) 882/2004

and the proposed policy options and sub-options;

▪ Section 4 presents the impact assessment results for each of the policy options and sub-

options; and



▪ Section 5 provides conclusions based on the impact assessment of the options and sub-

options.

Supporting material is provided in the Annexes to the report:

▪ Annex 1 provides the detailed assessment of the policy options (as summarised in section 4).

It in turn draws on blocks of evidence that are presented in further annexes;

▪ Annex 2 details the case study consultations and analysis carried out for Belgium, Finland,

France, the Netherlands, Poland, and the United Kingdom;

▪ Annex 3 summarises and analyses the responses received from EU level stakeholders

(mostly industry associations);

▪ Annex 4 provides an assessment of the administrative burdens associated with the options

for amending Regulation 882/2004 with respect to fees charged for official controls; and

▪ Annex 5 provides:

– Data on Competent Authority controls performed in EU MS as reported in the study

survey (section A5.1, page 272);

– Business statistics for selected sectors most affected by official control activity –

meat, fish, dairy and feed (section A5.2, page 282);

– Production and trade statistics (section A5.3, page 310);

– DG SANCO’s validated database on the current situation vis-à-vis official controls

(section A5.4, page 316);

– Data on competent authority staff numbers (section A5.5, page 343); and

– Information on control activity from Regulation 882/2004 Annual Reports as supplied

to the European Commission for Finland, the Netherlands, Poland and the UK (section

A5.6, page 346).

The options assessment also draws on a costing exercise covering the supply of additional

financial data to the Commission, described in Annex 6. Annex 7 lists the participants in the

consultations carried out for the study while Annex 8 lists supplementary references.

Figure 1.2 shows the overall report structure schematically.

Figure 1.2 Schematic representation of the structure of the report

Section 4Appraisal of the policy

options

Annex 3Responses from EU level stakeholders

Annex 2Member State Case studies

Annex 1 Detailed assessment of options

and their impacts

Annex 6Reporting costs estimates

regarding financing of

official controls

Annex 5Costing exercise

on reporting

Annex 6 Participants in the consultations

Section 5Conclusions

Section 3Policy objectives and

policy options

Section 2Problem definition

Annex 7 References

Section 1Introduction

Annex 4Responses from EU

level industry

stakeholders

Annex 5Control activity and associated industry

data



2 Problem definition

This section of the report analyses the problems with the operation of Articles 26-29 of

Regulation 882/2004 that the options developed by the European Commission are intended to

address. A background discussion on the organisation and operation of official controls is not

included here as it has been discussed at some length in other documents, including the final

report to the Study on fees or charges collected by the Member States to cover the costs

occasioned by official controls prepared by the Food Chain Evaluation Consortium for DG

SANCO in 2009. This section focuses on the specific issue of fees for controls.

2.1 Overview of the system for financing official controls

2.1.1 The scope of official controls extends to food business operators across the food chain

Official controls are the inspections and other control activities prescribed under EU law on food

and feed, plant health, animal health and animal welfare. A suite of regulations have been

designed to implement the EU’s General Food Law (Regulation 178/2002/EC) to ensure food

safety across the EU Member States (MS).

Regulations 852/2004/EC, 853/2004/EC and 854/2004/EC are particularly relevant as they

describe what the official controls relate to and what the controls themselves entail. These

regulations specify a range of official controls and together comprise the ‘hygiene package’:

▪ Regulation 852/2004/EC applies to all food business operators (FBOs). It is a general

description of the requirements of food producers handling foodstuffs. In the context of this

regulation, a foodstuff is anything that has been harvested or slaughtered and is intended for

human consumption.

▪ Regulation 853/2004/EC is similar to Regulation 852/2004/EC, but has specific provisions for

foodstuffs of animal origin.

▪ Regulation 854/2004/EC describes what Competent Authorities (CAs) should inspect and

check to ensure appropriate food hygiene standards are observed on foodstuffs of animal

origin intended for human consumption.

Additionally, Regulation 183/2005 lays down requirements for feed hygiene. Regulation

2076/2005 lays down transitional arrangements for the implementation of Regulations 853/2004,

854/2004 and 882/2004.

The hygiene package is supplemented by other EU legislation:

▪ Directive 89/662/EEC aims to harmonise the internal market with respect to veterinary checks

on intra-EU trade.

▪ Directive 90/425/EC lays down rules relating to veterinary and zoo technical checks on live

animals and products of animal origin for intra-EU trade.

▪ Directive 93/119/EEC relates to animal welfare and sets out measures on the protection of

animals at the time of slaughter or killing.

▪ Directive 96/23/EC sets out measures to monitor certain substances and residues for live

animals and products of animal origin.

▪ Directive 97/78/EC sets out the principles governing the organisation of veterinary checks on

products entering the EU from third countries.

▪ Directive 91/496/EEC sets out principles governing the organisation of veterinary checks on

animals entering the EU from third countries

Regulation 882/2004/EC sets out the requirements for official controls organised and undertaken

by Competent Authorities in EU Member States for this body of legislation with respect to

monitoring and verifying compliance with, and enforcing EU law in these areas.



2.1.2 Articles 26-29 of Regulation 882/2004/EC aim to ensure consistency in the fee charging systems for official controls in EU Member States

Articles 26-29 of Regulation 882/2004/EC describe the fee charging obligations for official

controls with respect to food and feed law, and animal health and welfare rules. The inspection

activities covered by Articles 26-29 of the Regulation include:

▪ Controls applied to goods imported to the EU within certain product sectors (such as

inspections to verify the health of live animals brought into the EU and inspections relating to

residues in animal products);

▪ Controls applied to establishments based in the EU, including those relating to:

– The movement of relevant products within the EU (such as inspections and controls

relating to law governing the transportation of animals); and

– The proper operation of establishments within individual Member States (such as

inspections at slaughterhouses, food hygiene inspections in food service and food retail

establishments).

In particular, these articles of the Regulation:

▪ Do not apply to official controls on organisms harmful to plants and plant products – these are

covered by Council Directive 2000/29/EC.

▪ Do apply to other aspects of the plant health sector, including EU inspections within the

Member States and third countries.

Regulation 882/2004/EC describes how CAs should conduct the inspections and checks required

under EU law.

2.1.2.1 The Regulation obliges Member States to collect fees for certain official controls

Article 27 of the Regulation states that Member States may collect fees or charges to cover the

costs occasioned by official controls and, further, that for certain controls Member States shall

ensure the collection of such a fee. This gives rise to the terms ‘voluntary fee’ and ‘mandatory

fee’ which commonly appear in discussions of this area of EU law.

Under Article 27, Member States are obliged to collect fees (commonly known as ‘mandatory

fees’) on activities defined in:

▪ Annex IV (section A), that is:

– Activities covered by Directives 89/662/EEC1, 90/425/EEC

2, 93/119/EEC

3 and

96/23/EC4 for which Member States are currently collecting fees pursuant to Directive

85/73/EEC5; and

– The approval of feed establishments.

▪ Annex V (section A), that is, activities covered by Directives 97/78/EC6 and 91/496/EEC

7 for

which Member States are currently collecting fees pursuant to Directive 85/73/EEC.

1 Council Directive 89/662/EEC of 11 December 1989 concerning veterinary checks in intra-Community trade with a

view to the completion of the internal market 2 Council Directive 90/425/EEC of 26 June 1990 concerning veterinary and zootechnical checks applicable in intra-

Community trade in certain live animals and products with a view to the completion of the internal market 3 Council Directive 93/119/EEC of 22 December 1993 on the protection of animals at the time of slaughter or killing

4 Council Directive 96/23/EC of 29 April 1996 on measures to monitor certain substances and residues thereof in live

animals and animal products and repealing Directives 85/358/EEC and 86/469EEC and Decisions 89/187/EEC and 91/664/EEC 5 Council Directive 85/73/EEC of 29 January 1985 on the financing of health inspections and controls of fresh meat

and poultry meat



The use of the terms ‘mandatory’ and ‘voluntary’ (or ‘non-mandatory’) thus relates to whether

Member States are obliged to collect a fee.

Table 2.1 lists controls within the scope of Regulation 854/2004/EC and Regulation 882/2004/EC

for which a fee is mandatory under Regulation 882/2004/EC.

Table 2.1 Official controls within the scope of Regulation 854/2004 and Regulation 882/2004/EC for which a fee is mandatory

Regulation Control

854/2004

Approval of establishments that produce products of animal origin for human consumption

Audit of fresh meat establishments (domestic ungulates, poultry and lagomorphs, farmed and

wild gamed)

Inspection of fresh meat establishments (including ante- and post-mortem inspection and animal

welfare, but not SRM controls and TSE testing)

Inspection of fresh meat establishments: SRM controls and TSE testing

Checks at milk production holdings

Checks on production and marketing of fishery products and aquaculture products

Checks at other food establishments approved in accordance with Regulation 853/2004

882/2004

Checks on animal health at holdings of origin for live animals

Monitoring residues of veterinary medicines and other substances

Approval of feed establishments

Approval of animal by-products establishments

Checks at animal by-product establishments

Checks on imported live animals

Checks on imported feed and food of animal origin8

Checks on imported feed and food of non-animal origin

Checks on live animals and goods transiting the community

2.1.2.2 Articles 26-29 of the Regulation set upper and lower boundaries on the level of mandatory fees, albeit with some scope for fees to fall below the lower limit

Under the Regulation, Member States are free to set the appropriate level of fees or charges but

only within certain common boundaries, that is:

▪ Fees should not be higher than the actual cost of the official controls; and

▪ Minimum levels for mandatory fees are defined in Annexes IV and V.

Minimum fees are defined on a throughput basis – for example, per type of animal or bird for

slaughter and per tonne of meat entering the plant for cutting operations.

Until 1 January 2008 Member States were allowed to use the charge rates defined in Directive

85/73/EEC (which previously defined charges for meat hygiene controls) as a minimum level for

fees.

6 Council Directive 97/78/EC of 18 December 1997 laying down the principles governing the organisation of veterinary

checks on products entering the Community from third countries 7 Council Directive 91/496/EEC of 15 July 1991 laying down the principles governing the organisation of veterinary

checks on animals entering the Community from third countries and amending Directives 89/662/EEC, 90/425/EEC and 90/675/EEC 8 A fee for control activity on imported feed and food of animal origin is required only with respect to Article 15.5

commodities.



2.2 Articles 26-29 of the Regulation are designed to ensure consistency in the financing for official controls across Member States and to ensure that adequate financing is available for these controls

The objective of Articles 26-29 of the Regulation is to ensure that the approach to financing official controls is consistent across Member States. The Regulation describes the general approach that should be taken by Member States, and the principles that should be adopted by relevant authorities in MS.

Articles 26-29 of the Regulation outline the provisions related to the financing of official controls. The main principles of these provisions can be summarised as:

▪ Member States must ensure that adequate financial resources are made available for official

controls (Article 26);

▪ Where inspection fees are imposed on feed and food business operators, common principles

must be observed for fee-setting and the methods and data used for calculating the fees

must be published or otherwise made available to the public (Article 27); and


result from more intensive controls must be borne by the feed and food business operator

concerned (Article28).

Articles 26-29 also reflect a set of principles that should be taken into account by MS when

considering the scope and specification of fees, which are identified in the FCEC study (2009):

▪ Proportionality: Article 5 of the Treaty indicates that EU Regulation should not go beyond

what is necessary in order to achieve the objectives pursued9;

▪ Subsidiarity: Article 5 of the Treaty also indicates that where objectives cannot be

sufficiently achieved by the Member States and would therefore, by reason of their

complexity, trans-border character and, with regard to feed and food imports, international

character, be better achieved at EU level, the EU may adopt measures10

; and

▪ FBO responsibility: EU food and feed law is based on the principle that FBOs at all stages

within the business under their control are responsible for ensuring product safety11

.

There is substantive evidence12

from stakeholders, however, that these objectives are not being

met due to differences in the interpretation and application of the Regulation across MS.

2.2.1 There are three main reasons why the objectives related to the fee setting elements of the Regulation are not being met

Failure to meet the objectives set out in Articles 26-29 of the Regulation can be described in

terms of four issues: lack of clarity and uniformity, lack of transparency in calculating costs, fees

do not cover inspection costs, and there is a lack of flexibility in the current legal framework.

2.2.1.1 Issue 1: There is a lack of clarity and uniformity in the Regulation, which results in diverging interpretations in EU MS

The Regulation is vague, and therefore open to diverging interpretation by Member States. This

has led to significantly different fee charging systems, with MS generally calculating and charging

fees at different levels and on different bases. Compulsory fees are not always collected. There is

9 Preamble (48) of Regulation 882/2004/EC; preamble (66) of Regulation 178/2002/EC

10 Preamble (48) of Regulation 882/2004/EC

11 Preamble (4) of Regulation 882/2004/EC; Article 17.1 of Regulation 178/2002/EC

12 The European Commission launched an external evaluation of these rules which concluded in February 2009. The

Commission reported on this to the European Parliament and Council with Report COM/2009/334/Final in July 2009 (in line with Article 65 of the Regulation).



significant variation in the level of fees charged. Several MS do not collect fees for non-

compulsory control activities whilst others do.

Section A of Annex IV (concerning domestic production) and Annex V (imports) of the Regulation

specify the types of goods, establishments and activities for which fees should be charged for

official controls. These fees are termed ‘compulsory’ within the meaning of Article 27.2. Not all

MS collect the required level of compulsory fees. The Regulation also includes provisions for

collection of fees for official control activities outside of those identified in Section A of Annex IV

and Section A of Annex V, but collection of fees for these activities is ‘non-compulsory’ (Article

27.1). Several MS collect fees for such official control activities (i.e. non-compulsory fees) while

others do not collect any fees beyond those they are obliged to collect by the Regulation (under

Article 27.2). While the legislation envisaged that this may occur, in practice the variance in

controls for which fees are collected creates a lack of uniformity which makes it difficult to

compare systems across the EU and a lack of clarity as to why collection of fees for some control

activities is mandatory and for others it is not.

Article 28 provides for the collection of fees on expenses arising from additional official controls

beyond ‘routine controls’. The interpretation of ‘routine’ differs between MS; as a result, some

MS are not collecting fees where these are supposed to be mandatory.

Article 27.7 specifies that where several official controls are conducted at the same establishment

they should be charged as one control. There is evidence of double charging, however: fees are

being collected more than once at the same establishment at different points along the supply

chain for what should effectively be considered the same control. This is contrary to Article 27.7

of the Regulation. The FCEC evaluation found evidence of doubling charging, for example, in the

meat sector where some industry respondents indicated that they were charged fees for the

same activity both at slaughter and meat cutting points. Additionally, there is evidence that

charges are being levied more than once when a good is traded across MS borders. For

example, the FCEC evaluation found that dairy products brought into one MS from another are

being re-examined for residues, despite coming from an approved EU-factory in a MS that

applies a residue plan.

Fees are charged according to two main principles: fees must not be below minimum levels and should not be higher than the actual cost of the controls. In practice, these principles are often not applied.

Article 27 describes the basic principles of how fees for official controls should be charged: first,

fees must be at least the minimum specified in Annexes IV and V, and second, they should not

be more than the actual costs of the controls. The actual fee system employed is left to the

discretion of the MS.

The FCEC study13

found that the provisions of Article 27 are perceived by Competent Authorities

and other stakeholders as unclear and vague. Article 27 is subsequently interpreted in various

and often quite different ways by MS, leading to multiple scenarios for the fee rates used.

Most Member States use a combination of flat rates and/ or minimum rates

A combination of flat and minimum rates is often used. Under the Regulation, flat rates may be

used where the rate represents the actual cost of the control activity. Baseline data for 2010

provided by DG SANCO indicate that 17 out of 27 MS use a mix of flat and minimum rates (Table

2.2). One MS (Malta) uses minimum rates for Annex IV and V activities and does not collect fees

outside of these areas. Seven MS use flat rates for all activities for which they collect fees, in

accordance with paragraphs 1 or 2 of Article 27.

In many cases where a combination of flat and minimum fees are used, minimum fees are

applied to control activities for which a fee is mandatory, while flat fees are calculated for control

13 Ibid.



activities for which a fee is non-mandatory. Other MS collect minimum fees for a more limited set

of controls or in special circumstances. For example, the Netherlands only charges the minimum

fee for import controls and a flat fee for all other controls, while in Finland municipalities may

choose to charge smaller establishments either the minimum fee or a charge based on costs.

In some cases, the application of flat or minimum rates is not consistent with Article 27.4(a). This

Article stipulates that fees should not be higher than the costs borne by the CA (in accordance

with the list of eligible costs in Annex VI) and that the fee may be based either on CA costs or on

the minimum fees set out in section B of Annexes IV and V. At least two Member States charge

the minimum fee for controls where the fee is greater than actual costs (e.g. DE and the UK).

Some Member States apply fee rates below the minimum rates set out in Annexes IV and V of Regulation 882/2004

Five MS apply fees that are below the minimum rates specified in Annexes IV and V. Although

Article 27.6 makes provision for charging a reduced fee in certain limited circumstances, in

practice the lower fees are not necessarily always applied in accordance with this provision. Two

Member States charge less than the minimum fee as the fee calculation indicates that the control

costs are lower than the minimum rates set out in the legislation (i.e. LT and NL). One MS

indicates that lower fees are charged for import controls in accordance with the exceptions set

out in the legislation (HU). In two MS, it is unclear why rates are charged below the minimum (i.e.

FR and DE (Bavaria)).

Many Member States use flat rates based on throughput or time basis

Where flat rates are used, the rates are often calculated on a throughput basis (animal or

tonnage basis in accordance with Articles 26 – 29), or based on the actual time and cost of the

staff performing the official controls. These are often complex calculations that differ widely

across MS. In some MS, an hourly fee is set for certain controls (e.g. DE and IT). Several MS use

a flat minimum rate supplemented by a time based fee.

Table 2.2 Fee rates used for official controls across the EU-27

Member

State

Flat rates

only

Minimum

rates only

Flat + min

rates

Reduction below

minimum rates

Flat rates on throughput

or time basis

AT

BE

BG

CY

CZ

DE

DK

EE

ES

FI

FR

GR

HU

IE

IT

LT

LU*

LV



Member

State

Flat rates

only

Minimum

rates only

Flat + min

rates

Reduction below

minimum rates

Flat rates on throughput

or time basis

MT

NL

PT

PL

RO

SE

SI

SK

UK

TOTAL 7 1 17 5 17

Source: DG SANCO Baseline data (2010)

*Luxembourg – no data available

Finally, Article 3 specifies criteria that Member States should follow in the design of their official

control fees systems. These are particularly relevant where Member States adapt their controls

systems in light of risk factors, the degree of businesses’ past compliance and own checks, the

presence of small businesses and issues related to the location of remote businesses. The way

in which these criteria are described in the legislation makes them difficult to implement.

2.2.1.2 Issue 2: There is a lack of transparency in the calculation of costs at MS level

The calculation of fees is governed by Article 27. Many MS calculate fees in breach of the

provisions of the Regulation. The calculation method used to determine the appropriate time

based fee should be transparent and communicated to the Commission (as per Article 27.12).

Numerous MS fail to provide the calculation method used to the Commission. Where the

calculation method has been made available it has often not been transparent; the cost

categories included and the CA that has incurred them are unclear, as are the time periods to

which the costs relate.

The three cost categories that can be included in calculating fees are specified in Annex VI as:

staff salaries, staff costs (including facilities, tools, equipment, training, travel, and associated

costs) and laboratory analysis and sampling. Member States perceive these categories to be

vague. As a result, there is considerable uncertainty as to how cost calculations are derived.

2.2.1.3 Issue 3: Fees do not cover inspection costs

The general principle of financing official controls is that funding should be made available to CAs

for control activities and that for some controls a fee must be levied. Where fees must be levied,

these should cover the costs of carrying out the specified control activities. In the majority of MS,

however, the fees collected do not cover the inspection costs14

. Fees collected are often

incorporated into a Member State’s general budget (either in entirety or in part), with no

restrictions or conditions regarding how they should be used subsequently.

14 Ibid.



3 Policy objectives and policy options

This section of the report outlines the general objectives of the proposed revisions to Articles 26-

29 of Regulation 882/2004/EC on the financing of official controls, as well as the specific and

operational objectives that contribute towards meeting the general objectives. This section also

summarises the policy options for the proposed revisions to the Regulation, and how they relate

to achieving the policy objectives.

3.1 Policy objectives of the proposed revisions to Articles 26-29 of the Regulation are set at three levels

European Commission guidelines recommend developing objectives at three levels (all three

levels need not always be considered):

▪ General objectives: the Treaty-based goals towards which the policy aims to contribute;

▪ Specific objectives: aims specific to the policy intervention under consideration. These should

contribute directly to meeting the general objectives of the legislative revision; and

▪ Operational objectives: the deliverables (outputs) of the legislative revision, which contribute

to meeting the specific objectives of the revisions.

3.1.1 General objectives are set to achieve the primary goal of ensuring that Member States have adequate financial resources to carry out official controls

The general objectives of revisions to Articles 26-29 of the Regulation are set to achieve one

main goal: ensuring that Member States have adequate financial resources to carry out

official controls. These include:

▪ Developing a clearer, simpler and more transparent system;

▪ Taking into account the principles of proportionality and subsidiarity; and

▪ Taking into account the need to avoid disturbing the internal market.

3.1.2 Five specific objectives have been set to achieve the general objectives

The specific objectives aim to contribute directly to achieving the general objectives:

▪ Mobilisation of resources for efficiently delivered controls: ensuring that Member State

official bodies have adequate financial means to efficiently perform official controls to ensure

food safety;

▪ Simplification: providing a clearer and simpler legal framework;

▪ Comparability: avoiding disturbance of the internal market while accounting for different cost

structures across Member States;

▪ Streamlining: reducing the administrative burden on Member States and stakeholders as far

as possible; and


collected and used.

3.1.3 Operational objectives describe the anticipated outputs from legislative changes; these are developed based on the results from this study

The operational objectives for revisions to the legislation describe the outputs that are anticipated

once the changes have come into force. Operational objectives are considered in Section 4.4 as

part of the outline of a monitoring and evaluation framework for the legislative revision.



3.2 Policy options have been identified to achieve the objectives of the proposed revisions to Articles 26-29 of the Regulation

The European Commission developed a set of policy options for revision to Articles 26-29 of the

Regulation in order to improve financing for official controls. These were defined and updated

over the period December 2009 to September 2010. These options were developed based on the

results of an evaluation in 200815

and further evidence collected from stakeholders and the Food

and Veterinary Office (FVO), DG SANCO. They have been further refined during the inception

phase of the study and again following submission of the interim report. The options are:

▪ Option A: Improve the current system;

▪ Option B: Harmonise inspection fees; and

▪ Option C: Full subsidiarity of inspection fees.

Each of these options is mutually exclusive and must be considered in isolation. Option A

includes a series of sub-options which must be considered together as a potential ‘package’ of

options. In this case, the sub-options are not mutually exclusive and may be considered as

potentially co-existing in any revisions to Articles 26-29 of Regulation (EC) 882/2004.

Nonetheless, there are interactions between many of the sub-options which must be weighed in

order to develop an optimised ‘package’ within Option A. These interactions are discussed in

Section 4.3.

Table 3.1 lists the three options and the sub-options to Options A and B assessed in this study.

The options and sub-options are described in the remainder of this section.

Table 3.3 The study considers three main options and a series of sub-options, each of which contributes to addressing the specific policy objectives

Ref Policy option & sub-option

A

Improve the current system

A1 Extend the scope of mandatory fees

A2 Require full cost recovery

A3 Clearly define eligible costs

A4 Introduce time-based fees

A5 Require ring-fencing of resources

A6 Incorporate bonus-malus principles

A7 Introduce transparency and reporting requirements

A8 Provide for industry participation

A9 Introduce exemptions and reductions for micro-enterprises

B Full harmonisation

B1 Introduce unified fees for the EU-27

B2 Adjust unified fees using a cost of living index

B3 Introduce EU harmonised fees only for certain import controls

C Repeal Articles 26-29 of the Regulation (full subsidiarity)

15 Report COM/2009/334/Final (July 2009).



3.2.2 Option A - Improve the current system

Option A considers a set of potential modifications to the current system through amendments to

Articles 26-29 of the Regulation. Each sub-option could be considered a ‘stand-alone’ possibility,

although in some cases, respondents indicated that they may be necessarily linked.

3.2.2.4 Sub-option A1 – Extend the scope of mandatory fees

Sub-option A1 considers extending the scope of mandatory fees to cover some or all of the

controls for which fees are currently ‘non-mandatory’ (i.e. increasing the number of official

controls for which Member States are obliged to collect fees).

The option as specified does not indicate which controls would be made mandatory. In its more

robust form this sub-option could, in principle, require that fees are applied for all controls across

the food chain – ensuring equal treatment of all businesses involved, from inputs to production

(such as feed) to retail and food service. In a more moderate form it could cover those controls

carried out on operators subject to the provisions of Regulations (EC) 852/2004 and 183/2005 for

which fees are currently not mandatory.

3.2.2.5 Sub-option A2 – Require full cost recovery

Sub-option A2 considers whether the Regulation should impose a legal requirement on Member

States to achieve full cost recovery of the (eligible) costs of official controls.

3.2.2.6 Sub-option A3 – Clearly define eligible costs

Sub-option A3 considers changes to the Regulation that more clearly define the costs that can be

recovered from fees to those directly linked to performing official controls. Currently, Annex VI

sets out a definition of eligible costs as follows:

▪ Salaries of the staff involved in official controls;

▪ Staff costs related to control activities, including facilities, tools, equipment, training, travel,

and associated costs; and

▪ Laboratory sampling and analysis costs.

As reported in the previous evaluation, this specification has been criticised for lack of clarity and

there have been differences of interpretation.

The terms of reference for this study specified a suggested alternative schedule of eligible costs.

This list is intended to define costs more clearly and so address the problems that there have

been in the interpretation of the current Annex VI text.

The suggested eligible cost items are:

▪ Salaries for inspectors, including social contributions;

▪ Tools and instruments to be used during inspections;

▪ Out of office hours activities;

▪ Travelling linked to official controls;

▪ Training of inspectors;

▪ Quota of administrative costs linked to the inspection activities (including planning); and

▪ Sampling and analysis costs (when needed).

This sub-option considers whether, and how:

▪ Each of the above costs set out in the revised list should remain;

▪ The revised list is sufficiently clear to avoid different interpretations;

▪ Other costs should be added and/or certain items should be deleted from the list;

▪ The ‘quota of administrative costs’ should be more clearly specified (if it remains in the list);

and

▪ The ‘quota of administrative costs’ adequately cover overheads related to inspection

activities.



3.2.2.7 Sub-option A4 – Introduce time-based fees

Sub-option A4 considers the impact of requiring time-based fees in the Regulation for official

controls that require continuous and systematic presence of officials.

Consideration of this sub-option includes stakeholder views on where time-based fees might be

applied beyond those controls that require continuous or systematic presence of officials.

3.2.2.8 Sub-option A5 – Require ring-fencing of resources

Sub-option A5 considers whether the Regulation should introduce a requirement that fee revenue

be used exclusively to cover the costs of the official controls for which they are being charged

(i.e. directly with a budget line or indirectly through the general budget).

3.2.2.9 Sub-option A6 – Incorporate bonus-malus principles

Sub-option A6 considers whether Articles 26-29 of the Regulation should be changed to

incorporate bonus-malus principles in the fee system for official controls such that best

performers are rewarded while the worst performers are penalised. This sub-option considers:

▪ How the Regulation can promote bonus-malus principles (and not inhibit their application);

▪ Which controls are most suitable for fees that incorporate bonus-malus principles; and

▪ How the overall performance of Option A can be improved by incorporating bonus-malus

principles.

Bonus-malus systems incorporated into fee schedules are a separate matter from the legal

sanctions (including fines) imposed by authorities on businesses in cases of non-compliance.

Fines and other sanctions are outside the scope of this study.

3.2.2.10 Sub-option A7 – Introduce transparency and reporting requirements

Sub-option A7 considers whether Articles 26-29 of the Regulation should be changed to require

Member States to provide information:

▪ To the Commission regarding the financial resources devoted to official controls each year

(through the annual reports required under Regulation 882/2004/EC); and

▪ To the public regarding fees (e.g. the implementing rules, fee review process, and the

calculation method), modes of payment and other administrative procedures.

3.2.2.11 Sub-option A8 – Provide for industry participation

Sub-option A8 considers changes to Articles 26-29 of the Regulation that would provide FBOs

with the right to participate in the process of setting the structure of fee rates. This sub-option

considers:

▪ Whether and how FBOs already participate in this process in each Member State;

▪ Advantages and disadvantages of amending the Regulation to provide each FBO with the

right to participate; and

▪ Stakeholders’ views of how such an amendment should be specified so as to maximise its

positive impacts and minimise negative impacts.

3.2.2.12 Sub-option A9 – Introduce exemptions and reductions for micro-enterprises

Sub-option A9 considers whether the Regulation should be changed to provide reduced fees or

fee exemptions for micro-enterprises. The sub-option does not state whether the exemption

would be mandatory or an option that Member States could choose to exercise. The (potential)

exemption relates only to the levying of fees, and not the imposition of controls.

3.2.3 Option B – Fully harmonise inspection fees for official controls

Option B considers the possibility to fully harmonise inspection fees for official controls

throughout the EU. Option B is equivalent to the ‘full harmonisation’ option considered in the

evaluation study carried out for DG SANCO by the Food Chain Evaluation Consortium (FCEC).



Under this scenario all MS would pay the same fees (fixed rates) for the same activities (i.e. full

harmonisation). There are three sub-options within this option.

3.2.3.13 Sub-option B1: Introduce unified fees for the EU-27

Fees for the provision of controls are determined on a unified basis for the EU as a whole (i.e. the

same fee rates apply in each Member State).

3.2.3.14 Sub-option B2: Adjust unified fees using a cost of living index

A modified version of this option in which harmonised fees are adjusted for each Member State

using a cost of living index (e.g. based on Purchasing Power Parity or other price indexes).

3.2.3.15 Sub-option B3: Introduce EU harmonised fees only for certain import controls

This sub-option for import controls considers whether the Regulation should require that certain

import controls are subject to harmonised fees, particularly those controls where there is a higher

degree of harmonisation (e.g. BIPS and DPEs). A single, uniform price would apply to any EU

border point.

3.2.4 Option C – Repeal Articles 26-29 of the Regulation (full subsidiarity)

Option C considers the possibility that Member States are obliged to allocate ‘sufficient

resources’ to official controls but that each Member State will be free to determine the approach

they follow. Option C requires repeal of Articles 26-29 in Regulation 882/2004/EC. This would

mean deregulation of fee requirements for official control activity and is broadly equivalent to the

‘full subsidiarity’ option in the 2009 FCEC study.

3.3 The options are assessed against a ‘do nothing’ reference scenario

The options listed above are assessed against a reference scenario which in this instance

equates to a ‘do nothing option’ – that is, in relation to the arrangements currently in place for

financing official controls in the various Member States without reforming existing EU law. The

‘do nothing’ scenario can be defined with reference to the current situation in individual Member

States and expected changes over time, based on currently available information and present

expectations. The main sources of information available to assist with defining the current

situation are:

▪ Baseline data provided by DG SANCO which was collected from the following sources:

– The previous evaluation of the official control systems across EU Member States

(FCEC 2008);

– Competent Authority websites; and

– FVO inspections.

▪ Member State’s annual reports as prepared under Regulation 882/2004/EC.

▪ Data provided by DG SANCO on stakeholder views of the official controls systems.

▪ Data from Eurostat related to the NACE codes for labour costs, production, trade, SMEs and

micro enterprises.16

▪ Information obtained through the stakeholder consultation as part of this study.

The problem definition in the previous chapter outlined various aspects of the current situation.

The remainder of this section supplements that by highlighting further issues that are relevant to

the definition of the baseline scenario and to the appraisal of the proposed changes to the

Regulation. Annex 5 provides more data on the current operation of controls, the industries to

which controls are applied and relevant patterns of trade.

16 10.01 – processing and preserving of meat and production of meat products; 10.02 – processing and preserving of

fish, crustaceans and molluscs; 10.05 – manufacture of dairy products; and 10.09 – manufacture of prepared animal feeds.



3.3.1 The organisation of official control systems ranges from the highly centralised to heavily decentralised, depending on the Member State

One of the most significant challenges faced in assessing the impacts of reforms to the current

legislation is that although the legislation prescribes a common approach, there is no standard

EU model for the delivery of official control services. Moreover, the organisation of Competent

Authorities responsible for implementing and administering official controls across the MS is

considerably more complex than the Regulation assumes. CAs are responsible for the overall

supervision and operations of the official controls system in each Member State (Article 2.417

).

The Competent Authorities are structured and organised differently in each MS, both in terms of

the administrative structure for fee collection and execution of the controls18

. Depending on the

Member State, CAs involved in the system of official controls may span national, regional and

district / municipal level authorities, and may also include external delegated bodies.

The Regulation includes provisions to ensure ‘efficient and effective coordination’ between such

organisations, but in practice these provisions are not always utilised. When several CAs or

delegated bodies are involved, the central CA does not always have complete information on the

actual operation of the system. Such differences pose significant difficulties when attempting to

calculate and apply fee rates.

The official control systems in Member States range from those with a high level of centralisation,

to those that are highly decentralised. Table 3.2 categorises each Member State in terms of how

centralised its official system is, using the following four categories:

▪ Highly centralised (HC): countries in which control responsibilities remain largely at national

level and the distribution of responsibilities for control activity is contained within a small

number of implementing bodies.

▪ Centralised (C): countries in which control responsibilities remain largely at national level, but

control activities themselves are delegated to regional offices and/or control responsibilities

are spread across a larger number of government departments.

▪ Decentralised (DC): countries in which control activity is delegated to regional or

municipal/local offices but control responsibilities are coordinated through a small number of

government departments.

▪ Highly decentralised (HDC): countries in which control responsibilities are spread across

national and regional offices or devolved administrations and control activities are

coordinated at municipal / local levels.

There is a relatively even split of countries between centralised (13) and decentralised systems

(11), with some further differences between each category (Table 3.2).

Table 3.4 Governance of official control systems in Member States

Member State Highly

centralised

Centralised Decentralised Highly

decentralised

Austria*

Belgium

Bulgaria

Cyprus

Czech Republic*

Denmark

17 Article 2.4: ‘Competent authority’ means the central authority of a Member State competent for the organisation of

official controls or any other authority to which that competence has been conferred. 18

FCEC (2009)



Member State Highly

centralised

Centralised Decentralised Highly

decentralised

Estonia

Finland

France

Germany**

Greece

Hungary*

Ireland*

Italy

Latvia**

Lithuania

Luxembourg

Malta

Netherlands*

Poland

Portugal*

Romania**

Slovakia**

Slovenia

Spain

Sweden

United Kingdom

Total 5 8 3 8

Source: FVO country profiles

* Based on FVO country profile prior to 2008. **Supplementary research.

The level of centralisation influences how straightforward it is for central competent authorities to

implement options and changes set down in European law. In some Member States, such as

Finland, the central CAs have no direct jurisdiction over the municipal CAs responsible for

conducting the control activities and setting and collecting fees. OC systems which are highly

centralised, such as the system in France, could find it easier to implement changes to fee levels

without additional national measures.

3.3.2 The competent authorities delivering official controls also vary widely in scale

The composition of staff in CAs responsible for executing controls differs widely between MS,

ranging from higher-cost direct payroll public service individuals to lower cost / freelance

contractual arrangements with appropriately qualified persons. According to the most recent FVO

country profiles, the number of CA full-time equivalents (FTE) employed in Member States’

official control systems ranges between approximately 55 (Luxembourg) and 21,200 (Italy). The

number of CA FTEs depends on the size of the sector(s) to which the controls relate. As with the



structure of control activity in different MS described in Section 3.3.1 this variation can pose

significant difficulties when attempting to calculate and apply fee rates19

.

Table 3.5 Staff resources of official control systems in Member States

Member State Staff resources

(FTE)

Austria* 2,500

Belgium 2,100

Bulgaria 3,300

Cyprus 600

Czech Republic* 3,700

Denmark 5,500

Estonia 1,400

Finland 1,300

France 8,200

Germany** -

Greece 4,700

Hungary* 3,200

Ireland* 2,300

Italy 21,100

Latvia** -

Lithuania 2,100

Luxembourg 55

Malta 133

Netherlands* 3,100

Poland 12,100 (and 5,200 private veterinary practitioners)

Portugal* 1,342

Romania** -

Slovakia** -

Slovenia 580

Spain 7,330

Sweden 3,400

United Kingdom 8,800

Source: FVO country profiles

* Based on FVO country profile prior to 2008.

**No country profile available.

19 The FVO country profiles present data on staff resources at varying levels of specificity. Some profiles provide a

detailed breakdown of staff resources by municipality, while others provide figures on a national basis only. Where figures are provided on a sub-national basis, it is often unclear if they relate to staff dedicated to official controls only. To avoid double counting, and ensure comparability between Member States, only national-level data on staff resources for official control systems is included in Table 3.5.



3.3.3 The proportion of SMEs in affected sectors varies across the Member States, but remains high

The proportion of SMEs in the sectors most affected by fees for official controls varies from 21

per cent in Slovakia, to 75 per cent in Ireland (Table 3.4). The impact of changes in fee

arrangements on SMEs is an important consideration; small businesses may be less able to

absorb or pass on increases in cost triggered by new or higher official control fees.

Table 3.6 Proportion of SMEs in the four sectors most affected by fees for official controls20

Member State Proportion of SMEs (%)

Austria 66

Belgium 65

Bulgaria 40

Cyprus 62

Czech Republic No information available

Denmark No information available

Estonia 65

Finland 56

France No information available

Germany 75

Greece No information available

Hungary No information available

Ireland 75

Italy 53

Latvia 69

Lithuania 42

Luxembourg 46

Malta No information available

Netherlands No information available

Poland 60

Portugal 41

Romania 38

Slovakia 21

Slovenia 48

Spain 44

Sweden 64

United Kingdom 57

Eurostat 2008

20 The four sectors are: processing and preserving of meat and production of meat products; processing and

preserving of fish, crustaceans and molluscs; manufacture of dairy products; and manufacture of prepared animal feeds.



3.3.4 Hard data on control costs and fees remain elusive

Successive studies have found that data on the control costs and fees collected for control

activities are difficult to obtain. Publication of fee rates is not a universal practice (see section

3.2.2.7). The survey for this study requested data on the costs (to competent authorities) of

carrying out control activity, but only two Member States provided complete information (the UK

and Bulgaria), and four provided information on import control activity (Ireland, Lithuania, Spain,

and Sweden) (see Annex 1,Table A5.2). Only one of these is a case study country from whom

this level of detail was requested. The problems of lack of transparency and inconsistency that

are cause for reform of the present arrangements also pose barriers to that reform by making it

difficult to assemble a clear picture of the baseline situation.

Data have been assembled where they are available. An assessment has been made of the

baseline situation and impacts of the proposed options based on extrapolations from the limited

information provided. Lack of data posed challenges to option assessment, constraining the

depth of analysis possible on each option. Section 4.4 proposes opportunities for data collection

that would assist future monitoring and evaluation of the official controls system based on the

challenges encountered in this study.



4 Appraisal of the policy options

This section of the report summarises the impact assessment results for each policy option and

sub-option described in section 3. Detailed assessments of each option and sub-option are

provided in Annex 1 and should be read in conjunction with this section of the report.

4.1 Option evaluation criteria are set to assess opportunities to develop a clearer, simpler and more transparent system

At a strategic level, the proposals aim to develop a clearer, simpler and more transparent system,

taking into account in particular the principles of proportionality and subsidiarity and the need to

avoid internal market disturbance. They must ensure the fulfilment of the principle set in Article

26 of Regulation 882/2004/EC that Member States shall have adequate financial means to

provide the necessary staff and other resources for official controls.

The frame of reference is provided by:

▪ The baseline intervention logic for EU intervention in the governance of fees for official

controls as defined by Articles 26-29 of Regulation 882/2004/EC (Figure 4.1); and

▪ The logic framework for the current proposals for reform to Articles 26-29 of Regulation

882/2004/EC (Figure 4.2);

The options will need to be individually and collectively evaluated, with reference to the ‘do

nothing’ scenario, on the basis of the following criteria:

▪ Efficiency: ensuring that Member States’ official bodies have adequate financial means for

the efficient performance of official controls to ensure food safety;

▪ Simplification: creating a clearer and simpler legal framework;

▪ Comparability: avoiding the disturbance of the internal market, while taking into account

different MS cost structures;

▪ Streamlining: reducing the administrative burden on MS and on stakeholders as much as

possible; and


collected and used.

The options are also assessed with respect to their:

▪ Feasibility: possibility to implement the option and extent of the required changed; and

▪ Wider impacts: wider consequences of implementing the option, including sector-specific,

food chain and extra-EU effects.

Finally, the assessment considers the overall contribution of the option to meeting the specific

objectives, and correcting a known deficiency in the official controls system.

The impact assessment for each policy option is based on:

▪ Evidence collected through stakeholder consultation at EU level;

▪ Six case studies of official control systems in EU Member States (summarised in Annex 2);

and

▪ Other data gathered on the market and current operation of official controls.

The evidence collected includes a range of qualitative and quantitative information.


28

Figure 4.3 Intervention logic for proposed reforms to Articles 26-29 of Regulation 882/2004/EC

Inputs• Skilled staff

• Financial management and reporting systems• Billing infrastructure

• Time management and recording systems

• Time involved in fee setting, consultations/appeals/etc

Specific Objectives• Ensure a harmonised approach with regard to official controls

consistent with:o The principle of proportionality

o The principle of subsidiarity

o The principle of FBO responsibility• Authorities achieve cost recovery on efficiently delivered

service

Global Objectives• Ensure a high level of protection of human life and health and

the protection of consumers' interests, including fair practices in food trade, taking account of, where appropriate, the

protection of animal health and welfare, and the environment

• Achieve the free movement in the Community of food and feed manufactured or marketed according to the general principles

and requirements of EU law• Promote better regulation and maintain / support

competitiveness.

Activities• Application of charges & collection of

revenues• Time/cost accounting & bill generation

processes

• Financial reporting• Rate-setting activities (including

consultation and appeal processes)• Budgeting

Outputs• Cost recovery on specified official control

activities• Fees levied on FBOs which match the cost

of inspection

OutcomesAdequately resourced official controls

delivered as part of an professional, efficient, risk-sensitive system for monitoring

compliance & managing

ProblemInterpretation & application of current law

ProblemScope & basis of charging fees lack

Harmonisation

Transparency Coherence

Impacts• Improved protection of human health

• Fairer food trade practices• Greater protection of animal health and

welfare

• Improved market functioning

Problem:Lack of full cost recovery in

most Member States

A well-functioning system, based on

implementation of the proposed

changes will have

positive outcomes (and thus, impacts)

that correspond with the objectives of the

legislation

ProblemResourcing of controls is

inadequate (?)


29


30

Figure 4.4 Logic framework for the proposed reforms to Articles 26-29 of Regulation 882/2004/EC

Option C – Improve current system

Improve

market operation &

outcomes by

addressing problems in

interpretation & application

of current law

Lack of full

cost recovery

for MS

Lack of

harmonisation

Dysfunction in

EU internal

market

Lack of

coherence

Lack of

transparency

Time-based

fees for

continuous

activity

(based on

one of):

1.MS costs

2.EU-wide

hourly rate

3.Detailed cost

calculation

Extended

scope for

mandatory

fees

Full cost

recovery

requirement

Internal market

functions, but

MS cost

structures

considered

Clearer &

simpler legal

f ramework

MS adequately

f inance

controls

Lower MS &

stakeholder

administrative

burdens

Greater

efficiency

Streamlined

processes

Comparability

Simplified

system

Greater

accountability

Rationale Problem areas Interventions OutputsIntermediate

Outcomes Outcomes

Ensure

stakeholder

access to

information

Flat-rate fees

where time-

based fees are

inappropriate

Eligible costs

clearly def ined This study

assesses the potential

effects of the

proposed interventions

and the extent to which they

will deliver the

anticipated outcomes

Exemptions

for micro-

enterprises

Transparency

& reporting

obligations

Industry

participation &

right of appeal Bonus-malus

system

Ring-fencing

Option B – Full subsidiarity

Option A – Full harmonisation


GHK Consulting with ADAS 31

4.2 Option assessment

4.2.1 Option A - Improve the current system

Option A considers a set of potential modifications to the current system through

amendments to Articles 26-29 of the Regulation. It consists of a number of sub-options.

These are first assessed individually and then (in Section 4.3) a commentary is provided on

linkages between the sub-options and the development of a robust package.

4.2.1.16 Sub-option A1 – Extend the scope of mandatory fees

Summary of the option:

The impacts of extending the scope of mandatory fees are expected to be positive for CAs overall and negative for FBOs not currently charged. This sub-option could increase the resources available for financing official controls and improve comparability, creating a level playing field across the EU and across sectors of the food chain. This option could see some increased costs to CAs where they must assess and collect a fee for these controls, and new costs for those business sectors that are not currently subject to fees. Clearer definitions of eligible costs should be considered in conjunction with extending the scope of fees.

4.2.1.17 Sub-option A1 - Specification

Sub-option A1 considers an extension in the scope of the mandatory fees (i.e. increasing the

number of official controls for which Member States are obliged to collect fees). Specifically,

Article 27 of Regulation 882/2004/EC is changed so that controls are transferred from the

‘non-mandatory’ category to the ‘mandatory’ category.

The option as specified in the terms of reference did not indicate which controls would be

made mandatory. In principle, mandatory charging could be extended to all controls covered

by Regulation 882/2004/EC and thus the full breadth of the food chain. In this study,

however, an ‘intermediate’ option was considered whereby mandatory fees are extended to

controls carried out on operators subject to the provisions of Regulations (EC) 852/2004 and

183/2005. That is, the hypothetical scenario considers extending the scope to control areas

that would have a wide impact across different parts of the food chain, and for a large

number of FBOs, but does not encompass the full range of controls for which charges could

be levied.

Survey respondents were asked to consider the advantages and disadvantages of changing

the status of particular controls from ‘non-mandatory’ to ‘mandatory’, list those controls that

might be considered for reclassification, and indicate the potential impacts of this change

from a long and short term perspective.

4.2.1.18 Sub-option A1 – Evidence and analysis

Respondent scores and comments

Overall, Competent Authorities believe that extending the scope of mandatory fees would

have a positive impact on official controls systems in Member States. In particular, extending

the scope would improve efficiency and comparability of systems. Industry believes that

extending the scope of fees would have a negative impact, and have particular concerns

about increasing costs, though industry also sees opportunities for positive impacts

(specifically, for improved comparability of systems) as well.

Some CA and industry respondents indicated that fees should be mandatory across all

sectors, without discrimination. This is an issue of fairness – the principle of equal treatment

of all sectors in the food chain with regard to charging, rather than the costs of official

controls being recovered only from particular sectors. Some CAs are concerned, however,

that extending the scope of fees could create additional administrative burdens.



When asked to indicate fees that are currently non-mandatory, but should become

mandatory, respondents suggested the following categories:

▪ Certification,

▪ Audits,

▪ Feed-stuffs of non-animal origin,

▪ Fees for border veterinary controls,

▪ Commercial quality control of agricultural and food products in production, marketing and

import stage, and

▪ Supervision activities across a range of sectors (detailed in Annex A1.1.1, page 101).

Case study assessment

Extending the scope of mandatory fees will impact each of the case study countries

differently, according to the current set of non-mandatory fees charged and the new

mandatory fees included in any revision to Regulation 882/2004/EC.

▪ Fees in Belgium cover the entire food chain. Any extension of scope from non-

mandatory to mandatory is likely to have little, if any, impact on the fee control system in

this country. The same is likely to be true in Poland, where most control activities across

the food chain are charged a fee.

▪ Fees are charged on some controls for which fees are non-mandatory in Finland,

France, and the Netherlands. Impacts in these countries will depend on the specific

control activities that become mandatory.

▪ Fees in the United Kingdom cover mostly the mandatory controls, with some exceptions.

Few areas are included from the non-mandatory category. There are likely to be impacts

in the UK where an extension of scope is implemented, but this depends on the control

activities covered.

Other evidence

The scope of fees collected under official controls systems in different Member States varies

widely across the EU-27, as described in Table A1.5, page 108. The range of fees collected

can be broken down into four categories:

▪ Only mandatory fees are collected.

▪ Only mandatory fees, with some exceptions (some mandatory fees are not collected).

▪ Mandatory fees and some activities outside them are collected.

▪ Fees are collected across the food chain.

Many Member States collect fees for some controls for which fees are not mandatory. Table

4.1 indicates those areas for which CAs in the case study countries collect fees. The degree

of impact of an extension of scope within the four categories described above will depend to

a great extent on the specific controls chosen to be ‘mandatory’ under any revisions to the

Regulation. A hypothetical extension to controls carried out on operators subject to the

provisions of Regulations (EC) 852/2004 and 183/2005 is discussed below.





Table 4.7 Fees charged for official controls - CA survey responses

PL UK BE FI FR NL

1 Approval of establishments that produce products of animal origin for human consumption

2 Audit of fresh meat establishments

3 Inspection of fresh meat establishments (ante- and post-mortem inspections)

4 Inspection of fresh meat establishments: SRM controls and TSE testing

5 Checks at milk production holdings

6 Checks on production and marketing of fishery products and aquaculture products

7 Checks at other food establishments approved in accordance with Regulation 853/2004

8 Checks on hygiene of foodstuffs at primary production holdings

9 Checks on hygiene of foodstuffs at food establishments other than establishments approved

in accordance with Regulation 853/2004

10 Checks on animal health at holdings of origin for live animals

11 Monitoring residues of veterinary medicines and other substances

12 Approval of feed establishments

13 Checks at feed establishments

14 Approval of animal by-products establishments

15 Checks at animal by-product establishments

16 Checks on imported live animals

17 Checks on imported feed and food of animal origin

18 Checks on imported feed and food of non-animal origin

19 Checks on live animals and goods transiting the community

20 Welfare checks on live animals exiting the EU

21 Checks on live animals at assembly centres

22 Organic production

23 Labels (e.g. geographical indications)

24 Animal by-product checks at food establishments



25 Export certification (living animals, semen, ova, hatching eggs)

26 Export animal products

27 Re-inspection after incidental inspection



If the scope of mandatory fees was extended to all controls carried out on operators subject

to the provisions of Regulations (EC) 852/2004 and 183/2005. This would reach up the food

chain to primary producers (i.e. those not already covered by a mandatory fee such as fish

and aquaculture production) and down the food chain to food retail and food service

establishments. Overall, the number of enterprises affected in each Member State would

increase. Table 4.2, Table 4.3 and Table 4.4 summarise the potential impact of extending

the scope of mandatory fees (based on Eurostat data21

).

Table 4.2 considers the potential impact of extending the scope of mandatory fees to include

enterprises related to Regulations 882 852 / 2004 and 183/2005, excluding primary holdings.

The assessment is based on the proportion of enterprises that could potentially be affected

by an extension of existing mandatory fees, excluding primary producers. It includes food

processors such as companies manufacturing animal feed, and food establishments, such

as caterers and restaurants. Impacts in each Member State will depend on the number of

controls and their related costs included in any extension, in addition to the number of

enterprises affected.

Extending the scope of mandatory fees to other enterprises in the food chain (excluding

primary producers) could have a significant impact in the UK and Spain, potentially affecting

169,000 (33 per cent) and 442,000 (20 per cent) of enterprises, respectively. Moderate

impacts are expected in 13 Member States where 10 – 19 per cent of enterprises could be

affected. For example, in Portugal the fee for certification could be extended to other FBOs,

such as food retailers. Low impacts are expected in eight Member States where between 4

– 9 per cent of enterprises could be affected. This could mean, for example, that in Poland

the fee to register a FBO could be extended to primary producers or food retailers.

Table 4.3 examines the impacts of extending the scope of mandatory fees to include primary

producers only (i.e. excluding other enterprises such as feed businesses and food retailers).

It suggests significant impacts for primary producers in six Member States. 69 - 94 per cent

of relevant enterprises could be affected. This is due to the relative importance of agriculture

in these countries. Moderate impacts are expected in 13 Member States (35 - 67 per cent of

total enterprises), and low impacts in six Member States (8 - 31 per cent of total enterprises).

21 The Eurostat (2008) data include the number of enterprises, by Member State, for the following sectors:

1.Processing and preserving of fruit and vegetables; 2. Manufacture of vegetable and animal oils and fats;

3.Manufacture of grain mill products, starches and starch products; 4.Manufacture of beverages; 5.Wholesale of

agricultural raw materials and live animals; 6. Wholesale of food, beverages and tobacco; 7.Retail sale of food,

beverages and tobacco in specialised stores; 8.Restaurants and mobile food service activities; 9. Event catering

and other food service activities; 10.Beverage serving activities; 11.All holdings with arable land; 12.All holdings

with permanent grassland and meadow; 13.All holdings growing permanent crops; 14.All holdings rearing

livestock; and, 15.All holdings rearing other livestock. It is likely that this data is indicative of the number of

enterprises only. There may be double counting of enterprises, and / or relevant enterprises may not appear in

the data set. In addition, there may be other sectors which could be subject to official controls following an

extension of their scope. Data for sectors 1 – 10 above was not available for the Czech Republic, France or

Malta. Data for sectors 11 – 15 were not available for Germany, Estonia or Sweden.



Table 4.8 Potential impact of extending the scope of mandatory fees to include enterprises related to Regulations 852 /2004 and 183/2005, excluding primary holdings*

U

K

ES

CY

SE

PT

BE

AT

IE

BG

LU

IT

De

NL

DK

HU

SL

RO

PL

FI

LV

SK

EE

LT

CZ

FR

GR

MT

High impact

Medium impact

Low impact

No data available

High impact

(>20% enterprises)

Medium impact

(10% - 19% enterprises)

Low impact


Eurostat 2008

*Total number of enterprises in the following sectors: Processing and preserving of fruit and vegetables; Manufacture of vegetable and animal oils and fats; Manufacture of grain mill products, starches and starch products; Manufacture of prepared animal feeds; Manufacture of beverages; Wholesale of agricultural raw materials and live animals; Wholesale of food, beverages and tobacco; Retail sale of food, beverages and tobacco in specialised stores; Restaurants and mobile food service activities; Event catering and other food service activities; and, Beverage serving activities.

Table 4.9 Potential impact of extending the scope of mandatory fees to include primary holdings (excluding other potentially relevant enterprises) related to Regulations 852 /2004 and 183/2005*

RO

LT

BG

LV

PL

SK

SL

HU

CY

IE

PT

AT

EE

IT

ES

SE

SE

UK

FI

FR

DK

NL

BE

LU

CZ

GR

MT

High impact

Medium impact

Low impact

No data available

High impact

(>67% enterprises)

Medium impact


Low impact


Eurostat 2008

*Primary holdings include: All holdings with arable land; all holdings growing permanent crops; all holdings rearing livestock; and, all holdings rearing other livestock.



Table 4.10 Potential impact of extending the scope of mandatory fees to include enterprises and primary holdings related to Regulations 852/2004 and 183/2005*

RO

LT

BG

PL

LV

SK

SL

HU

CY

IE

UK

PT

AT

ES

SE

IT

EE

FI

DK

DE

BE

FR

NL

LU

CZ

GR

MT

High impact

Medium impact

Low impact

No data available

High impact

(>67% enterprises)

Medium impact


Low impact


Eurostat 2008

*Total number of enterprises in the following sectors: Processing and preserving of fruit and vegetables; Manufacture of vegetable and animal oils and fats; Manufacture of grain mill products, starches and starch products; Manufacture of prepared animal feeds; Manufacture of beverages; Wholesale of agricultural raw materials and live animals; Wholesale of food, beverages and tobacco; Retail sale of food, beverages and tobacco in specialised stores; Restaurants and mobile food service activities; Event catering and other food service activities; and, Beverage serving activities. Primary holdings include: All holdings with arable land; all holdings growing permanent crops; all holdings rearing livestock; and, all holdings rearing other livestock.



Table 4.4 includes both primary producers and other enterprises likely to be affected.

Significant impacts could occur in 10 Member States, where between 67 - 95 per cent of

relevant enterprises and primary holdings could be affected. Of these 10 Member States,

nine are new Member States (the exception is Ireland), indicating that extending the scope of

mandatory fees could have a significant impact in new Member States. Moderate impacts

are expected in 10 Member States, where between 34 - 58 per cent of enterprises and

primary holdings could be affected. Low impacts are expected in five Member States where

between 8 - 31 per cent of enterprises and primary holdings could be affected.

The magnitude of impacts

The scale of the impact of this option on individual Member States and on individual FBOs

would be determined by the controls currently considered to be ‘non-mandatory’ that become

‘mandatory’. Each Member State that currently collects fees on those controls would then

need to be assessed. Those MS that already collect fees for those controls are unlikely to be

affected. In MS that do not, an estimate of the magnitude would depend on the fee rates at

which the new mandatory controls are set, and the number of businesses affected. The

assessment of expanding the scope of mandatory controls to primary producers and to food

establishments other than those approved in accordance with Regulation 852/2004/EC

indicates that high impact will be felt in a relatively small number of countries, but where a

large number of businesses may be affected. The majority of MS would see moderate

impact from this hypothetical extension.

Incidence of impact and distributional issues

Impacts would fall primarily within the EU. This option would impact on all FBOs operating in

Member States where fees for the newly mandatory controls are not already charged under

the ‘non-mandatory’ category. Member States would also see their fee revenue increase

where the new mandatory controls are charged for, but were not previously.

The distribution of impacts depends on the controls that become mandatory, and then by the

fee rate set by each Member State for each newly mandatory control.

In sectors where fees are not currently charged, any new fees charged for controls will affect

SMEs in those sectors.

Compliance costs and administrative burdens

This option would increase the administrative burdens associated with calculating,

discussing, setting, communicating and collecting fees for any new mandatory controls in

Member States where fees are not already collected for those controls. There will be no

additional administrative burdens in those Member States where a fee is already collected

on a ‘non-mandatory’ basis.

Costs and benefits

The net financial outcome for CAs of the change in scope of mandatory fees will depend on

the extent of cost recovery achieved by the fees, the fate of the revenues, and the extent to

which additional fee income is offset by compensating reductions in the budget allocations

made to CAs by finance ministries (or their equivalent source of general finance). The

specific impact on the resources available for financing controls cannot therefore be

determined ex ante though the general principles determining that impact can be

determined.

If fee revenues are recycled back in to the CAs then the change should result in a revenue

stream for financing of official controls that moves in line with the expansion or contraction of

the food chain (and the inspection thereof). The shift would connect CA financing more

closely to changes in the food chain and less closely to overall public expenditure (as with

finance by general taxation). This does not occur if there is no link between FBO fee

payments and the revenue of the CA, for example, if fees are paid into general public

revenue.

There is therefore a potential positive relationship between extension of mandatory fees, full

cost recovery, ring-fencing, and measures on transparency, governance (participation of



FBOs) and incentives on CAs to continuously improve the efficiency of controls. The

potential to create positive feedback loops within the system will be missed if (for example):

▪ CAs become more dependent on industry for their income but no more accountable to

FBOs for the efficiency with which inspections are carried out (e.g. where the basis of

fees is unclear and there is no mechanism for industry engagement); and

▪ Fees are paid by FBOs but the revenues do not contribute to the resources available to

the CA for application of controls (e.g. where fees are paid into general government

revenue).

The introduction of additional fees would result in some incremental administrative costs for

CAs in the short run due to determining appropriate fees for control activities concerned.

However, these additional costs are likely to decrease over time as CAs’ charging systems

for the newly mandatory fees are implemented. There are likely to be increased costs

associated with the administrative burdens of collecting fees from FBOs.

Industry costs are likely to rise in most Member States, but to differing degrees depending on

the number of enterprises that become subject to mandatory fees for the first time. The

actual cost incurred by industry will depend to a large extent on the precise mandatory fees

to which they are subject. In cases where fee income from one food sector is currently cross-

subsidising the inspection of other sectors, the extension of fees (subject to the income

allocation issues discussed above) ought to reduce the added burden on those sectors that

pay most today. Extension of mandatory fees could thus make the system ‘fairer’. Inevitably

some FBOs will need to pay more, such as the feed sector; there are theoretically some

circumstances in which the burden on FBOs which are charged today could also fall, for

example, in the meat sector.

4.2.1.19 Sub-option A2 – Require full cost recovery


A full cost recovery option, especially when used in conjunction with ring-fencing, ought to increase

the resources available for the application of official controls and therefore support progress towards

the primary objective that the reforms are intended to reach. Most Member States do not achieve full

cost recovery at present, and a requirement to do so would enable MS to put systems in place to do

so. On the other dimensions, however, full cost recovery is not considered to have a positive impact.

In particular, it is likely to involve some increase in administrative costs to CAs and create

complications where MS must change their legal frameworks and system structures to implement

and monitor cost recovery. Industry is concerned that this requirement will lead to less efficient

inspections while increasing their costs.

A year-by-year staged increase in cost recovery rates (where these are currently less than 100 per

cent) would provide time for adjustment both by FBOs and by Competent Authorities. If businesses

are being asked to pay more it is important that the system is seen to be fair, transparent and

efficient therefore this option would best be combined with complementary measures on

transparency, governance and clear definition of eligible costs. The sub-option that gives Member

States the option to provide fee exemptions to micro-enterprises would also enable Member States

to mitigate impacts of full cost recovery on very small businesses where necessary.


Sub-option A2 considers whether the Regulation should impose a legal requirement on

Member States to achieve full cost recovery of the (eligible) costs of official controls.

Respondents were asked to consider the positive and negative impacts of a full cost

recovery requirement. As interpreted here, the option relates to recovery of the costs of the

controls for which fees are charged. There are thus complementarities between sub-options

A2 and A1 in terms of recovery of costs of the overall control regime (Figure 4.3).



Figure 4.5 Sub-options A1 and A2 have complementary effects on overall cost recovery

Proportion of official

controls subject to fees

Level of

cost

recovery

achieved

by fees

100%

100%

A2 Require

full cost

recovery

A1 Extend mandatory fees

A1 + A2



Industry does not favour full cost recovery for official control activity. In particular, industry is

concerned that the requirement would not provide incentives for CAs to conduct efficient

control inspections or reduce the cost of delivery for control activities, and that it might

enable CAs to charge for control activities that are not strictly necessary.

A full cost recovery requirement is also likely to negatively impact small businesses as costs

are likely to increase for control activities. Finally, a requirement could reduce the

competitiveness of European businesses due to increased cost burdens.

Fewer than half of the CAs who responded to the survey (6 of 13) supported full cost

recovery. CAs indicated that it could improve efficiency and increase accountability, but the

option is thought to have negative impacts with respect to comparability and where

implementation increases administrative costs.


The case study results indicate that a full cost recovery requirement would have varied

impacts on Member States depending on:

▪ Current levels of cost recovery;

▪ The degree of decentralisation in the official controls system; and

▪ Legislative requirements that may require changes.

In Member States with a high degree of public financing and low degree of cost recovery

from fees (e.g. Belgium), a full cost recovery requirement could be difficult to achieve. There

would also be legislative changes required in Belgium and in Finland, which would create

some administrative burdens, at least initially. In MS such as Finland where local authorities

set fee rates and bear responsibility for their own cost recovery, the implementation of this

sub-option would need to be designed carefully to avoid substantial new administrative costs

at the central level.

Other evidence

DG SANCO baseline data indicate that only five Member States may achieve full cost

recovery through fee collection for control activities (where fees are applied): Lithuania,

Latvia, Portugal, Poland and Slovenia (Table A1.8, page 121). In other MS, fees cover costs

in most areas, with some exceptions. For example, Denmark and Finland achieve full cost

recovery, except for fees collected from small FBOs. In Austria and France, costs are

recovered, except on border controls. In most Member States, current fee recovery does not

cover costs, and the level of recovery is between approximately 30 and 80 percent. A full

cost recovery requirement will therefore impact most Member States.



Cost recovery levels should be interpreted with caution, however. Information related to

levels of cost recovery is relatively limited, and where available from multiple sources, is

sometimes contradictory. For example, in the context of the current study, representatives

from the Polish CA stated that data on cost recovery levels were unavailable, and that fee

recovery was likely to be below 100 per cent. But the DG SANCO baseline data report that

Poland recovers 100 per cent of official control costs. Cost recovery data are also

problematic for Finland, where figures for cost recovery vary widely. The DG SANCO

baseline states that cost recovery is 20 per cent for small FBOs, while the FCEC (2009)

study provides a more nuanced picture, indicating that the level of cost recovery ranges from

20 per cent (municipal food control) to 97 per cent (veterinary border control). A selection of

the potential factors behind the disparity of cost recovery in Finland is discussed in the box

below.

Cost recovery rates in Finland

Official controls for small FBOs in Finland, of which there are many, are the responsibility of the

municipal control unit. Evira, the Finnish CA, is responsible for collecting fees from large FBOs, of

which there are few. The FCEC (2009) study of official controls found that cost recovery for large

FBOs was 99 per cent and only 20 per cent for municipal controls; data reported in DG SANCO

baseline indicates that cost recovery is 20 per cent for small FBOs

Consistent with this finding, Lepostö et al. (2010) investigated the extent to which Finnish Competent

Authorities recovered the costs of performing official controls. The fees collected were compared to

costs incurred, based on a questionnaire of municipal environmental health and food control

authorities. The study found that only 38 per cent of municipal control units collected fees that

covered 100 per cent of control costs. This compares with the 20 per cent reported in the FCEC

study.

The data suggest that cost recovery levels in Finland are high for a small proportion of FBOs, but low

for the majority of FBOs.

This discrepancy may, in part, be explained by the characteristics of the Finnish official control

system where there are regional differences in the application of official control fees. Rates are set

at municipal level, and are based on actual costs or may even be less than costs.22

Additionally,

Lepostö et al. (2010) found that official control activities were often conducted in conjunction with

inspections related to other legislation (such as health and safety inspections), but these inspections

were considered as one inspection and charged as one single control. This was the case in 54 per

cent of control units. This supports the points made by an interviewee from Evira for this study, who

stated that it is very difficult to determine the proportion of cost recovery for official controls in Finland

because control units do not separately record the time dedicated to official control activities. Official

controls are considered as a sub-set of controls in a larger set that control units are responsible for

administering. In the interviewee’s opinion, it would require the introduction of burdensome data

collection mechanisms to accurately record the level of official control cost recovery in Finland.

Table 4.5 illustrates the potential level of impact for each MS achieving 100 per cent cost

recovery based on their current cost recovery rates as reported in the DG SANCO baseline

dataset. It is intended to provide an indication of the potential impact only; due to the issues

with the cost recovery data it is not intended to be a definitive analysis23

. The potential

impact of increasing recovery to 100 per cent is expressed in terms of high impact (MS

currently recovering between 0% - 33% of costs), medium impact (MS currently recovering

between 34% - 66% of costs), low impact (MS currently recovering between 67% - 99% of

costs) and no impact (MS currently recovering 100% of costs). For several MS no

information was identified to indicate current rates of cost recovery.

These data suggest that six MS would be impacted very little or not at all by a full cost

recovery option. Nine MS would see a moderate impact for this requirement, and eight would

require significant changes in the operation of their fee recovery systems in order to meet a

22 Lepostö et al. (2010)

23 The baseline relates only to fees currently charged, and these vary from country to country.



full cost recovery requirement. The potential impacts are unknown for three MS, where

information is currently unavailable.



would be determined by the approach and principles underpinning a full cost recovery

requirement. If the requirement were to be phased in over time, for example, CAs would

have time to adjust their systems to increase cost recovery incrementally. If the requirement

were to be effective immediately with a revision to the Regulation, most Member States are

likely to struggle to achieve full cost recovery and the requirement will simply go unmet. The

specification of the requirement, however, is unknown.

In addition, the scale of the impact would be influenced by the ability of CAs to accurately

determine the costs of performing official controls. Where official controls are performed

alongside controls relating to other legislation during an inspection, for example, CAs may

find it difficult to accurately determine the cost of performing one of a suite of controls. Some

CAs may require the introduction of new systems, organisational and / or technological, to

accurately record and determine the cost of official controls.



Table 4.11 Potential impact of requiring MS to achieve full cost recovery on controls for which fees are currently applied24

BG

CZ

EE

ES

*

FI*

*

SE

*

GR

*

IE

BE

DK

FR

HU

IT

MT

RO

SK

UK

NL

AT

PL

+

LT

LV

PT

SI

DE

CY

LU

High impact

Medium

impact

Low impact

No impact

Unknown

High impact (0 – 33% costs

recovered)

Medium impact (34% - 66% costs

recovered)

Low impact (67% - 99% costs

recovered)

No impact

(100% costs recovered)

Unknown

DG SANCO baseline

*Fees are not covered by costs, but the precise recovery rate is unknown.

**Data about cost recovery rates in Finland is contradictory. The DG SANCO baseline states that it is 20 per cent; a previous evaluation (FCEC 2008) found that it was 99 per cent (for large FBOs) and an independent academic study (Lepostö et al. 2010) found that it is 38 per cent for municipal control authorities. This study has concluded that cost recovery rates are likely to be high for large FBOs (of which there are few) and low for small FBOs (of which there are many).

+Data in the DG SANCO baseline indicates that cost recovery is 100%; however during an interview the Polish CA indicated that this is highly unlikely. The Polish CA

could not provide a precise recovery rate as an alternative to the 100% in the DG SANCO baseline.

24 The data used to construct this table is highly uncertain and is often contradictory. It is intended to provide an indicative assessment of the distributional impact of requiring full

cost recovery based on current rates of recovery. Actual impacts will be influenced by a range of factors in addition to current cost recovery rates.



Factors influencing the aggregate impact on the food chain of moving to full cost recovery include: (i)

the range of controls on which fees are applied (as discussed in A1), (ii) the speed with which the

transition is made and thus firms’ opportunity to adjust, (iii) the extent to which there are changes in

the regulatory cost base over the transition period, and (iv) the design of the fee structure. For

example, if the efficiency of controls is improved during the transition period (e.g. encouraged by

greater transparency and accountability) and bonus-malus principles are designed into the fee

structure then the proportionate change in costs to a well-performing firm may be less than the

change in the recovery rate.


Impacts would fall primarily within the EU. This option would, in principle, impact on all FBOs

subject to fees for official controls, and the income of all entities that collect fees for control

activities.

The distribution of impacts depends on the degree to which full cost recovery is already

achieved in the Member State and the control activity concerned (e.g. for small FBOs and/or

for border inspections).

The net impact on business would also be influenced by the approach taken by CAs to

recover costs. Where a cost recovery requirement is met through a bonus-malus approach

to fee collection, some FBOs may find their costs reduced and others with their costs

increased. This has not been specified, however, and is only speculative.

There is no particular SME bias to the impacts but if there are fee exemptions or reductions

for small or micro businesses, CAs will need to determine how to recover costs from

elsewhere in the system or from other revenue sources.

There is a related issue of the level at which the cost-recovery is assessed. For example, is

cost recovery to be assessed and reported on for each type of control, and at the Competent

Authority level, and/or at Member State level? The implications of this choice are likely to

vary according to the level of decentralised administration for official controls. In a country

where there are a large number of Competent Authorities, the calculation of a ‘blended’

national cost recovery rate is likely to be complex and the scope to move revenues from

points of ‘over-recovery’ to those of ‘under-recovery’ limited.


Costs may increase for FBOs, but they may also decrease, depending on the interaction of

this sub-option with other sub-options that may be included in any revisions to the

Regulation. There would be some increase in administrative costs for CAs that are not

currently able to estimate their cost recovery rate as accounting and information systems are

upgraded.

Costs and benefits

For CAs there will be administrative burdens associated with determining the actual costs of

official controls, and ensuring that these costs are reflected in control fees. There are also

likely to be administrative burdens (and hence costs) associated with setting appropriate fee

levels for FBOs. The net impact will be influenced by whether those costs can be recovered

from the fees themselves.

Costs are likely to increase for FBOs in Member States where current recovery levels are

low. The actual impact on FBOs will depend on current recovery levels, the trajectory set

towards full cost recovery, and the extent to which there are adjustments in the regulatory

cost base over that period.

Overall, requiring full cost recovery is likely to increase costs for FBOs. There will be more

significant impacts in Member States where current recovery levels are low.



4.2.1.22 Sub-option A3 – Clearly define eligible costs


A precise (‘definitive’) definition of eligible costs is required. A clear definition is likely to have strong

positive impacts for official controls systems across the EU.

CAs expect improved cost recovery from this sub-option. Evidence suggests it will also improve

comparability, transparency and accountability. Greater specification or adding new costs may

increase the administrative burden on CAs, though this is not likely to be significant.

CA respondents agreed that the proposed list of eligible costs is appropriate and that each category

should be included in any future list. CAs proposed that overhead costs should be included, as well

as the salary costs for local veterinarians and inspection report preparation. Industry responses were

more varied, with a strong majority agreeing with salaries and tools and instruments, and significant

disagreement regarding travel costs and administrative costs. Industry, in contrast to CAs, indicated

that overhead costs should not be included.

The imprecise specification of allowable administrative (overhead) cost recovery in the text used for

this study could be open to the same differences of interpretation that have caused problems in the

current legislation. A simple means of resolving this difficulty is to for the legislation to specify that

administrative costs cannot exceed a given percentage of salary costs. Further engagement with

Member States (in particular) would be required to establish what percentage is appropriate as the

problem was identified during the study and there has been no second round of consultations on the

potential remedies.


Sub-option A3 considers changes to the Regulation that would define more clearly the costs

that can be recovered from fees linked to performing official controls. Currently, Annex VI

sets out a definition of eligible costs as follows:


▪ Staff costs related to control activities, including facilities, tools, equipment, training,

travel, and associated costs; and


Although Regulation 882/2004 attempts to do this through Annex VI, the specification is

unclear and has resulted in differences of interpretation. This study assessed the following

list provided by DG SANCO, which more clearly defines the eligible costs:








Respondents were asked to consider whether (and how):

▪ They agree or disagree with each of the revised costs;

▪ The revised list is sufficiently clear to avoid different interpretations; and

▪ Other costs should be added and/or items should be deleted from the list.

Net change in income to CAs (or to the other public body receiving fee income) through this

sub-option is influenced by the decisions taken on other sub-options, as illustrated by Figure

4.4.



Figure 4.6 A3 determines the eligible cost base on which the rates considered in sub-option A2 are calculated, and which determines income generated by sub-option A1



Level of cost

recovery achieved by

feesA2 Require

full cost

recovery


Scope of

eligible costs

A3 Define

eligible costs

Baseline

position



Both CA and industry respondents indicated that a clear definition of eligible costs would

have a positive impact on official controls systems. CAs in particular expected significant

positive impacts on efficiency, accountability and simplicity of the system. CAs also uniformly

agree that each individual cost specified (i.e. salaries, tools and instruments, out of office

hours activities, travel costs, administrative costs, and sampling and analysis) should be

included.

Industry views are more varied on the specified list of costs:

▪ A strong majority agree that salaries (75%) and tools and instruments (72%) should be

included;

▪ A majority agree that costs of sampling and analysis (66%), travelling linked to official

control activities (59%), and out of office hours activities (53%) should be included; but

▪ A majority disagree that training of inspectors (72%) and a quota of administrative costs

(59%) should be included.

When asked to specify other costs that should be included, CAs proposed:

▪ Overhead costs (e.g. buildings and maintenance, legal fees, financial administration, IT

costs);

▪ Salaries of local veterinarians; and

▪ Inspection report preparation.

Conversely, industry representatives indicated that overhead costs in particular should not

be included.

One CA suggested that rather than specify a list of costs, activity-based costing (ABC)

should be used to identify the relevant activities associated with official controls and assign a

cost to each according to actual consumption. ABC identifies and separates out the fixed,

variable and overhead costs for different activities. In particular, overhead costs are assigned

in proportion to the activity’s direct costs. This model can be used to help an organisation

identify ineffective resource allocation thereby increasing the efficiency of operations. It can

be resource intensive to implement, however, and is constrained predominantly by the



availability of data required to implement it. There is also scope for differences of

interpretation and lack of consistency across the EU.


A clear definition of costs will have a positive impact on each of the case study countries,

particularly where reduced ambiguity ensures that fees charged cover only those costs

directly related to control activity. CAs are likely to benefit where this helps recover costs and

reduce uncertainty about what is ‘allowable’. Industry benefits where CAs are not allowed to

include unrelated costs, and thus FBOs pay lower rates.

Other evidence

The cost categories themselves require precise definition in order to overcome the variations

in the cost base identified in the FCEC Evaluation. Criteria need to be precise enough to

ensure that Member States are consistent in their application of the eligible cost categories

to fee rates. The ‘quota’ of administrative costs referred to in the current text is potentially

open to different interpretations, and any overhead costs that may be included are also

subject to significant variance in what might be considered a relevant component. One

option is to specify that administrative costs cannot exceed a given percentage of staff costs.


The scale of the impact of the sub-option on individual Member States and on individual

FBOs would be determined by:

▪ The ultimate definition of eligible costs (e.g. specification of allowable costs under each

allowable category);

▪ The gap between that definition and current practice and

▪ The costs associated with each component and for each control in individual Member

States (i.e. the baseline costs).

The final definition of eligible costs has yet to be determined. The variance between the draft

list and current practice across the CAs within the 27 MS is not documented.


Impacts would fall primarily within the EU. This sub-option would, in principle, impact all

FBOs subject to fees for official controls, and the income of all entities that collect these fees.

The distribution of impacts is affected by the cost categories that are included, and the

components within those categories that are considered allowable. For example, if the

generosity of the overhead allowance increases, the costs to industry (and income to

government) are likely to increase. If travel costs and/or administrative costs are excluded,

as suggested by many industry respondents, then industry costs are likely to decrease and

income to CAs (or finance ministries) is likely to fall.

Many businesses operating in the sectors affected by official controls are SMEs. SMEs

would be affected where the definition of eligible costs widened and resulted in increased

fees. For example, inclusion of inspector travel costs could affect rural SMEs.


Administrative burdens may increase initially for CAs as the newly defined cost categories

must be assessed against current fee charging practices and adjusted as required. Costs

are likely to decrease over time, however, as the lack of ambiguity ensures that fees cover

only directly related costs and accounting practices have been adopted and implemented

accordingly.

Costs and benefits

The impact of redefining eligible costs will vary by CA according to the final definition

adopted and current charging practice. The sub-option, as with A2 (and the sub-option on

transparency, A7), requires CAs to have an understanding of the costs of their official control

activity. Where that understanding is currently lacking the reform package as a whole would



result in some initial cost increase as CAs assess their cost base and (re)assess fees for

control activities based on the more precise list of cost categories. Those incremental costs

would be expected to diminish over time once a new system is established.

Industry costs may rise in some Member States, where new cost calculations result in high

fees. Equally, industry costs may decrease in Member States where the reverse occurs.

Overall, both CAs and industry believe that a precise definition of costs will improve the

official controls system in the EU. In particular, precise cost definitions are likely to increase

efficiency for CAs to recover control costs. Transparency and accountability will improve,

which benefits industry. CA uncertainty over what should be included is reduced, which CAs

indicated would be an improvement over the current system.

4.2.1.25 Sub-option A4 – Introduce time-based fees


Time-based fees are already in use in a number of MS as illustrated by the case study results.

Respondents indicated that inspections in slaughterhouses and cutting plants are best suited to time-

based fees. Other areas that may be well-suited to time based fees include certifications, audits, and

border inspections.

The codification of time-based fees in EU legislation is expected, overall, to result in a slight positive

impact of the overall functioning of official controls systems in EU Member States. This approach to

fee-setting can increase efficiency, and is consistent with adoption of risk-based approaches to

inspection. But time-based fee systems are also more likely to be difficult to compare across

Member States. Their introduction can increase the administrative burden on CAs.

When asked to rank the method of fee-setting, both CAs and industry favour fees set according to

MS costs operating to standard EU rules on eligible costs. There is an established practice with

some MS of billing (eligible costs) according to a detailed cost calculation. Text in the revised

legislation which did not inhibit use of detailed billing of individual FBOs on the basis of actual costs

(and based on a common schedule of what types of cost are eligible) would avoid those MS having

to move away from systems which provide a good approximation of true control costs.


Sub-option A4 considers the impact of specifying time-based fees in the Regulation for

official controls that require continuous or systematic presence of officials.

The expectation is that fees would be calculated on the basis of Member States’ costs under

common EU rules, though other options were also assessed including a standard, EU-wide,

hourly rate; a standard, EU-wide, hourly rate, indexed in each MS by a cost-of-living

adjustment; and local costs determined under common rules.



CAs and industry agree that there is likely to be a slight positive impact from introducing

time-based fees for official controls that require continuous or systematic presence. In

particular, CAs expected improved efficiency and accountability, as well a simplified system

with reduced administrative burdens. Both CAs and industry respondents noted that time-

based fees are naturally suited to a system that employs risk-based principles, thus ensuring

that time is spent only for activities and on businesses that present the most risk to the food

chain. Nonetheless, CAs voiced some concerns regarding complications arising from trying

to calculate time-based fees. Both groups were concerned that time-based fees could

incentivise veterinarians to conduct inspections that are longer than required in order to

obtain more fees.

When asked what fees in particular might be well-suited to time-based principles, both CAs

and industry agree that red meat and poultry inspections, in slaughterhouses and cutting



plants and for ante- and post-mortem inspections would be appropriate. Industry also sees

potential for audit, certification and import control checks though some CAs indicated that

audit and import controls should remain as flat fees.

Respondents were also asked to rank their preference for the method to use in setting time-

based fees. CAs and industry stakeholders ranked the options as follows:

▪ CAs prefer setting time-based fees according to MS costs under EU rules and industry

also sees this as a good option.

▪ Industry prefers setting time-based fees according to a standard, EU-wide hourly rate

that is indexed in each Member State by a cost-of-living index, but CAs see this as a less

appealing option: while no CA ranked this option last, only 1 ranked it first and 8 ranked it

third.

▪ Neither CAs nor industry prefers setting time-based fees based on a standard, EU-wide,

hourly rate (without a cost-of-living index)—this option ranked lowest for both groups.

While CAs support time-based fee setting according to a detailed cost calculation (9 CAs

ranked it first or second), 1 CA ranked this as the worst option; and while industry sees this

as the third best option (18 ranked it third or fourth), 8 ranked it first. The greatest diversity of

response arose for this option, with no clear preference expressed by either CAs or industry.


Time-based fees are already used in a number of Member States. They operate in a number

of areas in all case study countries except for France. The areas currently covered by time

based fees include:

▪ Meat inspections (Netherlands and UK);

▪ Most areas, with a few exceptions (Belgium); and

▪ Time-based fees are used, but coverage of official control areas is unknown (Poland and

Finland).

In Belgium, time-based fees are already used. Respondents foresee that their wider

introduction alongside an increased use of flat fees could improve CA cost recovery and

reduce administrative burdens, while encouraging more efficient inspections and improve

accountability through a common EU-wide approach to define MS costs.

In Finland and Poland, time-based fees are already used, and as in Belgium, their wider use

could improve cost recovery for CAs. But this sub-option could have a negative effect on the

simplicity of the system and may increase administrative burdens and reduce comparability.

In France, time-based fees are not in use. Business associations and the trade union for

veterinarians were of the opinion that their introduction is expected to result in greater cost

recovery for CAs and improve transparency, though it may reduce comparability and

increase administrative burdens. This is mainly due to the lack of transparency and cost

effectiveness of the current system where the fees do not reflect the inspection cost.

In the UK, views diverged considerably between CAs and industry where time-based fees

are already used in slaughterhouses. The CA believes this has improved efficiency and

effectiveness of controls because it has forced some inefficient plants to change their

procedures. Industry disagrees, however, and has stated that they believe time-based fees

remove the incentive to move to truly risk-based controls. The CA also believes time-based

fees would simplify the process, and improve comparability and accountability, but again

industry disagrees on each point, stating that SMEs in particular would be unable to afford

the fees.

Other evidence

Time-based fees are widely used amongst Member States for meat controls. Figure 4.5

shows the market turnover for four sectors most affected by mandatory fees for official

controls. Meat processing and production represents a significant portion of these four

sectors (nearly 50 per cent in 2008); introducing a requirement for time-based fees for the

meat processing and production sector would thus affect a significant share of the food

processing sector.



Figure 4.7 Several inspections in the meat sector – which is an economically important part of the food chain - are amenable to use of time-based fees

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Processing and preserving of meat and production of

meat products

Processing and preserving of f ish, crustaceans and

molluscs

Manufacture of dairy products

Manufacture of prepared animal

feeds

Source: Eurostat

Data collected through this study on time-based fees illustrate the variance in approach and

rates across four Member States (Table A1.34). In the Netherlands, Austria and the UK, a

single fee is applied for each inspection regardless of the size of the FBO (i.e. number or

rate of slaughter lines). In Belgium, fees vary based on the rate and number of slaughter

lines, with different rates for small and large slaughterhouses (€6.80 and €8.80 per head

respectively). In Belgium and the Netherlands, fees vary according to the category of animal

(young cattle, adult cattle, and pigs), but in Austria and the UK, the fees are uniform across

these categories. Some Member States also charge a base administrative fee (Austria and

the Netherlands), while others do not. Figure 4.6 illustrates the variance in fee rates amongst

the fees charged in Member States illustrated here.



Figure 4.8 Scatter plot showing variance of time based fees in selected Member States, average euro (€) per hour

0

50

100

150

200

250

300

€ / hr NL (ante and post mortum) € / hr AT (veterinarian / official inspector)

€ / hr BE (slow/fast & single/multiple slaughter) €/hr UK (slaughterhouse/cutting plant/game)

The majority of fees range between €25 - €75 / hour, covering a range of inspection types

Fees for fast slaughter lines in Belgium are considerably higher

Source: Clitravi data collected by Member State on inspection fees in the meat industry (2009)

* Exchange rate £1 = €1.13158, 18/06/2011


The scale of the impact of this sub-option on individual Member States and on individual

FBOs would be determined by the definition of the eligible cost base for time-based fees and

the detailed fee structure. This includes the controls subject to time-based fees and the basis

on which the fees are set.


Impacts would fall primarily within the EU. This sub-option would, in principle, impact on all

FBOs subject to a switch to time-based fee inspections. This could potentially include any

sector that currently pays fees for official controls, but meat inspections are the most likely

sector to be affected, as time-based fees are considered to be best suited for this area of

control activity.

The net impact on business will depend on the affected sectors, as already mentioned, as

well as any efficiency gained (or lost) through time-based fees. All else being equal, facilities

that have a higher throughput per inspection-hour are likely to benefit from lower fees in a

time-based system. Facilities with a low throughput per inspector-hour may face higher

charges. This could result in (for instance) fee burdens shifting from large scale, ‘efficient’

slaughterhouses to smaller scale operations.

Two other factors potentially affecting the impact are:

▪ Whether there are mechanisms in place to ensure that inspections are efficient (e.g. to

ensure inspectors do not spend longer than necessary on the inspections to increase

income); and

▪ Whether fixed minimum fees of the kind used under current legislation still apply

(considered below).




Respondents raised some concerns over the effectiveness of time-based fees where

inspectors do not have an incentive to perform the control as efficiently as possible. But

where time-based fees are used in conjunction with risk-based principles, these may

represent an ‘automatic’ bonus-malus system for such controls.

Additional considerations

A shift to time-based fees raises questions about how to treat the minimum fees that are

currently defined in the legislation, but are defined as flat rates based on throughput. Using

both time and flat rate fee schedules simultaneously may cause problems related to

consistency and administrative efficiency – accounting on both bases could increase the

administrative burden on Competent Authorities and potentially increase costs for

businesses as well.

There is an opportunity, in this context, to consider whether minimum fees are still required

and, if so, the basis on which they should be set. Minimum fees could be abolished. If the

other elements of the reforms are thought sufficient drive the desired improvements in the

fee regime, then the added value of minimum fee is less apparent. Indeed, their removal

could support a renewed focus on actual assessed costs.

An alternative to abolition is to revise the mechanism by which they are set. For example,

minimum fees could be set on a percentage basis rather than according to throughput (i.e.

as a fixed percentage of eligible costs). This:

▪ would ensure that minimum fee rates moved with inflation in actual costs. This option

also

▪ provides for the opportunity to set out a schedule specifying a rising rate of cost recovery

to drive the system as a whole towards full cost recovery.

▪ could address the misconception reported by some consultees of minimum fees being

the ‘fair price’ or the EU’s ‘expected price’ for a given control.

▪ could also reduce administrative burdens and avoid the problems generated by currency

exchange fluctuations which can require authorities in countries outside the Eurozone to

regularly revise fees to comply with the euro rate, and where actual costs are below the

minimum fees set in the European legislation.

Implementation would require that the CA calculate and evidence its actual costs (which is

consistent with other options).

Costs and benefits

CAs and industry stakeholders have divergent views on the merits and likely impacts of

introducing time-based fees.

The introduction of time-based fees is likely to benefit CAs by (in combination with other sub-

options) helping to ensure that the full costs of inspections are recovered through fees levied

on FBOs. There would likely be an initial increase in costs for CAs, due to administrative

burdens associated with developing the mechanism for calculating appropriate fees (e.g.

consulting with industry), but these costs would reduce over time.

A shift to time-based fees is likely to change the distribution of the cost burden with a given

sector. It could shift costs onto smaller and/or less efficient operators. For example, the

time taken to travel to a small FBO is the same as for a large FBO, and large operations may

be able to sustain higher throughput per hour of inspector’s time.

Inspection protocols agreed with industry would help to address FBOs concerns that a shift

to time-based fees could invite over-billing by inspectors working inefficiently.



4.2.1.28 Sub-option A5 – Require ring-fencing of resources


This option could have significant positive impacts on efficiency and result in improved accountability

and comparability of official controls systems. It would result in some additional investment and

additional administrative costs where CAs are required to handle receipts for the first time, but these

are expected to be comparatively minor.


Sub-option A5 considers whether the Regulation should introduce a requirement that fee

revenue be used exclusively to cover the costs of the official controls for which they are

being charged (i.e. directly with a budget line or indirectly through the general budget).

Respondents were asked to consider the positive and negative impacts of a ring-fencing

requirement.

The ultimate concern of the reform package is to ensure that official controls are properly

resourced. The sub-options that address resource mobilisation only contribute to that

outcome if there is a corresponding increase in the funds allocated to the financing of official

controls. Ring-fencing would commonly see revenues paid direct to the CA. If there are

compensating reductions in general budgetary support then overall CA income may be little

changed, or even diminished, and could potentially be more volatile.



Overall, CAs and industry respondents indicated that this sub-option would be expected to

have a positive impact on official controls systems. In particular, positive impacts are

expected for CA resource mobilisation and accountability. Industry also felt that the sub-

option could reduce administrative costs and burdens, while CAs felt that these were likely to

increase under a ring-fencing requirement.


The case studies indicate that ring-fencing would likely have positive impacts on CA

resources, and increase transparency and accountability. In Member States that already

have some degree of ring-fencing in place, there is likely to be little impact, but this impact is

expected to be positive. In some Member States, however, such as Poland, a ring-fencing

requirement would require legislative changes that could be very difficult to implement. A

system that has a clear definition of eligible costs, transparency of reporting and full cost

recovery requirements, however could effectively operate as a ring-fencing mechanism

without an explicit requirement to do so.

Other evidence

Ring-fencing already occurs for official control activities in many Member States to some

degree (Table A1.21, page 144):

▪ Eight Member States ring-fence 100 per cent of fee resources: Germany, Denmark,

Hungary, Latvia, the Netherlands, Portugal, Romania and Sweden;

▪ Eight Member States have some ring-fencing requirements or arrangements that are

functionally ring-fencing: Austria, Belgium, Estonia, Finland, France, Italy, Poland and

the UK.

▪ In the remaining 11 MS, all resources from fees charged for control activities go to the

general budget.

In Member States that already ring-fence resources there will likely be little, if any, impact

from this sub-option. In those Member States where ring-fencing is already employed but not

in every area, there will be administrative costs to implementation, but these may not be

significant. Ring-fencing will likely improve cost recovery in these MS and improve



accountability and transparency. In Member States where a significant portion or all of the

resources go the general budget, there may be significant administrative costs and

bureaucratic complexity to implementing a ring-fencing requirement.



would be determined by the degree to which ring-fencing practices are already employed

and in which sectors. In the 16 Member States where ring-fencing already occurs, the impact

will be modest, if any. In the 11 Member States where all resources go to the general

budget, the adoption of the sub-option would involve investment in new systems and greater

administrative costs, but also significantly improving accountability and transparency.


Impacts would fall primarily within the EU. Ring-fencing costs incurred by CAs would include

the one-off cost associated with setting up an accounts receivable department where one

does not already exist, plus the incremental cost for processing receipt of each payment.

The costs associated with billing and handling receipts are already borne by an entity in each

Member State, regardless of the extent of ring-fencing. Introducing the ring-fencing option

would simply transfer the incremental cost from one public body to another (where ring-

fencing does not already occur). The net cost to each MS is thus expected to be zero.

Nonetheless, individual CAs in each MS will be impacted where ring-fencing does not

already occur. This option would then, in principle, impact on the income of all entities that

collect such fees in Member States where all resources go to the general budget. In Member

States where ring-fencing occurs in some but not all sectors, those sectors in which ring-

fencing does not occur will be impacted. There is no particular SME bias to the impacts

expected from this sub-option.


Legislative costs would be incurred in some cases. Administrative burdens would fall on CAs

in Member States that do not already ring-fence resources, and particularly in those where

all fee income goes to the general budget. Administrative burdens are likely to be low in

Member States where ring-fencing already occurs.

Costs and benefits

Ring-fencing creates a direct link between industry payments and CA income. This sub-

option will result in one-off costs for CAs that do not currently ring-fence resources in

expenditure associated with setting up the administrative processes and procedures

necessary to ensure that fee resources are ring-fenced. Following these initial costs, CAs

should have minimal (if any) ongoing administrative costs. Administrative costs may be

recoverable through fees. The change may require legislation in some cases, with the

associated costs and uncertainty.

Ring-fencing fees will have limited impact on FBOs, although industry stakeholders

considered that over time it could reduce the cost of official controls to FBOs. Industry

stakeholders favoured ring-fencing of fees as they were of the opinion that it would improve

the efficiency and accountability of controls (thereby reducing costs over time). There is

uncertainty about such a benefit. Finance authorities’ response to CAs being given ring-

fenced income would affect where the CAs emerge with larger (or smaller) net income.

4.2.1.31 Sub-option A6 – Incorporate bonus-malus principles


Integration of bonus-malus principles into fee structures is likely to have a positive impact on the

efficiency of official controls systems. Bonus-malus arrangements must be consistent with the

principle that the fees charged are set according to their actual cost, and any extra costs for controls

for non-compliance are borne by the businesses concerned. This constrains the redistribution of



costs from good performers to poor performers.

However, a risk-based inspection regime where the frequency and intensity of inspection is set

according to risk of non-compliance and/or past history of compliance can fulfil this purpose (though

this option is outside the scope of the current study). Accordingly, businesses demonstrating a high

level of safety are inspected less often and therefore pay fees less frequently, and those with a poor

record of safety are inspected more often or more intensely and therefore pay fees more often.

It is important that the Regulation does not create barriers to the adoption of bonus-malus principles

or a move to risk-based inspection regimes. There are some aspects of the current Regulation that

could constrain successful implementation of bonus-malus principles, one example being the

schedule of minimum fees.



incorporate bonus-malus principles in the fee system for official controls such that best

performers are rewarded while the worst performers are penalised. This sub-option

considers:

▪ How Regulation 882/2004 can promote bonus-malus principles;


▪ How the overall performance of Option A can be improved by incorporating bonus-malus

principles.



CA and industry respondents indicated that incorporating time-based fees and risk-based

principles could provide an ‘automatic’ bonus-malus system for official controls. Industry

favours self-control to reduce the inspection frequency and therefore, the costs both for

industry and CAs. These systems must be based on oversight by CAs and/or certification by

independent bodies in order to be effective. In particular, bonus-malus principles would

improve efficiency and accountability.


The findings from the case studies are largely consistent with the wider findings from the

impact assessment. There is general support for the incorporation of bonus-malus principles

into official controls systems, with correspondingly positive impacts on cost recovery for CAs

anticipated. Bonus-malus principles are already incorporated into fee systems in several

Member States and considered to be a positive feature. In Poland, there is little experience

with bonus-malus systems and respondents indicated difficulty envisaging how bonus-malus

principles would operate in practice. Potential increases in administrative burdens were

identified as a particular concern in all Member States.

Other evidence

Some Member States have elements of a bonus-malus system already in place, some of

which are described in the DG SANCO baseline information (Table A1.23, page 150).

There are some shared principles that underlie the systems already in place across Member

States that could be considered in bonus-malus arrangements implemented through

changes to Regulation 882/2004:

▪ Self-control systems operated by FBOs can be used to reduce the costs for fee

collection to CAs and reduce costs for FBOs where the costs for self-control systems are

less than the cost of official inspection (e.g. Belgium, Italy).

▪ Fee rates can be linked to whether the FBO has a HACCP system that is accredited by a

certified body, with lower fees paid by FBOs that do; higher fees by those that do not

(e.g. Belgium).



▪ FBOs with a track record of good performance pay lower fees or are inspected less

frequently and poor performers pay higher fees or are inspected more frequently (e.g.

France, Germany, Italy).

▪ Time-based fees are utilised to lower the costs for good performers. Inspections take

less time when FBOs conform to the rules and risk-based principles can be used to vary

the intensity and/or frequency of checks (e.g. Netherlands).

▪ CAs and industry negotiate the steps that may be taken by an FBO on an individual

business basis to determine what changes would result in lower fees/fewer inspections

(e.g. UK).

There are some aspects of the Regulation that currently constrain successful implementation

of bonus-malus principles. The most important issue is minimum fees. As reported in the

FCEC 2009 evaluation, some CAs view the minimum fees as the indicative rate and charge

neither more nor less for control activities. But the primary assumption underlying a bonus-

malus system for fee collection is that good performers pay lower fees (or less often) than

poor performers. Minimum fees serve to constrain opportunities for bonus-malus principles

to apply to the fees charged where the system incorporates two (or more) pricing schedules

(for good and bad performers) or where fee rates overall are higher for control activity, but

because good performers pay less frequently, they ultimately pay fewer fees than poor

performers.



would be determined by the bonus-malus principles applied. This is not known. For those

MS where bonus-malus principles are already in place (9 MS), however, impacts are

expected to be less than for those MS that have little or no experience in this area.



subject to fees for official controls, and the income of all entities that collect these fees. The

distribution of impacts is affected by the principles adopted under a bonus-malus system and

the sectors that would be affected (e.g. based on a risk assessment).

The net impact on business would be influenced by the principle adopted as well. Self-

control systems, consultation with industry on steps to improve performance and reduce fee

costs, and other mechanisms could all benefit compliant FBOs and result in higher costs to

non-compliant FBOs. In order to ensure that fees do not exceed costs, bonus-malus

principles would need to ensure that the redistribution of costs equals the cost to perform the

control. Therefore, the frequency of inspection or the intensity of inspection will meet this

objective, while simply charging more to non-compliant businesses and less to compliant

ones, while still performing the same number and level of controls for each would not

conform to this principle.

There is no particular SME bias. Good performing SMEs will pay less and poor performers

will pay more. Bonus-malus principles could have a positive impact on SMEs where good

performers are able to reduce their costs.


There is some uncertainty regarding the overall impact on administrative costs as there

would be some increase in costs to implement the system but potentially fewer costs over

time as inspections become more efficient and fewer in number. Further specification and

development of the sub-option (and its interpretation in the context of varied MS fee

systems) is required for the burdens to be quantifiable.

Cost-benefit assessment

The administrative costs are unknown and the extent to which they result in higher or lower

costs to MS and FBOs depends entirely on the principles identified as under girding a bonus-

malus system. Administrative costs are, however, expected to fall over time as the system is

fine-tuned and control activity becomes more efficient. The overall benefits include greater



efficiency in control activity, which allows MS to target the most risky businesses and

provides incentives for businesses to improve their operations to reduce their inspection

costs.

4.2.1.34 Sub-option A7 – Introduce transparency and reporting requirements


Overall, providing information to the public regarding fees for official controls will have positive

impacts on accountability and is likely to require little additional administrative cost, particularly in

cases where such information is already provided through CA websites.

A requirement to report to the Commission on resources devoted to official controls will have

similarly positive impacts on accountability, but comes with greater administrative cost burdens to

CAs, particularly in MS with decentralised systems. Yearly reporting may be too onerous and could

be required every other year or less frequently. The overall change in administrative burdens would

be influenced by the exact reporting requirements (e.g. cost recovery rate only, or full financial and

control data) and whether existing reporting requirements under Regulation 882/2004 are

rationalised.



require Member States to provide information:

▪ To the Commission regarding the financial resources devoted to official controls each

year (through the annual reports required under Regulation 882/2004/EC); and



Respondents were asked to consider the positive and negative impacts of these

requirements.



Results from the analysis of survey responses as regards the impacts of this policy option

are summarised as follows:

▪ Competent Authorities and industry indicate that this sub-option is likely to result in

strong positive impacts on accountability, comparability and efficiency.

▪ In particular, positive impacts include:

– Improved information sharing amongst CAs and between CAs and industry;

– Improved transparency of the fee system; and

– Increased opportunities to benchmark between CAs in different Member States,

though some respondents warned that comparisons are not straightforward and

should be carefully considered.

Negative impacts may occur where these requirements introduce additional administrative

costs for CAs.


The findings from the case study indicate that a trade-off is likely between improvements in

accountability and increased costs and complexity for setting up and maintaining systems of

information provision to the Commission and the public. In Member States with centralised

official controls systems, the costs and complexities are reduced because the necessary

information is more readily available. In decentralised systems, the effort to collect

information, particularly to report to the Commission regarding resources allocated to official

controls, is likely to be time-consuming and therefore costly. With regard to providing



information to industry and the public more broadly, this is likely to entail some, but not

significant costs in Member States where information is not already provided.

Other evidence

The SANCO baseline data provide information on the current provision of information by

Member States to the public. Some Member States already publish information regarding fee

rates and the legislation itself on a public website. Seven Member States share complete

information in this fashion (Table 4.6). Some Member States provide access to the

legislation through the Official Journal, but do not provide any information through other

sources. Eleven Member States share information through the Official Journal, four of which

provide information both online and in the Official Journal: Finland, Netherlands, Spain, and

Sweden. No baseline information on reporting is available for the remaining 12 Member

States.

In Member States where all information on fee rates and the relevant legislation is provided

both through a public website and through the Official Journal, the component of sub-option

A7 that would require reporting to the public would likely have little or no impact. However,

the sub-option does not specify what particular reporting channels would satisfy a

requirement to provide information to the public. A change to the Regulation may therefore

add requirements for MS that only share information through the Official Journal or through a

website, but not both. The added costs for sharing information through both channels are

expected to be minimal. Member States that do not share information at all will have some

administrative costs associated with doing so, but these are not expected to be high.

The cost of sharing the information in Member States will depend on the average hourly

employment cost for CA employees. The study identified CA hourly rates for seven Member

States; Belgium, Finland, France, UK, Spain, Lithuania and Bulgaria. For Member States

where this information was not available, the average public sector hourly rate from Eurostat

was used to estimate if a CA is likely to have a high, medium or low rate. Where information

for public sector wage levels was not available in Eurostat, private sector wages were used

instead. Table 4.7 groups the Member States into four categories based on the average

wage rate (using CA, public sector or private sector data, where available). The table below

demonstrates that introducing mandatory reporting would be more expensive in Ireland and

Denmark than Italy and Greece, for example.

The second component of sub-option A7 would require Member States to provide

information to the Commission on resources devoted to official control activity through the

Regulation 882/2004/EC Annual Reports. The impact on Member States under this

requirement depends on the staff costs in each MS, the amount of time expected to be

required to collect and collate the data, and the degree to which the required information is

already collected.

In order to understand the likely impact of this sub-option, the survey for this study attempted

to collect information from each CA on the labour costs, time requirements and current data

collection practices of the case study Member States. Some Member States in the non-case

study countries also returned surveys and a few CAs provided information on this sub-option

as well. In total, seven CAs provided information on full-time equivalent (FTE) costs, but only

two estimated the staff time required to provide information on resources to the Commission.

Under these circumstances, construction of a standard cost model to estimate likely impacts

was not viable.

The UK’s Food Standards Agency (FSA) provided detailed information on the cost of

reporting to the Commission under three hypothetical scenarios indicative of the options that

might be considered under this sub-option. The data reported by CAs in other Member

States indicates the range of FTE costs across the EU.



Table 4.12 Transparency and reporting to the public on fees for official controls by EU Member State

BE

IE

UK

ES

FL

NL

SE

DE

EE

FR

IT

LT

PL

SK

MT

AT

BG

CY

CZ

DK

GR

HU

LU

LV

PT

RO

SI

All information available

online

Legislation published in

the Official Journal

Information recorded but

not available / published

No information available

High transparency Medium transparency Low transparency No information available

Source: DG SANCO baseline

Table 4.13 Average hourly wage rate for Member States, 2008

IE

BE

DE

FI

FR

UK

AT

*

ES

NL

SE

*

LU

*

DE

CY

MT

*

IT*

SL

GR

PT

*

CZ

PL

HU

EE

LV

LT

SL

RO

BG

High €65 €42 €30 €49

Moderately high €20

Moderately low

Low €3 €2

High

( > €30 / hour)

Moderately high

(€20 – €29 / hour)

Moderately low

(€10 – €19 / hour)

Low

(< €10 / hour)

Eurostat 2008

*Average hourly public sector wage rates not available; countries grouped using average private sector hourly rate.

Wage rates for France, Belgium, United Kingdom, Spain, Lithuania and Bulgaria provided via CA survey.



UK scenarios

The Food Standards Agency (FSA) provided a baseline (based on current costs) and three

alternative scenarios for reporting on controls undertaken by local authorities25

. Two of these

scenarios include a description of the cost implications of different levels of data collection;

while the third describes potential costs but does not provide an estimate (see section

A1.1.7.2 in Annex 1 for detailed calculations).

The current total cost of collecting data on meat inspections is estimated at between €3,055

and €3,960 including overheads.

The FSA expects collecting information on the total resources dedicated to meat inspections

to be relatively straightforward due to the low level of detail required. It estimates that it

would cost €1,655-€1,815 per year to collect only data on the number of FTEs dedicated to

meat inspections. These costs relate to collecting data at the national and local authority

level respectively. If more detailed information was required, such as the precise costs

based on actual time spent on each business by inspectors, the proposition becomes

considerably more expensive. Although actual monetary estimates were not provided, the

FSA listed the additional resources it thinks would be necessary:

▪ Enforcement officers, trading standards officers, and administrative staff at local

authorities recording time spent on each visit.

▪ The development of an IT system to capture this information at each local authority and

then report to the FSA.

▪ A large overhead at the FSA to produce reports.

This would all be new activity. Costs are unknown, but they are expected to be

considerable.

Data from Finland

The Finnish CA (Evira) estimated that it would cost €500,000 and require 4 FTEs to collect

and submit information about the resources spent by CAs in the execution of official control

activities. During interview, Evira stated that the €500,000 represents an initial investment to

set up an IT system capable of collecting the necessary data at a local (municipal) level.

Once the system was up and running, they estimated that it would require 4 FTEs on an

ongoing basis. Both the Finnish and UK official control systems are decentralised; it is

reasonable to assume that the cost of a more detailed calculation of costs as described

above for the UK may be similar to Finland’s estimate.

Table 4.8 provides data that was submitted by CAs through the study survey on FTE rates.

Though the data are limited, it gives an indication of the high variance in FTE rates across

Member States (from €1.86 / hour in Bulgaria to €64.74 / hour in Belgium). Consequently,

there is likely to be high variance in the potential administrative burdens under a requirement

to report information to the Commission, regardless of which model is implemented per the

UK’s three hypothetical options.

Nonetheless, given that the UK and Finland are Member States with a relatively high FTE

rate, and that they have a decentralised structure which makes reporting at MS level more

challenging than in other MS, it is reasonable to assume that providing a total resource

estimate for each MS, without subdivisions by control activity or level of administration might

cost around €1500 per country (FI estimate of €1470 at 5 days, €42/hr and UK estimate of

€1,655). A requirement to provide complete information by control and by level of

administration would likely impose an additional one-time cost of around €500,000 per MS to

implement an information system to collect this information, plus 4 FTEs per year to

administer the system.

25 For the figures in this section, an exchange rate £1 = €1.13158 (18/06/2011) is used.



Table 4.14 Data for the Standard Cost Model obtained through the survey indicate high variation in FTE rates across MS (between €3.31/hour and €64.74/hour)

MS CA Response

Q1 Q2 Q3

BE Federal Agency for the Safety

of the Food Chain (FASFC)

€64.74 / hr Staff time: 836

hours

External costs: 0

Staff time: 836

hours

External costs: 0

BG Bulgarian Food Safety Agency €1.86 / employee / hr n/a n/a

ES SG Sanidad Exterior (MSPSI);

SG Acuerdos Sanitarios y

Control en Frontera (MARM)

€20.42 / hr n/a n/a

FI Finnish Food Safety Authority

(Evira)

€42 / hr Staff time: 4 FTE

External costs:

€500,000

n/a

FR Direction générale de

l’alimentation (DGAI) –

Ministère chargé de

l’agriculture

€29.50 / hr n/a n/a

LT State Food and Veterinary

Service of Republic of

Lithuania

€3.31 / hr n/a n/a

UK Food Standards Agency (FSA) Grade 7: €55.44 / hr

Senior Executive

Officer: €42.07 / hr

Staff time: 5-6 FTE n/a

Source: Survey of CAs conducted as part of this study.


The scale of the impact of this sub-option on individual Member States will vary depending

on the level of detail required for reporting to the Commission—both the level of detail and

frequency of reporting to the Commission on resources devoted to official controls and the

type of public provision of information. These are unknown.

Based on the hourly rates contained in Table 4.8 above, it is clear that CA wages are

significantly higher in some Member States compared to others. For example, wages in

Bulgaria are approximately €1.86 per hour compared to €29.50 per hour in France. The cost

of collecting data and reporting to the Commission will be higher in Member States with

higher CA hourly wage levels. The wage data collected thought the CA survey is a relatively

good match with the Eurostat data on average public sector wages. This indicates that

Member States with high or moderately high wage levels may have a more significant

impact, in terms of costs, compared to Member States with moderately low or low average

public sector wage levels (Table 4.7).



CAs and FBOs subject to fees for official controls.

Member States with decentralised official controls systems are likely to be more affected by

financial resource reporting requirements than centralised systems because collecting and

reporting the information will require greater efforts and by more individuals. This effect

would be more pronounced in Member States with high wage rates (Figure 4.7).



Figure 4.9 Costs of introducing and maintaining detailed reporting on resources to the Commission will be greater for Member States with decentralised systems and higher wage rates

e.g. DE, UK, FI

Organisation of controls

Wage

rates

High

Low

DecentralisedCentralised

Member States that already collect detailed information on financial resources devoted to

official controls and/or publicise their fee rates and legislation will be subject to little or no

impact from these requirements.

Publicising information on fee rates and other related information to the public is likely to

have a low impact on Member States that do not already publicise this information.

There is no particular SME bias to this sub-option.


The more detailed the reporting requirements, the greater the administrative burden

associated with reporting them. The three scenarios set out by the UK CA indicate a range of

possibilities of varying potential administrative burdens, depending on the level of detail

required in any reporting scenario. Member States with decentralised official controls

systems are likely to have higher administrative burdens than centralised Member States,

due to the additional effort required to collect information at different government levels.

Costs and benefits

This sub-option will increase costs for CAs; the extent of the cost increase will depend on the

current arrangements in Member States related to data collection. Costs will relate to setting

up and maintaining systems necessary to collect and collate relevant data. Costs for CAs in

decentralised Member States will be higher than centralised Member States; collecting

standardised data in decentralised Member States will require more effort and have a larger

administrative burden. Over time, increasing transparency and reporting could reduce costs

for CAs by increasing sharing of best practice.

Increasing transparency and reporting of data to the Commission will not increase costs for

FBOs. It could, over time, reduce costs by improving benchmarking and sharing of best

practice between Member States.

The specification of reporting requirements and their relationship to the revised performance

monitoring and management system for Regulation 882/2004 is important. If the reports to

the Commission covered core performance measures that Member States themselves would

need to be monitoring in order to check compliance with the Regulation, then the incremental

cost of submitted data to Brussels would be very modest.



4.2.1.37 Sub-option A8 – Provide for industry participation


Industry participation could have significant positive impacts on accountability for the efficient

conduct of official controls and the associated fee setting process. Industry participation could

provide opportunities for FBOs and CAs to work together to pursue common objectives. Fee

acceptance is also likely to be higher where industry can participate in the process.


Sub-option A8 considers changes to Articles 26-29 of the Regulation that would provide

FBOs with the right to participate in the process of setting the structure of fee rates. This

sub-option considers:

▪ Whether and how FBOs already participate in this process in each Member State;

▪ Advantages and disadvantages of amending the Regulation to provide each FBO with

the right to participate; and

▪ Stakeholders’ views of how such an amendment should be specified so as to maximise

its positive impacts and minimise negative impacts.



Industry respondents generally view this option positively and believe it would improve

efficiency, accountability and comparability of official controls systems. The option would

allow industry to have a meaningful role in the fee setting process and could provide

opportunities for sharing information that could increase effectiveness of inspections. It could

also motivate FBOs and CAs to work together to pursue common objectives. Fee


CAs generally indicated that this option would have little impact on the current official

controls systems overall, but could have positive impacts on accountability, where it

increased transparency in the fee-structuring process.


Respondents in all of the case study countries indicated that industry participation in fee

structuring and other aspects of system implementation would positively impact on

accountability. It could improve the fairness of the fee schedules and increase acceptance of

the fees as a result. CAs expressed concern, however, that participation could lead to

increased administrative burdens. Responses were mixed regarding the extent to which

industry participation would simplify official control activity. Some respondents thought it

would introduce complexity in the fee setting process that currently does not exist in many

Member States, while others thought it could simplify the process.

Other evidence

No additional information is available on participation by FBOs in fee setting and system

development for official controls.



FBOs would be determined by the level of participation granted to industry and the degree to

which industry perceives itself to have a meaningful role in the process. This will depend on

the specification of any participatory process, and this is currently unknown.




Impacts would fall primarily within the EU. This option would, in principle, impact all FBOs

subject to fees for official controls, and all Competent Authorities in EU Member States.

The distribution of impacts would depend on the level of industry participation offered by any

changes to the Regulation, and the degree to which industry believed it had a meaningful

role in the fee setting process as well as any costs to CAs related to ensuring participation

and any benefits to CAs and industry from improvements to the fee systems as a result of

industry participation.


The direction of change for CAs related to administrative burdens is impossible to predict.

There will be some additional costs to creating and implementing participatory systems. CAs

will potentially see some reduced costs where industry participation results in greater

efficiencies in official controls systems or conversely increased costs where industry

participation leads to greater difficulties in considering and agreeing a fee system.

Costs and benefits

CAs are likely to face some increased administrative burdens to organise and operate

participatory processes with industry, but these costs are likely to be low. Industry will also

face increased costs where it chooses to participate in the process. Costs to industry cannot

be measured because the decision to participate or not in any new process will vary by

Member State and sector. Industry will, however, only participate in any new process where

the benefits are seen to outweigh the costs.

Both industry and CAs expect that introducing participatory processes will result in improved

transparency and accountability. There is likely to be an additional improvement in the

efficiency of control activity where information sharing leads to innovations in control

activities, and thus their effectiveness.

4.2.1.40 Sub-option A9 – Introduce exemptions and reductions for micro-enterprises


Mandatory fee reductions or exemptions for micro-enterprises may reduce cost recovery in Member

States, particularly for those with a large number of such businesses. There is no correlation that can

be determined, however, between the percentage of micro enterprises in a MS, the degree of cost

recovery and whether or not a MS already offers an exemption or reduction. More information is

required to understand this relationship.

Nonetheless, respondents indicated a clear preference for the choice to provide such an exemption

or no provision for such an exemption, rather than a requirement to provide universal exemptions or

reductions. Providing Member States with the option to determine whether or not to provide an

exemption or reduction would allow this decision to be made on a case-by-case basis in each MS

and would not require those MS that already provide an exemption (at least 11 of 27 MS) to remove

the already existing fee reduction or exemption provisions in its control system.


Sub-option A9 considers whether the Regulation should be changed to provide reduced fees

or fee exemptions for micro-enterprises. The sub-option does not state whether the

exemption would be mandatory or an option that Member States could choose to exercise.

The (potential) exemption relates to the levying of fees only, and not the imposition of

controls. Respondents were asked to consider the advantages and disadvantages of

including fee reductions or exemptions, impacts on different stakeholder groups, and

whether the Regulation should provide a universal exemption for micro-enterprises under EU

law or provide the option for Member States to implement reductions or exemptions as they

choose.





CA and industry respondents clearly favour the option to have an exemption or reduction, or

to have no special terms for micro enterprises, rather than to introduce a universal

exemption or reduction.

Competent Authority and industry respondents uniformly indicated that this sub-option would

have negative or no impacts on official controls systems. In particular, this option is likely to

have a negative impact on resource mobilisation where less fee revenue is collected but the

number of controls remains the same. Nonetheless, respondent comments indicate that the

amendment would reduce the financial burden on micro-enterprises and help to encourage

development of small businesses. Several respondents indicated that fee exemptions or

reductions are unfair, and that inspections should be undertaken according to risk. An

effective risk-based system would automatically reduce the costs for the best-performing

micro-enterprises.

Respondents clearly favour the option of an exemption or reduction, or no special terms for

micro enterprises, rather than a universal exemption or reduction. No CAs and 8 industry

respondents prefer a universal exemption or reduction. CAs strongly prefer the choice to

implement an exemption or reduction (8 CAs) and 11 industry respondents prefer a choice

as well. Industry respondents prefer no special mention and no special terms for micro

enterprises (13) and 2 CAs prefer no special mention as well.


The findings from the case study indicate that fee reductions or exemptions for micro-

enterprises are likely to have negative impacts in some Member States and positive impacts

in others. This depends in part on the proportion of micro-enterprises in a given Member

State relative to other businesses, as well as the extent of cost recovery in that Member

State. Where there are a large number of micro-enterprises, fee reductions or exemptions

will have a negative impact on the resources mobilised from fees. Similarly, this sub-option

could simplify the system by reducing the number of FBOs subject to fees (if information

systems can distinguish such FBOs).

Other evidence

Micro-enterprises represent a significant proportion of all FBOs in sectors most affected by

official controls (Figure 4.8). In 16 of the 23 Member States for which data are available,

micro enterprises represent more than half of all FBOs. In seven Member States, they

represent between approximately 70 – 80 per cent of FBOs.

Data suggest that fee reductions or exemptions are currently provided to micro enterprises in

11 Member States. Five Member States do not offer such reductions or exemptions. No

information is available for the remaining 11 Member States (Table A1.32, page 172).



Figure 4.10 Micro-enterprises as a percentage of total number of enterprises in four major European industries affected by official control activity (2008)26

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro-enterprises

Source: Eurostat

The impact of a fee reduction or exemption is likely to depend on the proportion of micro

enterprises in the population of FBOs and the extent of full cost recovery. Predicting the

likely effects further would require more complete data. Relevant information includes

whether or not a MS currently provides an exemption or reduction, full cost recovery status

and the percentage of micro enterprises across Member States. There are only 12 MS for

which complete information is available, and 10 of these already offer an exemption.


The scale of the impact on Member States and individual FBOs would be determined by

whether or not the option to exempt micro-enterprises (or reduce their fees) is exercised.

Where a fee reduction is chosen, the impact of that reduction will further vary by Member

State depending on their already existing fee rates.

In Member States that currently exempt micro enterprises, there will be little or no impact of

requiring that such exemptions are provided. However, introducing a requirement in

Member States where such exemptions are not provided could have a high impact. Table

4.9 illustrates the Member States where high and low impacts may occur.


Administrative burdens may be increased or decreased as a result of mandatory exemptions

or reductions, but the precise direction of the impact is difficult to predict and will vary by

Member State. For example, administrative burdens could increase where Member States

must identify micro-enterprises to ensure fees are reduced or eliminated. Additional costs will

arise where a fee reduction must be calculated, discussed, set, communicated and collected.

Conversely, administrative burdens could decrease where Member States are not obligated

to collect a fee where an exemption is implemented.

26 Industry sectors include: processing and preserving of meat and production of meat products; processing and

preserving of fish, crustaceans and molluscs; manufacture of dairy products; manufacture of prepared animal feeds. Greece and Malta are not included in Eurostat dataset. Data for the Czech Republic and France are not available.



Costs and benefits

Introducing fee exemptions for micro-enterprises will reduce the proportion of costs

recovered by CAs. This will be especially pronounced in Member States with a high

proportion of micro-enterprises, and high cost recovery levels.

There is a potential tension between the micro-enterprise exemption and other objectives.

Where micro-enterprise reductions or exemptions are applied, the costs of inspection must

be met by alternative sources. Cross-subsidy of very small businesses by levying a

surcharge on fees applied to larger firms is not consistent with the principle that each

business should not be charged more than the costs of inspecting that business. If the

deficit is made up with revenues from general taxation then the CA (and MS) will not be able

to achieve full cost recovery.



Table 4.15 A requirement to provide an exemption or fee reductions for micro enterprises will have little or no impact on MS where such exemptions or reductions already exist, but could have a high impact where they do not

DE

ES

FR

PL

SK

BE

DK

EE

FI

IE

IT

NL

PT

RO

SE

UK

AT

BG

CY

CZ

GR

HU

LT

LU

LV

MT

SI

No exemptions or

reductions / no

specific rules

Exemptions and/or

reductions provided

No information

% micro-enterprises

to all enterprises in

relevant sectors

58 60 N/A 66 13 69 57 40 74 26 71 66 63 62 80 58 69 43 79 N/A N/A 57 48 47 41 N/A 73

% full cost

recovery27

N/A N/A

45 -

70

10028

51 37 35* 20 20*

40 -

90 50 81 100 50 N/A 43 100 27 N/A 28 N/A 60 100 N/A 100 39 100

High impact Low impact

No information available /

identified

DG SANCO baseline and Eurostat 2008

N/A – those countries for which micro-enterprise data or full cost recovery information is not available.

DK cost recovery for small abattoirs = 35%; FI cost recovery for small plants = 20%

27 See Table A1.8 for full cost recovery details by Member State.

28 The baseline data provided by DG SANCO indicate that Poland achieves full cost recovery; interviews with the Polish CA for this study, however, suggest that there is little

data on cost recovery and that the available data indicate that cost recovery is insufficient.



4.2.2 Option B –Fully harmonise inspection fees for official controls



evaluation study carried out for DG SANCO by the Food Chain Evaluation Consortium

(FCEC). Under this scenario all MS would pay the same fees (fixed rates) for the same

activities (i.e. full harmonisation).

There are three sub-options within this option:

▪ Fees are determined on a unified basis for the EU as a whole;

▪ A modified version, in which harmonised fees are adjusted for each Member State using

a cost of living index; and

▪ A sub-option that considers whether fees should be harmonised only for certain import

controls.

In the first two cases, respondents were asked to consider the impacts of harmonised fees

on official controls determined on both a time unit and a number/quantity basis.

General points relevant to the impact assessment are that:

▪ The actual price schedule (and indeed the costing model that would be needed to

underpin the harmonised prices) was not specified in the option text provided for this

study. The quantitative appraisal of impacts is thus constrained not only by the gaps in

the baseline data, but also by uncertainty about the ex-post position (i.e. at what level

fees would be set); and

▪ The feedback received from consultees reflected their perceptions of how the level of a

harmonised EU fee might compare to the current fee in their particular Member State,

about which there is uncertainty.

4.2.2.43 Sub-option B1: Introduce unified fees for the EU-27


Full harmonisation on the basis of a unified schedule of rates is likely to have a negative impact on

official controls systems across the EU-27.

There are valid questions about the feasibility of this option. Developing a cost model or set of

pricing principles for each official control that was seen by stakeholders to be fair and appropriate

(given control costs) would be an extremely challenging exercise. Due to the significant differences

in the organisation of official controls systems, variation in cost factors, etc. amongst Member States

it would be impossible to identify a fee level that would be appropriate for every country.

Harmonised fees would also be politically difficult to implement in MS with highly decentralised

decision making and governance structures. In MS with decentralised OC systems, it may not be

possible to specify the fee rates under existing national legislative arrangements. There are cases

where new national legislation would be needed.

4.2.2.44 Sub-option B1 - Specification

In this sub-option the fees for the provision of controls are determined on a unified basis for

the EU as a whole (i.e. the same fee rates apply in each Member State).



4.2.2.45 Sub-option B1 – Evidence and analysis


Respondents were asked to consider whether they agree or disagree with a set of

advantages and disadvantages for sub-option B1 and to offer any additional benefits or

drawbacks that they could see arising. Results from the analysis of survey responses as

regards the impacts of this policy option are summarised as follows:

▪ Competent Authorities and industry stakeholders indicated that this option would be

positive in terms of simplification and streamlining of the system.

▪ Competent Authorities also noted that unified fees would improve comparability and

accountability, though industry stakeholders felt the option would have little or a slightly

negative impact in these areas.

▪ Both CAs and industry believe that the option would have a negative impact on

efficiency, however. Moreover, respondent comments indicate that this option may not

be practical, could be too rigid and would not provide incentives for efficiency gains.

Overall, full harmonisation, applying a unified rate across the EU-27, is likely to reduce the

efficiency of the official control system. CAs consider that it could have a positive effect on

the other four criteria, but expressed concerns about the inability of a harmonised fee to

reflect differences in official controls systems between MS, and inadequately cover actual

costs. FBOs are similarly concerned with the potential negative impacts on the efficiency of

the controls system, and argue that harmonised fees would have little positive impact on the

other four criteria. Due to the wide divergence in official controls systems across the MS,

FBOs do not think that full harmonisation is a realistic option.


Results from the case studies reflect the inherent uncertainty as to the direction of change

under harmonised fees. There are two possible extreme scenarios under full harmonisation

that respond to two different objectives of the legislation:

1. Fees are set at the highest common denominator in order to ensure full cost recovery in

the most expensive Member State; or

2. Fees are set at the lowest common denominator in order to ensure that in the least

expensive Member State fees are not higher than the actual cost of controls.

The first scenario is reflected in the impacts projected in some of the case study countries.

For example, in Member States where fees are relatively low (e.g. Poland), harmonised fees

are likely to increase the fee rates charged and thus increase cost recovery. These

increases might, however, place an unacceptably high burden on industry where the controls

become too costly to operate viable businesses. The CAs in Poland are likely to recover

more fees than required to cover costs. In Member States where costs are relatively high

(e.g. the UK), harmonised fees will have less overall impact as there is likely to be little

change in the fees charged to operate the controls system.

Conversely, if fees are set at the lowest common denominator, Poland will be less impacted

(and still achieve full cost recovery), but the UK system will be under funded (in the UK only

44 per cent of costs were recovered under the current system in 2009).

Other evidence

Figure 4.9 illustrates why the impacts of harmonised fees are so uncertain. Considering only

one control (adult cattle slaughter rates) in one area of official control activity (meat controls),

the rates charged in a selection of Member States are plotted by the cost in euro per head of

cattle. The fee rates are taken from a survey of rates charged to industry conducted by

CLITRAVI in 2007 and updated in 2009. For the purposes of this chart an arbitrary

harmonised fee rate of five euro per head was chosen because it is the current minimum fee

for this control and many Member States currently charge the minimum fee. This provides an

illustration of the variance in fee rates relative to the average rate. Significant complexity in

the fees charged underlies the highly simplified diagram below, as described in Table 4.10.

Nevertheless, it illustrates the gap between the fees currently charged in a selection of



Member States and any potential harmonised fee. The actual harmonised fee rate that

might be used under Option B is unknown, and therefore precise impacts are impossible to

calculate.

Figure 4.11 Fee harmonisation would change prices for most FBOs and control fee income for governments - but the direction, scale and distribution of change would be determined by the actual level at which fees are set

0

5

10

15

20

25

30

BE BG CZ DK ES FL FR HU IT LI LV NL IE RO SE SI

Maximum rate (€/head)

Minimum rate (€/head)

Hypothetical harmonised fee (€/head)

There is a considerable gap between the fees currently charged in different MS and any potential harmonised fee.

There is uncertainty regarding how a harmonised fee would compare to current fees in EU MS

Figure prepared by GHK. The hypothetical example shown here is based on fee rates for slaughtering adult cattle (€/head). Fee rates are taken from a survey of MS fee rates by CLITRAVI, updated in 2009.

Table 4.16 Explanation of data underlying Figure 4.9 for meat industry inspection rates - 2009 fee rates for slaughtering adult cattle (€/head)

MS Rate explanation

BE Different rates are charged for small slaughterhouses and large slaughterhouses:

▪ €5.12 is the rate for slaughter lines slaughtering more than 50 animals per hour

▪ €11.63 is the rate for small slaughterhouses

▪ €15.50 is the rate for slaughterhouses slaughtering four animals or fewer per hour

The minimum and maximum rates are used in this example

DK Different rates are charged for small and large slaughterhouses:

▪ €6.80 for small slaughterhouses

▪ €8.80 for large slaughterhouses

These are set as the minimum and maximum rates in this example

ES A wide range of rates are charged depending on fees set by region:

▪ In some regions, rates charged cover costs

▪ In other regions, no charge is levied

▪ A range of rates may be charged between these extremes

The maximum charge is unknown. The minimum (i.e. no charge) is used in this example.

FI Slaughterhouses are charged once a month. The invoice covers all meat inspection and control

activities including hygiene, food safety, animal welfare, animal diseases, etc. There is no animal-

based fee and an estimate is difficult to provide as most slaughterhouses process several types



of animal. There is also large variation between large and small slaughterhouses.

The fees presented here are estimates of the minimum and maximum cost per animal for cattle.

HU A range of fees is charged depending on the examination time and using a multiplier to vary the

rate according to the distance of the slaughterhouse from the location of the official veterinarian.

▪ Rates by time of inspection:

– €4.72 (between 6 am - 4.30 pm)

– €9.44 (between 4.30 pm - 6 am)

▪ Multiplier by distance:

– 1.2 (<10 km)

– 1.3 (between 10-50 km)

– 1.4 (between 50-100 km)

– 1.5 (between 100-200 km)

– 1.6 (> 200 km) This example presents the highest and lowest possible fee (i.e. €9.44 * 1.6 and €4.72 * 1.2)

IT Charges vary by region and size of establishment. Establishments handling:

▪ >70,001 units per year are charged €3 per head

▪ 50,001-70,000 are charged €3.50 per head

▪ 25,001 to 50,000 are charged €4 per head

▪ 10,001-25,000 are charged €4.5 per head

▪ 10,000 or fewer are charged €5 per head

The minimum and maximum charges (i.e. €3 and €5 per head) are used in this example

LI A lump sum is charged for issuing a supervision certificate and checking 10 adult cattle (€50.10).

In this example, the estimate of €5.01 per head is used, but this includes a portion of the cost for

issuing the certificate and is thus an overestimate.

NL Hourly rates are charged:

▪ €26.48 per hour for ante-mortem inspections

▪ €19.28 per hour for post-mortem inspections

▪ Minimum rates per animal are also set (€2.02 per head)

Minimum rates are used in this example.

SE A range of fees is charged depending on the size of the establishment. The range for cattle is

€12-25 per head. The largest slaughterhouses pay the lowest fee.

The minimum and maximum charges (€12 and €25 per head) are used in this example.



would be determined by the level at which the harmonised fee was set for any given control

and how that relates to the existing (baseline) fee. This is not known.


Impacts would fall primarily within the EU. This option would, in principle, impact on all

FBOs subject to fees for official controls, and the income of all entities that collect such fees.

The distribution of impacts is affected by the level at which harmonised fees are set. If fees

were harmonised at the level of the highest prevailing fee in Europe then aggregate payment

by industry would rise substantially. If the fees were harmonised at the level of the lowest

prevailing fee then industry would, on balance, gain but there would be a corresponding

deficit in government income and in the overall cost-recovery rate. If fees were set in the

middle of the current range then there would be ‘winners’ and ‘losers’ on a state-by-state

basis. In MS with relatively higher costs, a harmonised fee rate could reduce resources

available for performing official controls. In MS with relatively lower costs, harmonised fees

could result in fee levels that are higher than actual costs, placing an unfair burden on FBOs.

Businesses in eastern MS, where costs and fees tend to be lower, would on balance pay

more whereas businesses in some western and northern MS, where fees tend to be higher,

would pay less.



The net impact on business would also be influenced by how governments (including, where

relevant, local municipalities) responded to any income deficit on official control fees – for

example, whether they raised local business taxes to generate compensating revenues.

There is no particular SME bias to the impacts but clearly a scenario in which the option

resulted in large changes in fees would affect many SMEs.

The distribution of impacts is also influenced by the specification and development of the

option. There is ambiguity in the option (as specified) in terms of how it would affect variation

in the scope and application of fees at Member State level – for instance, if a Member State

does not currently charge for a particular control would Option B mean that it was obliged to

do so? This creates some additional uncertainty in the definition of impacts and again

means that analysis has to be restricted to issues of principle and the direction of change

that the option in principle would be expected to create.


This option would avoid the administrative burdens associated with calculating, discussing,

setting and communicating local/regional/national fees. However, if fees were to be set on

the basis of aggregate cost to the EU as a whole of a given control then it would imply that

cost data would need to be reported to the Commission. As discussed under sub-option A7

(introducing additional transparency and reporting requirements) there is a cost to collating

this information, especially in Member States where responsibility is devolved to lower tiers

of government. Fee harmonisation would also negate the need for minimum fees in the

legislation, and the associated administrative costs.

There would then be the task of setting harmonised fees on the basis of that information and

operating the associated administrative and consultative processes. As noted above, it

would be very challenging to develop and operate a cost model for each control.


This option could have a very significant impact on the aggregate cost to business of official

controls and change the distribution of such costs across the EU. Where harmonised fees

are set at the highest common denominator, MS with low costs will obtain higher revenue

from fees than the costs of the control activity, which puts an unfair burden on businesses.

Where harmonised fees are set at the lowest common denominator, MS with high costs will

not receive sufficient revenue to recover costs, and may have to increase taxes or use other

means to fund control activities.

It will also affect the administrative costs to government for operating fee charging systems.

Harmonised fees would lower administrative costs for determining fees at MS level, but

would likely increase costs for collating information in order for the EU to assess and

determine the harmonised fee rate.

The benefits include greater transparency and simplification of a complex fee setting system

across the EU. The option would, however, undermine the cost recovery principle set out in

the legislation. The costs are expected to outweigh the benefits for this option.



4.2.2.46 Sub-option B2: Adjust unified fees using a cost of living index


This sub-option would be likely to have a negative overall effect on the functioning of official control

systems across the Member States. Although the sub-option could result in positive impacts on

comparability and streamlining, these are likely to be outweighed by the significant negative impacts

on efficiency and also of fairness and adherence to principles of cost recovery.

Indexation of rates according to the cost of living would mitigate some of the impacts of

harmonisation (as discussed for sub-option B1 above) but the process of setting an appropriate

harmonised fee would remain burdensome and is very unlikely to result in a schedule of fees that

reflects the actual costs of inspecting individual FBOs or even whole sectors at a Member State

level.


decision making and governance structures. In MS with decentralised OC systems, it may not be

possible to specify the fee rates under existing national legislative arrangements.


This sub-option is a modified version of full harmonisation in which harmonised fees are

adjusted for each Member State using a cost of living index (e.g. based on Purchasing

Power Parity or other price indexes).

4.2.2.48 Sub-option B2 –Evidence and analysis


Respondents were again asked to consider whether they agree or disagree with a set of

advantages and disadvantages for Option B and to offer any additional benefits or

drawbacks. They were also asked to consider whether including a cost-of-living index would

change their overall assessment of Option B.

CA and industry respondents agreed that the sub-option could have slightly positive effects

on the functioning of the OC system. Indexing harmonised fees for cost of living would

reduce some respondent concerns related to the potential for excessively high or low fee

rates. Nonetheless, CAs felt that the sub-option would be difficult to enforce, and could

increase distortions rather than reduce them. Industry believes that although harmonisation

could simplify the administration of the OC system, it would not necessarily improve the

effectiveness of the system and would be unable to account for the significant differences

between OC systems in the Member States. Overall, respondents argued that full

harmonisation would not adequately improve the current OC system.



under harmonised fees with a cost-of-living adjustment. Less extreme versions of the two

scenarios set out under sub-option B2 remain:

1. Fees may be set high enough so that a cost-of-living index ensures full cost recovery in


2. Fees are set low enough to ensure that in the least expensive Member State fees are not

higher than the actual cost of controls.

There will be some ‘winners’ and ‘losers’ under either scenario, with CAs in some Member

States profiting under the first scenario and some industries bearing unnecessary costs. In

the second scenario, many CAs will not be able to cover costs with fees. Additionally, where

fee rates must be adjusted based on currency fluctuations (e.g. the UK), the sub-option is

likely to add administrative cost and bureaucratic challenges for CAs.



Strict rules would be required to ensure that MS maintain harmonised fee rates and the cost-

of-living adjustments are likely to be burdensome on CAs.

Other evidence

Consultations and research suggest that there is only one viable candidate for a cost of living

benchmark under this scenario—Eurostat’s Price Level Indices (PLIs) which compare

average price levels across countries and are calculated from Purchasing Power Parities.

The data are produced by comparing the prices of a basket of (around 2500) goods and

services in all EU countries. The recommended option is to use the PLIs for an aggregate

called ‘Actual Individual Consumption‘(Figure 4.10). This includes both households’ own

expenditures and government's expenditures on, for example, health and education that are

for the benefit of households. Hence, it is a good indicator for the standard of living of

households. PLIs are expressed as an index with the EU-27 as reference: for example, an

index of 110 means that the country is 10 per cent more expensive than the EU-27

average29

.

One practical issue is the time-lag in publication of the index. As an example, 2010 data will

be added in December 2011. It would mean that adjustments to the relative level of fees in

individual Member States would need to be made one or two years in arrears.

Figure 4.12 Eurostat’s Price Level Index for Actual Individual Consumption is a potential adjustment factor for harmonised fees under sub-option B2

0

20

40

60

80

100

120

140

160

EU27 D

E

NO IE LT FL BE FR AT SE NL IT DE IS ES

GR

UK CY PT SI

MT EE LV SK CZ LT HU PL RO BG

PLI (AIC) 2009

EU27

Source: Eurostat


As with sub-option B1, the magnitude of impacts would be determined by the level at which

the reference (harmonised) price was set. This is not known.

29 See http://epp.eurostat.ec.europa.eu/portal/page/portal/purchasing_power_parities/introduction for

more information.

http://epp.eurostat.ec.europa.eu/portal/page/portal/purchasing_power_parities/introduction




As with sub-option B1, impacts would fall primarily within the EU and this option would, in

principle, impact on all FBOs subject to fees for official controls, and the income of all entities

that collect such fees.

The distribution of impacts is affected by the level at which harmonised fees are set.


As with B1 this option would avoid the administrative burdens associated with calculating,

discussing, setting and communicating local/regional/national fees, and would also negate

the need for minimum fees in the legislation, and the associated administrative costs.

Yet cost data would also still need to be reported to the Commission and that is known to be

burdensome for some Member States. There would then be the task of setting harmonised

fees on the basis of that information and operating the associated administrative and

consultative processes. As noted above, it would be very challenging to develop and

operate a cost model for each control.


Though it seems likely that impacts would be less severe that those of sub-option B1, the

current specification suggests that this option could have a significant impact on the

aggregate cost to business of official controls and change the distribution of such costs

across the EU. It would also impact on government costs as described under sub-option B1.

There may be some benefits with respect to improved transparency and simplification of the

system, but these benefits are not thought to outweigh the costs.

4.2.2.49 Sub-option B3 – Introduce EU harmonised fees only for certain import controls


Harmonisation of fees for import controls is likely to have a negative impact on the official controls

systems across the EU-27.

The argument for harmonised fees for import controls is that it would create a ‘level playing field’

across the EU-27 for such fees and remove the potential for trade distortions derived from importers

seeking out border points with lower fees. Some stakeholders claim that ‘BIP shopping’ is a major

problem which harmonised fees would resolve, but this study found no evidence for such ‘BIP

shopping’. When stakeholders were asked about the occurrence of BIP shopping, some indicated

that they understood it to be a problem but could provide no concrete examples of the problem.

As with the other sub-options for harmonised fees, development of a cost model or set of pricing

principles for import controls that is viewed by stakeholders as fair and appropriate (given control

costs) would be an extremely challenging exercise. Due to the significant differences in the

organisation of official controls systems, variation in cost factors, and other issues amongst Member

States, it would be impossible to identify a fee level that would be appropriate for every country.

A cost-of-living adjustment for these controls would face the same challenges described under

Option B2. Indexation of rates for cost of living would mitigate some of the impacts of harmonisation,

but the process of setting an appropriate, harmonised fee would remain burdensome and is unlikely

to result in a schedule of fees that reflects actual costs of inspection.


decision-making and governance structures. In MS with decentralised OC systems, it may not be

possible to specify the fee rates under existing national legislative arrangements.


This sub-option considers whether the Regulation should require that certain import controls

are subject to harmonised fees, particularly for those controls where there is currently a



higher degree of harmonisation (e.g. BIPS and DPEs). A single, uniform price would apply to

any EU border point.

4.2.2.51 Sub-option B3 - Evidence and analysis


Respondents were asked to consider the impact of harmonising import controls. Overall,

CAs and industry representatives indicated that this option would have a positive impact on

official controls systems in EU Member States. In particular, harmonised import control fees

would simplify the system, improve comparability amongst Member States and reduce

administrative burdens on CAs. Competent Authorities also foresee strong positive impacts

on efficiency and accountability. Both CAs and industry noted that harmonised fees would

reduce BIP selection at border posts, reducing competition distortions.

CAs and industry also noted, however, that in order to affect full cost recovery for all Member

States, the fee would need to be set according to the MS with the highest costs. Thus, some

Member States would profit from fee revenue above what is required to perform the control.

Some respondents indicated a preference for a cost-of-living adjusted fee rate for

harmonised controls though this would detract from the benefits mentioned above.


The case studies indicate that the impacts of harmonised import controls are likely to be

similar to the impacts described under Options B1 and B2 (full harmonisation, with or without

a cost-of-living adjustment). CAs with high costs for import controls will find it difficult to

recover costs if the fee is set at the highest common denominator (e.g. Finland) and CAs

with low costs will recover more fees than the actual cost of control activity (e.g. Poland).

The reverse is true in the case where the fee is set at the lowest common denominator.

FBOs benefit from a low-cost fee but face unfair cost burdens where a high-cost fee is set.

Other evidence

Some indication of the distribution of impacts could be estimated where the number of FBOs

subject to import controls is known. This information, however, is unavailable. Where import

controls information is provided in detail by Member States through the Regulation

882/2004/EC Annual Reports, this information refers only to the number of inspection

centres that are subject to controls (i.e. those belonging to a BIP) and the total number of

checks by category, not to the number of affected businesses.

During interviews, a selection of stakeholders was asked to provide information on the

occurrence of ‘BIP-shopping’. While some respondents indicated that this practice is

believed to occur, none could identify concrete examples of these activities. No solid

evidence could be obtained in this study to support the idea of ‘BIP shopping’.

The magnitude of impact

As with sub-options B1 and B2, the magnitude of impacts would be determined by the level

at which the reference (harmonised) price was set, which is unknown. Furthermore, baseline

data are missing for most countries—the fees currently charged for import controls are also

unknown.


As with sub-options B1 and B2, impacts would fall primarily within the EU and this option

would, in principle, impact on all FBOs subject to import controls, and the income of all

entities that collect such fees.

The distribution of impacts is affected by the level at which harmonised fees are set, which is

unspecified. As with sub-options B1 and B2, however, there would be ‘winners’ and ‘losers’

depending on whether the harmonised fee resulted in MS receiving more revenue than the

cost of import control activities or insufficient revenue to recover costs.




As with sub-options B1 and B2, this sub-option would avoid the administrative burdens

associated with calculating, discussing, setting and communicating local/regional/national

fees, and would also negate the need for minimum fees in the legislation, and the associated

administrative costs.




consultative processes. As noted in Options B1 and B2, it would be challenging to develop

and operate a cost model for the relevant controls.


The costs are likely to be similar for those identified under sub-options B1 and B2.

4.2.3 Option C – Repeal Articles 26-29 of the Regulation (full subsidiarity)


Full subsidiarity could have a positive impact on the functioning of official controls systems; it would

enable CAs to organise controls in a way that most appropriately reflects the particular

characteristics of their systems. This could reduce unnecessary control activities and improve overall

efficiency.

It is more likely, however, that full subsidiary would have a negative impact on the OC system. It

would widen disparities between Member States, and increase pressure on CAs to lower fees to

maintain industry’s competitive advantage. Over time this would reduce the level of resources

available to finance official controls, resulting in a reduction in control activity.

4.2.3.52 Option C - Specification

Under Option C Member States would be obliged to allocate ‘sufficient resources’ to official

controls but each Member State would be free to determine its own approach to fee setting.

Option C requires repeal of Articles 26-29 in Regulation 882/2004/EC. This is broadly

equivalent to the ‘full subsidiarity’ option in the 2009 FCEC study.

Option C – Evidence and analysis



advantages and disadvantages for Option C and to offer any additional benefits or

drawbacks. Competent Authorities and industry hold similarly negative views of this option.

CAs expressed concerns that full subsidiary would increase disparities between MS, which

could increase pressure to reduce fees in order to gain a competitive advantage over other

Member States. Industry had similar concerns about the negative consequences of full

subsidiarity, but in several instances these related to CAs operating inefficiently, charging

excessively high fees or conducting controls that are not strictly necessary.


Full subsidiarity is likely to have a significant negative impact on most of the case study

countries. It is likely to increase pressure on CAs to reduce fee rates in order to ensure that

FBOs are not disadvantaged relative to fee rates in other Member States. Cost recovery is

likely to decrease as a result.

Other evidence

Member States already exhibit significantly wide variance in their fee collection for control

activities. Cost recovery rates vary across MS from as little as 37 per cent in Belgium to 100

per cent claimed in some countries (Table A1.8, page 121), and within Member States



depending on the governance arrangements for fee collection (decentralised to centralised).

Some sectors also have higher cost recovery rates (e.g. for import controls, CAs often do

adequately recover costs through fees). This degree of variation can be seen across each

issue examined in this study, including the availability of information to the public (Table

A1.26, page 158), the rates and controls covered by time-based fees (Section A1.1.4, page

132), charging practices and scope of fees for non-mandatory controls (A1.1.1, page 98),

bonus-malus principles in operation (Table A1.23, page 150), and the degree of ring-fencing

(Table A1.21, page 144).

Full subsidiarity is likely to increase the degree of variation amongst official control systems

across the EU-27, and likely to reduce comparability between MS, and transparency and

accountability of CAs as a result.


The magnitude of impacts cannot be stated with any confidence because they would be

determined entirely by how Member States decided to modify their domestic fee regimes in

the absence of the framework provided by current EU legislation.


The impacts of this option on businesses and national authorities would be indirect and are

uncertain – as stated above, they would be determined by how Member States decided to

modify their domestic fee regimes once given the freedom to do so.

Commentary on how domestic policies might develop under such a scenario would be

essentially speculative. However, it seems reasonable to assume that over time Member

States’ systems would diversify further, potentially with impacts on the Single Market.


This option would remove those administrative burdens associated with administration of

minimum fees and other processes specific to the European legislation, but Member States

would still face the costs of administering their domestic fee regime.


The overall effect of this option depends on the approach taken by each Member State in

response to this proposed change. Full subsidiarity could result in Member States charging

higher fees in order to better recover costs or it could result in MS charging fees below

current rates due to pressure from industry to compete against other MS. Where fees are

lowered, industry would benefit from lower costs, but MS would face costs associated with

insufficient funds to carry out the required activities. Where they are raised, MS would benefit

from higher cost recovery, but industry would face higher costs. Administrative costs to

Member States may also be higher or lower depending on whether subsidiarity leads MS to

streamline their systems, or if it increases their complexity and therefore the resources

required to operate them.

4.3 From independent components to an integrated package – building a sustainable solution with Option A

The preceding sections discuss the various sub-components of Option A as distinct and

independent propositions. Table 4.11 provides a rating for each sub-option, considered in

isolation from the other sub-options under Option A. Ratings are presented against each

objective for reforming the fee control system based on the predicted impacts on CAs and

industry. A net rating summarises the cumulative impact of each sub-option. In sum, the

effect on CAs and industry for each sub-option considered independently from other

changes is likely to be positive for all but the full cost recovery and micro enterprise

exemption sub-options.



Table 4.17 Impacts of Option A sub-options on CAs and industry for reforming the fee collection system

Option Objective / score Net rating

Adequate

resources

for CAs

Efficient

control

activities

Simplification Comparability Streamlining Accountability

CA

s

Industr

y

CA

s

Industr

y

CA

s

Industr

y

CA

s

Industr

y

A1 Extend the scope of mandatory fees ++ + - - ++ + + - + - +

A2 Require full cost recovery ++ - + - - - - -- + - -

A3 Clearly define eligible costs ++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++

A4 Introduce time-based fees + +/- ++ + +/- +/- +/- + + + +

A5 Require ring-fencing of resources ++ + + + + + + - + + +

A6 Incorporate bonus-malus principles ++ ++ +/- +/- +/- + +/- + + + +

A7 Introduce transparency & reporting

requirements

+ ++ + + ++ + - + ++ ++ ++

A8 Provide for industry participation +/- ++ +/- + +/- + +/- +/- ++ ++ +

A9 Introduce exemptions & reductions

for micro-enterprises

- - +/- - - - +/- +/- +/- +/- -



The primary objective for changes to the fee system for official controls is to ensure that CAs

have adequate resources for official control activities. Other key considerations for legislative

reform include the likely increased efficiency for performing official control activities and any

administrative burdens that might fall to CAs and industry. Table 4.12 presents a rating for

each sub-option based on their ability to ensure adequate CA resources, and their ability to

incentivise efficient control activity. The likely direction of change for administrative burdens

is also considered. An overall expected impact rating is provided considering each of these

criteria. The sub-options that are likely to have the strongest positive impact based on this

analysis include:

▪ Clearly defined eligible costs;

▪ A ring-fencing requirement; and

▪ The introduction of transparency and reporting requirements.

Yet, as is clear from the consultations and analysis, the Option also needs to be considered

as a ‘package’. The individual components deal with different elements of the ‘system’ and

have a cumulative and collective impact on the problems that the reforms are intended to

address. The last column in Table 4.12 considers which other sub-options would improve the

net impact of each sub-option if they were introduced together, as well as other potential

changes that could have positive impacts as well.

Considering the cumulative effects of sub-options introduced together, a full cost recovery

option can support the extension of scope of mandatory fees and a ring-fencing requirement.

These three options, taken together, are likely to provide the strongest potential for ensuring

adequate resources for official control activities.

Options that introduce greater transparency, clarity, and accountability can support

availability of sufficient resources, including clearly defined eligible costs, transparency and

reporting requirements and industry participation. Greater efficiency of control activity can be

achieved where bonus-malus principles are also introduced. Time-based fees could provide

the basis for an effective bonus-malus system.

Table 4.18 Option A scores - prioritise adequate CA financial resources

Ensures

adequate

resources for

official controls

Incentivises

efficient

control

activity

Estimated impact

on administrative

burdens

Overall

expected

impact

Additional

positive effects

(with other

sub-options &

other changes)

A1 Extend the scope

of mandatory fees

++ 0 Increase (except

where a fee is

already collected)

+ (CAs)

+/- (industry)

A2, A5, A6

A7, A8

A2 Require full cost

recovery

++ +/- Increase for CAs

Increase or

decrease for

industry,

depending on

interaction with

sub-options

+ A1, A5

A3 Clearly define

eligible costs

++ ++ Increase for CAs

– short term;

decrease for CAs

– long term

++ A7, A8

A4 Introduce time-

based fees

+ +/- Increase for CAs

– short term;

decrease for CAs

– long term

+ A6

(also phase out

or eliminate

minimum fees)

A5 Require ring-

fencing of

++ 0 One-off cost for

some CAs to set

++ A2, A3, A7



resources up system

A6 Incorporate

bonus-malus

principles

+ ++ Uncertain + A4, A8

(also phase out

or eliminate

minimum fees)

A7 Introduce

transparency &

reporting

requirements

+ ++ Slight increase for

some CAs to

publish

information

Increase for CAs

to report on cost

recovery

++ A8

A8 Provide for

industry

participation

+ + Slight increase for

CAs

Slight increase for

industry to

participate

+ A7

A9 Introduce

exemptions &

reductions for

micro-enterprises

- 0 Uncertain +/- (option to

provide an

exemption)

The potential for interactions between Option A components are mostly positive, but

sometimes negative, as illustrated in Figure 4.11. For example:

▪ Increasing the transparency of the system by publishing details of the fee basis (A7)

ought to increase the positive impacts associated with promoting industry participation

(A8);

▪ A clear definition of eligible costs (A3) and mechanisms for promoting industry

participation (A8) could mitigate some of the concerns from industry about how the

efficiency of inspections would be sustained under a time-based fee arrangements (A4);

▪ The use of time-based fee arrangements (A4) is positive with regard to the integration of

bonus-malus principles into the inspection regime (A6); but

▪ A requirement to provide fees exemption for micro-enterprises (A9) would act in

opposition to a cost recovery objective (A2) in those areas where a significant proportion

of FBOs are micro-enterprises.

The analysis has also identified issues raised by implementation of Option A as currently

specified, which are not explicitly addressed in the current sub-option specifications. One

example is minimum fees. The sub-option proposing time-based fees for controls where

there is continuous presence of officials does not yet address whether minimum fees would

continue to be applied on a throughput basis. Some examples of the challenges created by

current minimum fee arrangements were discussed in the analysis, for example:

▪ Fees need to be revised by CAs to align them with legislated minimum fee values due to

movements of the local currency against the euro rather than changes in actual costs;

▪ The possibility that actual costs of inspecting a business are lower than the minimum fee

given in the Regulation;

▪ The need for ‘parallel accounting’ on both a throughput and time basis.

There is also the relationship between the provisions governing fees and the provisions

governing the wider inspection regime. If, for instance, the inspection regime is informed by

assessments of the risks posed by individual FBOs, and the fee levied on each business

reflects the cost of inspecting that business, then a system with ‘bonus-malus’ attributes has

been created. It is more difficult to apply ‘bonus-malus’ principles via the fee schedule alone,



that is, where risk assessment plays no part in determination of the inspection regime

applied to FBOs.



Figure 4.13 There are both positive and negative interactions between the components of Option C

+veA8 Publication of cost data

A7 Industry

participation

A6 Bonus-malus

A9 Exemptions

for micro-enterprises

A4 Time-based fees for continuous

presence

-veA3

Definition of eligible

costs

+ve

A1 Extend scope of mandatory

fees

+ve

The extra costs of additional

controls are borne by non-compliant FBO

Common principles & methods / data used are published or otherwise

made available

Financial resources

provided for official controls are adequate

A2 Full cost recovery

A5 Ring

fencing

There is a lack of transparency in the

calculation of costs at MS level

Fees do not cover inspection costs

There is a lack of clarity and uniformity in the Regulation,

which results in diverging interpretations in EU MS

Objectives of the Regulation

Current problems

Option A components

+ve+ve



4.4 Monitoring

Monitoring indicators enable policy makers to assess whether an intervention is proceeding

as intended, and whether there are any unintended impacts. The terms of reference for this

study require the contractor to consider the issue of ex-post monitoring of the proposed

legislative changes and the indicators by which changes might be tracked in order to

address the problems discussed in Section 2.

Work by the Commission, previous evaluations, and this study have all demonstrated the

challenges of mapping the situation in Member States in a context where arrangements for

the financing of controls vary widely, interpretation of the legislation varies and there has not

always been timely compliance with European legislation. In Member States, the central

Competent Authorities themselves often have limited visibility of the situation in different

parts of their own countries due to the devolution of powers of control to local and regional

authorities and limited pass-through of information back up to the centre.

Two classes of indicator can be considered:

▪ ‘Macro’ indicators that provide information about the progress that the system as a

whole has made towards it core objectives; and

▪ ‘Micro’ indicators that give information on the impacts of the changes introduced by the

reforms to specific actors within the system (e.g. food business operators, competent

authorities).

4.4.1 ‘Macro’ / system indicators

The main principles of the provisions under review here (as laid out in Section 2) are that:

▪ Member States must ensure that adequate financial resources are made available for

official controls (Article 26);

▪ Where inspection fees are imposed on feed and food business operators, common

principles must be observed for fee-setting and the methods and data used for

calculating the fees must be published or otherwise made available to the public (Article

27); and


result from more intensive controls must be borne by the feed and food business

operator concerned (Article28).

Table 4.13 provides a commentary on potential ‘macro’ indicators. Changes in the financing

of official controls against these kinds of measures could be tracked more easily if there was:

▪ An improvement in the consistency, coverage and clarity of the annual reports produced

by the Member States under Regulation 882/2004/EC;

▪ A performance management framework for the system that included a core set of agreed

metrics; and

▪ Adoption of sub-option A7 on publication of cost data (and/or the second component of

sub-option A7 on reporting to the Commission, see also Table 4.13).

The Annual Reports provided to the study team for this impact assessment reveal several

significant barriers to effective provision of information through this mechanism:

▪ Clarity: many of the annual reports appear to have been translated into English via

translation software. For these reports, it is virtually impossible to understand what

information is provided. In some reports, the readability is better but in many cases vital

information is missing (e.g. units) or key words remain in the original language.

▪ Consistency: for those reports that can be read and understood, a second problem is a

lack of consistency amongst the reports. This includes the organisation of the reports,

the control areas covered, and the type of information provided. Reports cannot currently



be compared across Member States, even regarding basic information such as the

number of controls performed or hours of inspection activity.

▪ Coverage: in many cases, the level of detail is insufficient in the reports. Control activity

is often combined and described as a category of activity such that it is impossible in

some cases to know precisely what controls fall within that category. In many reports,

entire areas of control activity are not reported on at all.

If the Commissioned published the status of all Member States against the macro indicators

of system performance on a regular basis, it could help harness the ‘power of information’ to

encourage further progress towards the given objectives.

4.4.2 Indicators of micro / specific impacts

The impacts of the regulatory reform should also be evaluated in terms of impacts on

specific actors within the system. This could be achieved by examining the effect on a

sample of (i) food business operators and (ii) competent authorities. A comparative analysis

that stretches across a number of Member States could capture aspects of the variation

caused by differences of circumstance in different parts of the EU.

Examples of the indicators that could be used in assessing impacts on those actors are

given below:

▪ For competent authorities:

− Change in resources devoted to official controls;

− Change in source/structure of the revenues used for financing official controls;

− Volatility in income available for financing of official controls; and

− Indicators/information relating to specific sub-options of Option A (if adopted), for

example, (i) cost recovery rate achieved, (ii) proportion of controls for which fees are

charged, (iii) structure of fees (including use of the option for micro-enterprise

exemption, integration of bonus-malus principles), and (iv) practices related to

transparency and industry participation.

▪ For FBOs

− Change in expenditure on official controls (aggregate/as percentage of turnover); and

− Qualitative indicators relating to factors addressed by the reforms (e.g.

understanding of the basis of fees, perceived ‘fairness’ and transparency of fee

structures).

Such evaluations would be made more robust if statistically significant samples were taken

on a regular basis (e.g. every couple of years), and/or cohort(s) of actors were followed over

a period of time.



Table 4.19 High level indicators of progress against elements of the problem definition

Element of the problem

definition

Potential direct

indicator(s)

Commentary Potential ‘proxy’ &

complementary

indicators

Commentary

Member States must ensure

that adequate financial

resources are made available

for official controls

Member States’

expenditure on official

controls as compared to

that required to efficiently

deliver a prudent, risk-

based inspection regime

Lack of consistency in reporting

within MS and to the

Commission in Regulation

882/2004/EC annual reports is a

barrier to the benchmarking of

efficiency and comparison of

control strategies.

Not all CAs publish expenditure

data.

Cost-recovery ratio

(value of fees collected

as a percentage of

estimated control

expenditure)

Cost recovery rate alone lacks a reference to

specification of control strategy and the efficiency

with which it is delivered. Estimates of this

indicator have been made for some MS but there

are issues with consistency and coverage.

For this to be feasible: Central Competent

Authorities need to understand the full costs of

controls and the totality of control-related revenue

to government (whether sent to CAs or to finance

ministries/other government departments).

Where inspection fees are

imposed on feed and food

business operators, common

principles must be observed

for fee-setting and the

methods and data used for

calculating the fees must be

published or otherwise made

available to the public (Article

27)

Regular statement to the

Commission from MS

(based on returns from all

Competent Authorities) that

there has been publication

of (i) principles of fees, (ii)

method of calculation, and

(iii) cost data on which fees

are based.

For this indicator to be feasible:

▪ Competent authorities need

to understand their costs and

cost structures vis-à-vis the

application of official

controls.

▪ Member States need the

internal mechanisms to

gather declarations at the

centre where powers of

control are devolved.

When official controls reveal

non-compliance with feed and

food law, the extra costs that

result from more intensive

controls must be borne by the

feed and food business

operator concerned (Article28)

Regular declaration to the

Commission (‘yes’/’no’)

from MS that control

regimes place burden of

additional control costs

arising from non-

compliance on the

offending FBO.

For this indicator to be feasible

Member States need the internal

mechanisms to gather

declarations at the centre where

powers of control are devolved.

Bonus-malus systems

are risk-based and MS

report on full cost

recovery rate

A risk-based bonus-malus system would be

developed where the frequency and intensity of

inspection is set according to risk of non-

compliance and/or past history of compliance.

This combined with an indication of full-cost

recovery would suggest that extra costs are borne

by non-compliant FBOs.



The Annual Reports could be improved so that they can be a useful mechanism for providing

transparent and complete information on control activity to the Commission. Further

improvements in transparency would result from publication of the annual reports through

the Commission website. This change will require:

▪ Standard formatting principles for each area of control activity;

▪ Specification of the type and level of detailed information required; and

▪ Quality control to ensure that the reports can be understood in the language they are

written.

Over time, with sufficient information being put in the public domain, it ought to be possible

for researchers to carry out more comparative analysis on the resources consumed and

outputs delivered of inspection regimes in different locations and thus improve collective

understanding of their comparative efficiency (allowing for differences in approach to

inspection).



5 Conclusions This report presents the results of a study to assess a set of proposed revisions to

Regulation 882/2004/EC regarding the fees for official control activity in EU Member States

in order to inform an impact assessment in this area.

The analysis has established the substantive nature of the impacts expected to arise from

the options. Their performance and relative advantages and disadvantages in different

operating contexts (e.g. centralised or decentralised systems) have been established as far

as is possible given:

▪ The fact that many of the options are framed as shifts in the principle or broad approach

to be adopted in particular sections of the Regulation rather than specific changes to

specific controls; and

▪ The very limited data provided by Member States here and in response to previous

enquiries on the level of control activity and the associated costs.

The Member States of the European Union need official control regimes that are properly

resourced and efficiently operated in which:

▪ Regulators are efficient and the regulated are responsible;

▪ The authorities take a risk-based approach to inspection and levy fees that reflect fair

costs;

▪ Companies are rewarded for risk-reducing behaviour and penalised for poor risk

management;

▪ There is transparency and stakeholders have a ‘voice’; and

▪ Financing of official controls does not contribute to distortions of the European single

market.

It can reasonably be argued that - given the diversity of control and locality-specific

circumstances - there is merit in focusing on a ‘system-based’ approach that focuses on

fostering positive behaviours rather than attempting to define each individual parameter in a

way that is appropriate to all. The diversity of approaches adopted by Member States in the

delivery and financing of official controls means that, even with good data, appraisal of

specific options would be complex. For the most part good data are lacking.

Of the three options assessed, Option A has the greatest potential to meet that challenge.

Further work is required on some aspects but the substantive aims of the option provide an

appropriate balance between EU harmonisation (with the consistency of approach which that

can bring) and recognition of local circumstances. With some adjustments it defines the

‘direction of travel’ for the next set of reforms and addresses a number of specific problems

with the existing system (e.g. the determination of eligible costs).



ANNEXES



Annex 1 Detailed assessment of options and their impacts

This annex contains the detailed appraisal of each option and sub-option under

consideration in the context of proposals to revise Regulation (EC) 882/2004. The analysis is

summarised in Section 3 of the main report.

The policy baseline is the current situation as described in Section 3.3 and elaborated in

Annex 1.

For each reform option and sub-option, the following information is provided:

▪ Baseline scenario information provided by DG SANCO, with an assessment of the likely

impacts relative to the current situation across the EU-27 Member States for the sub-

options under Option C to amend the current system;

▪ Relevant abstracts of the data gathered on the organisation and operation of official

controls in each Member State, and the scale and characteristics of the market and the

FBOs within it where it illustrates the expected scale and distribution of impacts;

▪ Scores awarded by study respondents:

– Presentation of scores according to each of the five appraisal criteria, which

relate to the specific objectives of the system revisions: efficiency, simplification,

comparability, streamlining and accountability.

– Respondents were asked to rate each option on a scale of -2 to +2, where -2

means ‘significant negative impact’, 0 means ‘no impact’, and +2 means ‘significant

positive impact’. Results have been disaggregated according to whether the

respondents are Competent Authorities or industry representatives, and further

disaggregated by sector where industry views are not aligned.

– In some cases, respondents did not provide a scorecard, but did complete the

accompanying questionnaire. In these cases, the questionnaire was used to

determine the scores, as responses are directly transferable from the questionnaire

to the scorecard. Additionally, two industry associations indicated that they wished to

be represented by the responses from another industry association. In these cases,

the same scores are used for the represented organisation as for the one

representing.

▪ Summary of the comments received from respondents to the impacts of each option and

sub-option. Comments were received through the scorecard, a detailed questionnaire

and in-depth interviews. These comments provide additional context and insight into the

specific likely impacts in each sub-option and related concerns.

▪ Case study assessment of the impacts in six Member States based on the detailed

analysis presented in Annex 2: Belgium, Finland, France, Netherlands, Poland and the

United Kingdom.

▪ Additional information to support the analysis, where available.

▪ A summary assessment of the impact assessment results, synthesising the baseline and

other supporting information, stakeholder responses and case study results to provide an

overview of the economic (and where relevant, social) impacts for each policy option and

sub-option, considering specifically the:

– Magnitude

– Incidence, including:

◦ Distribution across and within business sectors;

◦ Whether they fall inside or outside the EU;

◦ Any impact on other industries;

◦ Impacts on SMEs; and

– Compliance costs and administrative burdens.



Under Option A there is also a discussion of how the sub-options can be combined to form a

coherent ‘package’. This involves looking at how sub-options interact with one another (both

positively and negatively) and how the legislative amendments could encourage the

development of a ‘system’ that rewards prudent risk management by FBOs, risk-based

approaches to inspection, greater efficiency in the delivery of controls, and better

mobilisation of resources to finance them.

Finally there is a comparison of the principal options (A, B and C) with each other.

As discussed in Section 3 the options are assessed against five criteria: efficiency,

simplification, comparability, streamlining and accountability. The working definition used

for these terms as set out in the study terms of reference is repeated here for ease of

reference:

Efficiency: Ensure that Member States’ official bodies have adequate financial means for the

efficient performance of official controls to ensure food safety30

.

Simplification: Clearer and simpler legal framework.

Comparability: Avoid disturbance of the internal market taking into account Member States’ different

cost structures.

Streamlining: Reduce the administrative burden on the Member States and on stakeholders as

much as possible.

Accountability: Ensure that stakeholders have access to information on how resources are

collected and used.

A1.1 Option A - Improve the current system

Option A considers a set of potential modifications to the current system through

amendments to Regulation 882/2004. It consists of a number of sub-options. These are first

assessed individually and then (in Section 4.3) a commentary is provided on linkages

between the sub-options and the development of a robust package.

A1.1.1 Sub-option A1 - Extend the scope of mandatory fees

A1.1.1.1 A1 - Specification

Sub-option A1 considers an extension in the scope of the mandatory fees (i.e. increasing the

number of official controls for which Member States are obliged to collect fees). Specifically,

Article 27 of Regulation 882/2004/EC is changed so that controls are transferred from the

‘non-mandatory’ category to the ‘mandatory’ category.

Table A1.1 provides an indicative list31

of the controls under Regulation 854/2004 (controls

numbered 1-7) and Regulation 882/2004 (controls numbered 10-18) that are currently

considered mandatory for Member States to charge a fee for official control activity. Controls

numbered 8 and 9, controls under Regulation 183/2005, number 19, are currently non-

mandatory—that is, it is not currently required for Member States to collect a fee for control

activities in these areas.

Extending the scope of fees to cover all of Regulation 852/2004 activities would essentially

mean adding to the list of mandatory controls those numbered 8, 9, and 19 in Table A1.1:

1. Checks on hygiene of foodstuffs at primary production holdings;

30 Note that this Commission definition does not refer to the efficiency with which CAs operate.

31 This list is comprehensive but not exhaustive; it is intended to ensure that this study includes a

range of official controls sufficient to explore options for revisions to the fee charging system of

Regulation 882/2004.



2. Checks on hygiene of foodstuffs at food establishments other than establishments

approved in accordance with Regulation 853/2004;

3. Checks at feed establishments.

This would mean that primary producers who are not already covered by a mandatory

fee (where milk production, and fishery and aquaculture are already covered), feed

establishments, and most food establishments farther up the food chain (e.g. retailers,

including restaurants, and some transport and storage operations) would be brought under

the ‘mandatory’ requirement and would thus be affected by an extension of scope of the

mandatory fees.

This could be considered a ‘moderate’ extension. A more comprehensive extension would

see fees becoming mandatory on all official controls applied across the food chain.

Survey respondents were asked to consider the advantages and disadvantages of changing

the status of particular controls from ‘non-mandatory’ to ‘mandatory’, list those controls that

might be considered for reclassification, and indicate the potential impacts of this change

from a long and short term perspective.

Table A1.1 Selected official controls within the scope of Regulation 854/2004, Regulation 882/2004, and Regulation 183/2005 for which a fee is mandatory or where an extension may be considered

Regulation Controls

854/2004

1 Approval of establishments that produce products of animal origin for human

consumption

2 Audit of fresh meat establishments

3 Inspection of fresh meat establishments (ante- and post-mortem inspections)

4 Inspection of fresh meat establishments: SRM controls and TSE testing

5 Checks at milk production holdings

6 Checks on production and marketing of fishery products and aquaculture

products

7 Checks at other food establishments approved in accordance with Regulation

853/2004

8 Checks on hygiene of foodstuffs at primary production holdings*

9 Checks on hygiene of foodstuffs at food establishments other than

establishments approved in accordance with Regulation 853/2004*

882/2004

10 Checks on animal health at holdings of origin for live animals

11 Monitoring residues of veterinary medicines and other substances

12 Approval of feed establishments

13 Approval of animal by-products establishments

14 Checks at animal by-product establishments

15 Checks on imported live animals

16 Checks on imported feed and food of animal origin

17 Checks on imported feed and food of non-animal origin

18 Checks on live animals and goods transiting the community

183/2005 19 Checks at feed establishments*

*Controls activities for which a fee is currently non-mandatory.



A1.1.1.2 A1 – Evidence and analysis


The scores awarded by survey respondents as regards the impacts of this policy option are

summarised in Figure A1.1. Selected comments from CAs and industry are provided in

Table A1.2.

Overall, Competent Authorities believe that extending the scope of mandatory fees would

have a positive impact on official controls systems in Member States. In particular, extending

the scope would improve efficiency and comparability of systems. Industry believes that

extending the scope of fees would have a negative impact, and have particular concerns

about increasing costs, though industry also sees opportunities for positive impacts

(specifically, for improved comparability of systems) as well.

Some CA and industry respondents indicated that fees should be mandatory across all

sectors, without discrimination. This is an issue of fairness – the principle of equal treatment

of all sectors in the food chain with regard to charging, rather than the costs of official

controls being recovered only from particular sectors. Some CAs are concerned, however,

that extending the scope of fees could create additional administrative burdens and reduce

flexibility in the system.

When asked to indicate fees that are currently non-mandatory, but should become

mandatory, respondents suggested the following categories:

▪ Certification,

▪ Audits,

▪ Feed-stuffs of non-animal origin,

▪ Fees for border veterinary controls,


import stage,

▪ Supervision activities across a range of sectors including:

– Fresh fruit and vegetables,

– Wine,

– Poultry meat quality,

– Fertilizers,

– Classification of bovine and porcine carcasses in EUROP system,

– Accredited certifying bodies in organic farming, and

– Systems of regional and traditional products,

– Retail sector,

– Dairy sector,

– Controls undertaken due to non-compliance and controls requested to obtain a

higher rating or score, and

– Laboratory tests for random or ‘one-off’ food safety issues.



Figure A1.1 CAs believe extending the scope of mandatory fees will have positive impacts on OC systems, while industry believes the impacts will be negative. Both groups, however, see the potential for improved comparability in this area.

-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification

ComparabilityStreamlining

Accountability

Industry Competent Authorities

Base = 22 industry responses; 11 CA responses

Average score awarded by survey respondents based on a scale where -2 means ‘significant negative impact’ and +2 means ‘significant positive impact’. Responses that received a score of ‘don’t know’ are not included in the score.

Table A1.2 Sub-option A1: Comments provided by survey respondents about extending the scope of mandatory fees

Competent Authority Industry

Positive

▪ [It could reduce] distortion because

more inspection activities [would be]

covered.

▪ [It could] increase receipts to CAs.

▪ [It would] ensure better harmonisation of

fees across EU [and] avoid debate at

local level on whether fees should be

applied.

▪ The classification of mandatory fees

makes it clear for which official controls

MS should collect fees.

▪ [It would improve] transparency for all.

[There would be] less distortions

between MS.

▪ [It would lead to] more efficient controls

and more compliance with bonus-malus

[principles].

▪ [It would] facilitate budget planning.

▪ [It would lead to] greater consistency

and transparency as to what controls

are subject to the collection of fees

across the EU. Meat industry

representative.

▪ It would reduce the distortion of

competition among different sectors.

Meat industry representative.

▪ Some degree of commonality across

MS applies. Meat industry

representative.

▪ Increases the level playing field across

the EU. Meat industry representative.

▪ FBOs as well as authorities will have a

clear knowledge on what the fees cover.


▪ Increase resources for controls,

provided fees can be "ring fenced".

Public health representative.

Negative

▪ Increasing the number of official

controls would burden inspectors; there

might be some problems in relation to

the limited staff capacity. At the same

▪ [It] could mean that some costs for

controls currently borne by government

(e.g. some TSE controls) [would] be

transferred to industry. Meat industry



time FBOs would be exposed to [sic]

additional financial charges.

▪ [It could increase] costs of [the]

administrative process to collect fees,

e.g. fees to micro business may not

cover cost of collection. [This] could

present state aid issues in associated

expenditure.

▪ [It would be] less flexible.

▪ [It could lead to] higher costs for

industry and extra controls for the CAs.

representative.

▪ No incentive for control authorities to

improve efficiency. Meat industry

representative.

▪ Increasing fees on the same sectors for

new activities (e.g. meat processors

others than cutting plants) would be

devastating. Meat industry

representative.

▪ Could lead to conflicts with political

direction and between officials carrying

out controls and businesses. Public

health representative.

▪ [It would reduce fairness] and

transparency. Dairy sector

representative.

Respondents also made the following comments about the expansion of mandatory fees:

Table A1.3 Respondent comments on expanding the scope of mandatory fees

Competent Authority

▪ Article 27 should be cross-sectoral and focus on statutory fees for food and feed

establishments with the possibility to assess the feasibility of including other registered

establishments.

▪ All the actors of the food chain [should be subject to mandatory fees]

▪ Instead of mandatory fees it is more important to give clear rules what costs are included.

▪ 882/2004 should focus on the required outcomes of the fee systems not on the fee systems

themselves; due to the divergence of CA organizations across and within MS it is unlikely

that there is a "one size fits all" fee system. In short 882/2004 may state that a percentage

of total costs for delivery of OCs is required; MS will then decide how, at what level or levels

within the food chain; and taking national interest and structures into account this may be

best achieved.

▪ If the scope of mandatory fees is extended to other products (ex: for feed products of non-

animal origin), then the requirements for importation and import controls should be

established at EU level.

Industry

▪ No discrimination between sectors, animal/non animal products, production, imports and

exports.

▪ Fees to be charged to the FBO owning or utilizing the establishment where the inspection

costs are made and inspection costs at farm level should not be covered by fees charged to

slaughterhouses.

▪ There would be an increased need for clear definition of all the cost components of

additional mandatory controls for which fees would be collected.

▪ Existing mandatory fees are not charged by some MS - this must be corrected before any

addition

▪ Clarity on who is covered by mandatory fees is needed, for example currently some

approved establishments under 853/2004 are covered by statutory fee systems whilst not

others. The implementation of statutory fees should be considered not on a commodity

basis but on the applicable legislation (e.g. whether they fall under 853/2004 or not)

▪ The best solution is to maintain mandatory fees only for activities where the permanent or

systematic presence of an official is required. Other activities should be exempted from fees

(i.e. no possibility for MS to charge fees for the type of control referred to in article 27).

▪ Costs of [controls that are] national priorities have to be covered by other tax income.

▪ This system should be abandoned - controls are either required or not - 'optional 'controls

promote gold-plating and inter-MS charging disparities. It will be efficient only if fees are

directly appointed to official controls.



In addition to asking respondents to the stakeholder consultation about the impacts of

extending the scope of mandatory fees, which is discussed in Table A1.2 and Table A1.3

above, respondents were also asked to indicate those controls on which fees are currently

non-mandatory, but which should become mandatory. A list of those fees is provided in

Table A1.4.

Table A1.4 Non-mandatory fees (under Article 27 of Regulation 882/2004) which should become mandatory

Competent Authority

▪ Certification

▪ Audits ‘on request’

▪ Feeding-stuffs of non-animal origin

▪ All fees concerning official border veterinary control

▪ Audits and inspections in all industrial producing food or feed establishments (animal and

non-animal origin, approved and registered)


import stage

▪ Supervision over the following markets: fresh fruit and vegetables, wine, poultry meat quality,

fertilizers

▪ Certification of hops and hop products

▪ Supervision over classification of bovine and porcine carcasses in EUROP system

▪ Control of the bovine meat from adult male bovine animals and control of the marketing of

the meat from bovine animals aged 12 months or less (granting special export refunds)

▪ Exempting operators on their request from the marking obligations, where eggs are delivered

directly from the production site to the food industry

▪ Control of the goose breeding and fattening conditions

▪ Supervision, including over accredited certifying bodies in organic farming and over system

of regional and traditional products

▪ Laboratory tests for random or ‘one-off’ food safety issues

Industry

▪ Retail sector

▪ Dairy sector

▪ 852 controls which occur either as a result of significant business non compliance or where a

Hygiene Rating scheme exists and the business seeks a revisit in order to gain a higher

score i.e. they have improved compliance as a result of official controls and wish to be "re-

rated" before the next programmed visit.

▪ [Controls] mentioned under article 27 point 5 could be moved to the category of mandatory

fees


Extending the scope of mandatory fees will impact each of the case study countries

differently, according to the current set of non-mandatory fees charged and the new

mandatory fees included in any revision to Regulation 882/2004.

▪ Fees in Belgium cover the entire food chain. Any extension of scope from non-

mandatory to mandatory is likely to have little, if any, impact on the fee control system in

this country. The same is likely to be true in Poland, where fees also cover most of the

food chain.

▪ Fees are charged on some controls for which fees are non-mandatory in Finland,

France, and the Netherlands. Impacts in these countries will depend on the specific

control activities that become mandatory.

▪ Fees in the United Kingdom cover mostly the mandatory controls, with some exceptions.

Few areas are included from the non-mandatory category. There are likely to be impacts



in the UK where an extension of scope is implemented, but this depends on the control

activities covered.

The scores awarded by respondents in the case study countries as regards the impacts of

this policy option are summarised in Figure A1.2.

Figure A1.2 Extending the scope of mandatory fees is likely to improve comparability. Respondents in the UK are uniformly opposed to this option.

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Comparability Net score Streamlining


Average score awarded by survey respondents based on a scale where -2 means ‘significant negative impact’ and +2 means ‘significant positive impact’.

Findings from the case studies as presented in Figure A1.2 suggest that no impact is

foreseen from extending the scope of mandatory fees. But as indicated previously, this is

because CAs largely favour of an extension while industry is not, and this results in an

overall score of ‘no impact’. When taking this into account, the case study results suggest

similar concerns as reflected in the wider assessment: administrative burdens would likely

increase for CAs and the cost burden would increase for industry. Both groups see

opportunities for improved comparability, however, noting that this could create a ‘level

playing field’ across sectors and EU Member States.

Other evidence

The scope of fees collected under official controls systems in different Member States vary

widely across the EU-27. The range of fees collected can be broken down into four

categories:

▪ Only mandatory fees are collected.

▪ Only mandatory fees, with a few exceptions (some mandatory fees are not collected).

▪ Mandatory fees and some activities outside them are collected.

▪ Fees are collected across the food chain.

Most Member States collect the mandatory fees as well as fees for some controls for which

fees are not mandatory (see main report Table 4.1. The degree of impact of an extension of

scope within the four categories described above will depend to a great extent on the

specific controls chosen to be ‘mandatory’ under any revisions to the Regulation.



Extending the scope of fees to cover all of Regulations 852/2004 and 183/2005 would mean

that fees for those controls numbered 8, 9 and 13 in Table A1.1 become mandatory32

. To

estimate the potential impact of an extension of the scope of mandatory fees, it is possible to

compare the number of enterprises in each Member State that would become, in theory,

subject to mandatory fees.

Table A1.5 includes the number of enterprises that could be affected if the scope of

mandatory fees included primary producers, companies manufacturing animal feed, and

food establishments, such as caterers and restaurants. The totals are provided separately

for primary producers and other business potentially affected; there are significantly more

primary producers in the Member States compared to other enterprises which could be

affected. Separating the two makes it easier to determine the potential impacts on non-

primary producing sectors. The last column presents the total for primary producers and

other enterprises potentially affected. Table A1.6 provides the number of enterprises,

including and excluding primary producers, as a proportion of the total number of enterprises

in each Member State33

. Presenting the data as a proportion of the total facilitates a

comparison between Member States.

Excluding primary producers, extending the scope of mandatory fees to other enterprises in

the food chain could have a significant impact in the UK and Spain, potentially affecting

169,000 (33 per cent) and 442,000 (20 per cent) enterprises respectively. In the UK, for

example, this could mean that primary producers and retailers require authorisation and

export certification (where relevant). Moderate impacts are expected in 13 Member States

where between 10 - 19 per cent of enterprises could be affected. For example, in Portugal

the fee for certification could be extended to other FBOs, such as food retailers. Low

impacts are expected in eight Member States where between 4 – 9 per cent of enterprises

could be affected. This could mean, for example, that in Poland the fee to register FBOs

could be extended to primary producers or food retailers.

If primary producers are included, the potential impacts extending the scope of mandatory

fees change. Significant impacts could occur in 10 Member States, where between 67 - 95

per cent of relevant enterprises and primary holdings could be affected. Of these 10

Member States, nine are new Member States (the exception is Ireland). This indicates that

extending the scope of mandatory fees could have a significant impact in new Member

States which have a high proportion of primary holdings relative to other enterprises.

Moderate impacts are expected in 10 Member States, where between 34 - 58 per cent of

enterprises and primary holdings could be affected. Low impacts are expected in five

Member States where between 8 - 31 per cent of enterprises and primary holdings could be

affected.

A1.1.1.3 A1 - Summary

General conclusions

The impacts of extending the scope of mandatory fees are expected to be positive for CAs

overall and negative for industry. This sub-option could improve mobilisation of resources for

controls and improve comparability, creating a level playing field across the EU and across

sectors of the food chain. This option could increase costs to CAs and industry, however,

32Checks on hygiene of foodstuffs at primary production holdings; and Checks on hygiene of

foodstuffs at food establishments other than establishments approved in accordance with Regulation

853/2004.

33 Total number of enterprises estimated by adding total number of enterprises in the following sectors;

Manufacturing, mining and quarrying and other industry; Wholesale and retail trade, transportation and

storage, accommodation and food service activities; Information and communication; Financial and

insurance activities; Real estate activities; and, Professional, scientific, technical, administration and

support service activities.



with more inspections required of CAs and a greater cost burden on some sectors already

subject to mandatory fees and new costs for those that are not. A greater focus on clarity of

the mandatory controls and clearer definitions of cost should be considered in conjunction

with potentially extending the scope of fees. One solution could be to remove the ‘non-

mandatory’ category from the legislation altogether and specify only mandatory fees.



would be determined by the controls currently considered to be ‘non-mandatory’ that become

‘mandatory’. Each Member State that currently collects fees on those controls would then

need to be assessed. Those MS that already collect fees for those controls are unlikely to be

affected. In MS that do not, an estimate of the magnitude would depend on the fee rates at

which the new mandatory controls are set, and the number of businesses affected. The

assessment of expanding the scope of mandatory controls to primary producers and to food

establishments other than those approved in accordance with Regulation 852/2004/EC

indicates that high impact will be felt in a relatively small number of countries, but where a

large number of businesses may be affected. The majority of MS would see moderate

impact from this hypothetical extension.


Impacts would fall primarily within the EU. This option would impact on all FBOs operating in

Member States where fees for the newly mandatory controls are not already charged under

the ‘non-mandatory’ category. Member States would also see their fee revenue increase

where the new mandatory controls are charged for, but were not previously.

The distribution of impacts depends on the controls that become mandatory, and then by the

fee rate set by each Member State for each newly mandatory control.

In sectors where fees are not currently charged, any new fees charged for controls will affect

SMEs in those sectors.


This option would increase the administrative burdens associated with calculating,

discussing, setting, communicating and collecting fees for any new mandatory controls in

Member States where fees are not already collected for those controls. There will be no

additional administrative burdens in those Member States where a fee is already collected

on a ‘non-mandatory’ basis.

Costs and benefits

The net financial outcome for CAs of the change in scope of mandatory fees will depend on

the extent of cost recovery achieved by the fees, the fate of the revenues, and the extent to

additional fee income is offset by compensating reductions in the budget allocations made to

CAs by finance ministries (or their equivalent source of general finance). The specific impact

on the resources available for financing controls cannot therefore be determined ex ante

though the general principles determining that impact can.

If fee revenues are recycled back in to the CAs then the change should result in a revenue

stream for financing of official controls that moves in line with the expansion or contraction of

the food chain (and the inspection thereof). The shift would connect CA financing more

closely to changes in the food chain and less closely to overall public expenditure (as finance

by general taxation). This does not occur if there is no link between FBO fee payments and

the revenue of the CA, e.g. if fees are paid into general public revenue.

There is therefore a potential positive relationship between extension of mandatory controls,

full cost recovery, ring-fencing, and measures on transparency, governance (participation of

FBOs) and incentives on CAs to continuously improve the efficiency of controls. The

potential to create positive feedback loops within the system will be missed if (for example):



▪ CAs become more dependent on industry for their income but no more accountable to

FBOs for the efficiency with which inspections are carried out (e.g. where the basis of

fees is unclear and there is no mechanism for industry engagement); and

▪ Fees are paid by FBOs but the revenues do not contribute to the resources available to

the CA for application of controls (e.g. where fees are paid into general government

revenue).

The introduction of additional fees would result in some incremental administrative costs for

CAs in the short run due in determining appropriate fees for control activities concerned.

However these additional costs are likely to decrease over time as CAs once charging

systems for the newly mandatory fees have been implemented. There is likely to be

increased costs associated with the administrative burdens of collecting fees from FBOs.

Industry costs are likely to rise in most Member States, but to differing degrees depending on

the number of enterprises that become subject to mandatory fees for the first time. The

actual cost incurred by industry will depend to a large extent on the precise mandatory fees

to which they are subject. In cases where fee income from one food sector is currently

cross-subsidising the inspection of other sectors, the extension of fees (subject to the

income allocation issues discussed above) ought to reduce the added burden on those

sectors that pay most today. Extension of mandatory fees could thus make the system

‘fairer’. Inevitably some FBOs will need to pay more; there are theoretically some

circumstances in which the burden on FBOs which are charged today could fall.



Table A1.5 Fees currently collected by Member States, and the number of enterprises that could be affected by an extension of scope in mandatory fees to controls under Regulation 852/2004 and 183/2005

MS Activities subject

to fees

Non-mandatory fees collected Number of enterprises

that could be affected by

extending the scope of

mandatory fees

(excluding primary

holdings)*

Number of primary

holdings that could be

affected by extending the

scope of mandatory

fees**

Total enterprises and

primary holdings

AT Mandatory fees and

some minor activities

outside them.

▪ Hygiene checks in establishments that are subject to

approval in accordance with Regulation (EC) No

853/2004 (processing; milk; eggs; fish).

39,282 237,420 276,702

BE The whole food chain

(also primary

production).

▪ Fees for non-mandatory controls are covered by the

contributions paid by all participants to the food chain at

the beginning of the year.

▪ Activities carried out on FBOs request (e.g. export

certificates) - a combination of cost per certificate and

hourly rates.

▪ In general authorisation / registration requests are not

covered by fees even if they require an inspection on the

spot. However the authorisation of some establishments

is subject to a fee.

63,002 77,560 140,562

BG Only mandatory fees

and minor activities

outside them.

▪ Animal welfare controls and import of feed of non animal

origin. 35,382 892,780 928,162

CY Only mandatory fees


outside them.

▪ Export certificates and import of products of animal

origin outside Regulation 882/2004. 7,879 67,430 75,309

CZ Only mandatory fees


outside them.

▪ Issuing certificates.

▪ Approval and registration of establishments and

laboratories.

0 67,460 67,460

DE Mainly veterinary

area but in some ▪ Non-mandatory fees charged in some Landers. No

further information provided. 183,655 582,940 766,595




to fees




mandatory fees

(excluding primary

holdings)*

Number of primary



scope of mandatory

fees**


primary holdings

Landers also food

safety in general

(whole food chain).

DK Mandatory fees and

some activities

outside them.

▪ Food and feed of non animal origin.

▪ Food additives.

▪ Animal by-products.

▪ Food contact materials.

▪ Animal welfare during transport.

▪ Approval and registration of establishments.

17,035 71,700 88,735

EE The whole food and

feed chain. ▪ The whole food and feed chain is covered but fees are

calculated in different ways according to sector. 2,080 33,370 35,450

ES Not all control

activities are covered

by rules or specific

provisions on fees

collection under


Fees are collected for

imports of food of

animal origin.

▪ Non-mandatory fees are charged in some Autonomous

Communities.

▪ La Agencia Española de Seguridad Alimentaria y

Nutrición (AESAN) has some fees for the evaluation and

registration of several dietetic foods. 441,765 1,485,030 1,926,795

FI Mandatory fees and

some activities

outside them.

▪ All feed controls and approval of establishments. 12,610 97,470 110,080

FR Only mandatory

areas under Reg.

882/2004 (with some

▪ A fee for animal by-products during slaughter is

collected on national basis (part fee part subsidy).

▪ Non-mandatory fees for export certification and

0 849,920 849,920




to fees




mandatory fees

(excluding primary

holdings)*

Number of primary



scope of mandatory

fees**


primary holdings

exceptions) authorisation of plants are being considered.

GR Mandatory fees and

other minor activities

outside them.

▪ All type of inspections of feed stuffs. 0 1,427,280 1,427,280

HU Mandatory fees and

some activities

outside them.

▪ Inspection of herds.

▪ Certification and control of animals.

▪ Transport of animal products.

▪ Control of animal exhibitions and competition.

▪ Tuberculin testing and sampling.

47,300 986,120 1,033,420

IE Mandatory areas

under Regulation

882/2004.

▪ Meat cold stores supervised by the Department of

Agriculture, Fisheries and Food.

▪ The National Standards Association of Ireland fee’s for

premises requiring recognition for the extraction of

natural mineral water.

17,575 183,400 200,975

IT Food chain, excluding

retail, animal by-

products, feed and

primary production.

Authorisation of

establishments,

including feed

businesses (subject

to a flat rate fee).

Export certification

(time-based fee).

Out of office hours

▪ Non-mandatory fees are covered by the flat rate

contributions paid by FBOs at the beginning of the year,

and fees on import of food of non animal origin.

404,341 2,457,920 2,862,261




to fees




mandatory fees

(excluding primary

holdings)*

Number of primary



scope of mandatory

fees**


primary holdings

activities.

Italy is considering

the possibility to

extend fees also to

the transhipment part

of import.

LV Only mandatory fees


outside them.

▪ Issuing of health certificates and permits.

▪ Import of food contact materials and feed of non-animal

origin.

4,364 525,870 530,234

LT Only mandatory fees


outside them.

▪ Issuing of specific certificates. 3,182 3,910 7,092

LU NO INFORMATION

AVAILABLE ▪ NO INFORMATION AVAILABLE 3,887 211,390 215,277

MT Red meat inspection

fees.

Fees charged by

Border Inspection

Posts (as per Annex

V of the Regulation).

▪ No non-mandatory fees; implementing legislation would

be required.

0 13,700 13,700

NL Mandatory fees and

some activities

outside them.

In general fees are

applied for all official

veterinary controls

▪ Registration of FBOs.

▪ Approval and maintenance of approvals for dairy, milk,

eggs and egg products. 51,791 112,080 163,871




to fees




mandatory fees

(excluding primary

holdings)*

Number of primary



scope of mandatory

fees**


primary holdings

and analyses in

approved FBOs and

border inspection

posts.

PT Mandatory fees and

some activities

outside them.

▪ Checks in establishments subject to approval in

accordance with Regulation (EC) No 853/2004

(processing; milk; eggs; fish), and control under

Regulation (EC) No 1774/2002 and import from third

countries (BIP, minimum annex V).

▪ Certification.

▪ Slaughter.

▪ Rabies vaccination.

▪ Medicines and veterinary products approval and

licensing.

▪ Import control of foodstuffs of non-animal origin

▪ Costs of the analysis for audits to verify traceability and

HACCP requirements.

94,347 3,971,650 4,065,997

PL The whole food chain

(apart from primary

production) but with

specific systems for

veterinary and non

veterinary areas.

▪ In the veterinary area: certification (export, health), feed

(domestic), animal by-products, emergency slaughter

outside plant, genetic materials, markets, animal

quarantine,

▪ Outside the veterinary area Regulation 656/2009

introduces a fee for official controls on food other than in

the veterinary area.

122,665 614,310 736,975

RO Mandatory fees and

some other activities

outside them.

▪ Inspection of FBOs related to products of non animal

origin. 41,068 7,600,760 7,641,828

SK Mandatory fees. ▪ Non-mandatory fees are collected as time-based fees. 34,359 114,660 149,019




to fees




mandatory fees

(excluding primary

holdings)*

Number of primary



scope of mandatory

fees**


primary holdings

▪ Import of food of non-animal origin.

▪ Veterinary controls of animals, hatching eggs, germinal

products and animal by products (also with reference to

export).

SL Mandatory areas and

some activities

outside them.

▪ Animal feed (control of approved establishments)

▪ Official controls not covered by Annex IV of Regulation

882/2004.

3,121 126,500 129,621

SE The whole food

chain, except primary

producers.

▪ Pesticides and residues.

▪ Import of feed of non animal origin and animal by-

products.

▪ Animal welfare in slaughterhouses.

8,188 180,150 188,338

UK Generally only

mandatory areas

under Regulation

882/2004, with the

exclusion of dairy

sector and a number

of exemptions (see

right).

▪ Approval of irradiation facilities.

▪ Pesticide residues programme (fee on chemical

industry).

▪ Sampling and testing of raw cow milk in England and

Wales.

168,753 309,370 478,123

Eurostat (2008)

*Total number of enterprises in the following sectors; Processing and preserving of fruit and vegetables; Manufacture of vegetable and animal oils and fats; Manufacture of grain mill products, starches and starch products; Manufacture of prepared animal feeds; Manufacture of beverages; Wholesale of agricultural raw materials and live animals; Wholesale of food, beverages and tobacco; Retail sale of food, beverages and tobacco in specialised stores; Restaurants and mobile food service activities; Event catering and other food service activities; and, Beverage serving activities.

**All holdings with arable land; all holdings growing permanent crops; all holdings rearing livestock; and, all holdings rearing other livestock.



Table A1.6 Proportion of enterprises, compared to the total number of enterprises34, that could be affected by extending the scope of mandatory fees to controls under Regulations 852/2004 and 183/2005

MS Proportion of enterprises that could be

affected by extending the scope of mandatory

fees (excluding primary holdings)*

Proportion of primary holdings that could be


fees**

Proportion of enterprises that could be


fees (including primary holdings)

AT 15% 47% 55%

BE 17% 17% 31%

BG 14% 78% 81%

CY 19% 62% 70%

CZ 0 8% 8%

DE 11% 26% 34%

DK 10% 29% 36%

EE 5% 44% 47%

ES 20% 40% 52%

FI 7% 35% 40%

FR 0% 31% 31%

GR 0% 0 0%

34 Total number of enterprises estimated by adding total number of enterprises in the following sectors; Manufacturing, mining and quarrying and other industry; Wholesale and

retail trade, transportation and storage, accommodation and food service activities; Information and communication; Financial and insurance activities; Real estate activities; and, Professional, scientific, technical, administration and support service activities.



MS Proportion of enterprises that could be


fees (excluding primary holdings)*

Proportion of primary holdings that could be


fees**

Proportion of enterprises that could be


fees (including primary holdings)

HU 10% 67% 70%

IE 15 61% 67%

IT 12 43% 50%

LV 4% 82% 82%

LT 14% 14% 26%

LU 6% 76% 77%

MT 0 0 0

NL 11% 19% 28%

PT 7% 75% 77%

PL 19% 48% 58%

RO 9% 94% 95%

SK 19% 39% 50%

SL 5% 69% 71%

SE 9% 67% 70%

UK 33% 38% 58%

Eurostat (2008)

*Total number of enterprises in the following sectors; Processing and preserving of fruit and vegetables; Manufacture of vegetable and animal oils and fats; Manufacture of grain mill products, starches and starch products; Manufacture of prepared animal feeds; Manufacture of beverages; Wholesale of agricultural raw materials and live animals; Wholesale of food, beverages and tobacco; Retail sale of food, beverages and tobacco in specialised stores; Restaurants and mobile food service activities; Event catering and other food service activities; and, Beverage serving activities.

**All holdings with arable land; all holdings growing permanent crops; all holdings rearing livestock; and, all holdings rearing other livestock.



A1.1.2 Sub-option A2 – Require full cost recovery


Sub-option A2 considers whether the Regulation should impose a legal requirement on

Member States to achieve full cost recovery of the (eligible) costs of official controls.

Respondents were asked to consider the positive and negative impacts of a full cost

recovery requirement. As interpreted here, the option relates to recovery of the costs of the

controls for which fees are charged. There are thus complementarities between sub-options

A2 and A1 in terms of recovery of costs of the overall control regime (Figure A1.3).

Figure A1.3 Sub-options A1 and A2 have complementary effects on overall cost recovery



Level of

cost

recovery

achieved

by fees

100%

100%

A2 Require

full cost

recovery


A1 + A2





Table A1.7.

▪ Industry does not favour full cost recovery for official control activity. In particular:

– It would not provide incentives for CAs to conduct efficient control inspections or

reduce the cost of delivery for control activities;

– It would negatively impact small businesses as costs are likely to increase for

control activities; and

– It could reduce the competitiveness of European businesses due to increased

cost burdens.

▪ Competent Authorities support full cost recovery, as it would improve efficiency and

increase accountability. The option is thought have negative impacts, however, with

respect to comparability and where implementation increases administrative costs.

Figure A1.4 CAs favour full cost recovery where it improves efficiency and accountability, but it may have negative impacts on administrative costs and comparability. Industry believes full cost recovery will have uniformly negative impacts.



-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification


Accountability




Table A1.7 Option A2: Comments provided by survey respondents about full cost recovery


Positive

▪ The fees would [sic] ensure sustainable

financing of the official control.

▪ MS would recover all the costs

associated with official controls.

▪ [It would] guarantee full-costs recovery.

▪ [A] level playing field [would be] create

as...Member States [would] have similar

costs.

▪ [It would] guarantee of resources for

official controls.

▪ FBOs [would] have an interest to enable

the CA / inspector to work efficiently.


▪ If controls were risk based, full cost

recovery would provide a bonus-malus

system and incentivise compliance.


▪ [It would promote] fair competition.


▪ Industry would [sic] be subjected to

much less control. Meat industry

representative.

▪ The overall cost of OC delivery [would]

reduce. Meat industry representative.

▪ Ideally [it] would increase control

resources, if ring fenced. Public health

representative.

▪ The budgets of the MS [may be]

improved [sic]. Food and agricultural

sector representative.

▪ Inspections [may] increase in quality

and uniformity. Food and agricultural


▪ [It may] provide sufficient resources for

the effective and efficient operation of

official inspections. Food and

agricultural sector representative.

▪ Industry would [sic] be subjected to

much less control. Food and





▪ The overall cost of OC delivery will

reduce. Food and agricultural sector

representative.

Negative

▪ [There could be] pressure on CAs to

decrease the frequency of audits.

▪ [There could be a] reduction in official

animal welfare monitoring.

▪ Some sectors, particularly smaller

businesses, may be put under

increased financial pressure if costs of

official controls are imposed / increased.

▪ Cost / fees would differ between MS

and decrease harmonisation [sic] [of

the] system.

▪ Costs would increase for FBOs.

▪ Impossible to calculate...whether the

fees collected cover the full costs of

control as they are collected by the

National Treasury. [It] is not possible to

know which public activities they

[subsequently] finance.

▪ [It could] changing the frequency of

controls (higher than needed or lower

than necessary) because of financial

reasons.

▪ [It could lead to] more discussions with

FBOs.

▪ Full cost recovery leads to an unequal

[sic] of impact on sectors. There is a

difficulty in definition of what full cost

recovery means, what overheads are

covered and it would be very expensive,

in terms of resources, for the

Commission to police.

▪ No incentive for improving efficiency.


▪ The requirement for full cost recovery,

of itself, provides no incentive for the

competent authority to improve the

efficiency or reduce the cost of delivery

of official controls. Meat industry

representative.

▪ If controls are not risk based they would

not provide value for money and lead to

the closure of businesses for no public

health reason. Meat industry

representative.

▪ Many smaller plants will be lost.

Costs will be passed down the chain till

livestock producers where margins are

already tight, resulting in even great

reductions in livestock numbers. Meat

industry representative.

▪ Reduction in consumer safety.

Reduction in official animal welfare

monitoring. Industry will be decimated.


▪ Consumer choice will be restricted.

Smaller premises will close resulting in

higher 'food miles' thus damaging

animal welfare. May increase financial

burden for FBO. Meat industry

representative.

▪ No incentive for CAs to improve

performance plus increases cost of

production for feed manufacturer.

Animal feed sector representative.

▪ Could have significant business impacts

which are likely to result in increased

costs to consumers. Also potential to

lead to conflict with CAs. Public health

representative.

▪ [If] FBOs are further burdened with

costs, the competitiveness of European

enterprises would be weakened

dramatically. Food and agricultural


▪ Many smaller plants may be lost. Food

and agricultural sector representative.

▪ Costs will be passed down the chain to

livestock producers where margins are

already tight, resulting in even greater

reductions in livestock numbers,

particularly from the more sensitive

regions. Food and agricultural sector

representative.




▪ Will impact disproportionately on SME

FBOs: consumer protection will not be

enhanced by their demise. Decision

needed on which costs should be

funded from general taxation. Food


▪ [It would] destroy [sic] [the] level playing

field for EU importers and exporters.

Food sector representative.

▪ No incentive to control authorities to

improve their performance. Food sector

representative.

▪ Level playing field is destroyed for both

EU importer and exporter. Food sector

representative.

▪ Reduction in consumer safety.

Reduction in official animal welfare

monitoring. Veterinary sector

representative.


The case study results indicate that a full cost recovery requirement would have varied

impacts on Member States depending on:

▪ Current levels of cost recovery;

▪ The degree of decentralisation in the official controls system; and

▪ Legislative requirements that may require changes.

In Member States with a high degree of public financing and low degree of cost recovery

from fees (e.g. Belgium), a full cost recovery requirement could be difficult to achieve. There

would also be legislative changes required in Belgium and in Finland, which would create

some administrative burdens, at least initially. In MS such as Finland where local authorities

set fee rates and bear responsibility for their own cost recovery, the implementation of this

sub-option would need to be designed carefully to avoid substantial new administrative costs

at the central level.





Figure A1.5 Responses varied across case study countries with respect to full cost recovery. Some indicated that it could have positive overall impacts while others foresee negative impacts.

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Eff iciency Net score Simplif ication



The variance in responses across case study countries can be explained in part by the

extent to which official controls are publicly funded:

▪ In Belgium, official controls are primarily publicly funded. Full cost recovery would likely

require additional national legislation and would therefore have a negative impact for

simplification. Full cost recovery could however have slight positive impacts on efficiency

and comparability.

▪ In Finland, most CAs are under funded—only one-third are able to fully recover costs.

This is due largely to competition amongst municipal CAs to avoid charging

comparatively higher fees than neighbouring CAs. Central government has no legal

authority to influence fee rates. So, while respondents indicated that this option is likely

to have a positive impact on efficiency, it would create complications within the legal

framework and potentially reduce accountability as CAs would have less incentive to

control costs.

▪ In France, approximately 70 per cent of costs are recovered. Respondents indicated that

full-cost recovery could improve efficiency (i.e. cost recovery), while reducing the

efficiency of inspections and incentives for CAs to improve their performance.

▪ In the Netherlands, full cost recovery requirements would have a significant positive

impact on efficiency, and weakly so on comparability and accountability.

▪ In Poland, there is little information regarding current levels of cost recovery, but it is

thought to be insufficient. This option could improve efficiency and comparability, but is

thought to have a significant negative impact with respect to streamlining, as the option

would increase CA administrative burdens.

▪ In the UK, the CA is currently consulting with industry on full cost recovery in the meat

sector and considering changes for all other control activities. Industry, however,

considers this unfair where they are required to bear more of the costs, particularly as it

is unlikely to incentivise CA inspection efficiency.

Other evidence

DG SANCO baseline data indicate that only five Member States may achieve full cost

recovery through fee collection for control activities (where fees are applied): Lithuania,

Latvia, Portugal, Poland and Slovenia. In the case of Portugal and Slovenia, there is no

evidence to substantiate the CAs claim of full cost recovery, however. In other MS, fees



cover costs in most areas, with some exceptions. For example, Denmark and Finland

achieve full cost recovery, except for fees collected from small FBOs. In Austria and France,

costs are recovered, except on border controls. In most Member States, current fee recovery

does not cover costs, and the level of recovery is between approximately 30 and 80 percent.

A full cost recovery requirement will therefore impact most Member States.

Table A1.8 Full cost recovery across EU Member States

Member

state

Full cost

recovery

Percentage cost

recovery

(if less than

100%)

Fees cover

costs with some

exceptions

Fees do not

cover costs

(percentage

unknown)

No information

AT Fees for border

checks

BE 37% (2009)

BG 27% (2007)

CY

CZ 28% (2007)

DE

DK 35% (small

abattoirs)

EE 20% (2007)

ES

FI 20% (small FBOs)

FR 45% - 70%

(domestic)

(imports)

GR

HU 60% (2007)

IE

40% meat

90% milk

76% imports

(2009)

IT 50% (2007)

LT

LU

LV

MT 39% (2007)

NL 81% (2007)

PT

PL35

RO

50% non-animal

origin

(2007)

(processing

products of animal

origin)

35 The baseline data provided by DG SANCO indicate that Poland achieves full cost recovery; interviews with the

Polish CA for this study, however, suggest that there is little data on cost recovery and that cost recovery is thought to be insufficient.



Member

state

Full cost

recovery

Percentage cost

recovery

(if less than

100%)

Fees cover

costs with some

exceptions

Fees do not

cover costs

(percentage

unknown)

No information

SE

SI

SK 51% (2007)

UK 43% (2008)

DG SANCO baseline

Notes on the baseline data presented in Table A1.8

Italy:

▪ From 2009 fees are to be applied with an automatic 20% increase, then after the end of

the year the actual cost is calculated and the automatic increase/decrease is re-

calculated to reach 100% cost coverage.

▪ A 0.5% increase is meant to cover costs related to the implementation of MANCP and

ring fenced for this purpose to the Ministry of Health.

United Kingdom:

▪ Annex VI is the reference including social security costs and overheads.

In the slaughterhouse and cutting plant sector the following level of cost recovery was

achieved

Poland:

▪ The baseline data provided by DG SANCO indicate that Poland achieves full cost

recovery; interviews with the Polish CA for this study, however, suggest that there is little

data on cost recovery and that the available data indicate that cost recovery is

insufficient.

Portugal:

▪ CA claims 100% but has no data to support claim

Lithuania

▪ CA claims 100%

Greece

▪ Fees do not cover costs. No data available (for the years before 2008 fees were not

collected).

Austria

▪ At the Swiss border, lower fees are charged in accordance with an agreement between

the EU and Switzerland.

Sweden

▪ Generally speaking, the aim of the fees system is full cost recovery for all official

controls. The fees charged must be sufficient to finance the official control deemed

necessary, and fees may not be used to finance other activities. Administrative costs,

training, overheads, development of OC are included in the hourly rate. Slaughter up to

200 tonnes per year is partly subsidised (approx. total of 9 million SEK in subsidies

2010).

The notes on the baseline above indicate that data related to cost recovery levels should be

interpreted with caution. Information related to levels of cost recovery is relatively limited,

and where available from multiple sources, is sometimes contradictory. For example,

several of the CAs reporting 100% cost recovery but do not have the data to substantiate

their claim. Individuals from the Polish CA stated that data on cost recovery levels were

unavailable, but was likely to be below 100%, but the DG SANCO baseline states that

Poland recovers 100 per cent of official control costs. Another example of issues with cost

recovery data is Finland, where figures for cost recovery vary widely. The DG SANCO

baseline states that it is 20 per cent for small FBOs, while the FCEC (2008) study provides a

more nuanced picture, indicating that the level of cost recovery ranges from 20 per cent



(municipal food control) to 97 per cent (veterinary border control). A selection of the

potential factors behind the disparity of cost recovery in Finland is discussed in the box

below.

Cost recovery rates in Finland

Official controls for small FBOs in Finland, of which there are many, are the responsibility of the

municipal control unit. Evira, the Finnish CA, is responsible for collecting fees from large FBOs, of

which there are few. The FCEC (2009) study of official controls found that cost recovery for large

FBOs was 99 per cent and only 20 per cent for municipal controls; data reported in DG SANCO

baseline indicates that cost recovery is 20 per cent for small FBOs

Consistent with this finding, Lepostö et al. (2010) investigated the extent to which Finnish Competent

Authorities recovered the costs of performing official controls. The fees collected were compared to

costs incurred, based on a questionnaire of municipal environmental health and food control

authorities. The study found that only 38 per cent of municipal control units collected fees that

covered 100 per cent of control costs. This compares with the 20 per cent reported in the FCEC

study.

The data suggest that cost recovery levels in Finland are high for a small proportion of FBOs, but low

for the majority of FBOs.

This discrepancy may, in part, be explained by the characteristics of the Finnish official control

system where there are regional differences in the application of official control fees. Rates are set

at municipal level, and are based on actual costs or may even be less than costs.36

Additionally,

Lepostö et al. (2010) found that official control activities were often conducted in conjunction with

inspections related to other legislation (such as health and safety inspections), but these inspections

were considered as one inspection and charged as one single control. This was the case in 54 per

cent of control units. This supports the points made by an interviewee from Evira for this study, who

stated that it is very difficult to determine the proportion of cost recovery for official controls in Finland

because control units do not separately record the time dedicated to official control activities. Official

controls are considered as a sub-set of controls in a larger set that control units are responsible for

administering. In the interviewee’s opinion, it would require the introduction of burdensome data

collection mechanisms to accurately record the level of official control cost recovery in Finland.

Table A1.9 illustrates the potential level of impact for each MS achieving 100 per cent cost

recovery based on their current cost recovery rates as reported in the DG SANCO baseline

dataset. It is intended to provide an indication of the potential impact only; due to the issues

with the cost recovery data it is not intended to be a definitive analysis. The potential impact

of increasing recovery to 100 per cent is expressed in terms of high impact (MS currently

recovering between 0% - 33% of costs), medium impact (MS currently recovering between

34% - 66% of costs), low impact (MS currently recovering between 67% - 100% of costs)

and no impact (MS currently recovering 100% of costs). For several MS no information was

identified to indicate current rates of cost recovery.

These data suggest that eight MS would be impacted very little or not at all by a full cost

recovery option. Nine MS would see a moderate impact for this requirement, and five would

require significant changes in the operation of their fee recovery systems in order to meet a

full cost recovery requirement. The potential impacts are unknown for five MS, where

information is currently unavailable.

Table A1.9 Full cost recovery across EU Member States

Member

state

Percentage of costs

recovered

Percentage of costs

not recovered

Impact of reaching

100% recovery

AT 100% 0% No impact

BE 37% (2009) 63% Medium

BG 27% 73% High

36 Lepostö et al. (2010)



Member

state

Percentage of costs

recovered

Percentage of costs

not recovered

Impact of reaching

100% recovery

(2007)

CY No information Unknown Unknown impact

CZ 28%

(2007) 72% High

DE No information Unknown Unknown impact

DK 35% (small abattoirs) 65% Medium

EE 20%

(2007) 80% High

ES Costs not covered Unknown High

FI 20% (small FBOs) 80% High

FR 45% - 70% (domestic) 30% - 55% Medium

GR Costs not covered Unknown High

HU 60%

(2007) 40% Medium

IE

40% meat

90% milk

76% imports

(2009)

67%

(average) High

IT 50%

(2007) 50% Medium

LT 100% 0% No impact

LU No information Unknown Unknown impact

LV 100% 0% No impact

MT 39%

(2007) 61% Medium

NL 81%

(2007) 19% Low

PT 100% 0% No impact

PL37

100% 100% No impact

RO

50%

non-animal origin

(2007)

50% Medium

SE Costs not covered Unknown High

SI 100% 0% No impact

SK 51%

(2007) 49% Medium

UK 43%

(2008) 57% Medium

DG SANCO baseline

37 The baseline data provided by DG SANCO indicate that Poland achieves full cost recovery; interviews with the

Polish CA for this study, however, suggest that there is little data on cost recovery and that cost recovery is thought to be insufficient.



Factors influencing the aggregate impact on the food chain of moving to full cost recovery include: (i)

the range of controls on which fees are applied (as discussed in A1), (ii) the speed with which the

transition is made and thus firms’ opportunity to adjust (iii) the extent to which there are changes in

the regulatory cost base over the transition period, (iv) the design of the fee structure. For example,

if the efficiency of controls is improved during the transition period (e.g. encouraged by greater

transparency and accountability) and bonus-malus principles are designed into the fee structure then

the proportionate change in costs to a well-performing firm may be less than the change in the

recovery rate.


General conclusions

A full cost recovery option is likely to have a positive impact on efficiency, and therefore

meets the primary objective that this option is designed to achieve. Most Member States do

not achieve full cost recovery at present, and a requirement to do so would enable MS to put

systems in place to achieve this. On the other dimensions, however, full cost recovery is not

considered to have a positive impact. In particular, it is likely to increase administrative costs

to CAs and create complications where MS must change their legal frameworks and system

structures to implement and monitor cost recovery. Industry is concerned that this

requirement will lead to less efficient inspections while increasing their costs.



would be determined by the approach and principles underpinning a full cost recovery

requirement. If the requirement were to be phased in over time, for example, CAs would

have time to adjust their systems to increase cost recovery incrementally. If the requirement

were to be effective immediately with a revision to the Regulation, most Member States are

likely to struggle to achieve full cost recovery and the requirement will simply go unmet. The

specification of the requirement, however, is unknown.

In addition, the scale of the impact would be influenced by the ability of CAs to accurately

determine the costs of performing official controls. Where official controls are performed

alongside controls relating to other legislation during an inspection, for example, CAs may

find it difficult to accurately determine the cost of performing one of a suite of controls. Some

CAs may require the introduction of new systems, organisational and / or technological, to

accurately record and determine the cost of official controls.



subject to fees for official controls, and the income of all entities that collect fees for control

activities.

The distribution of impacts depends on the degree to which full cost recovery is already

achieved in the Member State and the control activity concerned (e.g. for small FBOs and/or

for border inspections).

The net impact on business would also be influenced by the approach taken by CAs to

recovering costs. Where a cost recovery requirement is met through a bonus-malus

approach to fee collection, some FBOs may find their costs reduced and others with their

costs increased. This has not been specified, however, and is only speculative.

There is no particular SME bias to the impacts but there are fee exemptions or reductions for

small or micro businesses, CAs will need to determine how to recover costs from elsewhere

in the system or from other revenue sources.

There is a related issue of the level at which the cost-recovery is assessed. For example, is

cost recovery to be assessed and reported on for each type of control, at the Competent

Authority level, at Member State level? The implications of this choice are likely to vary



according to how decentralised the administration of official controls is. In a country where

controls there are a large number of Competent Authorities the calculation of a ‘blended’

national cost recovery rate is likely to be complex and the scope to move revenues from

points of ‘over-recovery’ to those of ‘under-recovery’ limited.


Costs may increase for FBOs, but they may also decrease, depending on the interaction of

this sub-option with other sub-options that may be included in any revisions to the

Regulation. There would be some increase in administrative costs for CAs that are not

currently able to estimate their cost recovery rate as accounting and information systems are

upgraded.

Costs and benefits

For CAs there will be administrative burdens associated with determining the actual costs of

official controls, and ensuring that these costs are reflected in control fees. There are also

likely to be administrative burdens (and hence costs) associated with setting appropriate fee

levels for FBOs. The net impact will be influenced by whether those costs can be recovered

from the fees themselves.

Costs are likely to increase for FBOs in Member States where current recovery levels are

low. The actual impact on FBOs will depend on current recovery levels, and the trajectory

set towards full cost recovery, and the extent to which there are adjustments in the

regulatory cost base over that period.

Overall, requiring full cost recovery is likely to increase costs for FBOs. There will be more

significant impacts in Member States where current recovery levels are low.

A1.1.3 Sub-option A3 - Clearly define eligible costs


Sub-option A3 considers changes to the Regulation that more clearly define the costs that

can be recovered from fees to those directly linked to performing official controls. Currently,

Annex VI sets out a definition of eligible costs as follows:


▪ Staff costs related to control activities, including facilities, tools, equipment, training,

travel and associated costs; and


Although Regulation 882/2004 attempts to do this through Annex VI, the specification is

unclear and has resulted in differences of interpretation. This study assessed the following

list, which more clearly defines the eligible costs:








Respondents were asked to consider whether (and how):

▪ They agree or disagree with each of the costs set out in the revised list;

▪ The revised list is sufficiently clear to avoid different interpretations; and

▪ Other costs should be added and/or items should be deleted from the list.



Net change in income to CAs (or to the other public body receiving fee income) through this

sub-option is influenced by the decisions taken on other sub-options, as illustrated by Figure

A1.6.

Figure A1.6 A3 determines the eligible cost base on which the rates considered in sub-option A2 are calculated, and which determines income generated by sub-option A1



Level of cost

recovery achieved by

feesA2 Require

full cost

recovery


Scope of

eligible costs

A3 Define

eligible costs

Baseline

position





Table A1.12. In summary:

▪ Both CA and industry respondents indicated that a clear definition of eligible costs would

have a positive impact on official controls system. CAs in particular expected significant

positive impacts on efficiency, accountability and simplicity of the system.

▪ CAs also uniformly agree that each individual cost specified (i.e. salaries, tools and

instruments, out of office hours activities, travel costs, administrative costs, and sampling

and analysis) should be included.

▪ Industry views are more varied on the specified list of costs:

– A strong majority agree that salaries (75%) and tools and instruments (72%)

should be included;

– A majority agree that costs of sampling and analysis (66%), travelling linked to

official controls activities (59%), and out of office hours activities (53%) should be

included; and

– A majority disagree that training of inspectors (72%) and a quota of

administrative costs (59%) should be included.

▪ When asked to specify other costs that should be included, CAs proposed:

– Overhead costs (e.g. buildings and maintenance, legal fees, financial

administration, IT costs);

– Salaries of local veterinarians; and

– Inspection report preparation.

▪ Conversely, industry representatives indicated that overhead costs in particular should

not be included.



▪ One CA suggested that rather than specify a list of costs, activity-based costing (ABC)

should be used to identify the relevant activities associated with official controls and

assigns a cost to each according to actual consumption.

Figure A1.7 CA and industry respondents uniformly agree that a clear definition of eligible costs will have a net positive impact on official controls systems

-2.0

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0.0

1.0

2.0Efficiency

Simplification


Accountability




Survey respondents were asked to indicate whether they agree or disagree with the

inclusion of a set of different costs, including salaries, tools and instruments, out of office

hours activities, travelling, training, administrative costs, and sampling and analysis.

Competent Authorities who responded to this question unanimously agreed with the

proposed list, with the exception of one who disagreed regarding ‘out of office hours

activities’. Industry responses were more varied. Table A3.5 provides the breakdown of

responses for both groups.

Table A1.10 CA and industry respondents who agree with each of the proposed eligible costs directly linked to official control activities

Category Competent Authority Industry

Salaries for inspectors, including

social contributions

12 out of 12 (100%) 24 out of 32 (75%)

Tools and instruments to be used

during inspections

12 out of 12 (100%) 23 out of 32 (72%)

Out of office hours activities 11 out of 12 (92%) 17 out of 32 (53%)

Travelling linked to official controls 12 out of 12 (100%) 19 out of 32 (59%)

Training of inspectors 12 out of 12 (100%) 9 out of 32 (28%)

Quota of administrative costs linked

to inspection activities

12 out of 12 (100%) 13 out of 32 (41%)

Costs of sampling and analysis 12 out of 12 (100%) 21 out of 32 (66%)



Respondents were also asked to propose additional categories or wording to the list of

eligible costs set out in option specification. Table A3.14 provides the wording and

categories proposed by CAs and industry stakeholders.

Table A1.11 Sub-option A3: Other categories or proposed wording for eligible costs

Competent Authority

▪ The salaries of local veterinaries taking care of farm animals should be included in control

costs.

▪ Cost of building and maintenance of the required facilities for inspection should be added to

the list for costs recovery.

▪ [The] same authorities take care of animal health. The salaries of local veterinaries taking

care of farm animals should be included in control costs.

▪ Inspection activities include also inspection report (only planning is mentioned).

▪ Overhead costs linked to the above mentioned activities (personnel and organization, IT,

housing, ...)

▪ Maintenance of the technical equipment.

▪ Legal costs associated with enforcement action.

▪ Administrative costs must be determined clearly.

▪ Cost of building and maintenance of the required facilities for inspection.

▪ Financial administration, including salary administration

▪ Equipment of inspectors (clothes, boots...) and facilities

Industry

▪ Tools and instruments and administrative costs: [should] only [be] included [sic] if they are

harmonised between all MS. Food sector representative.

▪ Cost recovery should not be sought for salaries and certainly not for travel costs or training.

Food and agriculture representative.

▪ Quota of administrative costs linked to secretaries, vets, offices etc [should not be included].


▪ [Should] not have salary covered...only the cost of the service provided [and] tools /

instruments should be included. Long-term equipment should not be part of costs. Meat


▪ Governmental overheads are unacceptably high and reflect inherent inefficiency and

bureaucracy which should not be passed on to an efficient and competitive industry - no

overhead should be charged to industry as this will have negative effects on the delivery of

OCs and result in a diversion of resource away from ensuring safe food. Veterinary


▪ No changes of Annex VI Dairy industry representative

▪ Tools and instruments: long-term equipment should not be part of costs, but usable tools for

the specific inspection can be part of it

▪ Out of office activities: for specific [instances when the CA is needed] Dairy industry

representative

▪ Costs of sampling: only if way of working and reporting is harmonized Fruit and vegetable

industry representative

▪ Cost of sample taking in case same needs to be effected manually by hired workers.

Transport of samples. Animal feed trade and export representative

▪ Parts of the overhead costs like planning, IT, or social contribution e.g. should be born by

the authorities from the state budget. Food and agricultural trade representative

Table A1.12 Sub-option A3: Comments provided by survey respondents about a clear definition of eligible costs

Competent Authority

▪ [The definition of] out of office hours activities is unclear for me.

▪ Detailed lists tend to have a detrimental effect as they can still be interpreted in a number of



different ways, potentially increasing the administrative burden on the CA due to increased

analysis, recording and reporting. We believe that the principle of activity based costing

should be applied. Activity-based costing (ABC) is a costing model that identifies activities in

an organization and assigns the cost of each activity resource to all products and services

according to the actual consumption by each.

▪ Overhead costs are always difficult to define.

Industry

▪ This is a critical concept. Harmonization of the understanding of what is included within the

calculation of the fee is paramount to ensure a more level [sic] playing field but also to

reduce the significant number of legal challenges currently suffered by CA from stakeholder

organizations. Public health representative.


A clear definition of costs will have a positive impact on each of the case study countries,

particularly where reduced ambiguity ensures that fees charged cover only those costs

directly related to control activity. CAs are likely to benefit where this helps recover costs and

reduce uncertainty about what is ‘allowable’. Industry benefits where CAs are not allowed to

include unrelated costs, and thus FBOs pay lower rates.



Figure A1.8 Overall, case study country respondents indicate that a clear definition of costs will have a positive impact on official controls systems, and particularly for efficiency

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Efficiency Net score Streamlining



The case study results indicate a similarly net positive impact expected from clearly defining

eligible costs. Respondents in Belgium, Finland, France and the Netherlands foresee

positive impacts particularly for efficient cost recovery. The overall effect is likely to be less in

Poland, where in practice fee rates may be determined through negotiation between central

CAs and industry associations. In France and the Netherlands, some respondents are

concerned that increasing the number of eligible costs could also increase the administrative

burdens on Competent Authorities.



Other evidence

The cost categories themselves require precise definition in order to overcome the variations

in the cost base identified in the FCEC Evaluation. Criteria need to be precise enough to

ensure that Member States are consistent in their application of the eligible cost categories

to fee rates. The ‘quota’ of administrative costs referred to in the current draft text is

potentially open to different interpretations, and any overhead costs that may be included are

also subject to significant variance in what might be considered a relevant component. One

option is to specify that administrative costs that cannot exceed a given percentage of staff

costs.


General conclusions

A clear definition of eligible costs is likely to have strong positive impacts for official controls

systems across the EU. The strongest positive impact is likely with respect to efficient cost

recovery for CAs. Greater specification or adding new costs may, however, increase the

administrative burden on CAs, though this is not likely to be significant.

When asked to assess a specific list of eligible costs, CAs agreed that the proposed list was

appropriate and that each category should be included. CAs proposed that overhead costs

should also be included, as well as the salary costs for local veterinarians and inspection

report preparation. Industry responses were more varied, with a strong majority agreeing

with salaries and tools and instruments, and significant disagreement regarding travel costs

and administrative costs. Industry, in contrast to CAs, indicated that overhead costs should

not be included.

If the problems with the existing Annex VI text are to be avoided then a clear definition of

each cost element is required. The definition of eligible overheads is an area of particular

difficulty. The wording currently proposed for these other administrative costs may not be

sufficiently clear (the scale or basis of the ‘quota’ referred to in the text is not defined).


The scale of the impact of the sub-option on individual Member States and on individual

FBOs would be determined by:

▪ The ultimate definition of eligible costs (e.g. specification of allowable costs under each

allowable category);

▪ The gap between that definition and current practice and

▪ The costs associated with each component and for each control in individual Member

States (i.e. the baseline costs).

The final definition of eligible costs has yet to be determined. The variance between the

draft list and current practice across the CAs within the 27 MS is not documented.


Impacts would fall primarily within the EU. This sub-option would, in principle, impact all


The distribution of impacts is affected by the cost categories that are included, and the

components within those categories that are considered allowable. For example, as the

generosity of the overhead allowance increases, the costs to industry (and income to

government) are likely to increase. If travel costs and/or administrative costs are excluded,

as suggested by many industry respondents, then industry costs are likely to decrease and

income to CAs (or finance ministries) is likely to fall.

Many businesses operating in the sectors affected by official controls are SMEs. SMEs

would be affected where the definition of eligible costs widened and resulted in increased

fees. For example, inclusion of inspector travel costs could affect rural SMEs.




Administrative burdens may increase, at least initially, for CAs as the newly defined cost

categories must be assessed against current fee charging practices and adjusted as

required. Costs are likely to decrease over time, however, as the lack of ambiguity ensures

that fees cover only directly related costs and accounting practices have been adopted and

implemented accordingly.

Costs and benefits

The impact of redefinition of eligible costs will vary by CA according the final definition

adopted and current charging practice. The sub-option, as with A2 (and the sub-option on

transparency, A7), requires CAs to have an understanding of the costs of their official control

activity. Where that understanding is currently lacking the reform package as a whole would

result in some initial cost increase as CAs assess their cost base and (re)assess fees for

control activities based on the more precise list of cost categories. Those incremental costs

would be expected to diminish over time once a new system is established.

Industry costs may rise in some Member States, where new cost calculations result in high

fees. Equally, industry costs may decrease in Member States where the reverse occurs.

Overall, both CAs and industry believe that a precise definition of costs will improve the

official controls system in the EU. In particular, precise cost definitions are likely to increase

efficiency for CAs to recover control costs. Transparency and accountability will improve,

which benefits industry. CA uncertainty over what should be included is reduced, which CAs

indicated would be an improvement over the current system.

A1.1.4 Sub-option A4 – Introduce time-based fees


Sub-option A4 considers the impact of Regulation 882/2004 specifying time-based fees for

official controls that require continuous or systematic presence of officials. Flat fees would

apply to those controls outside the scope of time-based fees.

The expectation is that fees would be calculated on the basis of Member States’ costs under

common EU rules, though three alternative bases for the fee calculation are provided:

▪ A standard, EU-wide, hourly rate;

▪ A standard, EU-wide, hourly rate, indexed in each MS by a cost-of-living adjustment; or

▪ Detailed cost calculations (i.e. local costs determined under common rules).





Table A1.13.

CAs and industry agree that there is likely to be a slight positive impact from introducing

time-based fees for official controls that require continuous or systematic presence. In

particular, CAs expected improved efficiency and accountability, as well a simplified system

with reduced administrative burdens. Both CAs and industry respondents noted that risk-

based fees are naturally suited to a system that employs risk-based principles, thus ensuring

that time is spent only for activities and on businesses that present the most risk to the food

chain. Nonetheless, CAs voiced some concerns regarding complications arising from trying

to calculate time-based fees. Both groups are concerned that time-based fees could

incentivise veterinarians to conduct inspections that are longer than required in order to

obtain more fees.

When asked what fees in particular might be well-suited to time-based principles, both CAs

and industry agree that red meat and poultry inspections, in slaughterhouses and cutting

plants and for ante- and post-mortem inspections would be appropriate. Industry also sees



potential for audit, certification and import control checks, though some CAs indicated that

audit and import controls should remain as flat fees.



▪ CAs prefer setting time-based fees according to MS costs under EU rules and industry

also sees this as a good option.

▪ Industry prefers setting time-based fees according to a standard, EU-wide hourly rate

that is indexed in each Member State by a cost-of-living index, but CAs see this as a less

appealing option: while no CA ranked this option last, only 1 ranked it first and 8 ranked it

third.

▪ Neither CAs nor industry prefer setting time-based fees based on a standard, EU-wide,

hourly rate—this option ranked lowest for both groups.

▪ While CAs support time-based fee setting according to a detailed cost calculation (8

ranked it first or second), 1 ranked this as the worst option; and while industry sees this

as the third best option (18 ranked it third or fourth), 8 ranked it first. The greatest

diversity of response arose for this option, with no clear preference expressed by either

CAs or industry.

Figure A1.9 Overall, CAs indicate positive impacts from introducing time-based fees, while industry believes it may improve comparability and simplify the system, but have little or no impact on efficiency, accountability and streamlining

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1.0

2.0Efficiency

Simplification


Accountability




Table A1.13 Official controls that CAs and industry expect to be covered by time-based fees

Competent Authority

▪ Meat inspection – slaughterhouse and cutting controls

▪ Control of organic farming

▪ BIP checks

Industry

▪ Meat and poultry= inspection – slaughterhouse and cutting controls

▪ Ante mortem and post mortem inspections



▪ Serious random events (e.g. dioxins or widespread identification of undesirable substances

▪ Controls on a continuous or systematic basis as laid down in Annex 1 of Regulation

854/2004

▪ Import controls

▪ Audits

▪ Certification

Table A1.14 Official controls that CAs and industry expect to remain as flat fees (i.e. should not become time-based)

Competent Authority

▪ On the spot official checks

▪ Audits

▪ Feed controls

▪ Import controls

▪ Residue controls

▪ Laboratory analysis

Industry

▪ Ad-hoc controls

Table A1.15 Sub-option A4: Comments provided by survey respondents about time-based fees


Positive

▪ [The] matching principle [should be]

possible to realize.

▪ Additional fees [should] be paid for

veterinary control of consignment [in]

case checks take longer than usual or

additional checks are required.

▪ [It would enable] more efficient use of

time and better cost recovery.

▪ Controls [would]...be risk based and

with that bonus-malus would be

automatically applied [sic]. Less time

[would be]...spent at well organized

establishments and they [would] need

less frequent controls.

▪ This will help to harmonize, simplify and

clarify outcomes.

▪ [It would enable] more realistic fees

[that reflect the] actual expense of [sic]

for official controls

▪ [It would increase]...financing for EU

Member States control [activities].

▪ Cost effective for efficient higher

throughput plants. Meat industry

representative.

▪ Theoretically acts as an incentive for

slaughterhouse to operate more

efficiently. Meat industry

representative.

▪ Greater transparency. Meat industry

representative.

▪ In slaughter houses, compared to a flat

rate, [time-based fees would be] better

to show actual costs. Food and

agriculture representative.

▪ The fee is based on real value of the

control. Food and agriculture

representative.

▪ More attention and punctuality of the

controls (accountability is expected to

increase). Food and agriculture

representative.

Negative

▪ Different fee rate would not be accepted

well from the FBOs; time is not a real

indicator for the quality of the performed

official control.

▪ Might include a temptation [for

inspectors] to work extra slow. Food

and agriculture representative.

▪ [It could lead to] unnecessary




▪ Changing the system may meet some

difficulties and it may not give real

benefits.

▪ Too complicated to calculate.

▪ It could be abused by veterinary

inspector of BIP, who could prolong

[the] time of inspection...in order to get

higher fee for veterinary control.

▪ Operators [might] concentrate on speed

of production rather than hygiene of

production.

▪ It would be better to keep product-

based fees instead of introducing time-

based fees.

▪ Special consideration must be given to

small and medium enterprises, and the

burden that such changes may impose

on them.

inspections to finance organisational

costs [of CAs]. Food sector

representative.

▪ Operators [may] concentrate on speed

of production rather than [the] hygiene

of production. Meat industry

representative.

▪ Increases CA inefficiency; would not be

affordable in slaughterhouse and game

plant SMEs, removes incentives for CAs

to negotiate risk based controls that do

not require continuous presence. Meat


▪ It could result in] extra costs for

ineffective [sic] FBOs, increasing costs

for micro-FBOs (e.g. butchers). Meat


▪ It was suggested prior to introduction in

the UK that it would result in a

concentration in slaughtering hours.

This has not been the case as operators

already had to operate efficiently to

survive. Meat industry

representative.

▪ Smaller businesses may have flexible

operating hours, [which are]...very

difficult to work with in a flexible manner

for charges based on continuous

presence for official controls. Food and

agriculture representative.

▪ [It could increase an] FBOs focus on

cost rather than compliance,

[increasing] pressure on inspectors to

leave premises due to time based

charging. Veterinary sector

representative.

▪ May be difficult to calculate. Public




▪ Fees based on a standard, EU-wide hourly rate: Both CAs and industry ranked this

option as the worst option (9 CAs and 22 industry stakeholders gave this option a score

of 3 or 4).

▪ Fees based on a standard, EU-wide hourly rate, indexed in each Member State by a

cost-of-living index: CAs view this as the second worst option (8 CAs gave this a score of

3 or 4), while industry ranked this option as the best (20 industry respondents gave this a

score of 1 or 2).

▪ Fees based on MS costs as prescribed under common EU rules: CAs view this as the

best option (10 gave this a score of 1 or 2) and industry views this as the second best

option (18 gave this a score of 1 or 2).

▪ Fees based on a detailed calculation of costs (i.e. local costs determined under common

rules): CAs view this as the second best option (9 gave this a score of 1 or 2), while

industry views this as the second worst option (18 gave this a score of 3 or 4).




Time-based fees are already used in a number of Member States. In the case study

countries, they operate in a number of areas in all case study countries except for France.

The areas currently covered by time based fees include:

▪ Meat inspections (Netherlands and UK);

▪ Most areas, with a few exceptions (Belgium); and

▪ Fees are used, but coverage of official control areas is unknown (Poland and Finland).



Figure A1.10 Time-based fees are likely to have a strong positive effect on efficiency, but a negative impact on comparability.

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Eff iciency Net score Comparability



▪ In Belgium, time-based fees are already used. Respondents foresee that their wider

introduction alongside an increased use of flat fees could improve CA cost recovery and

reduce administrative burdens, while encouraging more efficient inspections and improve

accountability through a common approach to define costs.

▪ In Finland and Poland, time-based fees are already used, and as in Belgium, their wider

use could improve cost recovery for CAs. But this sub-option could have a negative

effect on the simplicity of the system may increase administrative burdens and reduce

comparability.

▪ In France, time-based fees are not in use. Their introduction is expected to result in

greater cost recovery for CAs, though it may increase administrative burdens38

.

▪ In the UK, views diverged considerably between CAs and industry where time-based

fees are already used in slaughterhouses. The CA believes this has improved efficiency

and effectiveness of controls because it has forced some inefficient plants to change

38 CA representatives stated that introducing a time-based fee mechanism to calculate fees would be likely to

improve cost recovery rates. The CA representatives also stated that introducing time-based fees would require a detailed definition of the control procedures and the precise costs associated with each element. In their opinion, obtaining and recording such information would increase the administrative burden associated with official controls; currently the fee collection mechanism does not reflect the resources required by official control activities.



their procedures. Industry disagrees, however, and has stated that they believe time-

based fees remove the incentive to move to truly risk-based controls. The CA also

believes time-based fees would simplify the process, and improve comparability and

accountability, but again industry disagrees on each point, stating that SMEs in particular

would be unable to afford the fees, would be driven out of business and with fewer small

slaughterhouses animal welfare is likely to suffer as transport distances would increase.

Other evidence

Time-based fees are widely used amongst Member States for meat controls as shown in

Table A1.16 through Table A1.19 for selected Member States. Figure A1.11 shows the

market turnover for four sectors most affected by mandatory fees for official controls. Meat

processing and production represents a significant portion of these four sectors (nearly 50

per cent in 2008); introducing a requirement for time-based fees for the meat processing and

production sector would thus affect a significant share of the food processing sector.

Figure A1.11 Several inspections on the meat sector – which is an economically important part of the food chain – are amenable to use of time-based fees

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Processing and preserving of meat and production of

meat products

Processing and preserving of f ish, crustaceans and

molluscs

Manufacture of dairy products

Manufacture of prepared animal

feeds

Source: Eurostat

Data collected through this study on time-based fees illustrates the variance in approach and

rates across four Member States. In the Netherlands, Austria and the UK, a single fee is

applied for each inspection regardless of the size of the FBO (i.e. number or rate of slaughter

lines). In Belgium, fees vary based on the rate and number of slaughter lines. In Belgium and

the Netherlands, fees vary according to the category of animal (young cattle, adult cattle,

and pigs), but in Austria and the Netherlands, the fees are uniform across these categories.

Some Member States also charge a base administrative fee (Austria and the Netherlands),

while others do not. Figure A1.12 illustrates the variance in fee rates amongst the fees

charged in Member States illustrated here.

Table A1.16 Time-based fees for meat inspection - Netherlands

Inspection Ante Mortem

Cost per hour (€)

Post Mortem

Cost per hour (€)

Inspections of adult / young

cattle - veterinarian

106 77

Inspections of pigs - veterinarian 106 77

Inspections of pigs – official

assistant

77 77



Rate for starting activities 8 8

Average* 73 54

Clitravi data collected by Member State on inspection fees in the meat industry (2009)

*Excludes hourly rate for official assistants for pig inspections.

Table A1.17 Time-based fees for meat inspection - Belgium

Inspection Slow slaughter lines

Cost per hour (€)

Fast slaughter lines

Cost per hour (€)

Slaughterhouse – one line

Adult cattle 62 256

Young cattle 15 164

Pigs 62 406

Average 46 275

Slaughterhouse - several lines

Adult cattle 62 256

Young cattle 31 128

Pigs 12 52

Average 35 145


Table A1.18 Time-based fees for meat inspection - Austria

Inspection Veterinarian

Cost per hour (€)

Official inspector

Cost per hour (€)

Inspection fee (pigs / cattle) 66 42

Admin fee 8 8

Total 74 50


Table A1.19 Time-based fees for meat inspection - United Kingdom

Inspection Hourly cost

Cost per hour (€)*

Slaughterhouse 28

Cutting Plant 28

Game 28

Average 28


* Exchange rate £1 = €1.13158, 18/06/2011

Figure A1.12 Scatter plot showing variance of time based fees in selected Member States, average euro (€) per hour



0

50

100

150

200

250

300

€ / hr NL (ante and post mortum) € / hr AT (veterinarian / official inspector)

€ / hr BE (slow/fast & single/multiple slaughter) €/hr UK (slaughterhouse/cutting plant/game)

The majority of fees range between €25 - €75 / hour, covering a range of inspection types

Fees for fast slaughter lines in Belgium are considerably higher


* Exchange rate £1 = €1.13158, 18/06/2011

A1.1.5 A4 - Summary

General conclusions

Time-based fees are already in use in a number of MS as illustrated by the case study

results. Respondents indicated that red meat and poultry inspections are best suited to time-

based fees, in slaughterhouses and cutting plants and for ante- and post-mortem

inspections. Other areas that may be well-suited to time based fees include certifications,

audits, and BIPs.

The codification of time-based fees in EU legislation is expected, overall, to result in a slight

positive impact of the overall functioning of official controls systems in EU Member States.

This approach to fee-setting can increase efficiency. But time-based fee systems are also

more likely to be difficult to compare across Member States. Their introduction can also

increase the administrative burden on CAs.

When asked to rank the method of fee-setting, both CAs and industry favour fees according

to MS costs under EU rules.



FBOs would be determined by the definition of the eligible cost base for time-based fees and

the detailed fee structure. This includes the controls subject to time-based fees and the basis

on which the fees are set.



FBOs subject to a switch to time-based fee inspections. This could potentially include any

sector that currently pays fees for official controls, but meat inspections are the most likely

sector to be affected, as time-based fees are considered to be best suited for this area of

control activity.

The net impact on business will depend on the affected sectors, as already mentioned, as

well as any efficiency gained (or lost) through time-based fees. All else being equal, facilities

that have a higher throughput per inspection-hour are likely to benefit from lower fees on a



time-based system. Facilities with a low throughput per inspector-hour may face higher

charges. This could result in (for instance) fee burdens shifting from large scale, ‘efficient’

slaughterhouses to smaller scale operations.

Two other factors potentially affecting the impact are:

▪ Whether there are mechanisms in place to ensure that inspections are efficient (e.g. to

ensure inspectors do not spend longer than necessary on the inspections to increase

income);

▪ Whether fixed minimum fees of the kind used under current legislation still apply

(considered below).


Respondents raised some concerns over the effectiveness of time-based fees where

inspectors do not have an incentive to perform the control as efficiently as possible. But

where time-based fees are used in conjunction with risk-based principles, these may

represent an ‘automatic’ bonus-malus system for such controls.

A1.1.5.1 Additional considerations:

A shift to time-based fees raises questions about how to treat the minimum fees that are

currently defined in the legislation, but are defined as flat rates based on throughput.

Operating time and flat rate fee schedules simultaneously raises questions of consistency

and efficiency – accounting on both bases could increase the administrative burden on

Competent Authorities and potentially increase costs for businesses as well.

There is an opportunity, in this context, to consider whether minimum fees are still required

and, if so, the basis on which they should be set. For example, minimum fees could be set

on a percentage basis rather than according to throughput (i.e. as a fixed percentage of

eligible costs). This could reduce administrative burdens and would avoid the problems

generated by currency exchange fluctuations which require authorities to constantly revise

fees in countries outside the Eurozone, and where actual costs are below the minimum fees

set in the European legislation. This option also provides for the opportunity to set a rising

schedule of cost recovery over time to drive the system as a whole towards full cost

recovery. Implementation would require that the CA calculate and evidence its actual costs.

Recalibrating minimum fees on a percentage basis could also address the misconception

reported by some consultees of minimum fees being the ‘fair price’ or the EU’s ‘expected

price’ for a given control.

Costs and benefits

CAs and industry stakeholders had divergent views on the merits and likely impacts of

introducing time-based fees.

The introduction of time-based fees is likely to benefit CAs by (in combination with other sub-

options) helping to ensure that the full costs of inspections are recovered through fees levied

on FBOs. There would likely be an initial increase in costs for CAs, due to administrative

burdens associated with developing the mechanism for calculating appropriate fees (e.g.

consulting with industry), but these costs would reduce over time.

A shift to time-based fees is likely to change the distribution of the cost burden with a given

sector. It could shift costs onto smaller and/or less efficient operators. For example, the

time taken to travel to a small FBO is the same as for a large FBO, and large operations may

be able to sustain higher throughput per hour of inspector’s time.

Inspection protocols agreed with industry would help to address FBOs concerns that a shift

to time-based fees could invite over-billing by inspectors working inefficiently.



5.1.1 Sub-option A5 – Require ring-fencing of resources


Sub-option A5 considers whether Regulation 882/2004 should introduce a requirement that

fee revenue be used exclusively to cover the costs of the official controls for which they are

being charged (i.e. directly with a budget line or indirectly through the general budget).

Respondents were asked to consider the positive and negative impacts of a ring-fencing

requirement.

The ultimate concern of the reform package is to ensure that official controls are properly

resourced. The sub-options that address resource mobilisation only contribute to that

outcome if there is a corresponding increase in the funds allocated to the financing of official

controls. Ring-fencing would commonly see revenues paid direct to the CA. If there are

compensating reductions in general budgetary support then overall CA income may be little

changed, or even diminished, and could potentially be more volatile.





Table A1.20.

▪ Overall, CAs and industry respondents indicated that this sub-option would be expected

to have a positive impact on official controls systems.

▪ In particular, positive impacts are expected for CA resource mobilisation and

accountability.

▪ Industry felt that the sub-option could reduce administrative costs and burdens, while

CAs felt that these were likely to increase under a ring-fencing requirement.

Figure A1.13 Overall, CAs and industry indicated a positive impact from a ring-fencing requirement

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0.0

1.0

2.0Efficiency

Simplification


Accountability






Table A1.20 Sub-option A5: Comments provided by survey respondents about ring-fencing resources


Positive

▪ [It would] improve [sic] efficiency.

▪ Better enforcement of application /

collection of fees by section of CA [that]

would get [the fee revenue] back to

spend.

▪ [It would provide] clarity to FBOs [about]

how fees are being used to provide...the

delivery of OCs.

▪ [It would provide] assurances to CAs

[that] the necessary financial resources

to deliver OCs [would be available].

▪ [It would] guarantee full-cost recovery.

▪ This is needed in order to fulfil the

requirement for cost recovery, and to

have a link between cost / controls and

costs / compliance. Otherwise there is

no efficiency and transparency.

▪ [It would] guarantee...resources for

official controls.

▪ The obligation to invest the money

collected through import control fees in

improving the inspection services

should be established at EU level.

▪ FBOs [would] only bear the cost of

official controls to which they are

subject. Meat industry

representative.

▪ [It would encourage] fair competition.


▪ [It would facilitate a] level playing field.


▪ [It would] provide some transparency so

excess funds are not funnelled off by

CAs. Meat industry representative.

▪ Would assist with ensuring adequate

resources are available to carry out

official controls. Particularly important

when resource allocation is determined

at local level for activities that are

carried out as a national benefit rather

than for a local need. Public health

representative.

▪ Clear budget and clear allocation for

stakeholders, and also final consumers.

Dairy sector representative.

▪ Inspections [may] increase in quality

and uniformity. Veterinary sector

representative.

▪ [It would] provide sufficient resources

for the effective and efficient operation

of official inspections. Veterinary


Negative

▪ [It would be] time consuming [and an]

administrative burden.

▪ [It is] very difficult to assess...the actual

cost associated with OC delivery by [sic]

CAs.

▪ [It could require] potentially difficult

accounting procedures.

▪ [It] may be difficult to implement where

budgets are not ring-fenced.

▪ The requirement for fee revenue to be

used exclusively to cover the costs of

official controls provides no incentive for

the competent authority to improve the

efficiency or reduce the cost of delivery

of official controls. Meat industry

representative.

▪ [It could result in a] lack of

transparency, [and] distortion of

competition among different sectors.


▪ [It would] reduce flexibility for CAs to

use its resources to the maximum

benefit of the consumer. Meat industry

representative.

▪ Very difficult to assess what is the

actual cost associated with OC delivery

from CAs. Meat industry

representative.

▪ Politically difficult particularly when local

competent authorities are ideologically

against ring fenced budgets. Public





The case studies indicate that ring-fencing would likely have positive impacts on CA

resources, and increase transparency and accountability. In Member States that already

have some degree of ring-fencing in place, there is likely to be little impact, but this impact is

expected to be positive. In some Member States, however, such as Poland, a ring-fencing

requirement would require legislative changes that could be very difficult to implement. A

system that has a clear definition of eligible costs, transparency reporting and full cost

recovery requirements, however could effectively operate as a ring-fencing mechanism

without an explicit requirement to do so.


this policy option are summarised in Table A1.21.

Figure A1.14 A ring-fencing requirement was seen to have little net impact in most of the case study countries, with the exception of France, where a positive impact is expected. In particular, ring-fencing would improve accountability but also result in additional administrative costs to CAs.

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Streamlining Net score Accountability



The case study results reported appear to indicate less positive overall impacts from a ring-

fencing requirement than the EU-wide assessment above. Taking into consideration

comments received from respondents in the case study countries through the surveys and

interviews helps to explain the reasons for this:

▪ In Belgium, no net impact of ring-fencing is expected, aside from some administrative

inputs by CAs. Respondents consider this to be a good option, however, as it would

increase accountability by clarifying the relationship between costs and fee revenue.

▪ In Finland, fees collected at municipal level are retained at this level, so that ring-fencing

is already in effect operational in Finland to a certain extent. But municipal units are also

responsible for other activities and it would be difficult to accurately allocate the

resources spent by a CA on official controls activities alone.

▪ In France, ring-fencing principles do not exist, and fees are incorporated into the general

budget. But respondents consider that ring-fencing would result in greater efficiency,

simplify the system and improve comparability and accountability.

▪ In the Netherlands, 70 per cent of official control activity is publicly financed. A ring-

fencing would result in greater administrative costs to CAs. Respondents indicated that



ring-fencing could effectively be achieved, however, through a clearly administered

system with identifiable costs and income.

▪ In Poland, ring-fencing occurs where the GVI retain fee revenues to fund their work, but

CAs direct fee revenue to the state budget. A ring-fencing requirement may improve

efficiency, comparability and accountability, but would require changes to current legal

arrangements and could increase the administrative burden on CAs.

▪ In the UK, respondents consider a ring-fencing requirement to be desirable, but unlikely

to be implemented given the current system structure. The requirement could, however,

improve efficiency and accountability.

Other evidence

Ring-fencing already occurs for official control activities in many Member States to great and

lesser degrees:

▪ Eight Member States ring-fence 100 per cent of fee resources: Germany, Denmark,

Hungary, Latvia, Netherlands, Portugal, Romania and Sweden;

▪ Eight Member States have some ring-fencing requirements or arrangements that are

functionally ring-fencing: Austria, Belgium, Estonia, Finland, France, Italy, Poland and

the UK.

▪ In the remaining 11 MS, resources from fees charged for control activities go to the

general budget.

In Member States that already ring-fence resources there will likely be little, if any, impact

from this sub-option. In those Member States where ring-fencing is already employed but not

in every area, there will be administrative costs to implementation, but these may not be

significant. Ring-fencing will likely improve cost recovery in these MS and improve

accountability and transparency. In Member States where a significant portion or all of the

resources go the general budget, there may be significant administrative costs and

bureaucratic complexity to implementing a ring-fencing requirement.

Table A1.21 Ring-fencing of resources for official control activity in EU Member States

MS All resources

ring-fenced

Percentage 0f resources

ring-fenced

(if less than 100%

Resources ring-

fenced, with

some

exceptions

Resources to

general budget

No

information

AT Border inspection

fees

BE

95% local CA and

laboratories

5% regional and central

CAs

20% import fees

For AFSCA

activities

BG

CY

CZ

DE

DK

EE Feed control

ES

FI

Controls by

municipal

authorities

Other controls

FR Imports Domestic



MS All resources

ring-fenced

Percentage 0f resources

ring-fenced

(if less than 100%

Resources ring-

fenced, with

some

exceptions

Resources to

general budget

No

information

production

GR

HU

IE

IT

95% domestic fee income

for local CA and

laboratories

5% regional and central

CAs

20% import fees

LT

LU

LV

MT

NL

PT

PL

Veterinary controls

when contractors

used

RO

SE

SI

SK

UK

100% FSA controls for

slaughterhouses and cutting

plant controls.

Other controls are

performed by local

authorities and revenue

remains at this level.

DG SANCO baseline

Notes on baseline data for ring-fencing in EU MS:

United Kingdom:

▪ Controls carried out by Food standards agency operations in slaughterhouses and meat

cutting plants are ring fenced (collected and used within the agency).

▪ The rest of the sectors when monies are collected this is done through Local Authorities

and kept within the authority.

Germany:

▪ In general fees are collected to be directly used to finance the official controls (they are

in fact mainly based on full cost recovery). In those Landers where fees go to the

general budget in any case they are earmarked for the CA.

Sweden:

▪ Local and central authorities use fees directly to finance their official controls. Fees may

not be used to finance other activities.




General conclusions

This option could have significant positive impacts on efficiency and result in improved

accountability and comparability of official controls systems. There would be negative

impacts on CAs where additional administrative costs are required to implement the

requirement. Where inspectors also have responsibilities for other activities, it could be very

difficult for Member States to determine the precise allocation of resources spent on official

control activities separate from these other activities.



would be determined by the degree to which ring-fencing practices are already employed

and in which sectors. In the 16 Member States where ring-fencing already occurs, the impact

will be modest, if any. In the 11 Member States where resources go to the general budget,

the adoption of the sub-option would involve investment in new systems and greater

administrative costs, but also significantly improving accountability and transparency.


Impacts would fall primarily within the EU. Ring-fencing costs incurred by CAs would include

the one-off cost associated with setting up an accounts receivable department where one

does not already exist, plus the incremental cost for processing receipt of each payment.

The costs associated with billing and handling receipts are already borne by an entity in each

Member State, regardless of the extent of ring-fencing. Introducing the ring-fencing option

would simply transfer the incremental cost from one public body to another (where ring-

fencing does not already occur). The net cost to each MS is thus expected to be zero.

Nonetheless, individual CAs in each MS will be impacted where ring-fencing does not

already occur. This option would then, in principle, impact on the income of all entities that

collect such fees in Member States where all resources go to the general budget. In Member

States where ring-fencing occurs in some but not all sectors, those sectors in which ring-

fencing does not occur will be impacted. There is no particular SME bias to the impacts

expected from this sub-option.


Legislative costs would be incurred in some cases. Administrative burdens would fall on CAs

in Member States that do not already ring-fence resources, and particularly in those where

all fee income goes to the general budget. Administrative burdens are likely to be low in

Member States where ring-fencing already occurs.

Costs and benefits

Ring-fencing creates a direct link between industry payments and CA income. This sub-

option will increase costs and administrative burdens for the majority of CAs that do not

currently ring-fence resources. There will be initial costs associated with setting up the

administrative processes and procedures necessary to ensure that fee resources are ring-

fenced. Following these initial costs, CAs should have minimal (if any) ongoing

administrative costs. Administrative incurred costs may be recoverable through fees. The

change may require legislation in some cases, with the associated costs and uncertainty.

Ring-fencing fees will have limited impact on FBOs, although industry stakeholders

considered that over time it could reduce the cost of official controls to FBOs. Industry

stakeholders favoured ring-fencing of fees as they were of the opinion that it would improve

the efficiency and accountability of controls (thereby reducing costs over time). There is

uncertainty about such a benefit. Finance authorities’ response to CAs being given ring-

fenced income would affect where the CAs emerge with larger (or smaller) net income.

A1.1.6 Sub-option A6 – Incorporate bonus-malus principles




Sub-option A6 considers whether Regulation 882/2004 should be changed to incorporate

bonus-malus principles in the fee system for official controls such that best performers are

rewarded while the worst performers are penalised. Respondents were asked to consider:

▪ How Regulation 882/2004 can promote bonus-malus principles;


▪ How the overall performance of Option C can be improved by incorporating bonus-malus

principles.





Table A1.22.

▪ CA and industry respondents indicated that incorporating time-based fees and risk-

based principles could provide an ‘automatic’ bonus-malus system for official controls.

▪ Industry favours self-control to reduce the inspection frequency and therefore, the costs

both for industry and CAs. These systems must be based on oversight by CAs and/or

certification by independent bodies in order to be effective.

▪ In particular, bonus-malus principles would improve efficiency and accountability.

Figure A1.15 Incorporating bonus-malus principles into the fee system is likely to have a positive impact on CA cost recovery and to improve accountability

-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification


Accountability




Table A1.22 Sub-option A6: Comments provided by survey respondents about bonus-malus systems


Positive

▪ Bonus-malus systems are difficult to ▪ ...the [CA] presence should be




apply [sic] in real circumstances, but

would [sic] encourage the better

performers.

▪ Bonus-malus is automatically enacted

[sic] when official controls are time and

risk based.

maximised for FBOs that are highly

compliant (i.e. a risk-based approach).

This would reduce the costs of

inspections to such FBOs. Meat


▪ If the charged fee includes a time-based

element this immediately rewards

efficiency contributions for the FBO.


▪ The regulation should provide more

explicit provisions about bonus-malus

systems, for example, by referring to the

results of inspections carried out over a

period of time, or the implementation of

systems of self-control, etc. Meat


▪ If controls were truly risk based there

would be no need for a separate bonus-

malus system as higher risk

establishments would receive more

controls. Meat industry

representative.

▪ [A] very stimulating tool also used in

other sectors. Should be linked to the

use of self-control system certified by

independent bodies. Meat industry

representative.

▪ It should a good incentive for the FBO

to encourage him to perform better on

the animal welfare field (and food

safety). Meat industry representative.

▪ Bonus-malus system is a very good

principle to promote incentives for the

effectiveness and efficiency of the

official controls. Food and agricultural


▪ ...plants that work hard to comply and

can show themselves to be low risk

should be rewarded with reduced

inspection levels. It is important...that

standards are consistent across the EU.

Food and agricultural sector

representative.

▪ Provides incentives for high compliance.

Public health representative.

Negative

▪ Adequate [sic] sanctions for non-

compliances are more effective than

establishing a bonus-malus system.

[Such a system] would be

unmanageable and might pose legal

problems for its application in certain

MS.

▪ Bonus-malus systems are clear

perhaps, [but] not necessarily simpler.






impact assessment. There is general support for the incorporation of bonus-malus principles

into official controls systems, with correspondingly positive impacts on efficiency for CAs.

Bonus-malus principles are already incorporated into fee systems in several Member States

and considered to be a positive feature. In Poland, there is little experience with bonus-

malus systems, however, and respondents indicated difficulty envisaging how bonus-malus

principles would operate in practice. Potential increases in administrative burdens were

identified as a particular concern in all Member States.



Figure A1.16 Respondents in most of the case study countries indicated that bonus-malus principles would have a net positive impact on official controls systems, with the exception of Poland where a negative impact is anticipated

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Eff iciency Net score Streamlining



Other evidence

Some Member States have elements of a bonus-malus system already in place, some of

which are describes in the DG SANCO baseline information (Table A1.23).

There are some shared principles that underlie the systems already in place across Member

States that could be considered in bonus-malus arrangements implemented through

changes to Regulation 882/2004:

▪ Self-control systems operated by FBOs can be used to reduce the costs for fee

collection to CAs and reduce costs for FBOs where the costs for self-control systems are

less than the cost of official inspection (e.g. Belgium, Italy).

▪ Fee rates can be linked to whether the FBO has a HACCP system that is accredited by a

certified body, with lower fees paid to FBOs that do; higher fees by those that do not

(e.g. Belgium).



▪ FBOs with a track record of good performers pay lower fees or are inspected less

frequently and poor performers pay higher fees or are inspected more frequently (e.g.

France, Germany, and Italy).

▪ Time-based fees are utilised to lower the costs for good performers. Inspections take

less time when FBOs conform to the rules and risk-based principles can be used to vary

the intensity and/or frequency of checks (e.g. Netherlands).

▪ CAs and industry negotiate the steps that may be taken by an FBO on an individual

business basis to determine what changes would result in lower fees/fewer inspections

(e.g. UK).

There are some aspects of the Regulation that currently constrain successful implementation

of bonus-malus principles. The most important issue is minimum fees. As reported in the

FCEC 2009 evaluation, some CAs view the minimum fees as the indicative rate and do not

charge more for control activities, nor less. But the primary assumption underlying a bonus-

malus system for fee collection is that good performers pay lower fees (or less often) than

poor performers. Minimum fees serve to constrain opportunities for bonus-malus principles

to apply to the fees charged where the system incorporates two (or more) pricing schedules

(for good and bad performers) or where fee rates overall are higher for control activity, but

because good performers pay less frequently, they ultimately pay fewer fees than poor

performers.

Table A1.23 Member State bonus-malus arrangements for official controls fees

Member

State

Description

BE Annual contributions are reduced by 50% if the Hazard Analysis Critical Control Point

system of the FBO is certified by accredited bodies (recognised by AFSCA). If such

an accredited system is not in place then FBOs must pay an additional 20% (2009),

60% (2010) and 100% (2011). Poultry slaughterhouses where FBOs are involved in

controls have reduced fees. Animals in slaughterhouses that are not clearly identified

are subject to a higher fee.

FR Slaughterhouses are classified in 4 categories depending on their level of compliance.

FBOs in the two categories with good compliance receive a reward, while FBOs in the

two categories with poor compliance receive a punishment. The reward / punishment

system is specified in the case study analysis A2.3.

DE Some Landers have trialled a system of categorising meat establishments according to

risk. The frequency of inspections is changed to reflect the risk posed by the FBO.

IT The application of mandatory fees may take into consideration the FBOs previous

record of conformity, risk category and the efficiency of their own checks.

MT No mechanism exists to reward FBOs. However there is a procedure to levy fines for

breaches of some elements of the Regulation.

NL There is a fee per inspection visit and a time-based fee charged per quarter of an hour.

FBOs that have better organised operations and require less CA time have lower cost.

Where possible official controls are risk-based. There are surcharges for requests for

controls outside regular working hours, and CA overtime that is incurred over the time

originally requested by the FBO.

SP The application of mandatory fees may take account of an FBOs previous record of

conformity, its risk category, the efficiency of its own checks, and other items such as

the level of administrative support required, or if inspections occur at unsocial hours.

SE FBOs deemed to have a higher risk incur longer and / or more frequent inspections,

and thus have higher inspection costs. The level of risk posed by an FBO is

determined by the FBO’s past record; compliance or non-compliance can lead to a

reduction or an increase in the annual control time and annual fees.



UK FBOs and CAs agree to the amount of time a CA will spend during inspections. FBOs

can propose changes to the production process to decrease the need for CA

presence.

Source: DG SANCO baseline


General conclusions

Bonus-malus principles are likely to have a positive impact on the efficiency of official

controls systems, particularly where resources can more effectively be used to target

establishments that pose greater risks and where overall inspection numbers are reduced.

Critically, bonus-malus principles must be consistent with the principle that the fees charged

are set according to their actual cost, and any extra costs for controls for non-compliance are

borne by the businesses concerned. This constrains the redistribution of costs from good

performers to poor performers. A risk-based inspection regime where the frequency and

intensity of inspection is set according to risk of non-compliance and/or past history of

compliance can fulfil this purpose (though this option is outside the scope of the current

study). Accordingly, businesses demonstrating a high level of safety are inspected less often

and therefore pay lower fees, and those with a poor record of safety are inspected more

often or more intensely and therefore pay higher fees.



would be determined by the bonus-malus principles applied. This is not known. For those

MS where bonus-malus principles are already in place (9 MS), however, the impacts are

expected to be less than for those MS that have little or no experience in this area.


Impacts would fall primarily within the EU. This option would, in principles, impact on all


The distribution of impacts is affected by the principles adopted under a bonus-malus system

and the sectors that would be affected (e.g. based on a risk assessment).

The net impact on business would be influenced by the principle adopted as well. Self-

control systems, consultation with industry on steps to improve performance and reduce fee

costs, and other mechanisms could all benefit compliant FBOs and result in higher costs to

non-compliant FBOs. In order to ensure that fees do not exceed costs, bonus-malus

principles would need to ensure that the redistribution of costs equals the cost to perform the

control. Therefore, the frequency of inspection or the intensity of inspection will meet this

objective, while simply charging more to non-compliant businesses and less to compliant

ones, while still performing the same number and level of controls for each would not

conform to this principle.

There is no particular SME bias, though good performing SMEs will pay less and poor

performers will pay more. Bonus-malus principles could have a positive impact on SMEs

where good performers are able to reduce their costs.


There is some uncertainty regarding the overall impact on administrative costs as there

would be some increase in costs to implement the system but potentially fewer costs over

time as inspections become more efficient and fewer in number. Further specification and

development of the sub-option (and its interpretation in the context of varied MS fee

systems) is required for the burdens to be quantifiable.



Costs and benefits assessment

The administrative costs are unknown and the extent to which they result in higher or lower

costs to MS and FBOs depends entirely on the principles identified as undergirding a bonus-

malus system. Administrative costs are, however, expected to fall over time as the system is

fine-tuned and control activity becomes more efficient. The overall benefits include greater

efficiency in control activity, which allows MS to target the most risky businesses and

provides incentives for businesses to improve their operations to reduce their inspection

costs.

A1.1.7 Sub-option A7 – Introduce transparency and reporting


Sub-option C5 considers whether Regulation 882/2004 should be changed to require

Member States to provide information:

▪ To the Commission regarding the financial resources devoted to official controls each

year (through the 882/2004 annual reports); and



Respondents were asked to consider the positive and negative impacts of these

requirements.





Table A1.24.

▪ Competent Authorities and industry indicate that this sub-option is likely to result in

strong positive impacts on accountability, comparability and efficiency.

▪ In particular, positive impacts include:

– Improved information sharing amongst CAs and between CAs and industry;

– Improved transparency of the fee system; and

– Increased opportunities to benchmark between CAs in different Member States,

though some respondents warned that comparisons are not straightforward and

should be carefully considered.

▪ Negative impacts may occur where these requirements introduce additional

administrative costs for CAs.

Figure A1.17 Overall, introducing requirements to provide information on official controls systems is likely to have a positive impact, particularly on accountability, though the administrative burden is likely to increase for CAs to implement these requirements



-2.0

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0.0

1.0

2.0Efficiency

Simplification


Accountability






Table A1.24 Sub-option A7: Comments provided by survey respondents about transparency and reporting


Positive

▪ Knowledge about practices [may]

increase.

▪ [It may improve] transparency of the fee

establishment process and of the

relevant financial system.

▪ [It may improve] clarity to stakeholders

on the way fees are calculated, [leading

to] greater accuracy and fairness.

▪ The requirement on publication of

information on fees for public [may]

ensure awareness and familiarity with

implementation of official control fee

system.

▪ [It would ensure] free access to

information for all stakeholders.

▪ [It could] create a kind of bench marking

between CAs in different MSs. Meat


▪ It would resolve the present problem in

the UK of [the] FSA seeking full cost

recovery without providing transparency

on what costs it wishes to recover.


▪ Greater transparency; FBOs as well as

consumers would [sic] have clear

knowledge on the costs of food

inspection. Meat industry

representative.

▪ Transparency may facilitate the

comparison between Member States as

regards the efficiency of their controls

and could also facilitate the transfer of

best practices (e.g. for the bonus-malus

system). Meat industry

representative.

▪ [It] might help to hold MS to account.


▪ More transparency; the public will have

a possibility to understand the public

good; the food businesses will have a

better understanding for the level of the

costs. Meat industry representative.

▪ Transparency may facilitate efficiency

between Member States. Animal feed


▪ Transparency and clarity about amounts

allocated to official controls. Public


▪ FBOs as well as consumers will have

clear knowledge on the costs of food

inspection. Food and agriculture


▪ Transparency may facilitate the

comparison between Member States as

regards the efficiency of their controls

and could also facilitate the transfer of

best practices (e.g. for the bonus-malus

system). Food sector representative.

Negative

▪ [The] administrative burden [may]

increase.

▪ [The] information provided may be

difficult to interpret and misleading.

▪ In MS with devolved regions it may be

difficult to ascertain [the] charging

system at different levels of

government.

▪ [It could increase the] administrative

burden. Meat industry representative.

▪ Comparison between countries should

be handled with care to avoid too

simplistic conclusions. Meat industry

representative.

▪ Extra bureaucracy and fairly pointless

as some MS will simply provide

inaccurate information to suit their own




▪ [The] costs of the system to get all this

knowledge by the same way from all

MS are huge.

▪ [It could result in] more legal cases if the

FBOs do not [sic] agree with the

calculation (on individual or sector level)

▪ [It would be] difficult to evaluate for the

Commission and [would] cause endless

discussions.

needs. Meat industry representative.

▪ If you accept that it is up to the MS to

decide what level of fees they wish to

collect, how in effect they wish to

finance their own official controls, and

accept that harmonization is impossible,

who cares what they charge and what is

the point of the exercise? The FVO can

simply audit if controls are adequately

enforced or not. Meat industry

representative.

▪ Comparison between countries should

be handled carefully to avoid too

simplistic a conclusion. Animal feed


▪ This is pointless unless the FVO

actually validates and verifies the

accuracy of the information being

submitted - strong enforcement is

needed to ensure compliance and

without this then it is of limited value to

ask for this information. Veterinary



The findings from the case study indicate that a trade-off is likely between improvements in

accountability and increased costs and complexity for setting up and maintaining systems of

information provision to the Commission and the public. In Member States with centralised

official controls systems, the costs and complexities are reduced because the necessary

information is more readily available. In decentralised systems, the effort to collect

information, particularly to report to the Commission regarding resources allocated to official

controls, is likely to be time-consuming and therefore costly. With regard to providing

information to industry and the public more broadly, this is not likely to entail some, but not

significant costs in Member States where information is not already provided.





Figure A1.18 Respondents in the case studies believe that providing information is likely to have a positive impact on accountability, but introduce complexity in the system

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Accountability Net score Streamlining



Other evidence

The SANCO baseline data provide information on the current provision of information by

Member States to the public. Some Member States already publish information regarding fee

rates and the legislation itself on a public website. Seven Member States share complete

information in this fashion (Table A1.26). Some Member States provide access to the

legislation through the Official Journal, but do not provide any information through other

sources. Eleven Member States share information through the Official Journal, four of which

provide information both online and in the OJ: Finland, Netherlands, Spain, and Sweden. No

baseline information on reporting is available for the remaining 12 Member States.

In Member States where all information on fee rates and the relevant legislation is provided

both through a public website and through the Official Journal, the component of sub-option

A7 that would require reporting to the public would likely have little or no impact. However,

the sub-option does not specify what particular reporting channels would satisfy a

requirement to provide information to the public. A change to the Regulation may therefore

add requirements for MS that only share information through the Official Journal or through a

website, but not both. The added costs for sharing information through both channels are

expected to be minimal. Member States that do not share information at all will have some

administrative costs associated with doing so, but these are not expected to be high.

The cost of sharing the information in Member States will depend on the average hourly

employment cost for CA employees. CA hourly rates were identified for seven Member

States; Belgium, Finland, France, UK, Spain, Lithuania and Bulgaria. For Member States

where this information was not available, the average public sector hourly rate provides an

indication of a CA’s average hourly rate. When information for public sector wage levels was

not available (in Eurostat), private sector wages are used to instead. Table A1.25

demonstrates that introducing mandatory reporting would be more expensive in Ireland and

Denmark compared to Italy and Greece, for example.



Table A1.25 Average hourly wage rate for Member States, 2008

Member State CA hourly rate

(Average € / hour)

Private sector


Public sector


Austria No information available 20.03 No information available

Belgium €65 23.66 No information available

Bulgaria €2 2.09 2.71

Cyprus No information available 14.09 19.12

Czech Republic No information available 6.7 7.85

Estonia No information available 5.77 7.19

Finland €42 20.91 22.87

France €30 20.99 No information available

Germany No information available 22.56 21.24

Greece No information available 13.52 12.24

Hungary No information available 5.54 7.45

Italy No information available 18.36 No information available

Latvia No information available 4.65 6.58

Lithuania €3 4.23 6.03

Luxembourg No information available 26.89 No information available

Malta No information available 10.37 No information available

Poland No information available 6.34 7.82

Portugal No information available 9.89 No information available

Romania No information available 3.23 4.19

Slovakia No information available 5.48 5.53

Slovenia No information available 11.56 14.77

Spain €20 14.33 16.76

Sweden No information available 21.22 No information available

United Kingdom €49 18.12 19.86

Eurostat 2008

.



Table A1.26 Transparency and reporting to the public on fees for official controls by EU Member State

BE

IE

UK

ES

FL

NL

SE

DE

EE

FR

IT

LT

PL

SK

MT

AT

BG

CY

CZ

DK

GR

HU

LU

LV

PT

RO

SI

All information available

online


the official journal

Information recorded but

not available / published

No information available

/ identified

High transparency Medium transparency Low transparency No information available / identified

DG SANCO baseline



The second component of sub-option A7 would require Member States to provide

information to the Commission on resources devoted to official control activity through the

Regulation 882/2004 Annual Reports. The impact on Member States under this requirement

depend on the staff costs in each MS, the amount of time expected to be required to collect

and collate the data, and the degree to which the required information is already collected.

In order to understand the likely impact of this sub-option, the survey for this study attempted

to collect information from each CA on the labour costs, time requirements and current data

collection practices of the case study Member States. Some Member States in the non-case

study countries also returned surveys and a few CAs provided information on this sub-option

as well. In total, seven CAs provided information on full-time equivalent (FTE) costs, but only

two estimated the staff time required to provide information on resources to the Commission.

Under these circumstances, construction of a standard cost model to estimate likely impacts

was not viable.

The UK’s Food Standards Agency (FSA) provided detailed information on the cost of

reporting to the Commission under three hypothetical scenarios indicative of the options that

might be considered under this sub-option. The data reported by CAs in other Member

States indicates the range of FTE costs across the EU.

UK scenarios

The Food Standards Agency (FSA) provided a baseline (based on current costs) and three

alternative scenarios for reporting on controls undertaken by local authorities39

. Two of these

scenarios include a description of the cost implications of different levels of data collection,

while the third describes potential costs but does not provide an estimate.

Baseline: Current costs of reporting (not incremental).

Collecting information on meat inspections for the FSA’s annual accounts takes

approximately 10 working days, split between a Senior Executive Officer and a Grade 7

equivalent. Using wage rates from the Office for National Statistics (ONS) survey control

guidance (Table A1.27), the cost of this time is at €3,055 to €3,960, including overheads.

If data had to be reported on in greater detail, and in a different format, considerably more

time would be required.

Scenario 1: Provision of total resource estimates for the UK as a whole, with no subdivisions.

The FSA estimated that collating information on total resources estimates for 2009-10 took

approximately five days (excluding time taken for preparing a report or presenting the data in

a standard format to report to the EU or the public). Assuming two days of a middle

manager’s time and three days of a junior manager’s time and using their respective hourly

rates40

((Table A1.27), the total cost of extending the scope of reporting to include

information on the financial resources devoted to official controls each year would be around

€1,655.

Scenario 2: Precise figures of costs based on a flat rate per local authority.

Providing precise figures for total resources at a sub-national level, that is by local authority,

would require additional resources compared to collating data for the UK as a whole. The

FSA estimates that it would take approximately six days for an FSA analyst. This would

result in a cost to the FSA of approximately €1,815 (Table A1.27). As per Scenario 1, this

cost does not include any time required to put the information into a standard format for the

EU or the public. This would require more time than scenario 1 as the reporting would need

to be at a local authority level.

39 For the figures in this section, an exchange rate £1 = €1.13158 (18/06/2011) is used.

40 The hourly rates are based on civil service “full economic” pay rates and up-rates each year based on the

Annual Survey of Hours and Earnings inflation rate (ASHE). http://www.statistics.gov.uk/statbase/product.asp?vlnk=13101

http://www.statistics.gov.uk/statbase/product.asp?vlnk=13101



Table A1.27 Civil service ‘full economic’ pay rates in 2010 / 2011

Civil service

grade /

position

FSA grade /

position41

Hourly

wage rate

(€)

Scenario 1 Scenario 2

Time

(days)

Cost (€) Time

(days)

Cost (€)

Director Director 103.24

Senior

manager

Grade 5 80.29

Middle

manager

Grade 7 55.44 2 775

Junior

manager

Higher /

Senior

Executive

Officer

42.07 3 880 6 1,817

Clerical Executive

Officer 26.74

Total 1,655

1,815 +

formatting

Source: Provided by the FSA as part of its contribution to the CA questionnaire.

The FSA outlined several caveats and limitations related to these calculations:

▪ Figures for charges and fees are only available for food hygiene and for England. UK

and food standard figures would need to be estimated by scaling up based on FTEs.

▪ The calculation is based on definitions of food safety expenditure. If there were precise

rules about what to include when calculating costs (and these rules required significantly

different information from what was included in current estimations) it would require

significant additional work, for example additional reporting from over 400 local

authorities.

▪ The information currently held on sales, fees and charges also includes other income;

precise details of charges to Food Business Operators (FBOs) are not currently

available. Precise figures for charges would require a lot of additional work, including

additional reporting from local authorities.

▪ The number of visits, premises and FTEs only relates to visits reported through the

system used to monitor local authority enforcement actions. The costs may also include

other food safety work undertaken by local authorities.

▪ The ability to provide information about the resources devoted to official controls

assumes that the relevant government department (currently the Department of

Communities and Local Government) continues to produce food safety costs and that

local authorities continue to report through the local authority enforcement monitoring

system.

Scenario 3: Precise figures of cost based on actual time spent on each business.

Collecting precise data on costs, based on actual time spent on each FBO, would require:






41 The allocation of FSA grades across the five civil service positions is an assumption.




considerable.

Data from Finland

The Finnish CA (Evira) estimated that it would cost €500,000 and absorb 4 FTEs to collect

and submit information about the resources spent by CAs in the execution of official control

activities. During interview, Evira stated that the €500,000 represents an initial investment to

set up an IT system capable of collecting the necessary data at a local (municipal) level.

Both the Finnish and UK official control systems are decentralised; it is reasonable to

assume that the cost of Scenario 3 above for the UK may be similar to Finland’s estimate.

Table A1.28 provides data that was submitted by CAs through the study survey on FTE

rates. Though the data are limited, it gives an indication of the high variance in FTE rates

across Member States (from €1.86 / hour in Bulgaria to €64.74 / hour in Belgium).

Consequently, there is likely to be high variance in the potential administrative burdens

under a requirement to report information to the Commission, regardless of which model is

implemented per the UK’s three hypothetical options.

Table A1.28 Data for the Standard Cost Model obtained through the survey indicate high variation in FTE rates across MS (between €3.31 / hour and €64.74 / hour)

MS CA Response

Q1 Q2 Q3

BE Federal Agency for the Safety of

the Food Chain (FASFC)

€64.74 / hour Staff time: 836

hours

External costs: 0

Staff time: 836

hours

External costs: 0

BG Bulgarian Food Safety Agency €1.86 / employee /

hour

n/a n/a

ES SG Sanidad Exterior (MSPSI);



€20.42 / hour n/a n/a

FI Finnish Food Safety Authority

(Evira)

€42 / hour Staff time: 4 FTE

External costs:

€500,000

n/a

FR Direction générale de

l’alimentation (DGAI) – Ministère

chargé de l’agriculture

€29.50 / hour n/a n/a

LT State Food and Veterinary

Service of Republic of Lithuania

€3.31 / hour n/a n/a

UK Food Standards Agency (FSA) Grade 7: €55.44 /

hour

Senior Executive

Officer: €42.07 /

hour

Staff time: 5-6 FTE n/a


Nonetheless, given that the UK and Finland are Member States with a relatively high FTE

rate, and that they have a decentralised structure which makes reporting at MS level more

challenging than in other MS, it is reasonable to assume that providing a total resource

estimate for each MS, without subdivisions by control activity or level of administration might

cost around €1500 per country (FI estimate of €1470 at 5 days, €42/hr and UK estimate of

€1,655). A requirement to provide complete information by control and by level of

administration would likely impose an additional one-time cost of around €500,000 per state

to implement an information system to collect this information, plus 4 FTEs per year to

administer the system.




General conclusions

Overall, providing information to the public regarding fees for official controls will have

positive impacts on accountability and is likely to require little or no additional administrative

costs, particularly in cases where such information is already provided through CA websites.

A requirement to report to the Commission on resources devoted to official controls will have

similarly positive impacts on accountability, but comes with greater administrative cost

burdens to CAs, particularly in MS with decentralised systems. Yearly reporting may be too

onerous and could be required every other year or less frequently.


The scale of the impact of this sub-option on individual Member States will vary depending

on the level of detail required for reporting to the Commission—both the level of detail and

frequency of reporting to the Commission on resource devoted to official controls and the

type of public provision of information. These are unknown.

Based on the hourly rates contained in Table A1.28 above, it is clear that CA wages are

significantly higher in some Member States compared to others. For example, wages in

Bulgaria are approximately €1.86 per hour compared to €29.50 per hour in France. The cost

of collecting data and reporting to the Commission will be higher in Member States with

higher CA hourly wage levels. The wage data collected thought the CA survey is a relatively

good match with the Eurostat data on average public sector wages. This indicates that

Member States with high or moderately high wage levels may have a more significant

impact, in terms of costs, compared to Member States with moderately low or low average

public sector wage levels (Table A1.25).



CAs and FBOs subject to fees for official controls.

Member States with decentralised official controls systems are likely to be more affected by

financial resource reporting requirements than centralised systems because collecting and

reporting the information will require greater efforts and by more individuals. This effect

would be more pronounced in Member States with high wage rates (Figure A1.19)

Figure A1.19 Costs of introducing and maintaining detailed reporting on resources to the Commission will be greater for Member States with decentralised systems and higher wage rates

e.g. DE, UK, FI

Organisation of controls

Wage

rates

High

Low

DecentralisedCentralised



Member States that already collect detailed information on financial resources devoted to

official controls and/or publicise their fee rates and legislation will be subject to little or no

impact from these requirements.

Publicising information on fee rates and other related information to the public is likely to

have a low impact on Member States that do not already publicise this information.

There is no particular SME bias to this bus-option.


The more detailed the reporting requirements the greater the admin burden associated with

reporting them. The three scenarios set out by the UK CA indicate a range of possibilities of

varying potential administrative burdens, depending on the level of detail required in any

reporting scenario. Member States with decentralised official controls systems are likely to

have higher administrative burdens than centralised Member States, due to the additional

effort required to collect information at different government levels.

Costs and benefits

This sub-option will increase costs for CAs; the extent of the cost increase will depend on the

current arrangements in Member States related to data collection. Costs will relate to setting

up and maintaining systems necessary to collect and collate relevant data. Costs for CAs in

decentralised Member States will be higher than centralised Member States; collecting

standardised data in decentralised Member States will require more effort and have a larger

administrative burden. Over time, increasing transparency and reporting could reduce costs

for CAs by increasing sharing of best practice.

Increasing transparency and reporting of data to the Commission will not increase costs for

FBOs. It could, over time, reduce costs by improving benchmarking and sharing of best

practice between Member States.

The specification of reporting requirements and their relationship to the revised performance

monitoring and management system for Regulation 882/2004 is important. If the reports to

the Commission covered core performance measures that Member States themselves would

need to be monitoring in order to check compliance with the Regulation then the incremental

cost of submitted data to Brussels would be very modest.

A1.1.8 Sub-option A8 - Industry participation


Sub-option A8 considers changes to Regulation 882/2004 that would provide FBOs with the

right to participate in the process of setting the structure. Respondents were asked to

consider:

▪ Whether and how FBOs are already involved in setting fees in each Member State;

▪ Stakeholders’ review of how participation should be specified so as to maximise the

positive impacts and minimise negative impacts.





Table A1.29.

▪ Industry respondents generally view this option positively and believe it would improve

efficiency, accountability and comparability of official controls systems. The option would

allow industry to have a meaningful role in the fee setting process and could provide

opportunities for sharing information that could increase effectiveness of inspections. It

could also motivate FBOs and CAs to work together to pursue common objectives. Fee




▪ CAs generally indicated that this option would have little impact on the current official

controls systems overall, but could have positive impacts on accountability, where it

increased transparency in the fee-setting process.

Figure A1.20 Industry expects this option to improve efficiency. Industry and CA respondents expect improvements in accountability.

-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification


Accountability




Table A1.29 Sub-option A8: Comments provided by survey respondents about industry participation


Positive

▪ [It could improve] transparency.

▪ This should permit FBOs to have say in

their own future.

▪ Participation of FBOs [may] improve the

acceptance of fees imposed.

▪ It is a good way to motivate FBOs and

CAs to pursue common objectives.

▪ As the paying 'customer', industry would

have a meaningful role in the process

for setting fees and driving efficiencies.


▪ Reducing distortion of competition. Fees

affect the economy of FBOs. It would be

fair for FBOs to participate in setting

schedules. Meat industry

representative.

▪ It would remove much of the current

conflict surrounding official control

invoices. Meat industry

representative.

▪ This will lead to a better cost/benefit

based scenario for the industry. Meat


▪ This will improve the fairness of the fee

schedules and will increase the rate of

acceptance. Meat industry

representative.

▪ Greater say and flexibility in the

provision of the services. Meat





▪ It forces FBOs to intensify their quality

system including self controls, in

addition it is a good way to motivate

FBO and competent authority to pursue

common objectives as well as a better

understanding for the level of the costs.


▪ [It may] encourage the authority to

continually evaluate efficiency. Meat


▪ [It could result in a] better reflection of

real structures and costs, possibly also

best benefit per risk. Dairy sector

representative.

▪ Could introduce "ownership" as Fees

would be [sic] better accepted. Public


▪ [It] would strengthen the stakeholder’s

position. Food and agricultural sector

representative.

▪ Greater say and flexibility in the

provision of services. Food and


▪ [It would increase] dialogue and

interaction between stakeholders and

authorities. Food sector

representative.

▪ Knowledge on food quality and safety

[would be] better used and harmonised

within food chain. Food sector

representative.

▪ Authorities [would] learn from private

quality and food safety system and

standards. Food sector

representative.

Negative

▪ [It] would increase the admin burden

▪ [It could result in] too much lobbying.

▪ [It could introduce an] unrealistic

expectation by FBOs that fees would

decrease.

▪ [It could] increase [the] administrative

burden on FBOs and CAs due to

development of a process (business

agreements) that wasn't previously

required.

▪ FBOs would be interested in approval of

the lowest possible fees for veterinary

control.

▪ [It could cause] endless discussions on

the fee setting.

▪ [It could result in] less financing for EU

MS as FBOs would like low fees.

▪ No negative impact for FBOs. Maybe

only [an additional] burden for

administration. Meat industry

representative.

▪ [It could] reduce fairness [sic] between

member states and on national level.


▪ The CA needs to be required to take

heed of views as well as merely

consulting - without this requirement

then this could simply be a bureaucratic

exercise of being seen to consult. Meat


▪ Less financing for EU Member States

as FBOs would like low fees. Meat


▪ Likely to introduce conflict about costs

and levels of controls. Could distort

trade across EU. Public health

representative.

▪ Might strain the member states budgets




if they have to agree on lower fees then

planned. Food and agricultural





Figure A1.21 Respondents in all case study countries indicated that industry participation would have positive impacts on accountability, but some indicated potential negative impacts in other areas

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Accountability Net score Simplif ication



Respondents in all of the case study countries indicated that industry participation in fee

setting and other aspects of system implementation would positively impact on

accountability. It could improve the fairness of the fee schedules and increase acceptance of

the fees as a result. CAs expressed concern, however, that participation would lead to

increased administrative burdens. Responses were mixed regarding the extent to which

industry participation would simplify official control activity. Some respondents thought it

would introduce complexity in the fee setting process that currently does not exist in many

Member States, while others thought it could simplify the process.

Other evidence

No additional information is available on participation by FBOs in fee setting and system

development for official controls.


General conclusions

Industry participation is likely to have significant positive impacts on accountability, where

industry believes it has a meaningful role in the fee setting process. Industry participation

could provide opportunities for FBOs and CAs to work together to pursue common



objectives. Fee acceptance is also likely to be higher where industry can participate in the

process.



FBOs would be determined by the level of participation granted to industry and the degree to

which industry perceives itself to have a meaningful role in the process. This will depend on

the specification of any participatory process, and this is currently unknown.


Impacts would fall primarily within the EU. This option would, in principle, impact all FBOs

subject to fees for official controls, and all Competent Authorities in EU Member States.

The distribution of impacts would depend on the level of industry participation offered by any

changes to Regulation 882/2004, and the degree to which industry believed it had a

meaningful role in the fee setting process as well as any costs to CAs related to ensuring

participation and any benefits to CAs and industry from improvements to the fee systems as

a result of industry participation.


The direction of change for CAs related to administrative burdens is impossible to predict.

There will be some additional costs to creating and implementing participatory systems. CAs

will potentially see some reduced costs where industry participation results in greater

efficiencies in official controls systems or conversely increased costs where industry

participation leads to greater difficulties in considering and agreeing a fee system.

Costs and benefits

CAs are likely to face some increased administrative burdens to organise and operate

participatory processes with industry, but these costs are likely to be low. Industry will also

face increased costs where it chooses to participate in the process. Costs to industry cannot

be measured because the decision to participate or not in any new process will vary by

Member State and sector. Industry will, however, only participate in any new process where

the benefits are seen to outweigh the costs.

Both industry and CAs expect that introducing participatory processes will result in improved

transparency and accountability. There is likely to be an additional improvement in the

efficiency of control activity where information sharing leads to innovations in control

activities, and thus their effectiveness.

A1.1.9 Sub-option A9 – Introduce exemptions and reductions for micro-enterprises


Sub-option A9 considers whether Regulation 882/2004 should be changed to provide

reduced fees or fee exemptions for micro-enterprises. Respondents were asked to consider

the advantages and disadvantages of including fee reductions or exemptions, impacts on

different stakeholder groups, and whether the Regulation should provide a universal

exemption for micro-enterprises under EU law or provide the option for Member States to

implement reductions or exemptions as they choose.





Table A1.30.



▪ Competent Authority and industry respondents uniformly indicated that this sub-option

would have negative or no impacts on official controls systems.

▪ In particular, this option is likely to have a negative impact on resource mobilisation

where less fee revenue is collected but the number of controls remains the same.

▪ Nonetheless, respondent comments indicate that the amendment would reduce the

financial burden on micro-enterprises and help to encourage development of small

businesses.

▪ Several respondents indicated that fee exemptions or reductions are unfair, and that

inspections should be undertaken according to risk. An effective risk-based system

would automatically reduce the costs for the best-performing micro-enterprises.

▪ Respondents clearly favour the option of an exemption or reduction, or no special terms

for micro enterprises, rather than a universal exemption or reduction:

– Only 1 CAs and 7 industry respondents prefer a universal exemption or

reduction;

– 7 CAs and 10 industry respondents prefer the choice to implement an

exemption or reduction; and

– 2 CAs and 14 industry respondents prefer no special mention and no special

terms for micro enterprises in Regulation 882/2004.

Figure A1.22 Fee reductions or exemptions for micro-enterprises are expected to have negative or no impact on the operation of official controls systems

-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification


Accountability




Table A1.30 Sub-option A9: Comments provided by survey respondents about exemptions and reductions for micro-businesses


Positive

▪ It would put less financial burden on the

micro-enterprises.

▪ [It would] assist with [the] creation and

maintenance and development of

artisan type establishments.

▪ No negative impact if exemptions are

given to micro-enterprises with a proven

▪ This amendment would reduce the

inspection pressure (sometimes

unnecessary) on operators. Meat


▪ It would drive CAs to negotiate more

risk based controls. Meat industry

representative.



record of good functioning.

▪ The direct linkage between fees and

delivery of OCs has proved instrumental

on encouraging FBOs to efficiently use

CAs resources. The removal of fees as

a tool to encourage compliance could

result on an increased risk to the

consumer.

▪ It would maintain local marketing of

products and production of traditional

products. It would also maintain current

animal welfare advantages of having

local slaughterhouses. Meat industry

representative.

▪ Given that most micro-enterprises

source stock/raw material from known

suppliers locally and supply to the local

community at very low levels it can be

argued that from a risk impact view-

point this will be limited.

Negative

▪ Lower cost recovery may lead to lower

efficiency of CAs.

▪ [It could result in] less revenue income.

▪ Any discounts provided to FBOs by CAs

should remain based on a percentage

discount of actual costs at a level

sufficient to incentivise efficient use of

CA resources by FBOs. At the same

time, on those instances of poor

performance, any additional controls

should be cost recoverable to the same

level than any other business and to full

cost.

▪ Full costs recovery cannot be achieved

on micro-enterprises and it is unfair to

charge this to the big operators.

▪ [There could be a] risk of food products

not complying with safety and quality

requirements entering market.

▪ Exemptions for micro-enterprises could

potentially have competitiveness

implications depending on how 'micro-

enterprise' is defined. Meat industry

representative.

▪ Exemptions for micro-enterprises could

potentially have competitiveness

implications depending on how 'micro-

enterprise' is defined between member-

states. Meat industry representative.

▪ A small size does not mean a smaller

risk. Meat industry representative.

▪ [It could] increases risks to the public if

exemptions are not based on the risks

posed by the business. Public health

representative.

▪ A small size does not mean a lower risk.

This may depend on sectors but at least

this is true in the feed sector. An

exemption of fees would certainly

benefit the competent authorities

administratively speaking but would also

be a further incentive to authorities to

focus controls on large companies and

"ignore" micro-enterprises. Food


Table A1.31 CA and industry respondents who prefer a universal exemption or reduction, the option to create an exemption or fee reduction, or no mention/no special terms

Category Competent Authority Industry

Universal exemption or reduction 0 out of 10 (0%) 8 out of 32 (25%)

Option to create exemptions or

reductions

8 out of 10 (80%) 11 out of 32 (34%)

No mention and no special terms 2 out of 10 (20%) 13 out of 32 (41%)


The findings from the case study indicate that fee reductions or exemptions for micro-

enterprises are likely to have negative impacts in some Member States and positive impacts

in others. This depends in part on the proportion of micro-enterprises in a given Member

State relative to other businesses, as well as the extent of cost recovery in that Member



State. Where there are a large number of micro-enterprises, fee reductions or exemptions

will have a negative impact on the resources mobilised from fees. Similarly, this sub-option

could simplify the system by reducing the number of FBOs subject to fees (if information

systems can distinguish such FBOs).



Figure A1.23 Overall, case study country respondents indicated that fee reductions or exemptions for micro-enterprises will have no or negative impacts on official controls systems

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Eff iciency Net score Simplif ication



Fee reductions or exemptions for micro enterprises are currently offered in four of the case

study countries (Belgium, Finland, the Netherlands and the UK). France and Poland do not

offer fee reductions or exemptions. In six of these Member States, micro enterprises

represent more than half of all businesses operating in the sectors most affected by official

control activities (i.e. meat, fish, dairy and feed sectors). In Finland, micro enterprises

represent almost 74 per cent of all businesses operating in these sectors. Data on the

number of micro enterprises operating in France are not available.

The impact of this sub-option on Member States depends on the number of micro

enterprises relative to all businesses, as well as the extent of cost recovery in each. For

example:

▪ Belgium offers fee exemptions or reductions for micro enterprises, but only recovers 40

per cent of its costs through fees; the remainder comes from public funds. In Belgium,

approximately 70 per cent of businesses subject to official controls are micro enterprises

[mandatory fees/voluntary fees?].

▪ The United Kingdom offers reductions or exemptions, but only recovers approximately

40 per cent of its costs through fees. In the UK, approximately 60 percent of businesses

subject to official controls are micro enterprises.

▪ Finland also offers fee reductions or exemptions, but only recovers 20 per cent of costs

through fees from small businesses. In Finland, approximately 70 per cent of businesses

subject to official controls are micro enterprises.

▪ Poland does not offer fee reductions or exemptions and claims to achieve full cost

recovery. In Poland, approximately 65 per cent of businesses subject to official controls

are micro enterprises.



Other evidence

Micro-enterprises represent a significant proportion of all FBOs in sectors most affected by

official control activity (Figure A1.24). In 16 of the 23 Member States for which data are

available, micro enterprises represent more than half of all FBOs. In seven Member States,

they represent between approximately 70 – 80 per cent of FBOs (Table A1.32).

Data suggest that fee reductions or exemptions are currently provided to micro enterprises in

11 Member States. Five Member States do not offer such reductions or exemptions. No

information is available for the remaining 11 Member States.

Figure A1.24 Micro-enterprises as a percentage of total number of enterprises in four major European industries affected by official control activity (2008)42

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro-enterprises

Source: Eurostat

42 Industry sectors include: processing and preserving of meat and production of meat products; processing and

preserving of fish, crustaceans and molluscs; manufacture of dairy products; manufacture of prepared animal feeds. GR and MT are not included in Eurostat dataset. Data for CZ and FR are not available.



Table A1.32 Exemptions or reductions for micro-enterprises by EU-Member State and the proportion of micr0-enterprise to all enterprises in sectors affected by fees for official controls

DE

ES

FR

PL

SK

BE

DK

EE

FI

IE

IT

NL

PT

RO

SE

UK

AT

BG

CY

CZ

GR

HU

LT

LU

LV

MT

SI

No exemptions or

reductions / no

specific rules

Exemptions and/or

reductions provided

No information

% micro-enterprises

to all enterprises in

relevant sectors

58 60 N/A 66 13 69 57 40 74 26 71 66 63 62 80 58 69 43 79 N/A N/A 57 48 47 41 N/A 73

% full cost

recovery43

N/A N/A

45 -

70

10044

51 37 35* 20 20*

40 -

90 50 81 100 50 N/A 43 100 27 N/A 28 N/A 60 100 N/A 100 39 100

High impact Low impact

No information available /

identified

DG SANCO baseline and Eurostat 2008; N/A – those countries for which micro-enterprise data or full cost recovery information is not available.

DK cost recovery for small abattoirs = 35%; FI cost recovery for small plants = 20%

43 See Table A1.8 for full cost recovery details by Member State.

44 The baseline data provided by DG SANCO indicate that Poland achieves full cost recovery; interviews with the Polish CA for this study, however, suggest that there is little

data on cost recovery and that the available data indicate that cost recovery is insufficient.



The impact of a fee reduction or exemption is likely to depend on the proportion of micro

enterprises in the population of FBOs and the extent of full cost recovery. Predicting the

likely effects further would require more complete data. Relevant information includes

whether or not a MS currently provides an exemption or reduction, full cost recovery status

and the percentage of micro enterprises across Member States. There are only 12 MS for

which complete information is available, and 10 of these already offer an exemption.


General conclusions

Mandatory fee reductions or exemptions for micro-enterprises may reduce cost recovery in

Member States, particularly for those with a large number of such businesses. There is no

correlation that can be determined, however, between the percentage of micro enterprises in

a MS, the degree of cost recovery and whether or not a MS already offers an exemption or

reduction. More information is required to understand this relationship.

Nonetheless, respondents indicated a clear preference for the choice to provide such an

exemption or no provision for such an exemption, rather than a requirement to provide

universal exemptions or reductions. Providing the choice to Member States to determine

whether or not to provide an exemption or reduction would allow this decision to be made on

a case-by-case basis in each MS and would not require those MS that already provide an

exemption (at least 11 of 27 MS) to remove the already existing fee reduction or exemption

provisions in its control system.


The scale of the impact on Member States and individual FBOs would be determined by

whether or not the option to exempt micro-enterprises (or reduce their fees) is exercised.

Where a fee reduction is chosen, the impact of that reduction will further vary by Member

State depending on their already existing fee rates.


Administrative burdens may be increased or decreased as a result of mandatory exemptions

or reductions, but the precise direction of the impact is difficult to predict and will vary by

Member State. For example, administrative burdens could increase where Member States

must identify micro-enterprises to ensure fee are reduced or eliminated. Additional costs will

arise where a fee reduction must be calculated, discussed, set, communicated and collected.

Conversely, administrative burdens could decrease where Member States are not obligated

to collect a fee where an exemption is implemented.

Costs and benefits

Introducing fee exemptions for micro-enterprises will reduce the proportion of costs

recovered by CAs. This will be especially pronounced in Member States with a high

proportion of micro-enterprises, and high cost recovery levels.

There is a potential tension between the micro-enterprise exemption and other objectives.

Where micro-enterprise reductions or exemptions are applied the costs of inspection must

be met from alternative sources. Cross-subsidy of very small businesses by levying a

surcharge on fees applied to larger firms is not consistent with the principle that each

business should not be charged more than the costs of inspecting that business. If the

deficit is made up with revenues from general taxation then the CA (and MS) will not be able

to achieve full cost recovery.

A1.2 Option B – Fully harmonise inspections fees for official controls



evaluation study carried out for DG SANCO by the Food Chain Evaluation Consortium



(FCEC)45

. Under this scenario all MS would pay the same fees (fixed rates) for the same

activities (i.e. full harmonisation).

There are three sub-options within this option:

▪ The first whereby fees are determined on a unified basis for the EU as a whole.

▪ The second, modified version, in which harmonised fees are adjusted for each Member

State using a cost of living index.

▪ A third sub-option that considers whether fees should be harmonised only for certain

import controls.

In the first two cases, respondents were asked to consider the impacts of harmonised fees

on official controls determined on a time unit and a number/quantity basis.

General points relevant to the impact assessment are that:

▪ The actual price schedule (and indeed the costing model that would be needed to

underpin the harmonised prices) was not specified in the option text provided for this

study. The quantitative appraisal of impacts is thus constrained not only by the gaps in

the baseline data, but also by uncertainty about the ex-post position (i.e. at what level

fees would be set); and

▪ The feedback received from consultees reflected their perceptions of how the level of a

harmonised EU fee might compare to the current fee in their particular Member State,

about which there is uncertainty.

A1.2.1 Sub-option B1: Unified fees for the EU-27

A1.2.1.1 B1 - Specification

In this sub-option the fees for the provision of controls are determined on a unified basis for

the EU as a whole (i.e. the same fee rates apply in each Member State).

A1.2.1.2 B1 – Evidence and analysis



advantages and disadvantages for sub-option B1 and to offer any additional benefits or

drawbacks that they could see arising. The scores awarded by survey respondents as

regards the impacts of this policy option are summarised in Figure A1.25. Selected

comments from CAs and industry are provided in Table A1.33:

▪ Competent Authorities and industry stakeholders indicated that this option would be

positive in terms of simplification and streamlining of the system.

▪ Competent Authorities also noted that unified fees would improve comparability and

accountability, though industry stakeholders felt the option would have little or a slightly

negative impact in these areas.

▪ Both CAs and industry believe that the option would have a negative impact on

efficiency, however. Moreover, respondent comments indicate that this option may not

be practical, could be too rigid and would not provide incentives for efficiency gains.

Overall, full harmonisation, applying a unified rate across the EU-27, is likely to reduce the

efficiency of the official control system. CAs consider that it could have a positive effect on

the other four criteria, but expressed concerns about the inability of a harmonised fee to

reflect differences in official controls systems between MS, and inadequately cover actual

costs. FBOs are similarly concerned with the potential negative impacts on the efficiency of

45 Study on fees or charges collected by the Member States to cover the costs occasioned by official controls.

Final Report. Part One: Main Study And Conclusions. Submitted by: Food Chain Evaluation Consortium (FCEC). Project Leader: Agra CEAS Consulting.



the controls system, and argue that harmonised fees would have little positive impact on the

other four criteria. Due to the wide divergence in official controls systems across the MS,

FBOs do not think that full harmonisation is a realistic option.

Figure A1.25 CAs and industry see opportunities to simplify and streamline official controls through harmonised fees, but the overall impact on efficiency would likely be negative.

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-1.0

0.0

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Simplification


Accountability




Table A1.33 Sub-option B1: Comments provided by survey respondents regarding full harmonisation with unified fee for the EU-27


Positive

▪ [Full harmonisation would

prevent]...disputes with establishments

[FBOs]...and reduce [sic] legal claims.

Negative

▪ Local authorities [sic] [would] pay if [the]

uniform fee rate did not [sic] cover all

costs. This would [sic] decrease [the]

resources [available to them].

▪ [It] would not provide incentives for

efficiency gains...where [they are]

needed; fee per item; fee per hour.

▪ ...[it would be] a rigid system...not

subject to adjustment [based on] the

pricing level of the MS.

▪ ...it would [sic] be very difficult to set a

common fee rate that should apply in all

Member States given the different cost

levels. Therefore we do not see this

option as practical.

▪ The principle of fee rates creates a

problem in itself: a move should be

▪ Full harmonisation would not be

realistic. All 27 MS have a different

living index and different meat

inspection systems.

▪ Given the huge variation in economic

standards across all 27 countries this

might actually prove to be anti-

competitive putting some country's

industries at a disadvantage.

▪ [It] does not take into account the

national risk profile.

▪ Since official inspection is in hands of a

monopolist there is no guarantee that in

case the fee is covering the full costs,

the monopolist will function as

efficient[ly] as possible. Therefore a

scheme with shared costs may be the

best incentive for both sides to




Positive

made to fees based on actual costs.

▪ The rules on the financing of official

control must not be constructed in such

a way that risk assessments are [sic] no

longer the basis for prioritizing the

controls.

▪ [The] option does not increase

transparency or harmonisation since

MS who disagree with the philosophy of

charging will find a way to disguise

subsidy, at central or local government

level.

▪ Given the huge variation in economic

standards across all 27 countries this

might actually prove to be anti-

competitive putting some country's

industries at a disadvantage.

contribute to the efficiency [of the OC

system].

▪ Set fees at EU level would put pressure

on profligate CAs to maximise efficiency

of delivery, and to negotiate more risk-

based controls that would require less

input.

▪ Overall there will be no incentive for CA

to improve efficiency and quality of

controls.

▪ There would need to be full

consideration of the impacts for MS

outside the Eurozone; how would parity

be maintained, and how would relative

cost be determined, i.e. what might

seem reasonable based on income in

one country might be expensive in

another.



under harmonised fees. There are two possible extreme scenarios under full harmonisation

that respond to two different objectives of the legislation:

1. Fees are set at the highest common denominator in order to ensure full cost recovery in


2. Fees are set at the lowest common denominator in order to ensure that in the least

expensive Member State fees are not higher than the actual cost of controls.

The first scenario is reflected in the impacts projected in some of the cases study countries.

For example, in Member States where fees are relatively low (e.g. Poland), harmonised fees

are likely to increase the fee rates charged and thus increase cost recovery. These

increases might, however, place an unacceptably high burden on industry where the controls

become too costly to operate viable businesses. The CAs in Poland are likely to recover

more fees than required to cover costs. In Member States where costs are relatively high

(e.g. the UK), harmonised fees will have less overall impact as there is likely to be little

change in the fees charged to operate the controls system.

Conversely, if fees are set at the lowest common denominator, Poland will be less impacted

(and still achieve full cost recovery), but the UK system will be under funded (in the UK only

44 per cent of costs were recovered under the current system in 2009).





Figure A1.26 Respondents in most of the case study MS indicated that the overall impact of harmonised fees with a unified fee is likely to be negative.

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Eff iciency Net score Streamlining




survey results. There are concerns that harmonised fee rates would fail to account for

significant differences between Member States and that this would reduce the effectiveness

of the official controls system.

Responses from CAs and industry in some Member States diverged in some areas. For

instance, respondents in Poland argued that full harmonisation would be likely to have a

significantly positive effect on the cost recovery achieved in the Polish controls system. The

cost of official controls is relatively lower in Poland than in many other Member States, and

respondents considered it likely that harmonised fee rates would increase the fee rate from

current levels, and subsequently increase the resources available for official controls.

However the Polish respondents agreed that, overall, full harmonisation would be likely to

have negative impact on the controls system.

The UK respondents argued that from their perspective, overall, full harmonisation would be

unlikely to have any significant impact on the controls system, but it could reduce the

administrative burden associated with controls (i.e. promote streamlining). The respondents

thought that due to the likely reduction in fee levels, harmonised fees would put pressure on

CAs to maximise the efficiency of delivery and implement more risk-based controls requiring

less CA input.

Respondents from Finland thought that full harmonisation would have significant negative

effects on the Finnish controls system. Respondents stated that it would be extremely

difficult to implement harmonised fees in Finland as fee levels are calculated at the local

level by local CAs. Central CAs have no legal power to specify fee rates to local CAs. This

administrative relationship is a feature of governance in Finland more generally, and is

enshrined in legislation that would be practically difficult to change. For this reason the full

harmonisation option would pose particular feasibility issues in Finland.

Other evidence

Figure A1.27 illustrates why the impacts of harmonised fees are so uncertain. Considering

only one control (adult cattle slaughter rates) in one area of official control activity (meat

controls), the rates charged in selection of Member States are plotted by the cost in euro per

head of cattle. The fee rates are taken from a survey of rates charged to industry by

CLITRAVI in 2007 and updated in 2009. For the purposes of this chart an arbitrary



harmonised fee rate of five Euros per head was chosen because it is the current minimum

fee for this control and many Member States currently charged the minimum fee. This

provides an illustration of the variance in fee rates relative to the average rate. Significant

complexity in the fees charged underlies the highly simplified diagram below, as described in

Table A1.34. Nevertheless, it illustrates the gap between the fees currently charged in a

selection of Member States and any potential harmonised fee. Uncertainty as to the actual

harmonised fee rate that might be used under Option A is unknown, and therefore precise

impacts are impossible to calculate.

Figure A1.27 Fee harmonisation would change prices for most FBOs and control fee income for governments - but the direction, scale and distribution of change would be determined by the actual level at which fees are set

0

5

10

15

20

25

30

BE BG CZ DK ES FL FR HU IT LI LV NL IE RO SE SI

Maximum rate (€/head)

Minimum rate (€/head)

Hypothetical harmonised fee (€/head)

There is a considerable gap between the fees currently charged in different MS and any potential harmonised fee.

There is uncertainty regarding how a harmonised fee would compare to current fees in EU MS

Figure prepared by GHK. The hypothetical example shown here is based on fee rates for slaughtering adult cattle (€/head). Fee rates are taken from a survey of MS fee rates by CLITRAVI, updated in 2009.

Table A1.34 Explanation of data underlying Figure A1.27 for meat industry inspection rates - 2009 fee rates for slaughtering adult cattle (€/head)

MS Rate explanation

BE Different rates are charged for small slaughterhouses and large slaughterhouses:

▪ €5.12 is the rate for slaughter lines slaughtering more than 50 animals per hour

▪ € 11.63 is the rate for small slaughterhouses

▪ €15.5 is the rate for slaughterhouses slaughtering four animals or fewer per hour.

The minimum and maximum rates are used in this example

DK Different rates are charged for small and large slaughterhouses:

▪ €6.80 for small slaughterhouses

▪ €8.8 for large slaughterhouses

These are set as the minimum and maximum rates in this example

ES A wide range of rates are charged depending on fees set by region:

▪ In some regions, rates charged cover costs

▪ In other regions, no charge is levied.



▪ A range of rates may be charged between these extremes.

The maximum charge is unknown. The minimum (i.e. no charge) is used in this example.

FI Slaughterhouses are charged once a month. The invoice covers all meat inspection and control

activities including hygiene, food safety, animal welfare, animal diseases, etc. There is no animal-

based fee and an estimate is difficult to provide as most slaughterhouses process several types

of animal. There is also large variation between large and small slaughterhouses.

The fees presented here are estimates of the minimum and maximum cost per animal for cattle.

HU A range of fees is charged depending on the examination time and using a multiplier to vary the

rate according to the distance of the slaughterhouse from the location of the official veterinarian.

▪ Rates by time of inspection:

▪ €4.72 (between 6 am - 4.30 pm)

▪ €9.44 (between 4.30 pm - 6 am),

▪ Multiplier by distance:

▪ 1.2 (<10 km)

▪ 1.3 (between 10-50 km)

▪ 1.4 (between 50-100 km)

▪ 1.5 (between 100-200 km)

▪ 1.6 (> 200 km)

This example presents the highest and lowest possible fee (i.e. €2.72 * 1.6 and €1.36 * 1.2)

IT Charges vary by region and size of establishment. Establishments handling:

▪ >70,001 units per year are charged €3 per head;

▪ 50,001-70,000 are charged €3.50 per head;

▪ 25,001 to 50,000 are charged €4 per head;

▪ 10,001-25,000 are charged €4.5 per head;

▪ 10,000 or fewer are charged €5 per head

The minimum and maximum charges (i.e. €3 and €5 per head) are used in this example

LI A lump sum is charged for issuing a supervision certificate and checking 10 adult cattle (€50.10).

In this example, the estimate of €5.01 per head is used, but this includes a portion of the cost for

issuing the certificate and is thus an overestimate.

NL Hourly rate are charged:

▪ €26.48 per hour for ante-mortem inspections and

▪ €19.28 per hour for post-mortem inspections

▪ Minimum rates per animal are also set (€2.02 per head).

Minimum rates are used in this example.

SE A range of fees is charged depending on the size of the establishment. The range for cattle is

€12-25 per head. The largest slaughterhouses pay the lowest fee.

The minimum and maximum charges (€12 and €25 per head) are used in this example.

A1.2.1.3 B1 - Summary

General conclusions

Full harmonisation on the basis of a unified schedule of rates is likely to have a negative

impact on the official control system across the EU-27.

There are valid questions about how feasible this option is. Development of a cost model or

set of pricing principles for each official controls that was seen by stakeholders to be fair and

appropriate (given control costs) would be an extremely challenging exercise. Due to the

significant differences in the organisation of official controls systems, variation in cost factors,

etc. amongst Member States it would be impossible to identify a fee level that would be

appropriate for every country.

Harmonised fees would also be politically difficult to implement in MS with highly

decentralised decision making and governance structures. In MS with decentralised OC

systems, it may not be possible to specify the fee rates under existing national legislative

arrangements. There are cases where new national legislation would be needed.





would be determined by the level at which the harmonised fee was set for any given control

and how that relates to the existing (baseline) fee. This is not known.


Impacts would fall primarily within the EU. This option would, in principle, impact on all

FBOs subject to fees for official controls, and the income of all entities that collect such fees.

The distribution of impacts is affected by the level at which harmonised fees are set. If fees

were harmonised at the level of the highest prevailing fee in Europe then aggregate payment

by industry would rise substantially. If the fees were harmonised at the level of the lowest

prevailing fee then industry would, on balance, gain but there would be a corresponding

deficit in government income and in the overall cost-recovery rate. If fees were set in the

middle of the current range then there would be ‘winners’ and ‘losers’ on a state-by-state

basis. In MS with relatively higher costs, a harmonised fee rate could reduce resources

available for performing official controls. In MS with relatively lower costs, harmonised fees

could result in fee levels that are higher than actual costs, placing an unfair burden on FBOs.

Businesses in eastern MS, where costs and fees tend to be lower, would on balance pay

more whereas businesses in some western and northern MS, where fees tend to be higher,

would pay less.

The net impact on business would also be influenced by how governments (including, where

relevant, local municipalities) responded to any income deficit on official control fees – e.g.

whether they raised local business taxes to generate compensating revenues.

There is no particular SME bias to the impacts but clearly in a scenario whether the option

resulted in large changes in fees then many SMEs would be affected.

The distribution of impacts is also influenced by the specification and development of the

option. There is ambiguity in the option (as specified) in terms of how it would affect

variation in the scope and application of fees at Member State level – for instance, if a

Member State does not currently charge for a particular control would Option A mean that it

was obliged to do so? This creates some additional uncertainty in the definition of impacts

and again means that analysis has to be restricted to issues of principle and the direction of

change that the change in principle would be expected to create.


This option would avoid the administrative burdens associated with calculating, discussing,

setting and communicating local/regional/national fees. However, if fees were to be set on

the basis of aggregate cost to the EU as a whole of a given control then it would imply that

cost data would need to be reported to the Commission. As discussed below there is a cost

to that cost collation, especially in Member States where responsibility is devolved to lower

tiers of government. Fee harmonisation would also negate the need for minimum fees in the

legislation, and the associated administrative costs.

There would then be the task of setting harmonised fees on the basis of that information and

operating the associated administrative and consultative processes. As noted above, it

would be very challenging to develop and operate a cost model for each control.

As noted above, this option could have a very significant impact on the aggregate cost to

business of official controls and change the distribution of such costs across the EU.


This option could have a very significant impact on the aggregate cost to business of official

controls and change the distribution of such costs across the EU. Where harmonised fees

are set at the highest common denominator, MS with low costs will obtain higher revenue

from fees than the costs of the control activity, which puts an unfair burden on businesses.

Where harmonised fees are set at the lowest common denominator, MS with high costs will



not receive sufficient revenue to recover costs, and may have to increase taxes or use other

means to fund control activities.

It will also affect the administrative costs to government for operating fee charging systems.

Harmonised fees would lower administrative costs for determining fees at MS level, but

would likely increase costs for collating information in order for the EU to assess and

determine the harmonised fee rate.

The benefits include greater transparency and simplification of a complex fee setting system

across the EU. The option would, however, undermine the cost recovery principle set out in

the legislation. The costs are expected to outweigh the benefits for this option.

A1.2.2 Sub-option B2: Adjust unified fees using a cost of living index

A1.2.2.1 B2 - Specification

This sub-option is a modified version of full harmonisation in which harmonised fees are

adjusted for each Member State using a cost of living index (e.g. based on Purchasing

Power Parity or other price indexes).

A1.2.2.2 B2 –Evidence and analysis


Respondents were again asked to consider whether they agree or disagree with a set of

advantages and disadvantages for Option B1 and to offer any additional benefits or

drawbacks. They were also asked to consider whether including a cost-of-living index would

change their assessment of Option B.



Table A1.35.

CA and industry respondents agreed that the sub-option could have slightly positive effects

on the functioning of the OC system. Indexing harmonised fees for cost of living would

reduce some respondent concerns related to the potential for excessively high or low fee

rates. However, the positive overall impact represented in Figure A1.28 fails to convey the

range of divergent respondent opinion. CAs felt that the sub-option would be difficult to

enforce, and could increase distortions rather than reduce them. Industry believes that

although harmonisation could simplify the administration of the OC system, it would not

necessarily improve the effectiveness of the system and would be unable to account for the

significant differences between OC systems in the Member States. Overall, respondents

argued that full harmonisation would not adequately improve the current OC system.



Figure A1.28 CAs indicated that the impact of harmonised fees with a cost of living adjustment could be positive overall; industry respondents indicated weakly positive or no impact under this sub-option

-2.0

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Simplification


Accountability




Study respondents provided the following comments regarding this policy option:

Table A1.35 Sub-option B2: Comments provided by survey respondents about full harmonisation, fee adjustment using a cost of living index


Positive

▪ [There would be] fewer [sic] legal

issues.

▪ Allows efficient administration of funds

at national level.

▪ Harmonisation is crucial and MS should

be charged the same effective rate

taking into account the real difference in

costs of providing equivalent services

given significant variation in labour

charges.

Negative

▪ The system might be rather complex,

bureaucratic and subject to on-going

challenge.

▪ Efficiency gains [would] depend on the

choice of harmonized fee, i.e. unit or

time.

▪ ...this system would be difficult to

enforce and possibly result in even

greater distortion than at present.

▪ Harmonisation of the fee doesn't

necessarily means that official controls

are harmonised or standardized

▪ Although this [option] takes into account

differences on cost of living index, it still

fails to address some of the main

▪ [Full harmonisation] does not take into

account the national risk profile.

▪ Set fees at EU level would put pressure

on profligate CAs to maximise efficiency

of delivery and to negotiate more risk-

based controls that would require less

input.

▪ One EU price might not necessarily

provide all member states with

adequate financial means.

▪ [Full harmonisation] does not reflect the

different structures / ways of working in

the MS. [It] does not reflect the real

costs to all (flat rate), [does] not take

into account different real costs (e.g.




shortcomings presented with current

system.

costs for labour, transport, analysis

etc.).



under harmonised fees with a cost-of-living adjustment. Less extreme versions of the two

scenarios set out under sub-option B1 remain:

1. Fees may be set high enough to ensure that a cost-of-living index ensures full cost

recovery in the most expensive Member State; or

2. Fees are set low enough to ensure that in the least expensive Member State fees are not

higher than the actual cost of controls.

There will be some ‘winners’ and ‘losers’ under either scenario, with CAs in some Member

States profiting under the first scenario and some industries bearing unnecessary costs. In

the second scenario, many CAs will not be able to cover costs with fees. Additionally, where

fee rates must be adjusted based on currency fluctuations (e.g. the UK), the sub-option is

likely to add administrative cost and bureaucratic challenges for CAs.

Strict rules would be required to ensure that MS maintain harmonised fee rates and the cost-

of-living adjustments are likely to be burdensome on CAs.



Figure A1.29 There was significant variation in reactions to the option among the case study countries

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Comparability Net score Simplif ication



Full harmonisation, indexed for cost of living differences, has similar levels of support in the

case study countries as full harmonisation based on a unified fee rate. Only France has

slightly higher levels of support for the cost of living adjusted harmonised fee rate compared

to the unified fee. French stakeholders believe that it would improve efficiency and

comparability. Current levels of fee recovery are very low in France, and the respondents

thought that a harmonised fee would increase fee revenue and improve the efficiency of the

OC system.



Respondents in the Netherlands had a generally positive view of the sub-option. They were

of the opinion that harmonised fees would simplify the OC system, but expressed concerns

about the ability of legislation to ensure full harmonisation. They stated that strict provisions

would be required to prevent differences between Member States. There was a general

consensus that the sub-option would improve comparability between Member States in

relation to cost structures and fee levels. Finally, there was tentative support in relation to

potential reductions in administrative costs but this was qualified with reservations as any

impacts would depend on the final structure of harmonised fees.

The UK respondents were of the opinion that this sub-option would be complex and

bureaucratic, and would have to be frequently amended to take into account economic

growth indicators and changes to exchange rates. Respondents in the UK were consistently

negative about this sub-option across all criteria, with the exception that the option could

positively streamline official controls. Harmonised fees would likely increase pressure on

CAs, and encourage them to implement risk based systems that would be likely to reduce


Other evidence

Consultations and research suggest that there is only one viable candidate for a cost of living

benchmarking for current purposes and that is Eurostat’s Price Level Indices (PLIs) which

compare average price levels across countries and are calculated from Purchasing Power

Parities. The data are produced by comparing the prices of a basket of (around 2500) goods

and services in all EU countries. The recommended option is to use the PLIs for an

aggregate called "Actual Individual Consumption". This includes both households’ own

expenditures and government's expenditures on e.g. health and education that are for the

benefit of households. Hence, it is a good indicator for the standard of living of households.

PLIs are expressed as an index with the EU27 as reference, e.g. an index of 110 means that

the country is 10% more expensive than the EU27 average46

.

One practical issue is the time-lag in publication of the index. As an example, 2010 data will

be added in December 2011. It would mean that adjustments to the relative level of fees in

individual Member States would need to be made one or two years in arrears.

46 See http://epp.eurostat.ec.europa.eu/portal/page/portal/purchasing_power_parities/introduction for

more information.

http://epp.eurostat.ec.europa.eu/portal/page/portal/purchasing_power_parities/introduction



Figure A1.30 Eurostat’s Price Level Index for Actual Individual Consumption is a potential adjustment factor for harmonised fees under Sub-option A2

0

20

40

60

80

100

120

140

160

EU27 D

E

NO IE LT FL BE FR AT SE NL IT DE IS ES

GR

UK CY PT SI

MT EE LV SK CZ LT HU PL RO BG

PLI (AIC) 2009

EU27

Source: Eurostat

A1.2.2.3 B2 - Summary

General conclusions

This sub-option would be likely to have a negative overall effect on the functioning of official

control systems across the Member States. Although the sub-option could result in positive

impacts on comparability and streamlining, these are likely to be outweighed by the

significant negative impacts on efficiency and also of fairness and adherence to principles of

cost recovery.

Indexation of rates for cost of living would mitigate some of the impacts of harmonisation (as

discussed for sub-option B1 above) but the process of setting an appropriate harmonisation

fee would remain burdensome and is very unlikely to result in a schedule of fees that

reflected actual costs of inspecting individual FBOs or even whole sectors at a Member State

level.


decentralised decision making and governance structures. In MS with decentralised OC


arrangements.


As with B1, the magnitude of impacts would be determined by the level at which the

reference (harmonised) price was set. This is not known.


As with B1 impacts would fall primarily within the EU and this option would, in principle,

impact on all FBOs subject to fees for official controls, and the income of all entities that

collect such fees.

The distribution of impacts is affected by the level at which harmonised fees are set.




As with B1 this option would avoid the administrative burdens associated with calculating,

discussing, setting and communicating local/regional/national fees, and would also negate

the need for minimum fees in the legislation, and the associated administrative costs.




consultative processes. As noted above, it would be very challenging to develop and

operate a cost model for each control.

Though it seems likely that impacts would be less severe that those of B1, the current

specification suggests that this option could have a significant impact on the aggregate cost

to business of official controls and change the distribution of such costs across the EU.


Though it seems likely that impacts would be less severe that those of sub-option B1, the

current specification suggests that this option could have a significant impact on the

aggregate cost to business of official controls and change the distribution of such costs

across the EU. It would also impact on government costs as described under sub-option B1.

There may be some benefits with respect to improved transparency and simplification of the

system, but these benefits are not thought to outweigh the costs.

A1.2.3 Sub-option B3 - Fee structures – Introduce EU harmonised fees only for certain import controls

A1.2.3.1 Specification

Sub-option B3 considers whether Regulation 882/2004 should require that certain import

controls are subject to harmonised fees, particularly those controls where there is a higher

degree of harmonisation (e.g. BIPS and DPEs). A single, uniform price would apply to any

EU border point.

A1.2.3.2 Evidence and analysis


Respondents were asked to consider the impact of harmonising import controls. The scores

awarded by survey respondents as regards the impacts of this policy option are summarised

in Figure A1.31. Selected comments from CAs and industry are provided in Table A1.36.

Overall, CAs and industry representatives indicated that this option would have a positive

impact on official controls systems in EU Member States. In particular, harmonised import

control fees would simplify the system, improve comparability amongst Member States and

reduce administrative burdens on CAs. Competent Authorities also foresee strong positive

impacts on efficiency and accountability. Both CAs and industry noted that harmonised fees

would reduce BIP selection at border posts, reducing competition distortions.

CAs and industry also noted, however, that in order to effect full cost recovery for all Member

States, the fee would need to be set according to the MS with the highest costs. Thus, some

Member States would profit from fee revenue above what is required to perform the control.

Some respondents indicated a preference for a cost-of-living adjusted fee rate for

harmonised controls.



Figure A1.31 CAs and industry respondents indicate that harmonised fee rates for import controls would have a net positive impact on official controls systems

-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification


Accountability




Table A1.36 Sub-option B3: Comments provided by survey respondents about harmonising fees for certain import controls


Positive

▪ [It would] simplify and harmonise [the]

rules; equal conditions would apply for

all FBOs.

▪ [It would be] easier to compare with

other countries.

▪ [It would] reduce competitive distortions

[sic] of competition, [and also] increase

transparency [and] accountability.

▪ The harmonization of fees in all EU

could avoid [the selection of BIPs on the

basis of fee level].

▪ [It would] improve [the] transparency of

costs.

▪ In order to avoid possible disruptions to

natural trade routes a minimum fee

under which no MS shall go should be

set at EU level; at the same time MS

shall be allowed to set charges between

that minimum fee and full cost recovery.

▪ [It would] avoid the selection of the EU

border point based on the level of the

fee and therefore reduces the potential

for artificial movements of goods with

higher transport distances. Meat


▪ Fairer competition among the border

points (airports and ports). Meat


▪ Improved transparency of costs,

improved choice options for customers.


▪ Better safety of imported products.

Food sector representative.

▪ Would [reduce] trade barriers. Public


▪ [It would promote a] level playing field

as well in the internal market as

between EU and 3rd country

competitors in similar context. Dairy


▪ More consistency in the controls

Animal welfare representative.

Negative

▪ The number of consignments differs ▪ Some MS may have difficulties in




between countries. MS with a large

number of consignments can be more

cost-effective. Some MS may not

achieve full cost recovery.

▪ [There are] different costs per Member

States, differences [in] salaries, etc.

▪ The fees of border veterinary control

would be harmonized in different EU

countries however salaries of BIPs

veterinary inspectors would remain

different.

▪ If [the] harmonised fee is too low, [the]

CA [would] lose money.

▪ Cost of living anomalies.

▪ [It may result in] less financing for some

EU Member States controls. It doesn’t

take [account of a] cost of living index.

getting the cost covered and others may

get money out of it. Meat industry

representative.

▪ An arrangement on the basis of the

highest denominator would be

necessary. Meat industry

representative.

▪ Not indexed to the living cost. Food

and agriculture representative.

▪ Cost of living anomalies reduced

incentives to improve efficiency and

reduced competitiveness. Veterinarian


▪ Would not reflect local cost differences

e.g. payment rates for officials. Public


▪ Member states will be inclined to set the

fees on a very high level to gain an

additional income from import controls

for their budgets. Food and agriculture

representative.


The case studies indicate that the impacts of harmonised import controls are likely to be

similar to the impacts described under Option B1 and B2 (full harmonisation, with or without

a price-of-living adjustment). CAs with high costs for import controls will find it difficult to

recover costs if the fee is set at the highest common denominator (e.g. Finland) and CAs

with low costs will recover more fees than the actual cost of control activity (e.g. Poland).

The reverse is true in the case where the fee is set at the lowest common denominator.

FBOs benefit from a low-cost fee but face unfair cost burdens where a high-cost fee is set.



Figure A1.32 There was little consistency in the scores awarded to this option across the case study Member States

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Eff iciency Net score Accountability



The case study results illustrate the disparity between the principle of harmonised controls,

which has a high level of support amongst respondents, and the practice of implementing



these controls. Where respondents considered the practical implementation issues, a

negative response was often given. For example, in Finland, respondents are concerned that

harmonised fees could lead to over- and/or under-funding of CA activity depending on the

basis for harmonised fees. Respondents also raised concerns that harmonised fees would

complicate and increase administrative costs to controls system in Finland because it would

require oversight at Central Administration level, whereas controls are generally the

responsibility of municipal bodies.

In Poland, harmonised fees would likely have a significant positive impact on efficient cost

recovery, as the fee rate is likely to be set higher than the actual costs of control activity in

this Member State. But, as fees are often negotiated between the central CA and industry,

harmonised fees could reduce the flexibility for such agreements, giving industry a reduced

role in the process. Moreover, harmonised fees would likely result in increased costs to

industry above the actual cost for CAs to perform the control activities.

UK respondents believe that while harmonisation could have positive impacts, it is unlikely to

be practical to implement due to the highly varied organisation of official controls systems in

EU Member States and significant variation in costs.

Other evidence

Some indication of the distribution of impacts could be estimated where the number of FBOs

subject to import controls is known. This information, however, is unavailable. Where import

controls information is provided in detail by Member States through the Regulation 882/2004

Annual Reports, this information refers only to the number of inspection centres that are

subject to controls (i.e. those belonging to a BIP) and the total number of checks by

category, not to the number of affected businesses.

A1.2.4 Summary of impact assessment results for harmonising fees for certain import controls

General conclusions

Harmonisation of fees for import controls is likely to have a negative impact on the official

controls systems across the EU-27.

The argument for harmonised fees for import controls is that it would create a ‘level playing

field’ across the EU-27 for such fees and remove the potential for trade distortions derived

from importers seeking out border points with lower fees. Yet evidence for such ‘BIP

shopping’ could not be found through this study.

Development of a cost model or set of pricing principles for import controls that is viewed by

stakeholders as fair and appropriate (given control costs) would be an extremely challenging

exercise. Due to the significant differences in the organisation of official controls systems,

variation in cost factors, and other issues amongst Member States, it would be impossible to

identify a fee level that would be appropriate for every country.

A cost-of-living adjustment for these controls would face the same challenges described

under Option B2. Indexation of rates for cost of living would mitigate some of the impacts of

harmonisation, but the process of setting an appropriate, harmonised fee would remain

burdensome and is unlikely to result in a schedule of fees that reflects actual costs of

inspection.


decentralised decision-making and governance structures. In MS with decentralised OC


arrangements.

The magnitude of impact



As with sub-options B1 and B2, the magnitude of impacts would be determined by the level

at which the reference (harmonised) price was set, which is unknown. Furthermore, baseline

data are missing for most countries—the fees currently charged for import controls are also

unknown.


As with sub-options B1 and B2, impacts would fall primarily within the EU and this option

would, in principle, impact on all FBOs subject to import controls, and the income of all

entities that collect such fees.

The distribution of impacts is affected by the level at which harmonised fees are set, which is

unspecified. As with sub-options B1 and B2, however, there would be ‘winners’ and ‘losers’

depending on whether the harmonised fee resulted in MS receiving more revenue than the

cost of import control activities or insufficient revenue to recover costs.


As with sub-options B1 and B2, this sub-option would avoid the administrative burdens

associated with calculating, discussing, setting and communicating local/regional/national

fees, and would also negate the need for minimum fees in the legislation, and the associated





consultative processes. As noted in Options B1 and B2, it would be challenging to develop

and operate a cost model for the relevant controls.


The costs are likely to be similar for those identified under sub-options B1 and B2.



A1.3 Option C – Repeal Articles 26-29 of the Regulation (full subsidiarity)

This section considers the second strategic option – deregulation.

A1.3.1.1 C - Specification

Under Option C Member States would be obliged to allocate ‘sufficient resources’ to official

controls but each Member State would be free to determine its own approach to the setting

of fees. Option C requires repeal of Articles 26-29 in Regulation (EC) 882/2004. This is

broadly equivalent to the ‘full subsidiarity’ option in the 2009 FCEC study.

A1.3.1.2 C – Evidence and analysis



advantages and disadvantages for Option C and to offer any additional benefits or

drawbacks. The scores awarded by survey respondents as regards the impacts of this

policy option are summarised in Figure A1.33. Selected comments from CAs and industry

are provided in Table A1.37.

Competent Authorities and industry hold similarly negative views of this option. CAs

expressed concerns that full subsidiary would increase disparities between MS, which could

increase pressure to reduce fees in order to gain a competitive advantage over other

Member States. Industry had similar concerns about the negative consequences of full

subsidiarity, but in several instances these related to CAs operating inefficiently, charging

excessively high fees or conducting controls that are not strictly necessary.

Figure A1.33 CAs and industry uniformly indicated that the impacts of full subsidiarity are likely to be negative overall.

-2.0

-1.0

0.0

1.0

2.0Efficiency

Simplification


Accountability






Table A1.37 Option C: Comments provided by survey respondents about full subsidiarity


Positive

▪ Full subsidiarity may put the politicians

in the driving seat with negative or

positive consequences dependent on

the influence of the stakeholders and

can even lead to discrimination between

sectors.

▪ [Full subsidiarity could] encourage the

provision of efficient services.

▪ ...if this option is used properly it [sic]

will cover actual costs and enable

allocation of resources for the control.

▪ [The option] recognizes that

harmonisation is not possible.

Negative

▪ Local authorities [sic] won't necessarily

use [the] ‘possible greater potential to

cover real costs’.

▪ Although such principle offers potential,

in reality it creates a practical difficulty

due to potential inter MS distortions.

▪ It would be extremely difficult (if not

impossible) for MS to develop fee

systems or even increase levels of cost

recovery in a completely disharmonized

EU environment, due to stakeholders

pressure, fears of possible distortions to

trade or competitive disadvantages

being created to the national sector.

▪ Well developed national charges

systems could be undermined, and this

approach may negatively affect the

delivery of OCs due to diminishing

financial resources with an ultimate

outcome of reduced consumer

protection.

▪ Full subsidiarity may put the politicians

in the driving seat with negative or

positive consequences dependent on

the influence of the stakeholders and

can even lead to discrimination between

sectors.

▪ Full subsidiarity would [allow] CAs to

recoup the full cost of inefficiently

delivered official controls, and [it] would

[also] remove drivers to achieve

efficiency and negotiate more risk-

based controls in the fresh meat sector.

▪ This system would permit a MS to

'abuse' the level of flexibility permitted

within the regulations such that OCs

could be gold-plated or watered down to

inappropriate levels. If a MS determines

that OCs do not 'add value' then they

could feasibly simply seek to undermine

the inspection process by failing to fund

or resource it as required.

▪ Full subsidiarity would not necessarily

lead to greater 'accountability'.


Full subsidiarity is likely to have a significant negative impact on most of the case study

countries. It is likely to increase pressure on CAs to reduce fee rates in order to ensure that

FBOs are not disadvantaged relative to fee rates in other Member States. Cost recovery is

likely to decrease as a result.



Figure A1.34 Overall, respondents in the case study countries indicated that the impact of full subsidiarity is likely to be negative; Belgium foresees a potentially weak positive effect.

-2

-1

0

1

2BG

FL

FR

NL

PL

UK

Streamlining Net score Simplif ication



The majority of the case study respondents expected that this option would have a negative

impact on the official controls system in their respective countries. A common concern was

that full subsidiarity would result in a downward pressure on fees as MS attempted to ensure

that their FBOs are not at a competitive disadvantage.

Respondents in the UK were particularly concerned that full harmonisation would eventually

reduce the financing available for official controls to such an extent that it would result in the

failure to provide official controls. Respondents from the Netherlands expressed divergent

opinions in relation to the potential impacts to simplification. Some expected that there

would be no change as a result of the option, while others thought it would lead to more

complicated legislation. The potential for complicated legislation was related to concerns

that FBOs would be at an unfair cost disadvantage relative to fees in other MS. French

respondents were consistent in their view that full subsidiarity would have a negative impact

on their OC system; it would lead to lower fees and increase inconsistencies between

inspections.

Respondents in Belgium were the only group to consider that the option would have a

positive impact on official controls. As the option would enable the tailoring of the OC

system to the local situation, the respondents thought that it would improve the efficiency of

the Belgian system. In particular, full subsidiarity would provide the flexibility for the CA to

move costs from one budget to another. In addition, full subsidiarity would simplify the

Belgian system so that only two issues would have to be addressed: full cost recovery under

mandatory fees, and the controls subject to mandatory fees.

Other evidence

Member States already exhibit significantly wide variance in their fee collection for control

activities. Cost recovery rates vary across MS from as little as 37 per cent in Belgium to 100

per cent claimed in Latvia, Lithuania, Poland and Slovakia (Table A1.8), and within Member

States depending on the governance arrangements for fee collection (decentralised to

centralised) and the sector (e.g. import controls often do adequately recover costs through

fees). This degree of variation can be seen across each issue examined in this study,

including the availability of information to the public (Table A1.26), the rates and controls

covered by time-based fees (Figure A1.12), charging practices and scope of fees for non-



mandatory controls (Table A1.4), bonus-malus principles in operation (Table A1.23), and

degree of ring-fencing (Table A1.21).

Full subsidiarity is likely to increase the degree of variation amongst official control systems

across the EU-27, and likely to reduce comparability between MS, and transparency and

accountability of CAs as a result.

A1.3.1.3 C - Summary

General conclusions

Full subsidiarity could have a positive impact on the functioning of official controls systems; it

would enable CAs to organise controls in a way that most appropriately reflects the particular

characteristics of their systems. This could reduce unnecessary control activities and

improve overall efficiency.

However, it is more likely that full subsidiary would have a negative impact on the OC

system. It would widen disparities between Member States, and increase pressure on CAs

to lower fees to maintain industry’s competitive advantage. Over time this would reduce the

level of resources available to finance official controls, resulting in a reduction in control

activity.


The magnitude of impacts cannot be stated with any confidence because they would be

determined entirely by how Member States decided to modify their domestic fee regimes in

the absence of the framework for that provided by current EU legislation.


The incidence of impacts on business and authorities of this option would be indirect and are

uncertain – as stated above, they would be determined by how Member States decided to

modify their domestic fee regimes once given the freedom to do so.

Commentary on how domestic policies might develop under such a scenario would be

essentially speculative. However, it seems reasonable to assume that over time Member

States’ systems would diversify further, potentially with impacts on the Single Market.


This option would remove those administrative burdens associated with administration of

minimum fees and other processes specific to the European legislation, but Member States

would still face the costs of administering their domestic fee regime.


The overall effect of this option depends on the approach taken by each Member State in

response to this proposed change. Full subsidiarity could result in Member States charging

higher fees in order to better recover costs or it could result in MS charging fees below

current rates due to pressure from industry to compete against other MS. Where fees are

lowered, industry would benefit from lower costs, but MS would face costs associated with

insufficient funds to carry out the required activities. Where they are raised, MS would benefit

from higher cost recovery, but industry would face higher costs. Administrative costs to

Member States may also be higher or lower depending on whether subsidiarity leads MS to

streamline their systems, or if it increases their complexity and therefore the resources

required to operate them.





Annex 2 Member State case studies

This annex reports the results of case study research carried out in:

▪ Belgium

▪ Finland

▪ France

▪ Netherlands

▪ Poland

▪ UK

These case studies involved interviews with competent authorities and industry

representatives, data requests and supplementary analysis.

These Member States were selected for their variety of approaches to financing of official

controls, including differences in the prevailing rates of cost recovery, differing use of bonus-

malus systems, and differences in organisational (centralised/devolved).

A2.1 Belgium

A2.1.1 Introduction

This case study was informed by three interviews (two CAs and one industry representative)

and four returned questionnaires. The Federation for the Food Industry (FEVIA) responded

on behalf of the Belgian food industry.

A2.1.2 Option A: Improve the current system

Stakeholders generally agree that the official controls system in Belgium functions well and

that adjustments per Option C sub-options could improve the system.

A2.1.3 Sub-option A1: Extend the scope of mandatory fees

Belgium collects levies from all companies active in the food chain, from primary production

to retail and restaurants. Fees are charged, unit based or time based, for all legally required

activities, and also for other services on request.

The CA has expressed a desire to increase the scope of mandatory fees to include:

certification; approval for feed and food business establishments, and for laboratory tests

required in response to random / once off food safety issues.

Table A2.38 Sub-option A1: Impacts in Belgium of extending the scope of mandatory fees

Parameter Score Analysis

Efficiency 0 According to the CA, this option will have little or no effect, as most activities are

already covered by fees and all food businesses pay a levy. A substantial part of

the CA’s budget comes from the government (approximately 62%). This

percentage will likely change marginally by extension of mandatory fees to

those listed above.

Simplification 0 No impacts identified.

Comparability + The allocation of all food producing industries to mandatory fees could reduce

distortions between MS.

Streamlining - The administrative burden for CAs could increase if more establishments are

subject to mandatory fees.

Accountability 0 No impacts identified.

A2.1.4 Sub-option A2: Require full cost recovery



Table A2.39 Option A2: Impacts in Belgium of requiring full cost recovery


Efficiency + Full cost recovery would improve resourcing of official controls.

Simplification -- The main source of funding for official controls is currently public funding. Full

cost recovery would be likely to require additional national legislation (to collect

adequate fee revenues and to ensure that CAs can be funded in the absence of

public funds).

Comparability + It would improve comparability between MS and encourage fair competition.

Streamlining 0 No impacts identified.


A2.1.4.2 Sub-option A3: Clearly define eligible costs

Stakeholders agreed that a clear definition of eligible costs would be useful, but disagreed

about what the list should contain. The CA that all possible costs should be considered, but

industry though that they should be limited to salaries and equipment used during inspection.

Table A2.40 Sub-option A3: Impacts in Belgium of a clearly defining eligible costs


Efficiency + A clear definition of costs could help in financing official controls as it would

improve understanding of what fees should relate to.

Simplification ++ Clear definitions are likely to simplify the OC system and are unlikely to require

major changes to the system.

Comparability ++ Although using the same list of eligible costs does not necessarily mean that

systems will be the same in MS, positive impacts on comparability are expected.

It would result in a relative improvement from the current situation.

Streamlining + A clear definition of eligible costs would reduce the administrative burden for

stakeholders as only agreed costs would be considered in fee calculation rates.

Accountability + The option would be likely to improve transparency of what fees are based on,

which would thus increase accountability.

A2.1.4.3 Sub-option A4: Time-based fees and flat fees

Belgium operates unit based fees in slaughterhouses, which are dependent on the number

of animals slaughtered per hour. Certificates are issued on a per unit basis. Other activities

are time-based.

Table A2.41 Option A4: Impacts in Belgium of the introduction of time-based fees for which the continuous of systematic presence of official controls in required


Efficiency + Time based fees are already used. However, increased use of flat fees could

improve efficiency as it would encourage FBOs to increase their operational

activity and contribute to the smooth operation of controls.

Simplification + Existing legislation would need only a slight adaptation for wider introduction of

time-based fees.

Comparability - Time-based fees would reflect the unique situations in individual MS, which is

likely to reduce comparability.

Streamlining ++ Simplifying the fee structure would reduce the administrative burden for

stakeholders. Time-based fees would also encourage staff to be more efficient.

Accountability + A common approach to define costs would improve accountability.



A2.1.5 Sub-option A5: Requiring ring-fencing of resources

Table A2.42 Option A5: Impacts in Belgium of ring-fencing resources


Efficiency 0 No impacts identified.

Simplification 0 It would not require significant revisions to existing legislation.

Comparability 0 Ring fencing, as such, does not contribute to comparability.

Streamlining - Ring-fencing could require additional administrative input by CAs.

Accountability + It would clarify the relationship between costs and fee revenue.

A2.1.6 Sub-option A6: Incorporate bonus-malus system principles

A bonus-malus system is in operation based on certification of the company’s food safety

system. Meat inspection is based on the number of animals inspected. The real salary costs

are time based. In order to achieve realistic cost recovery, slaughterhouses with a higher

throughput have a reduced fee per animal slaughtered. Effectively, efficient slaughterhouses

pay less per head of animal. This can be seen either as the implementation of bonus-malus

principles or as stratification of costs in relation to the hours spent by the inspector.

Table A2.43 Option A6: Impacts in Belgium of introducing a bonus-malus principles


Efficiency ++ Bonus-malus principles, when effective, would reduce the total income of the CA,

but it could also improve the efficiency of controls and contribute to food safety.

Simplification + Elements of a bonus-malus system already exist in Belgium. It would not be

difficult to incorporate in national legislation.

Comparability + If all MS apply a bonus-malus system it would not cause significant distortions,

and would be likely to improve comparability (if only slightly).

Streamlining -- It could complicate the administration of the OC system as different groups of

enterprises would have to be treated and considered differently.


A2.1.7 Sub-option A7: Introduce transparency and reporting requirements

The CA produces a very detailed annual report on the activities and finances, which is

available on the CA website. This provides information for the consumers and industry. All

documents can be found on the website including the relevant legislation.

Table A2.44 Sub-option A7: Impacts in Belgium of introducing transparency and reporting requirements


Efficiency 0 The CA of Belgium already produces an extensive annual report which fulfils

the requirement. So no change is to be expected.

Simplification 0 No change is to be expected.

Comparability 0 No change is to be expected.

Streamlining 0 No change is to be expected.

Accountability 0 No change is to be expected.

A2.1.8 Sub-option A8: Provide for industry participation

The CA has an advisory committee in which representatives from consumers, primary

production, food processors (three of the four haven been consulted for this investigation),

food trade, catering and restaurants, transport, and feed.



Table A2.45 Sub-option A8: Impacts in Belgium of providing for industry participation


Efficiency + Increasing participation would improve the fairness of the fee schedules and

increase the rate of acceptance as a result.

Simplification + Improving industry participation could simplify the OC system.

Comparability + It would increase transparency, which would improve comparability.

Streamlining - Could lead to increased administrative burden as it would be relatively

complicated to implement.

Accountability + It would increase transparency, which would improve accountability.

A2.1.9 Sub-option A9: Introduce exemptions and reductions for micro-enterprises

Table A2.46 Sub-option A9: Impacts in Belgium of introducing exemptions and reductions for micro-enterprises


Efficiency - Negative impacts on efficiency likely as it would decrease the rate of cost

recovery. As exemptions and reductions would be introduced for a social reason,

the costs would have to be met by public funding.


Comparability - Comparability likely to be reduced as MS have different proportion of micro-

enterprises in their OC systems.

Streamlining - The option would create an extra category in the OC system, which would require

additional administration. However the impact is likely to be limited.


A2.1.10 Option B: Fully harmonise inspection fees for official controls

Full harmonisation was viewed unfavourably by stakeholders. They argued that full

harmonisation would be unable to reflect the specific situation in Belgium, which could create

significant inconsistencies and jeopardise the functioning of the system. It was considered

inflexible, unable to accommodate the specific needs of the country and insufficient to deliver

comparable official control systems between Member States.

A2.1.10.1 Option B1: Fees for provision of controls are determined on a unified basis for the EU as a whole (i.e. the same fee rates apply in each Member State)

Table A2.47 Option B1: Impacts of full harmonisation in Belgium where the same fee rates apply in each MS


Efficiency -- Harmonisation would be difficult as the content of the control activity would have

to be harmonised to avoid significant differences between inspection costs and

fee revenue. It is likely that harmonisation would result in fees that are too high

or too low.

Simplification - It is likely that harmonisation would require additional national legislation in

Belgium.

Comparability - While harmonisation could improve comparability between MS on a legislative

basis, it would also introduce distortions. MS would have to adapt the system to

their specific needs to prevent unwanted or unrealistic situations. It would be

difficult to find a common denominator, which could result in fees not being

collected or significant adaptations to the frequency of controls.

Streamlining - Harmonisation could increase the number of activities for which fees are

collected, increasing the administrative burden. However, calculating fees on a

per unit basis would reduce this impact somewhat.




A2.1.11 Option B2: Harmonised fees are adjusted for each Member State using a cost of living index

Although adjusting harmonised fees based on a cost of living could alleviate some concerns,

stakeholder’s views for this option were the same as those for harmonisation based on the

same fee rates in each MS.

Table A2.48 Option B2: Impacts of full harmonisation in Belgium where fee rates adjusted using a cost of living index apply in each MS


Efficiency -- Harmonisation, even indexed to cost of living, would be difficult as the content of

the control activity would have to be harmonised to avoid significant differences

between inspection costs and fee revenue. It is likely that harmonisation would

result in fees that are too high or too low.

Simplification - It is likely that harmonisation would require additional national legislation in

Belgium.

Comparability - While harmonisation could improve comparability between MS on a legislative

basis, it would also introduce distortions. MS would have to adapt the system to

their specific needs to prevent unwanted or unrealistic situations. It would be

difficult to find a common denominator, which would result in fees not being

collected, or significant adaptations to the frequency of controls.

Streamlining - Harmonisation could increase the number of activities for which fees are

collected, increasing the administrative burden. However, calculating fees on a

per unit basis would reduce this impact somewhat.


A2.1.12 Sub-option B3: Harmonise fees for certain import controls

The current system in Belgium is unit based for import controls.

Table A2.49 Option B3: Harmonise fees in Belgium for certain import controls


Efficiency 0 Currently, cost recovery is not directly related to each consignment in the unit

based system. Therefore, the tariff can be adjusted to a level that makes the

fees for import controls cost effective. In a harmonised system, with the same

tariff all over Europe, it will be dependent on the tariff whether full costs for the

import controls will be recovered. It would be very difficult to set a fee at the

correct level that recovers costs but avoids profits on the import controls.

Simplification - Unit-based fees are straightforward to implement, but harmonisation would

require additional EU regulations.

Comparability + Harmonised fees would improve comparability and reduce the selection of ports

on the basis of fee levels.

Streamlining 0 A similar system is currently in operation, so minimal adaptation would be

required.


A2.1.13 Option C: Repeal Articles 26-29 of the Regulation (full subsidiarity)

Table A2.50 Option C: Impacts of full subsidiarity in Belgium where fee rates are set differently in each Member State


Efficiency ++ The option would enable the tailoring of the OC system to the local situation,

which would have a positive impact on the efficiency. The CA would have the

flexibility to move costs from on budget to another.



Simplification + It is likely that minimal changes would be required to national legislation. It

would probably improve the simplicity of the system in Belgium. The system

would only have to address two issues; full cost recovery with mandatory fees,

and the controls subject to mandatory fees.

Comparability - Could reduce comparability due different fee structures and levels between MS.

Streamlining 0 Could reduce the administrative burden for CAs as they could organise their

fees for controls as per their specific needs, that is, administration and OC

activities could be fully complementary. However industry’s cost could increase

if more controls are brought under mandatory fees.


A2.1.14 Issues/considerations

Full harmonisation is not considered a ‘real solution’. It would be difficult to adapt

harmonised fees to the Belgian situation. In addition, time registration poses difficulties for

properly recording the respective definition of the units. Respondents expressed doubts in

relation of feasibility that is, that a definition of costs per unit or the time spent on a certain

task will be difficult to harmonise.

Full subsidiarity is considered to be very positive by the CA on all parameters, except for

comparability and accountability. Some drawbacks identified include potential trade

distortions and the loss of a common approach across Europe.

Improving the current system is welcomed by all stakeholders. Time based fees are

considered a feasible option, but not for import controls. Time based fees, and the costs they

relate to, should be based on common EU rules. Stakeholders consider it likely that time

based fees would reduce the admin burden over time. Harmonised fees for import controls

are welcomed by all respondents.

Labour costs differ substantially between the MSs. A standard fee per unit, in euro, all over

Europe leads to differences in cost recovery by the respective CAs. It will result in either

surplus or financial deficit, leading to not a full cost recovery (too much or too little).

Extending the scope of mandatory fees was welcomed by the CA, but not by FBOs. The CA

mentions in particular mandatory fees for: certification, approval of food and feed

establishments, audits/services on request of the FBO and extra controls needed in case

harmful products entered the market.

Concerns were expressed about introducing exemptions for micro-businesses; respondents

thought it could increase risks to food safety, and should only be granted to FBOs with a

good track record.

Industry did not think that the transparency and reporting option would lead to many

changes.

Bonus-malus principles are welcomed and already in operation. Food business operators

with a certified food safety system, either certified by the FAVV or another certification body,

benefit from reduced fees.

Full recovery of costs is viewed positively by the CA, but the industry considers controls (at

least) partly a public service which should be covered by the MS budget.

Ring fencing was considered to contribute to the correct allocation of costs.

A2.1.14.1 Conclusions

Some overarching observations include:

▪ The CA does not expect much change in future. It wishes to continue the present system

as it is well adapted to the Belgian situation.

▪ Fees should be set based on local costs, but under EU common rules.

▪ Import fees should be harmonised, but time-based in order to provide a better service.



▪ Full recovery of costs should include all costs, including for example, overheads, training,

office facilities, etc.

Potential effects of the options include:

▪ Efficiency: the CA sees the efficiency (collecting money) favourable when the scope of

mandatory fees is extended and full subsidiarity is accomplished. Industry considers

opposite. No major effects are anticipated

▪ Simplification: clear definition of eligible costs will contribute

▪ Comparability: industry participation and transparency and reporting will contribute.

Extension of the scope will have a positive effect supposed by the CA, but a negative is

expected by the industry

▪ Streamlining: very divergent opinions in relation to full harmonisation and full subsidiarity,

but harmonisation of fees for import controls and definition of costs have a positive

effect.

▪ Accountability: clear definition of costs and transparency and reporting contribute as

does industry participation in setting fees.

Options as seen acceptable by several parties include:

▪ Time based fees

▪ Harmonised fees for import controls

▪ Definition of eligible costs

▪ Bonus-malus

Options with diverging acceptance include:

▪ Full subsidiarity, the CA is in favour

▪ Extension of the scope of mandatory fees

▪ Exemptions for micro enterprises

Options facing resistance include:

▪ Full recovery of costs

▪ Extension of the scope of mandatory fees (industry)

Options contributing to the acceptance of fees include:

▪ Industry participation in setting fees

▪ Ring fencing

▪ Accountability


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A2.1.14.2 Belgium: summary table of option analysis

Table A2.51 Belgium: summary table of option analysis

Option Parameter/score

Efficiency Simplification Comparability Streamlining Accountability

A Improve the current system


fees

0 0 + - 0

A2 Full cost recovery + -- + 0 0

A3 Clear definition of eligible

costs

+ ++ ++ + +

A4 Time-based fees + + - ++ +

A5 Ring-fencing resources 0 0 0 - +

A6 Bonus-malus system ++ + + -- 0

A7 Transparency & reporting 0 0 0 0 0

A8 Industry participation + + + - +

A9 Micro-enterprises - 0 - - 0

B B1 Full harmonisation, unified

fees

-- - - - 0

B2 Full harmonisation, cost-of-

living adjusted

-- - - - 0

B3 Import fees 0 - + 0 0

C Full subsidiarity ++ + - 0 0


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A2.2 Finland

A2.2.1 Introduction

This case study was informed by 3 interviews (2 CA and 1 industry stakeholders) and 4

questionnaires. Information from a country profile of Finland (DG SANCO 2010), and a

study by Lepistö et al. (2010), were also used.


Fees for official controls are calculated differently by MFCAs across Finland. Some MFCAs

base fees on a flat rate, some fees are time based, but most are a mix of both time based

and flat fees.

A2.2.3 Sub-option A1: Extended the of scope mandatory fees

Extending the scope of mandatory fees should not pose any specific issues in Finland.

Although MFCAs are responsible for setting fee levels and conducting inspections, the range

of mandatory fees are set centrally.

Table A2.52 Sub-option A1: Impacts in Finland of extending the scope of mandatory fees


Efficiency + The majority of MFCAs do not recover enough fees to cover actual costs.

Extending the scope of mandatory fees could help to increase the fees available

to competent authorities (CAs).

Simplification 0 It is unlikely that the sub-option will have any effect on the clarity and simplicity

of the legal framework in Finland.

Comparability + The sub-option may improve the comparability of Finland with other Member

States. In addition, it could help to improve the comparability with Finland

between the numerous MFCAs.

Streamlining -- The sub-option could require an increase in the control and inspection of

municipal CAs by central CAs to ensure that mandatory fees are being

collected. It may also result in fees being charged for activities for which there

is no specific need. Both of these factors could increase the administration

burden and increase compliance costs.

Accountability 0 Extending the scope of mandatory fees would be unlikely to change

accountability in Finland. Stakeholders have good access to information about

how controls are organised and conducted. The MANCP includes objectives on

communication, and control reports are published on the internet. Confidentiality

of controls is legislated for in the Open of Government Activities Act 621/1999.

A2.2.4 Sub-option A2: Requiring full cost recovery

The majority of CAs are under funded; only one third recover fees that cover actual costs.

Due to the high number of CAs (over 300) there is a desire amongst MFCAs to avoid

charging comparatively higher fees than a neighbouring municipality (to ensure that local

businesses remain competitive). Central government has no legal authority to influence OC

fee rates; they are set locally by MFCAs. For these reasons it is likely to be extremely

difficult to achieve full cost recovery in Finland.

Table A2.53 Option A2: Impacts in Finland of requiring full cost recovery


Efficiency ++ The sub-option would ensure the adequate funding of OCs.

Simplification -- The sub-option would complicate the legal framework as central administration in

Finland cannot influence the fee level set by MFCAs. The sub-option would require

significant changes to the workings of Finland’s governance system (beyond official

controls).


200

Comparability + Full cost recovery could improve comparability as actual costs would be apparent.

Streamlining - The sub-option is likely to increase compliance costs for industry as it would require

that industry cover all costs associated with official controls.

Accountability -- If CAs will have all official control costs provided by FBOs, it could reduce the

incentive for CAs to be as efficient as possible. Thus the sub-option could reduce

accountability.

A2.2.4.2 Sub-option A4: Time-based fees, flat fees

Table A2.54 Option A4: Impacts in Finland of the introduction of time-based fees for which the continuous of systematic presence of official controls in required


Efficiency ++ The sub-option could have a positive impact on the financing of official controls.

Wider application of time based fees could reduce the disparity between actual

costs and the fees collected, but this would depend on the definition of eligible

costs. Introducing flat fees could improve the financing of official controls as it

would set a minimum fee for certain activities which some MFCAs may not be

currently charging for.

Simplification -- The sub-option could have major negative effect on the legal framework for official

controls in Finland. Finnish central administration does not have the legal power

to dictate how MFCAs charge for official controls. Significant legal changes would

be required in Finland for this sub-option to be implemented.

Comparability - Time-based fees could improve the comparability of official controls across the

Member States while having enough flexibility to account for Finland’s particular

cost structures. However, the introduction of flat rates could lead to distortions to

the Finnish official control system. Currently MFCAs calculate fee rates based on

actual costs and a risk assessment. The introduction of flat fees could lead to the

under funding of some MFCAs, and the over funding of others.

Streamlining - It would require an increase in the administrative control from central

administration in Finland to ensure that this sub-option is introduced across

Finland. This increase would probably result in increased costs on CAs and

industry.

Accountability 0 Introducing time based fees could improve accountability as CAs may have

communicate clearly the actions undertaken during an OC inspection. However,

introducing flat fees could reduce the accountability of CAs. Fees could be

charged at a rate higher than actual costs, and for activities which might not be

required.

A2.2.5 Sub-option A3: Clearly define eligible costs

There is a list of eligible costs used in Finland to calculate time based fees which is similar to

the list proposed in the sub-option. Finland is a relatively sparsely populated country, and as

a result travel time for OC inspections can be significant. Including travel time could place

an unfair cost burden on FBOs in remote locations.

Several respondents stated that the list of eligible costs is less important than clearly defining

and describing each eligible cost in detail. Doing so reduces confusion and avoids the mis-

interpretation of eligible costs.

Table A2.55 Sub-option A3: Impacts in Finland of clearly defining eligible costs


Efficiency ++ It is likely that clearly defining eligible costs would increase the financing

available for performing official controls. Finland uses a similar list of eligible

costs to calculate time based fees.

Simplification 0 The sub-option would be unlikely to clarify of simplify the legal framework in


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Finland.

Comparability + The sub-option is likely to have a minor positive effect as a similar list of eligible

costs is already used to calculate time based fees in Finland. However it could

improve the comparability of the Finnish system with those in other Member

States if all were to use a standard list of eligible costs.

Streamlining + Clearly defining eligible costs could reduce the administration burden for CAs by

removing uncertainty of what they can, and cannot, charge for.

Accountability 0 As Finland already uses a similar list of eligible costs, and publishes official

control reports online, it is unlikely if the sub-option would have any effect on the

accountability of the OC system in Finland.


Fees collected by MFCAs for OC activities are retained by MFCAs, they do not go to the

central state budget. Thus resources are somewhat ring-fenced. However the units in

MFCAs responsible for conducting OC inspections are also responsible for a range of other

inspections. FBOs inspections often include multiple activities, that is, FBOs may be

inspected for OCs in addition to other issues. It would be difficult to accurately allocate the

resources spent by a CA on OC activity only. For this reason the ring-fencing of resources

below the MFCA level (i.e. to specific units) would be practically impossible.

Table A2.56 Option A5: Impacts in Finland of requiring ring-fencing of resources


Efficiency 0 The majority of CAs (MFCAs) do not collect enough in fees to cover the actual costs

of official control activities. Ring-fencing resources is unlikely to improve this

situation.

Simplification -- MFCAs are responsible for control activities unrelated to official controls. Due to

these institutional arrangements it is likely that requiring ring-fencing of resources

would complicate the legal framework.

Comparability 0 No effects identified.

Streamlining - Requiring ring-fencing of resources is likely to increase the administrative burden in

Finland. Identifying the resources MFCAs allocate specifically to OC activity would

not be straightforward, and would require additional administrative procedures.

Accountability + Ring-fencing of resources could improve accountability as it would help to determine

the relationship between actual OC costs and fee revenue.

A2.2.7 Sub-option A6: Incorporate bonus-malus principles

There are currently elements of a bonus-malus system in Finland. For example the Food

Act specifies that the fee rate and frequency of OC inspections should be based on risk

assessment, and the majority of CAs use time based fees in conjunction with flat fees. In

practice, however, it is not clear if risk assessment is applied regularly and consistently by

CAs.

Table A2.57 Option A6: Impacts in Finland of incorporating bonus-malus principles


Efficiency ++ The sub-option could improve the financing of official controls as FBOs requiring

longer or more frequent inspections would be charged higher fees.

Simplification 0 Elements of a bonus-malus system, including risk assessment and time based fees,

already exist in Finland.

Comparability - Improving the correlation between risk levels and fee rates could reduce

comparability between Finland and other Member States; fees would be based on the

specific circumstances of very different OC systems.

Streamlining ++ The sub-option should improve the efficiency of the OC system as it could reduce


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unnecessary inspections or inspection activities, reducing costs for well performing

FBOs. It could also reduce the administrative burden as CAs would be able to focus

on poorly performing FBOs.

Accountability + A bonus-malus system could improve accountability of CAs. They may have to

clarify the justification for OC activities.


Transparency in Finland is high. Official control reports are published online, and

transparency is supported by national legislation that relates to the transparency of all

government activities (Open of Government Activities Act 621/1999). Information about fees

and how they are calculated is available from individual MFCAs upon request.

Reporting of time and resources dedicated specifically to OC activities would be difficult in

Finland. OC inspections are often conduced in conjunction with inspections which are

unrelated to OCs. In addition, CAs are generally responsible for a range of control activities

not related to OCs (such as tobacco control, for example). It would be extremely laborious (if

not impossible) to accurately determine the financial resources dedicated to OC activity.

Table A2.58 Sub-option A7: Impacts in Finland of introducing transparency and reporting requirements


Efficiency - The official control system is already quite transparent. Methods used to calculate

fees are publicly available, official control reports are published online. Transparency

of the system is underpinned by the Open of Government Activities Act 621/1999.

Requiring CAs to collect and submit information to the Commission could increase

the administrative burden and reduce the efficiency of the system.

Simplification 0 This sub-option is unlikely to change the legal framework of the OC system in

Finland.

Comparability 0 The sub-option could increase the comparability of the Finnish OC system, both

within Finland and between Finland and other Member States. However, due to the

unique arrangements in Finland (and in each Member State) respondents were

concerned that comparing OC systems would be meaningless.

Streamlining -- The sub-option would increase the administrative burden and compliance costs for

CAs. These costs would likely be passed on to industry.

Accountability + The sub-option could have a positive effect on accountability as all elements of the

OC system would be in the public domain.


FBOs are currently involved in the preparation of OC control plans prepared by CAs. They

can influence the activities engaged in by CAs, but cannot influence the level of the fee.

However, if an FBO feels that a fee is excessive they can protest to the CA and request that

it be reduced.

Table A2.59 Sub-option A8: Impacts in Finland of providing for industry participation


Efficiency 0 Increasing industry participation is unlikely change the efficiency of the OC system in

Finland.

Simplification -- Due to the high number of CAs in Finland this sub-option could complicate the OC

system.

Comparability - Comparability could be reduced, as greater involvement of FBOs could increase the

differences how fees are calculated.

Streamlining - The sub-option could increase the administrative burden of CAs as could have to

spend time engaging with industry. Industry costs could also increase if they spend a

significant amount of resources engaging with CAs.


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Accountability + The sub-option could increase accountability if CAs have to justify decisions related

to OC inspections and fee rates.


A significant proportion of FBOs in Finland could be considered micro-businesses

(potentially as high as 90 per cent). Respondents commented that a requirement to exempt

micro-businesses could seriously reduce the availability of funds for CAs, and could increase

health risks in the food chain. They maintained that any exemptions should be based on a

risk assessment rather than the size of a business.

Table A2.60 Sub-option A9: Impacts in Finland of introducing exemptions and reductions for micro-enterprises


Efficiency -- In Finland the majority of FBOs are micro-enterprises. If they were exempted

from inspections, or received reductions in their fees, it would significantly

reduce the finances available for performing OCs.

Simplification 0 This sub-option would be unlikely to change the legal framework in Finland.

Comparability 0 This sub-option would be unlikely to change the comparability of the Finnish

system.

Streamlining ++ The majority of FBOs in Finland are micro-enterprises. The sub-option would

reduce compliance costs for FBOs in Finland, would significantly reduce the

administrative burden for CAs.

Accountability 0 This sub-option would be unlikely to change the accountability of the Finnish

system.

A2.2.11 Option B: Full harmonisation

Fees in Finland are charged at the municipal level. They vary widely among municipalities,

in terms of both the amount and how they are calculated. Full harmonisation would be

extremely difficult to implement in Finland due to the devolvement of official control activities

to municipal control authorities (MFCAs). It would require a restructuring of the Finnish

official control system as central authorities currently do not have legal power (related to

control activities) over municipal authorities.

Fee rates differ considerably between Finnish municipalities and it is estimated that only

one-third collect enough fees to cover actual costs. Harmonised fee rates could result in

some MFCAs becoming under funded, and others over funded. Fees are currently

determined through a risk assessment process; harmonised fees reduce the incentive for

good behaviour encouraged by the use of risk assessment. Where full harmonisation results

in significantly increased fees in some municipal authorities, the costs borne by FBOs would

also increase, potentially reducing the competitiveness of Finnish exports, and increasing

prices for Finnish consumers.

A2.2.11.1 Option B1: Fees for provision of controls are determined on a unified basis for the EU as a whole (i.e. the same fee rates apply in each Member State

Table A2.61 Option B1: Impacts of full harmonisation in Finland where the same fee rates apply in each MS


Efficiency -- Fee rates differ considerably between Finnish municipalities and only a third

collect enough fees to cover actual costs. Harmonised fee rates could result in

some MFCAs becoming under funded, and others over funded. Fees are

currently determined using a risk assessment; harmonised fees reduce the

incentive for good behaviour encouraged by the use of risk assessment.

Simplification -- Harmonised fees would complicate the legal framework as it would require

changes to longstanding arrangements between different levels of Finnish


204

Government.

Comparability -- Harmonised fees would fail to take account of the cost differences between

municipalities in Finland.

Streamlining -- Harmonised fees could increase the administrative burden in Finland as central

government may have to become involved in monitoring the application of

harmonised fee rates across Finland’s 300+ municipalities.

Accountability 0 Harmonised fees would be unlikely to change accountability in Finland.

Stakeholders have good access to information about how controls are organised

and conducted. The MANCP includes objectives on communication, and control

reports are published on the internet. Confidentiality of controls is legislated for in

the Open of Government Activities Act 621/1999.


The legal power for charging official controls exists at the municipal level in Finland; central

authorities do not have the power to compel municipal authorities to charge prescribed fees.

Fees vary widely between municipalities, in terms of both the amount and how they are

calculated. Some municipalities do not charge fees at all.

It is unlikely that this option would improve the efficiency of the official control system in

Finland. Due to the current institutional and legal arrangements it would be extremely

difficult to implement. It would require a complete restructuring of the Finnish official control

system. If it were introduced, it could also result in significantly higher fees in municipal

authorities that currently charge low (or no) fees.

Table A2.62 Option B2: Impacts of full harmonisation in Finland where fee rates adjusted using a cost of living index apply in each MS


Efficiency -- Fee rates differ considerably between Finnish municipalities and only a third

collect enough fees to cover actual costs. Harmonised fee rates, even if

adjusted using a costs of living index, could result in some MFCAs becoming

under funded, and others over funded. Harmonised fees could also reduce the

incentive for good behaviour currently encouraged by the inclusion of a risk

assessment in fee calculation rates.

Simplification -- Harmonised fees would complicate the legal framework as it would require

changes to longstanding arrangements between different levels of Finnish

Government.

Comparability -- Harmonised fees, adjusted for cost of living arrangements, would fail to take

account of the cost differences between municipalities in Finland.

Streamlining -- Harmonised fees, adjusted for cost of living arrangements, could increase the

administrative burden in Finland as central government may have to become

involved in monitoring the application of harmonised fee rates across Finland’s

300+ municipalities.

Accountability 0 Harmonised fees, adjusted for cost of living arrangements, would be unlikely to

change accountability in Finland. Industry has good access to information about

how controls are organised and conducted. The MANCP includes objectives on

communication, and control reports are published on the internet. Confidentiality

of controls is legislated for in the Open of Government Activities Act 621/1999.


205

Table A2.63 Option B3: Harmonise fees in Finland for certain import controls


Efficiency -- Harmonised fees could have a negative impact as they could lead to the over-

funding (indicating excessive fee rates) or under-funding (indicating insufficient

fee rates) of OC activities.

Simplification - The option could complicate the official control system in Finland as it could

require central administration to check and ensure the harmonised fee rate is

applied.

Comparability - It is unlikely that a harmonised fee for certain import controls would be capable

of accommodating the particular costs structures in Finland.

Streamlining - It would require an increase in the administrative control from central

administration in Finland to ensure that this sub-option is introduced across

Finland. This increase would probably result in higher costs for CAs and

industry.

Accountability 0 Harmonised import control fees would be unlikely to change accountability in

Finland. Stakeholders have good access to information about how controls are

organised and conducted. The MANCP includes objectives on communication,

and control reports are published on the internet. Confidentiality of controls is

legislated for in the Open of Government Activities Act 621/1999.


The current OC arrangements are governed by national legislation (the Food Act). MFCAs

are responsible for setting fee levels, which should reflect local costs and the level of risk

posed by the FBO in question. It is unlikely that the OC system would change under full

subsidiarity.

Table A2.64 Option C: Impacts of full subsidiarity in Finland where fee rates are set differently in each Member State


Efficiency 0 Unlikely to change the adequacy of financing for performing official controls in

Finland. Currently MFCAs are responsible for calculating fee rates, which should

be based on actual costs and a risk assessment. However only one third of

MFCAs collect enough fees to cover actual costs.

Simplification 0 Unlikely to have any impact in Finland. The Finnish system is based on national

legislation that specifies institutional responsibilities and provides a clear legal

framework. Due to this legalisation and the clearly defined responsibilities it is

unlikely that full subsidiarity would have an impact in Finland.

Comparability 0 It is unlikely that this option would change the internal market in relation to

Finland. Official control costs are determined at the local level by MFCAs. They

differ widely between MFCAs.

Streamlining 0 It is unlikely that this option would impact on the administrative burden or

compliance costs on CAs and industry. The current system of official controls is

based on national legislation that would be unlikely to change if this option was

introduced.

Accountability 0 Access to official control information is good in Finland. National legislation

(Open of Government Activities Act 621/1999) enshrines transparency in how

official controls are calculated and organised, and in addition control reports are

published online.


Local government in Finland is strong, and the relationship between local, regional and

central government is defined and supported by legislation. The Food Act sets out the roles

and responsibilities of institutions across the three levels of government; Evira is responsible

for specifying how OC activity should be conducted, while MFCAs are responsible for


206

conducting OCs and setting and collecting OC fees. Evira has no legal power to influence

the fees charged by MFCAs. These institutional arrangements mean that options which

require specific fee rates, such as ‘full harmonisation’ or ‘full cost recovery’ would be

extremely difficult to implement in Finland. They would require changes to legislation

beyond those related to official controls.

There are already elements of a bonus-malus system in place in Finland, such as time-

based fees and the use of risk assessment in determining the frequency and length of OC

inspections. The bonus-malus option could probably be introduced relatively simply in

Finland; it would build on existing features of the current system and would also complement

the devolved structure of OC inspection and fee collection. It may also help with the current

low rates of cost recovery, as low risk FBOs would not be inspected.


207

A2.2.14.1 Finland: summary table of option analysis

Table A2.65 Finland: summary table of option analysis





fees

+ 0 + -- 0

A2 Full cost recovery ++ -- + - --


costs

++ 0 + + 0

A4 Time-based fees ++ -- - - 0

A5 Ring-fencing resources 0 -- 0 - +

A6 Bonus-malus system ++ 0 - ++ +

A7 Transparency & reporting - 0 0 -- +

A8 Industry participation 0 -- - - +

A9 Micro-enterprises -- 0 0 ++ 0


fees

-- -- -- -- 0


living adjusted

-- -- -- -- 0

B3 Import fees -- - - - 0

C Full subsidiarity 0 0 0 0 0



A2.3 France

A2.3.1 Introduction

This case study was informed by 2 interviews with industry stakeholders (CAs did not

respond to requests for interview) and 2 questionnaires.


A2.3.3 Sub-option A1: Extending the scope of mandatory fees

Collection of fees is limited to mandatory fees: the French system does not charge any fees

for other controls which may fall under Article 27(1) (i.e. official controls for which Member

State may, but is not obliged to, charge fees).

Table A2.66 Option A1: Impacts of improving the current system in France by extending the scope of mandatory fees


Efficiency + Extending the scope of mandatory fees will increase revenue for the competent

authority. This will ensure minimum level required (cost-recovery level) to achieve

effective controls. Businesses think that fees should take the cost of in-house

control measures into account and argued that increasing the scope of mandatory

fees does not necessarily increase efficiency.

Simplification + Given recent discussions about introducing new fees for controls which do not fall

under mandatory fees category, the extension the scope of the latter will in certain

extent clarify current fee system in France and increase the simplicity of the fee

mechanism in the implementation. This impact is however expected to be

marginal.

Comparability +

Narrowing room for arbitrary decision on fee applications (e.g. extending the

scope of mandatory fees) will increase the degree of harmonisation among EU

Member States. This will improve level playing field at the EU level while

accounting for different cost structures.

Streamlining - There are more than 300 slaughterhouses in France. Collecting more fees will

make the system more complex and will increase the administrative cost for

competent authorities. This impact is however expected to be minor.

Accountability 0 Extending the scope of mandatory fees is unlikely to have any impacts on

accountability of the OC system in France.

A2.3.4 Sub-option A2:Requiring full cost recovery

The FCEC study for the European Commission (2009)47

shows that the amount collected

does not appear to be sufficient to achieve full cost recovery. In 2008, an estimated 70% of

the total costs for domestic products was recovered (€80 million costs and €56 million

recovered). The gap between costs and revenues occurred mainly in slaughter and meat

cutting areas.

For import controls, cost recovery is around 100% but as discussed above, in general rental

costs are not included here and paid by operators directly. The rental costs accounts for

about 20% of total costs.

Stakeholders expressed concern that introduction of full-cost recovery could result in a trade-

off between cost recovery and efficiency of the inspectors. Stakeholders stated that full cost

recovery may reduce incentivises for competent authorities to improve their performance.

47 FCEC (2009) Study on fees or charges collected by MS for official controls: Final Report.



Table A2.67 Option A2: Impacts of improving the current system in France by requiring full cost recovery


Efficiency + Fees in France are currently below cost recovery levels therefore the principle will

increase revenues for competent authorities.

Simplification - Some stakeholders argued that this may make the system more complex, given

the simplicity of the current fee system. This mainly depends on the variation in

the potential increase of fees for different segment of the industry.

Comparability + Fee setting mechanism will be clearer and more comparable if businesses are

entitled to pay the competent authorities full cost of the inspections. Under current

situation it is difficult to assess the magnitude of an amount paid for a particular

service because in most cases the declared amount does not reflect the full value

of it. If full-cost recovery is implemented then price difference can be compared,

for example giving different living cost standards.

Streamlining - It will introduce further transition and administrative cost to competent authorities

as they will have to amend the current system and update the cost elements and

cost levels regularly. These costs can potentially be reflected on to businesses.

Accountability + The policy requires more precise definition of cost elements and hence fee

calculation. This is expected to create a link between fees and official controls and

increase accountability of the competent authority vis-à-vis fee payers and

citizens.


The previous study by FCEC48

showed that it is not clear whether and what type of criteria

have been used for the calculation of the current fee levels in France. The cost elements

included in fee setting mechanism in France are similar to the ones specified in the

Regulation. Fee setting mechanism in France includes the following costs:

▪ For domestic production:

– Staff costs (i.e. salaries).

– Training costs.

– Property charges.

– Operational costs including sampling.

▪ For import products:

– Rental costs for BIPs (if not already paid by FBOs).

– Staff costs (i.e. salaries).

– Equipments.

– Training.

– Cleaning.

– Travelling expenses.

– Sampling.

Table A2.68 Option A3: Impacts of improving the current system in France by clearly defining eligible costs in the Regulation


Efficiency ++ Stakeholders agreed that it is necessary to clarify and precisely define the elements

for eligible cost. This will reflect the real costs for inspections and bring the fees in

France up to cost-recovery levels.

Simplification 0 Stakeholders do not see any impact of the sub-option in terms of simplification of

the system.

48 Study on fees or charges collected by MS for official controls (2009)



Comparability 0 Same definition and hence same cost elements in fee calculation are expected to

have a small positive impact on the comparability aspect of the system across EU

Member States however this will not change the current structure in France

between national actors.

Streamlining - Some stakeholders think that the sub-option will not affect the administrative cost

while some others argued that this may create small negative impact in terms of

higher administrative cost for competent authorities and businesses.

Accountability ++ Well defined eligible costs will inform businesses and competent authorities about

the cost elements and will remove any doubts and conflicts between national actors

in fee determination.

A2.3.6 Sub-option A4: Time-based fees, flat fees

The French system for official controls does not include time-based fees. Unit-based fee

structure forms the basis of the French system for official controls. For domestic production,

the system follows the rules similar to the national rules on VAT. Rates for official controls

are slightly below minimum fees specified in Regulation 882/2004. For import products, the

costs are calculated the year before on BIP basis and then adjusted for the next year to

achieve a balance between costs and revenues.

The policy approach is considered to be a viable option. Stakeholder consultation shows that

French businesses support this policy sub-option. This will require amendments in national

legal framework.

Some areas and activities mentioned by stakeholders, where time-based fee can be

introduced, include:

▪ Areas:

– Slaughterhouses.

– Ports for seafood.

– Wholesale markets.

▪ Activities:

– Ante-mortem inspection.

– Post-mortem inspection.

– Agreements and audits.

– Issuing sanitary certification.

– Analysis within the framework of national supervision plans.

A2.3.7 Sub-option A4: Introduce time-based fees

Table A2.69 Option A4: Impacts of improving the current system in France with the introduction of time-based fees in each MS


Efficiency ++ Time-based fee will include risk elements and give FBOs incentive to increase

operational efficiency and hence enable shorter time for a complete inspection.

Efficiency will also be increased through higher transparency and precise definition

of cost calculation. However, time-based fee system may work at the detriment of

micro and small FBOs with relatively (with respect to large enterprises) slower lines

and production chain. Therefore, cost for official controls under time-based fees are

expected to be higher for micro and small enterprises and therefore this may create

distortions in French market. In order to ensure the optimum level of efficiency EU

institutions should also introduce guidelines preventing the adverse incentives of

the inspectors (e.g. spending more time in inspections to generate higher revenue).

There are different viewpoints expressed by the stakeholders for the structure of

time-based fee system. Businesses’ favourite option is ‘fees based on a detailed

calculation of costs’ while trade unions for health and veterinary services preferred

‘Fees based on a standard, EU-wide hourly rate, indexed in each Member State by

a cost-of-living adjustment’.

Simplification ++ French fee system in its current structure is clear and simple. Each FBO knows



what to pay and where to pay, and they do not complain about the current system.

However, In overall, time-based fee is expected to increase clarity for businesses

and simplification from administrative perspective.

Comparability - Stakeholders have different viewpoints on the comparability of the system under

time-based fee structure but overall they think that time-based fee will reduce the

level of comparability under different time-based fee structures. Time-based fee

system reflects the real costs of controls both internalising the efficiency of FBOs

and the inspectors however it may create more variations between Member States.

Streamlining -- Compared to current simplicity and clarity of the fee system in France the

administrative cost and compliance costs are expected to be higher. Both for the

businesses and public authorities.

Accountability ++ Time-based fee system specifies and clarifies the elements in cost calculation. This

can also be supported by EU policy documents, as suggested by some

stakeholders. Under this sub-option, French authorities and businesses can have

access to information on cost elements and fees as well as the destination of the

paid fees.


Ring fencing principle does not exist in the French system. Fees in the form of taxes

collected by the competent authority are incorporated into general state budget.

Table A2.70 Option A5: Impacts of improving the current system in France by requiring the ring-fencing of resources


Efficiency ++ Ring-fencing of resources will increase revenues for official controls in France.

Simplification + The principle of ring-fencing will make the system in France more simple if there

is a precise and clear table indicating where the money is spent and for which

inspection activities.

Comparability + Higher level of harmonisation through the introduction of the principle will

facilitate comparability across Member States. Some stakeholders however

mentioned a risk of turning the system into harmonised fee system where

businesses in each Member State end up paying approximately same the level

of fees. Such tendencies can potentially distort fair competition. Some Member

States may have difficulties to justify some costs.

Streamlining - This will increase administrative burden for competent authorities.

Accountability + Simplified and clarified cost structure will increase transparency and hence

accountability of the competent authorities vis-à-vis EU institutions, businesses

and citizens.


France has a system of classification based on the conformity of the businesses with current

standards. The aim of this system is to ensure the development of hygiene standards in

slaughterhouses. This classification system operates similarly to a bonus-malus system. A

structural update of the current classification system is expected to be in place in 2012

(although initially foreseen for 2011). Under this model the businesses are classified into

four categories:

▪ Group 1: In full conformity with the rules.

▪ Group 2: Small non-conformities of no impact on safety/quality.

▪ Group 3: Significant non-conformities of impact on safety/quality.

▪ Group 4: Serious non-conformities.

FBOs under categories 1 and 2 benefit from tax rebates while the businesses under group 3

pay the full rate. In the updated version of the system the fourth category becomes a

temporary class leading either to the closure of the business or to the improvement and in a



short time period upgrade to the third group. Categorisation has implications. For example,

FBOs classified under group 3 cannot export their products to third countries. In France,

about 80% of the slaughterhouses are categorised under either group 1 or group 2. In its

general lines, the criteria that businesses are evaluated against include:

▪ The structure of the establishment.

▪ The working conditions of the personnel.

▪ Hygiene rules.

▪ Good manufacturing practice.

▪ Documentation.

Table A2.71 Option A6: Impacts of improving the current system in France by incorporating bonus-malus principles in the Regulation


Efficiency + Bonus-malus type mechanism or ‘modulation’ system is already in operation in

French system. This helps businesses internalise the cost of controls (i.e.

establishing in-house auto-control mechanisms). The impact of introducing a

bonus-malus system at EU level will have minor positive impact on French

system if any. It will attach a bonus-malus element to French system and

standardise the existing practice.

Simplification 0 Elements of a bonus-malus system already exist in France. Including such a

system in the Regulation is therefore unlikely to have an impact on the legal

framework.

Comparability + Businesses argued that it is important to have a common bonus-malus system

in order to provide a benchmark across Member States. Criteria to determine a

bonus-malus system, the objectives to be achieved etc. should be clear.

Streamlining - System is already embedded in French system. The introduction of this policy at

EU level will put small compliance and transition cost on competent authority

and hence businesses. Stakeholders expect this impact to be small.

Accountability + It is expected that this increases accountability as it is the case in current

French system. Businesses are classified depending on their conformity with

standards. The mechanism informs them about how they should perform and

which standards they should meet. Competent authorities as well justify

possible reduction or penalties in collection of fees.


Legislation is published in the Official Journal of the European Union.

At the national level, Competent Authority and other relevant government institutions (e.g.

Customs) publish relevant information (e.g. a detailed list of establishments which have been

controlled and the result of conformity assessment) on their websites.

Table A2.72 Option A7: Impacts of improving the current system in France by introducing transparency and reporting requirements


Efficiency ++ This enables an efficient level of information on the cost elements. This will allow

competent authorities and businesses to learn from other experiences from different

Member States and apply good practice. It is important for businesses to know for

which purposes the revenues generated from official controls are spent.

Simplification + Higher level of transparency and an effective reporting system can potentially

simplify the procedures for businesses when they improve their standards to

achieve full conformity. Also legal framework under a more transparent environment

is expected to create less conflict in the definitions and in practice.

Comparability + Stakeholders think that this policy will increase transparency and hence facilitates

comparability across EU Member States. It will facilitate the system for competent

authorities to benchmark and make necessary improvements in national system.



Streamlining - This will create cost on competitive authorities. Stakeholders did not comment on

whether the benefits can exceed the cost.

Accountability ++ All stakeholders think that this policy will increase accountability of the competent

authority vis-à-vis businesses, EU institutions and citizens.

A2.3.11 Sub-option A8: Providing for industry participation

In France the framework for OCs does not include a systematic and organised mechanism

for industry participation. Business representations mentioned that there are small

information negotiations (i.e. lobbying activities) between public authorities and mainly large

businesses. Stakeholders think that exchange of views before setting fee levels for OCs and

interaction between government and business representation, which will create a consensus,

would make the mechanism for OCs more efficient. Such mechanism would have also

potential dangers if the public authority acts in the interests of the businesses instead of

public interest (i.e. regulatory capture).

Table A2.73 Option A8: Impacts of improving the current system in France by providing for industry participation


Efficiency + Fees for OCs in France are slightly below cost recovery levels and FBOs are

happy with the current fees. A potential policy for industry participation is

expected to have a positive impact in terms of efficiency as fees for OCs will be

based on a consensus. In practice the impact is however expected to be low and

lead to a great change in the status quo.

Simplification 0 Not applicable Policy option is not expected to have an impact in terms of

simplification because the current fee setting mechanism is simple and well

accepted by the FBOs (i.e. there are not any conflicts between government and

businesses).

Comparability 0 No impacts identified.

Streamlining ++ Systematic negotiations and interaction between public institutions and the

businesses before setting the level of fees will add a small administrative cost

however the benefits are expected to exceed this cost.

Accountability + Industry participation is expected to increase accountability because fee

determination process will be based on negotiations and hence fees will be an

outcome of a consensus. In theory, accountability is effective if FBOs have a third

party to refer to in the case of unfair treatment during negotiations. This is

however unlikely in French case because there are currently not any conflict

between the parties as far as the fee levels are concerned.


Fee rates in official control mechanism are uniform and each business operator, regardless

of its size, pays the same unit-based fee.

Given the relatively small size of micro enterprises (in terms of revenue) in French food

industry covered by the Regulation, the impacts of the sub-option are expected to be small.

Table A2.74 Option A9: Impacts of improving the current system in France by introducing exemptions and reductions for micro-enterprises


Efficiency - Providing exemptions or reductions for micro businesses will reduce revenues for

competent authorities however this direct impact of such policy will depend on the

size of the micro enterprises in sub-sectors of the industry. In France where

market share of micro enterprises is relatively small, this impact is expected to be

minor.

Simplification + Collecting fees from fewer enterprises will simplify fee collection process, both for



competent authorities and businesses.

Comparability 0 Given the size of micro enterprises stakeholders foresee no impact or minor

impact of this policy sub-option in terms of comparability.

Streamlining + Collecting fees from fewer enterprises will reduce administrative cost, both for

competent authorities and businesses. This impact is however expected to be

minor.



Given the structure of the current fee system in France, stakeholders argued that full

harmonisation is not a viable option: the potential negative impacts of the policy option are

likely to exceed its potential benefits. The main argument expressed by the stakeholders was

that harmonised fees based on a common denominator would not reflect the actual costs in

France. Unit-based fees currently charged in France are slightly below the minimum rates

specified in the Regulation. Harmonised fees based on a common denominator, which do

not reflect the true costs, could diminish the effectiveness and efficiency of national fee

system for official controls, and harm the competitiveness of French industry relative to

industry in other MS.

Some stakeholders stated that it is difficult to assess the potential impact of the policy

options as concrete definitions for certain elements, such as the common denominators, are

not available. It is therefore difficult to assess the potential benefits and drawbacks to certain

options. For example, full harmonisation may result in great added-value to the system in

terms of simplification of the procedures at the EU level. But simplified procedure through

harmonised fees may also create distortions in the European market. From this perspective,

simplification would simplify and clarify control mechanism but would also reduce fairness.

A2.3.13.1 Option B1: Fees for provision of controls are determined on a unified basis for the EU as a whole (i.e. the same fee rates apply in each Member State)

Table A2.75 Option B1: Impacts of full harmonisation in France where the same fee rates apply in each MS


Efficiency -- This option may improve efficiency as the fees charged in France are currently

slightly lower than the minimum rates specified by the Regulation, and are

significantly lower than some other Member States. In addition, fees in France are

below cost-recovery levels. This policy option, depending on the common

denominator, is expected to have a direct negative impact on French businesses in

as fee level changes may not reflect local realities. If the harmonised rates are

determined on the basis of the lowest denominator then there is a risk that fees will

not cover the costs, but if the fees are determined on the basis of the highest

denominator then the fees will exceed the costs. In the first scenario, competent

authorities will not have enough resources to undertake effective controls while in

the latter they will make profit. The lack of a direct link between fees and official

controls (i.e. fees are incorporated in the general budget in the form of taxes)

makes the efficiency improvements less visible. Industry stakeholders argued that

this is not a viable option as harmonised fees will not reflect local realities.

Simplification 0 Full harmonisation increases the level of clarity and simplicity for EU level

operations however, the added-value of this option in terms of simplification is

uncertain for the French system. The fee system is already clear and simple in

France.

Comparability -- Harmonised fee rates will enable cross-country benchmarking. This simplifies

operational and administrative procedures at the EU level. However, finding a

common denominator in fee calculation for all EU Member States may increase the

level of fees in France where they are currently one of the lowest in Europe. Full

harmonisation does not account for different cost national structures and does not

allow flexibility. This may then create distortions in the market.




Streamlining + At Member State level full harmonisation of fees will introduce compliance cost but

reduce the administrative costs since competent authorities will spend fewer

resources on the calculation of fees for official controls. Given the simplicity of the

current fee system in France, the potential impact of the policy option in terms of

streamlining is positive but relatively small.

Accountability 0 Applying same definitions and elements for cost calculation and fees is expected to

increase accountability. Given the use of the general budget to finance official

controls, the policy option will help FBOs have access to information on the

destination of paid fees for official controls. The impact of this option in terms of

accountability is however considered to be negligible by the stakeholders.


Stakeholders think that cost of living-adjusted harmonised fees address some of the issues

under full harmonisation.

Article 50 and 52 of the French Tax Code form the legal basis for the collection of OC fees

related to domestic production. The introduction of harmonised fees would require changes

to the tax code and supporting legislation.

Table A2.76 Option B2: Impacts of full harmonisation in France where the fee rates adjusted using a cost of living index apply in each MS


Efficiency ++ Index-adjusted fees can reflect local realities of Member States. Adjusted

harmonised fees may therefore increase efficiency in France, as they will lift up

current below-cost recovery fees for official controls. Updating the index will

introduce further costs for both EU and national officials. French stakeholders

agreed on the potential benefits of living cost-adjusted fee system in terms of

efficiency.

Simplification -- The current French fee system for official controls is clear and simple.

Harmonisation of fees at the EU level will not have added-value in terms of

simplification Stakeholders think that this option will have a negative impact in terms

of simplification of the system.

Comparability ++ Index-adjusted and updated harmonised fees allow comparability and account for

cost variance across Member States.

Streamlining + At Member State level full harmonisation of fees will introduce compliance cost but

on the other hand reduce the administrative costs since competent authorities will

spend fewer resources on the calculation of fees for official controls in the long-run.

Given the simplicity of the current fee system in France, the potential impact of the

policy option in terms of streamlining is positive but relatively small.

Accountability 0 Harmonised definitions and elements for cost calculation and fees are expected to

increase accountability. The current system is simple and clear in France. The

impact of this option in terms of accountability is however considered to be

negligible by the stakeholders.

A2.3.15 Sub-option B3: Introduce EU harmonised fees only for certain import controls

Table A2.77 Option B3: Impacts of improving the current system in France where the same fee rates or certain import controls apply in each MS


Efficiency ++ Stakeholders believe the sub-option will increase efficiency. It is however difficult to

find a common denominator at the EU level, which will reflect local realities and fit-

for-all approach may decrease efficiency for some other Member States.

Simplification + Fees for import controls are harmonised across France. The current system is

considered effective with clear definitions of cost elements. Given the current

situation in France this option is expected to have a positive but minor impact.



Comparability ++ Harmonised fees for certain import controls avoids fee-based BIP selection,

prevents distortions, and facilitates monitoring and inspections.

Streamlining ++ There will be less resource allocated for fee calculation mechanism. This is

therefore expected to reduce costs both on competent authorities and businesses.

Accountability ++ Harmonised fee structure if accompanied with a clear cost and fee calculation then

will increase accountability.


Full subsidiarity option has certain advantages, including flexibility and full cost-recovery.

The latter is particularly important in French context given the fees in the current system are

under cost recovery level. However, stakeholders considered the option to be unviable.

They were of the opinion that, as MS are likely to have significantly different systems, full

subsidiarity could create distortions in the EU market.

Table A2.78 Option C: Impacts of full subsidiarity in France where the fees are determined in each MS


Efficiency -- Current fees in France are below cost-recovery level and they are slightly lower than

the minimum rates specified in the Regulation. French businesses think that the

current involvement of the European Commission creates an effective third party

control mechanism over national competent authority. Adopting policy for OCs only

at national level is expected to decrease efficiency because it will eliminate the

current third party control. Industry stakeholders also indicated that there is some

inconsistency during inspections such as assessment of hygiene conditions. Lack of

EU involvement may increase the number of these cases.

Simplification -- The current system in France is simple and clear. Stakeholders think that full

subsidiarity will not have an added value in terms of simplification but create more

administrative procedures at national level.

Comparability -- It may create distortions in the level playing field in internal market and hence

damage the market share of France in the EU.

Streamlining - Changing the structure and transferring the responsibilities which are currently under

the scope of the EU institutions to national authorities will result in some


Accountability - This will decrease the level of accountability of national competent authorities. The

current structure creates a system of checks between EU institutions and national

competent authorities. Removing third party control could have direct implications on

French system, for example leading to inconsistent assessment of FBO’s hygiene

standards.


There are different viewpoints about financing official controls in France. The incorporation of

fees for official controls into the general state budget and lack of link between official controls

and fees collected for the service have implications on a number of principles considered for

the assessment, including full-cost recovery and ring-fencing. Who should pay for official

controls is therefore a relevant question to be agreed on in order to achieve certain

objectives.

For example, ring fencing of resources will require that the fees will be allocated to

Competent Authority’s accounts rather than to the general state budget. In order to achieve

effective official controls the fees incorporated into the budget of the Competent Authority

should be at full cost-recovery levels. In the current form, also citizens pay for the official

controls. If full cost recovery is not achieved then this may not allow the introduction of a ring

fencing principle.



A2.3.17.1 France: summary table of option analysis

Table A2.79 France: summary table of option analysis





fees

+ + + - 0

A2 Full cost recovery + - + - +


costs

++ 0 0 - ++

A4 Time-based fees ++ ++ - -- ++

A5 Ring-fencing resources ++ + + - +

A6 Bonus-malus system + 0 + - +

A7 Transparency & reporting ++ + + - ++

A8 Industry participation + 0 0 ++ 0

A9 Micro-enterprises - + 0 + 0


fees

-- 0 -- + 0


living adjusted

++ -- ++ + 0

B3 Import fees ++ + ++ ++ ++

C Full subsidiarity -- -- -- - -



A2.4 Netherlands

A2.4.1 Introduction

A total of 17 organisations were contacted to take part in the study. Including the CA, 10

returned the questionnaire or were interviewed. Several organisations did not respond

directly as their opinions were expressed by other organisations that did respond. Several

other non-responders indicated that they did not feel competent to make a response. Some

reactions were very limited while others reacted extensively, in particular the organisations of

FBOs that are most involved in fees. Interviews with the CA, meat board and retail

organisation contributed much to the information obtained. Generous cooperation was

received from the CA.

Four (groups of) stakeholders were identified:

3. The competent authority (CA). The budget of the CA is often under pressure in relation

to fees and resources. There is pressure on resources due to general cuts in

government budgets, and there is continuous pressure from industry to charge less and

lower fees. The CA’s reaction is to look for other, more secure, sources for financing.

Apart from extending the scope of mandatory fees to other business, CAs consider it fair

that all food businesses should pay fees, not only those involved in the production of

food of animal origin. To this end the CAs are striving towards a levy for all businesses

in the food sector, including retail, to provide a predictable source income.

4. Organisations representing food businesses dealing with food of plant origin and the

central retail organisation. These groups are of the opinion that the enforcement of

national law is the duty of the state and should therefore be funded on public money.

5. Meat and meat product organisations. These accepted fees on condition that the CA

operates efficiently.

6. A private company. This is strongly in favour of good controls and is willing to pay for

them provided that the controls are of high quality and for a reasonable price.


A2.4.2.1 Sub-option A1: Extend the scope of mandatory fees

Table A2.80 Sub-option A1: Impacts in the Netherlands of extending the scope of mandatory fees


Efficiency - Extension of the scope makes the financing of the controls less dependable on the

state budget and as a consequence less dependable on political moods. However,

increasing the dependency of CAs on private funding might have a negative effect

on the income of the CA.

Simplification + The legal framework can be simplified as not all categories have to be mentioned,

but the effect will be minimal.

Comparability +

Likely to have a positive impact as extending the scope of mandatory fees would

increase comparability between FBOs.

Streamlining -

The administration would slightly increase as more invoices would have to be

made. The effect will be minimal as the system is already in place for the current

invoicing of mandatory fees.

Accountability + Extension would have no significant influence on accountability as the system

would remain unchanged. Bringing fees under closer control of the Ministries could

increase budget accountability, but only slightly.




Table A2.81 Option A2: Impacts in the Netherlands of requiring full cost recovery


Efficiency ++ The CA would be assured of its financial situation. There would be no influence

from political intervention.

However, full cost recovery lacks the incentive for the CA to operate efficient and

cost effective.

Simplification 0 Very little or no impact; legislation for cost recovery is already in place and only

minor amendments would be required.

Comparability + Full cost recovery would reduce exemptions and differences in interpretations

made by MS. It would also ensure that costs are reflected in fees.

Streamlining 0 The current administration is already constructed in such way that the full

recovery of costs is foreseen for the mandatory fees.

Accountability + Costs incurred by CAs, or income collected by CAs, would be more transparent

under this option. This would have a positive impact on accountability.


In the Netherlands fees are currently based on how businesses calculate costs for services.

All costs are taken into account to calculate the costs per ¼ hour. These costs are related to

the activities performed. The costs include: salaries (including social fees), other staff costs

(temporarily staff), equipment (travel, car, IT, telephone, office, personal standard

equipment, and banking), rent of buildings, other housing costs, depreciation and interest.

Reorganisation costs are excluded.

Industry in the Netherlands is keen to ensure that it pays for costs only, while CAs consider

that industry should meet some of the administration costs too.

Table A2.82 Sub-option A3: Impacts in the Netherlands of clearly defining eligible costs


Efficiency ++ Clearly defining eligible costs would make a positive contribution to efficiency

provided that the costs incorporated in the fees are calculated as is common in

business; all costs should be listed, and more should be identified in the definition.

Any limitation of costs in the fees will lead to non-compliance with the requirement

for “full cost recovery”. The CA is dependent on the government for its resources –

government provides approximately 60% of the budget.

Simplification ++ The option would have a positive impact on the simplicity of the OC system in the

Netherlands by listing clearly what costs are eligible.

Comparability ++ The option would improve the comparability between MS as all would apply the

same list in their respective OC systems.

Streamlining - If the list of eligible costs increases it could increase the admin burden for CAs.

Accountability - As the administration becomes more complicated the accountability will become

more complicated too. More costs have to be accounted for.


Table A2.83 Option A4: Impacts in the Netherlands of the introduction of time-based fees for which the continuous of systematic presence of official controls in required


Efficiency + Time-based fees could improve efficiency as well organised establishments would

require shorter and more infrequent inspections. However flat fees could reduce

the incentive for CAs and FBOs to work together to facilitate efficient controls.

Simplification 0 Elements of a bonus-malus system already exist, so no impacts to legal



framework likely.

Comparability - Time-based fees could reduce comparability as differences in the efficiency CA

staff could result in differing FBO costs. Flat fees would reduce the transparency

of the relationship between fees and control costs.

Streamlining - Controls which are not really necessary could be performed to justify inspector

time and generate revenue for the CA.

Accountability ++ Time-based fees, as part of a bonus-malus system, would improve accountability

by improving efficiency and encouraging CAs to justify control activities.


Almost 70 per cent of OC activity is publicly financed. Ring-fencing a small proportion of

CAs income would be relatively meaningless, and would increase the admin burden of

allocating money to operations.

Table A2.84 Option A5: Impacts in the Netherlands of requiring ring-fencing of resources


Efficiency + If full cost recovery is strived for, administration is effective and fees are

transparent, than ring-fencing is automatically achieved.


Comparability 0 Not applicable

Streamlining 0 No extra effort needed when accountability is achieved

Accountability 0 Ring fencing can be made and at the same time accountability can be very poor.

Ring fencing in a physical manner is meaningless unless a good administration is

in place. Without a good administration nothing can be guaranteed.


Elements of a bonus-malus already exist in the Netherlands. The CA currently applies time-

based fees and risk-based controls.

Table A2.85 Option A6: Impacts in the Netherlands of incorporating bonus-malus principles


Efficiency ++ Likely to improve the efficiency of the system over time.

Simplification 0

As fees are already time-based and controls risk-based, no extra arrangement of

legislation would be required. Bonus-malus is intrinsic to the system currently in

operation.

Comparability + If all MS use the same system it would improve comparability.

Streamlining 0 No effect, as no special arrangements would have to be made (time based fees

and risk based controls are incorporated in the current system)

Accountability 0 No impacts likely.


Table A2.86 Sub-option A7: Impacts in the Netherlands of introducing transparency and reporting requirements


Efficiency + Positive impact likely as it could increase the acceptability of OC fees, and as a

result increase the settlement of invoices.

Simplification 0 No impacts likely.

Comparability + Reporting would increase comparability of CAs between MS, which would act as an




incentive for increasing the efficiency of performing official controls. However

comparison between countries can lead to simplistic conclusions.

Streamlining - Likely to lead to some additional admin burden for CAs. Some of the information is

likely to be available already, but extra effort will be required to make it suitable for

use and access by the public.

Accountability ++ Transparency and reporting contributes to accountability. Such systems are

common in the Netherlands. Institutionalising a system for official controls would

require minimal effort.


In the Netherlands stakeholders are usually consulted on many issues in relation to the final

arrangements for the official control system (amongst others). For example, opinions are

usually sought on the agenda for the Standing Committee for Food of the Commission. The

comments are taken on board, but the final decisions are made by the CA / Government.

Table A2.87 Sub-option A8: Impacts in the Netherlands of providing for industry participation


Efficiency + Likely to improve acceptance of fees, and could result in faster settlement of

invoices.

Simplification - Stakeholders are frequently consulted in the Netherlands. However the

introduction of a legal arrangement might be counterproductive as it would pose

a negative incentive for voluntary participation. In addition, consultation does not

necessarily bring results, so putting participation on a legal footing could increase

the expectations of industry.

Comparability + Participation could improve the comparability of OC systems in MS; it would help

to reveal differences between MSs.

Streamlining + Although organising meetings would require some effort, it is likely that

consultation would improve the functioning of the OC system.

Accountability + Providing stakeholders with the opportunity to express their views could improve

accountability, and would be likely to improve perceptions of accountability.


In relation to official controls, micro-enterprises in the Netherlands are defined by CAs as

those processing 10 or fewer large animal units a week.

Table A2.88 Sub-option A9: Impacts the Netherlands of introducing exemptions and reductions for micro-enterprises


Efficiency 0

No impacts on resourcing likely; exemptions for small enterprise would have no

influence on adequate financing, nor on the quality of controls. The option would be

justified on a social basis, and as such any shortfall in resources would be paid for

by the Government.

Simplification - The option would require some additional national legislation, but it would not be

overly complex. The important subject is to define the maximum size of the

establishment. The proposed definition (turnover 2 million euro and 10 staff) is far

too large for the Netherlands.

Comparability 0 Limited impact likely. Not many micro-enterprises exist in the Netherlands.

Streamlining 0 The option could increase admin burden related to categorising establishments, but

impact likely to be minimal.

Accountability 0 No impact likely.



A2.4.9 Option B: Fully harmonise inspection fees for official controls (full harmonisation)

In the Netherlands fees are time-based, except for import controls which are unit based.


Table A2.89 Option B1: Impacts of full harmonisation in the Netherlands where the same fee rates apply in each MS


Efficiency -- All stakeholders agreed that this option would have a negative effect on the

performance of the CA; there would be no incentive for efficiency; and harmonised

fees bear no relation to actual costs.

Adequate resourcing of official controls would be undermined; either the fees would

be too low to cover all costs, or would be higher than actual costs. Neither

situation is desirable.

Simplification ++ There was a general consensus that this option would simplify the Dutch OC

system. However, complications could arise related to achieving adequate cost

recovery. Complicated legislation would be required to deliver full harmonisation

and ensure adequate cost recovery. Strict provisions would also be required to

prevent differences between MS.

Comparability ++ There was a general consensus that this option would improve comparability in

relation to cost structure and level of fees. However, due to differences of cost of

living it would cause distortions between MS. This is illustrated by the following

quote: “Businesses (in NL) see an advantage in relative lower fees compared to

other EU members.”

Streamlining + There was a general consensus that the option would reduce administration costs.

However, the impacts on the Dutch OC system are dependent on the final structure

of harmonised fees. A forecast on the effect on administration is very difficult to

estimate. Any conclusion on this subject is premature.

Accountability + Whatever system is chosen, accountability fully depends on the structure of the

administration. Exchange rates have influence, interfering with harmonisation


This option has the same drawbacks as under harmonised fees. It is slightly better because

indexation would reduce distortions between MS.

Table A2.90 Option B2: Impacts of full harmonisation in the Netherlands where fee rates are adjusted for each MS using a cost of living index


Efficiency -- All stakeholders agreed that this option would have a negative effect on the

performance of the CA; there would be no incentive for efficiency; and

harmonised fees bear no relation to actual costs.

Adequate resourcing of official controls would be undermined; either the fees

would be too low to cover all costs, or would be higher than actual costs. Neither

situation is desirable.

Simplification ++ There was a general consensus that this option would simplify the Dutch OC

system.

However, complications could arise related to achieving adequate cost recovery.

Complicated legislation would be required to deliver full harmonisation and

ensure adequate cost recovery. Strict provisions would also be required to

prevent differences between MS.

Comparability ++ There was a general consensus that it this option would improve comparability in

relation to cost structure and level of fees.

However, due to differences of cost of living it would cause distortions between



MS. This is illustrated by the following quote: “Businesses (in NL) see an

advantage in relative lower fees compared to other EU members.”

Streamlining + There was a general consensus that the option would reduce administration

costs.

However, the impacts on the Dutch OC system are dependent on the final

structure of harmonised fees. A forecast on the effect on administration is very

difficult to estimate. Any conclusion on this subject is premature.

Accountability + Whatever system is chosen, accountability fully depends on the structure of the

administration. Exchange rates have influence, interfering with harmonisation

A2.4.10.2 Option B3: Harmonise fees in the Netherlands for certain import controls

Table A2.91 Option B3: Impacts in the Netherlands of the introduction of harmonised fees for import controls


Efficiency ++ For all import controls a unit based fee is preferred. Costs of controls are different

in the MS. The government assures the financial means for the CA, but the budget

might become under political pressure. Much of the imports in the Netherlands will

be for other European countries. In the situation that the import controls are not

cost effective, the Netherlands is subsidising the import control for other countries.

It is not possible to predict the extent to which the Netherlands government is

willing to do that.

Simplification - Harmonised fees could reduce fee rates that make recovery of costs impossible.

This would require complicated national legislation to address, which would have a

negative impact on simplification. Stakeholders stated that it would be likely that

harmonised fees would, however, lead to conflicts that would be impossible to

solve, even using national legislation.

Comparability ++ Likely to have a positive impact on comparability. It would lead to unambiguous

tariffs and remove differences between ports. It would also reduce preference for

harbours based on control fees.

Streamlining ++ The administration would be simple if fees were levied on a unit bases. It would be

simple to relate the invoice to the control and the applicable tariff.

Accountability ++ If a proper administration is in place accountability is no problem. Moreover, the

simplicity of the system would have a positive impact on accountability.


Under full subsidiarity, the CA involved is unlikely to change its fee strategy. There is a long

history of charging fees for meat inspection and cutting plants in the Netherlands. At present

fees are charged mainly on inspection and controls in the sectors processing food of animal

origin. That, most likely will not change under a full subsidiarity scenario. However, the

introduction of this option could lead to more discussions about allocating controls to

mandatory fees. The CA is very much in favour of charging fees for all controls in the food

industry and sectors of industry currently not subject to fees will object. Industry fully accepts

that fees will be charged for issuing certificates and approvals when legally required,

provided the controls are of high standard and for a reasonable price.

Table A2.92 Option C: Impacts of full subsidiarity in the Netherlands where fee rates are set differently in each Member State


Efficiency -- The adequacy of financing is very much dependent on the conditions set in the

EU. The option could increase the influence of politics, which in turn could lead

to a reduction in the funding available for official controls. On the other hand

subsidiarity could also lead to extravagant fees.



Simplification - Stakeholders expressed divergent views on the impacts of this option for

simplification. Some expected that at first no change would result. Others

thought that it could lead to more complicated legislation in the Netherlands due

to a willingness to ensure that FBOs are not at an unfair cost disadvantage

relative to fees in other MS.

Comparability -- Likely to reduce comparability; MS would have less confidence in each other's

systems.

Streamlining 0 It is unlikely that the system would change much in the Netherlands.

Complexity would depend on how individual MS organise the fees for official

controls, irrespective of how simple the EU legislation is.

Accountability - Unlikely that accountability would change in the Netherlands.

The major contributor, the Ministry of Health, keeps a close view on how the CA

is operating. The well organised industry follows the performance of the CA

closely and meets frequently with the CA.

A2.4.12 Issues /considerations

A2.4.12.1 Summary

The opinions of the CA and industry are divergent. The CA favours more mandatory fees,

but while other stakeholders accept that fees are necessary, they are concerned that fees

should include an incentive for efficiency of CAs. Stakeholders that are not paying any fees

wish this to remain the same.

Summarised issues and considerations are listed below:

▪ Efficiency: Full harmonisation conflicts with the objective of full cost recovery. Such a

system does not provide an incentive for the CA to improve efficiency of the organisation

Time-based controls would enable the FBO to control the invoice on the time spent.

Participation of stakeholders in the operation of the CA will contribute as well as

transparency and reporting.

▪ Simplification: One system of time based fees is not a too complicated legal issue,

combined with clear definition of which costs are incorporated in the fee. One line

regulating the compulsory application of time based fees only for controls, import

controls excluded, followed by the definition of costs in the fee and description of starting

fee and how to calculate.

▪ Comparability: only full subsidiarity would significantly reduce comparability; the other

options would generally improve comparability.

▪ Streamlining: exemptions, micro-enterprises, extension of mandatory fees and

transparency and reporting would increase the administrative burden and thus reduce

streamlining. However the administrative burden should not be exaggerated as

administration is already in place to operate the service. Only reporting could be

considered to cause extra activities. Increasing transparency and reporting would

contribute to the proper operation of the OC system and enhance food safety.

▪ Accountability: clear eligibility of costs, transparency, reporting and ring-fencing would

contribute to accountability. No impact is expected from extending the scope of

mandatory fees, exemptions for micro enterprises, full cost recovery or bonus-malus

system.

Options considered acceptable by several parties:

▪ Time based fees.

▪ Unit based fees for import controls.

▪ Definition of eligible costs for the fees, what costs to be included face different opinions.



▪ Fees charged for certificates, documents or activity required for bringing products on the

market.

Options with diverging acceptance:

▪ Controls on approvals and HACCP.

▪ Extension of the scope of controls with mandatory fees.

▪ Exemptions for micro-enterprises are acceptable, provided the financial deficit is publicly

funded.

Options facing resistance:

▪ Fees for controls on compliance with food safety regulations (risk based, unnoticed

controls)

Options contributing to the acceptance of fees based controls:

▪ Transparency and reporting

▪ Participation

▪ Bonus-malus system

▪ Ring-fencing

A2.4.12.2 The Competent Authority

The CA stated that in principle all controls should be paid for by FBOs. Doing so contributes

to full cost recovery and makes the CA less dependent on public funds (which are liable to

cuts). The discussion on time-based or unit-based fees has ended and resulted in time-

based fees for all activities, import controls excluded. The system automatically fulfils the

requirement for a bonus-malus. More efficiently organised businesses require less time for

controls and those having an excellent food safety system profit from less frequent

inspections. In slaughter, the lines with a higher throughput face lower inspection costs per

animal than the ones with a less efficient system. That means that bonus-malus type effects

are built in to the time based fee system. Controls of well organised companies with a good

quality system are less time consuming and when combined with risk based controls, risks

set at individual companies, automatically implements bonus-malus.

Tension remains about which controls should have a mandatory fee and which should be

publicly funded. The CA considers that all FBOs should pay for controls as they need to

have a HACCP system which needs regular auditing. Retail and restaurants should be

excluded from fees. The CA would like to pose a levy on all companies in the food chain to

secure a regular income.

A2.4.12.3 Plant products and retail organisations

This group of stakeholders consider that “the enforcement of public laws is the duty of a

state and must be financed publicly”. These stakeholders generally have good quality

systems in place that operate well. Official controls with mandatory fees do not relate to

them.

A2.4.12.4 Organisations representing firms dealing in products of animal origin

These organisations are used to paying fees and therefore focus on how the system can be

arranged in a practical way. They believe that, in order to share the burden, other food

producing establishments should be subject to mandatory fees. They are very much in

favour of time-based fees and risk based controls as it would implement a bonus-malus

system, something they support. Approvals should remain outside the mandatory fee

system (food establishments processing food of animal origin are legally required to have an

approval from the CA in order to produce; the CA states in the approval that the

establishment produces in compliance with the legislation).



This stakeholder group emphasised the need for a level playing field. In their opinion, this

would require a clear definition of eligible costs, controls which fall under mandatory fees and

incentives for efficient operation by the CA.

A2.4.12.5 Company

The company interviewed does not object to paying for controls providing they are of a high

standard and the fees are reasonable. It supports fees, as long as fees reflect actual costs

and are based on bonus-malus principles.



A2.4.12.6 The Netherlands: summary table of option analysis

Table A2.93 The Netherlands: summary table of option analysis





fees

- + + - +

A2 Full cost recovery ++ 0 + 0 -


costs

++ ++ ++ - -

A4 Time-based fees + 0 - - --

A5 Ring-fencing resources + 0 0 0 0

A6 Bonus-malus system ++ 0 + 0 0

A7 Transparency & reporting + 0 + - ++

A8 Industry participation + - + + +

A9 Micro-enterprises 0 - 0 0 0


fees

-- ++ ++ + +


living adjusted

-- ++ ++ + +

B3 Import fees ++ - ++ ++ ++

C Full subsidiarity -- - -- 0 -



A2.5 Poland

A2.5.1 Introduction

This case study was informed by 6 interviews (2 CAs and 4 industry stakeholders) and 2

questionnaires. One of the two questionnaires received was a joint response from the

Department of Food Safety and Veterinary Matters (MARD) on behalf of the General

Veterinary Inspectorate (GVI) Animal Health and Welfare, GVI Law Office, GVI Border

Office, GVI Safety of Food of Animal Origin, GVI Laboratory Post, GVI Animal Feed Stuffs,

Vet Medicine Products and Rendering Office.


A2.5.2.1 Sub-option A1: Extending the scope of mandatory fees

All fees charged in Poland are ‘non-compulsory’ as defined by the Regulation. During the

stakeholder consultation, CAs thought that it could be useful to reclassify certain

(unspecified) non-mandatory fees as mandatory to improve consistency across Europe, but

that doing so across the MS in a way that suited each MS would be difficult. Other

stakeholders (trade associations) did not think that there was a need to extend the scope of

mandatory fees.

The Polish OC system is centralised and it would be relatively straightforward to change the

list of mandatory fees.

Table A2.94 Sub-option A1: Impacts in Poland of extending the scope of mandatory fees


Efficiency -- Increasing the scope of mandatory fees could place an additional burden on

CAs. If funding from the state budget did not increase, it could result in the

capacity of CAs being exceeded.

Simplification - Could potentially complicate the legal framework as no compulsory fees are

currently charged, however centralised nature of Polish system means that any

complications are likely to be minimal.

Comparability + Extending the scope of mandatory fees could increase the comparability of the

OC system across Europe and the list of activities charged for would be similar

across MS.

Streamlining -- The sub-option could increase the administration burden of CAs as they would

have to charge for a wider range of activities. It would also be likely to increase

compliance costs for industry.


A2.5.2.2 Sub-option A2: Require full cost recovery

There is little information available on the level of cost recovery in Poland, but what

information does exist indicates that fee revenue is insufficient to adequately finance official

controls.

Table A2.95 Sub-option A2: Impacts in Poland of requiring full-cost recovery


Efficiency + Ensuring full cost recovery is likely to improve the adequacy of finances for

official controls. However, as CAs are funded from the state budget it may

make little difference to their budget in practice.


Comparability + Full cost recovery would increase comparability of CAs in Poland with those in

other MS as it would ensure that fee rates reflected actual costs.

Streamlining -- The sub-option would require a change from the current system and could



increase CA’s administrative burden as a result. The sub-option is also likely to

increase the cost for FBOs as fees would increase.



Fee rates in Poland are often calculated based on a list of eligible costs defined by the

central CA (GVI and the SSI) following guidelines set by MARD or the MH.

Table A2.96 Sub-0ption A3: Impacts in Poland of clearly defining eligible costs


Efficiency 0 Fees are, in principle, based on a list of eligible costs defined by central CAs.

However in practice fee rates may be determined by negotiations between

central CAs and industry bodies. For this reason this sub-option is unlikely to

have effect in Poland.

Simplification 0 No impact identified.

Comparability + If Poland used the same list of eligible costs as other MS it would improve

comparability between MS, and would also account for different MS costs

structures.

Streamlining 0 No effect identified. The sub-option could result in either lower or higher costs,

depending on the final list of eligible costs decided upon, and the difference

between these costs and those currently applied in Poland.

Accountability + Clearly defining costs could improve accountability as both CAs and FBOs

would be clear about eligible costs.


Fees in Poland are set based on a range of criteria specified by MARD, and also by

negotiation between MARD and industry bodies. Fees are a mix of time-based fees and flat

fees.

Sub-option A4: Introduce time-based fees

Table A2.97 Sub-option A4: Impacts in Poland of introducing time-based fees


Efficiency + Time-based are already used in some cases. Flat fees are currently charged for

certain OC activities. Expanding the list of activities for which flat fees are charged

may improve the resources available to CAs, especially the GVI which is the only

CA not to return fee revenue to the State Budget.

Simplification 0 Time-based are already used in some cases; the option would be unlikely to impact

the legal framework for official controls.

Comparability - Time-based fees could reduce the comparability of Poland with other MS as it may

be less transparent than the current system. To avoid issues around transparency

it is important that the eligible costs are well defined. Extending the scope of

activities for which flat fees are charged could improve the comparability of Poland

with other MS, especially as such fees would be based on a common methodology

but reflecting local cost considerations.

Streamlining -- As responsibilities between the various CAs are well defined it is likely that it would

be possible to determine which activities are related specifically to OC activities.

However time-based fees could increase the administration burden slightly in

Poland as they may require new administrative procedures. Extending the scope of

flat fees could increase the administrative burden for CAs, and could also increase

costs for FBOs.

Accountability ++ Time-based could increase accountability as CAs would have to justify time spent



on OC activities. Flat fees could increase accountability as fees would reflect the

scale of the operations inspected.

A2.5.2.5 Sub-option A5:Require ring-fencing of resources

There is minimal ring-fencing of resources in Poland. Only the GVI retain fee revenues for

their own use; all other CAs direct fee revenues to the state budget. All CAs, including the

GVI, receive their funding from the state budget.

Table A2.98 Sub-option A5: Impacts in Poland of requiring ring-fencing of resources


Efficiency + As fee rates are below actual costs, and CAs currently receive the majority of

their funding from the state budget, ring-fencing of resources is likely have a

limited positive effect on the financing of OC activity in Poland.

Simplification - Could require changes to current legal arrangements.

Comparability + The sub-option could help to determine the relationship between fees and actual

costs in Poland.

Streamlining - Could increase the admin burden as CAs would have to introduce arrangements

to collect and retain fee revenue.

Accountability + Could increase transparency about relationship between cost of controls and

fee revenue, which could increase accountability.

A2.5.2.6 Sub-option A6: Incorporate bonus-malus principles

Stakeholders had limited or no experience of a bonus-malus system; they had difficulty

envisaging how such a system could operate in practice.

Table A2.99 Sub-option A6: Impacts in Poland of incorporating bonus-malus principles


Efficiency - A bonus-malus system could, if it reduced the fee revenue collected, decrease

the finances available for CAs. However, as all CAs receive funding from the

state budget, and only the GVI keeps fee revenue, the potential for negative

effects are somewhat constrained.

Simplification - It is likely that this sub-option would require significant changes to the OC

system in Poland.

Comparability - Due to the complexities involved in introducing a bonus-malus system it is likely

that this sub-option would reduce comparability between Poland and other MS.

Streamlining -- This sub-option would require significant changes to the current OC system and

would probably increase the administrative burden on CAs.


A2.5.2.7 Sub-option A7: Introduce transparency and reporting requirements

Transparency in Poland is limited. Polish CAs do not regularly publish information about the

OC system, or provide information about precisely how fees are calculated. Funding for

CAs is provided centrally from the general State budget; it would be difficult to identify which

funds are specifically related to official controls, and thus determine the relationship been

fees and actual costs.

Table A2.100 Sub-option A7: Impacts of in Poland of introducing transparency and reporting requirements


Efficiency 0 Unlikely to have an impact as fees are directed to the State budget, and



resources are allocated directly to the CA from the central State budget.

Simplification 0 Unlikely to have an impact as fees are directed to the State budget, and


Comparability 0 Unlikely to have an impact as fees are directed to the State budget, and


Streamlining -- Likely to increase the admin burden as CAs do not currently engage in reporting,

and the relationship between fees and actual costs is unclear.

Accountability + Increasing transparency and reporting could increase access to information, and

help in the understanding of how information is collected and used.

A2.5.2.8 Sub-option A8: Providing for industry participation

In principle, fees in Poland should reflect actual costs. The central CA has defined eligible

costs and methodologies to calculate appropriate fee rates. However, in practice fees are

often set following negotiations between central the CAs and industry bodies. In this way

there already exists an, albeit informal, mechanism to include industry in the process of

setting fees.

Table A2.101 Sub-option A8: Impacts in Poland of providing for industry participation


Efficiency - Industry negotiates with central CAs about fee rates, and this is considered to

result in fee rates that are lower than actual costs. Increasing the opportunity of

industry participation could place further downward pressure on fees. However,

as all CAs (except the GVI) direct fee revenues to the state budget, further

decreases in fees may not adversely affect their own budgets.

Simplification -- The sub-option could complicate the legal framework by creating a mechanism

for industry to challenge fee levels.


Streamlining -- The sub-option could increase the burden on CAs if they have to engage with

industry and respond to legal challenges.

Accountability + The sub-option could increase the accountability of CAs to FBOs.

A2.5.2.9 Sub-option A9: Introduce exemptions and reductions for micro-enterprises

Approximately 20 to 30 per cent of meat on the Polish market originates from uncontrolled

slaughter. In the opinion of stakeholders exemptions for micro-enterprises should not be

introduced as they could increase the proportion of meat originating from uncontrolled

slaughter, increasing food safety risks in the food chain.

Table A2.102 Sub-option A9: Impacts in Poland of introducing exemptions and reductions for micro-enterprises


Efficiency + The sub-option could reduce the amount of inspections CAs have to conduct. As

CAs are funded from the state budget, and (except for the GVI) do not keep fee

revenue, it could reduce their workload without reducing their resources. This

would improve the resourcing of CAs.

Simplification - The sub-option could complicate the legal framework as exemptions would be

granted on the basis of size rather than risk.

Comparability - The option could reduce comparability as different MS are likely to have different

proportions of micro-enterprises.

Streamlining ++ The sub-option could potentially reduce the burden on CAs and also reduce

compliance costs on industry.



Accountability - The option could reduce accountability as exemptions would be granted on the

basis of size rather than risk.


Fees in Poland, in principle, should reflect full cost recovery of official control activities.

However final fees are based on negotiations between MARD and industry bodies, which

would suggest that they are unlikely to sufficiently high to recover full costs. Due to the

comparatively lower costs in Poland compared to the euro-area average, harmonised fee

rates could significantly increase the fees charged for official controls.


Table A2.103 Option B1: Impacts of full harmonisation in Poland where the same fee rates apply in each MS


Efficiency ++ Full harmonisation is likely to significantly increase fees in Poland, which would

probably improve financing for performing OC activities in the GVI. Other CAs may

not benefit as fee revenue is returned to the State Budget.


Comparability -- Full harmonisation would not account for the particular costs structures in Poland.

Streamlining -- Full harmonisation is likely to result in higher fees in Poland, which would increase

compliance costs on industry. It would be unlikely to affect the administration

burden for CAs.

Accountability - Fees are currently based on several criteria specified by MARD, but are also

influenced by negotiations between MARD and industry bodies. Harmonised fees

may reduce the scope for industry to influence fee rates and may also reduce

transparency about how fees are calculated.

A2.5.3.2 Option B2: Harmonised fees are adjusted for each Member State using a cost of living index

Table A2.104 Option B2: Impacts of full harmonisation in Poland where fee rates are adjusted for each MS using a cost of living index


Efficiency ++ Fee rates in Poland do not bear relation to the actual costs incurred. Although

information is limited about the proportion of full cost recovery, what evidence exists

suggests that it is low. Full harmonisation, adjusted for cost of living index, would

probably increase fee rates in Poland. This could increase revenue available for

the GVI, but would not necessarily affect the other CAs as they are funded centrally

(and all fees collected go to the State Budget).


Comparability - Full harmonisation with cost of living adjustment may increase OCs fees their

current low level, and improve comparability with other MS.

Streamlining -- OC fees are currently relatively low in Poland compared to other Member States.

Full harmonisation, adjusted for cost of living index, could increase OC fees and

increase compliance costs on industry.


influenced by negotiations between MARD and industry bodies. Harmonised fees,

adjusted for cost of living index, may reduce the scope for industry to influence fee

rates and may also reduce transparency about how fees are calculated.

A2.5.3.3 Sub-option B3: Harmonise fees for certain import controls



Table A2.105 Sub-0ption B3: Impacts in Poland of harmonised fees for certain import controls


Efficiency ++ Full harmonisation is likely to significantly increase fees in Poland, which could

improve financing for performing OC activities. However, as CAs conducting

import controls are funded from the state budget, and return fee revenue to the

state budget, the funding available for OC activities may not increase if fee revenue

increases.


Comparability -- Full harmonisation would not account for the particular costs structures in Poland.

Streamlining -- Full harmonisation is likely to result in higher fees in Poland, which would increase

compliance costs on industry. It would be unlikely to affect the administration

burden for CAs.


influenced by negotiations between MARD and industry bodies. Harmonised fees

may reduce the scope for industry to influence fee rates and may also reduce

transparency about how fees are calculated.


Industry stakeholders have previously expressed their support for full subsidiarity (FCEC

2008). In their opinion it provides MS with the flexibility required to reflect national cost

considerations in fee rates, which is especially important in Poland due to its relatively low

costs (compared to other MS). However, CAs have indicated that full subsidiarity could

reduce funding available to CAs, and reduce transparency between MS49

by increasing

differences in how fees are calculated.

Table A2.106 Option C: Impacts of full subsidiarity in Poland


Efficiency -- Likely to result in the under funding of official control activities as fees may be

reduced substantially. Especially important for the GVI, the only CA not to return

fee revenues to the State Budget.


Comparability -- Likely to reduce comparability between MS as each will be free to arrange official

controls in a different way.

Streamlining 0 No impact identified.

Accountability 0 No impact identified.

A2.5.4.2 Issues/considerations

Implementing harmonised changes across the OC system in Poland is likely to be

complicated by the multiple administrative layers responsible for implementing OCs; the

system includes an extensive network of central, regional and district level CAs.

All CAs in Poland receive funding from the state budget. In principle the fee rates should

reflect actual costs, but in practice are heavily influenced by negotiations between central

CAs and industry bodies. The result is that fees do not provide adequate financing for OC

activity, but the shortfall between fee revenues and actual costs are met from the state

budget. Any changes that are likely to change the balance of funding away from the state to

FBOs are likely to significantly increase industry’s costs.

49 During interviews as part of this evaluation.





A2.5.4.3 Poland: summary table of option analysis

Table A2.107 Poland: summary table of option analysis





fees

-- - + -- 0

A2 Full cost recovery + 0 + -- 0


costs

0 0 + 0 +

A4 Time-based fees 1 0 - -- ++

A5 Ring-fencing resources + - + - +

A6 Bonus-malus system - - - -- 0

A7 Transparency & reporting 0 0 0 -- +

A8 Industry participation - -- 0 -- +

A9 Micro-enterprises + - - ++ -


fees

++ 0 -- -- -


living adjusted

++ 0 - -- -

B3 Import fees ++ 0 -- -- -

C Full subsidiarity -- 0 -- 0 0



A2.6 United Kingdom

A2.6.1 Introduction

This case study was informed by 4 interviews (1 CA and 3 industry stakeholder(s)) and 9

questionnaires.

The CA for meat controls in Great Britain (Food Standards Agency (FSA)) consulted with

other CAs (Defra, VMD) to give a unified response, although a separate response was

received from Northern Ireland, where meat controls are delegated to Department for

Agriculture and Rural Development (DARD). DARD is also responsible for delivery of all

other official controls in Northern Ireland, which are otherwise largely delivered through local

authorities in GB (with the exception of checks at primary production holdings for milk and

eggs, imports through ports and veterinary residues).

Fees are currently charged for inspection and audit of fresh meat establishments, monitoring

of residues of veterinary residues, approval of feed establishments, and checks on imported

food.

This case study was undertaken at a time when the FSA was actively seeking to pass the full

cost of meat inspection onto the industry, which was causing considerable objections from

industry. The CA was also reviewing the funding of all official hygiene controls but had not

made any public announcements about its conclusions.


The statutory fee system should be cross-sectoral and not commodity based; therefore we

would envisage that 882/2004 could as an example state that all food and feed

establishments requiring approval (e.g. under 853/2004) should be covered by the fee

system.

A2.6.3 Sub-option A1: Extend the scope of mandatory fees

In the UK most emphasis and debate about charging for official controls concerns the meat

industry. In other sectors where charges are made, e.g. charging for veterinary residues,

industry accepts the charges as ‘legitimate’ and part of running their businesses. The vast

majority of food businesses in the UK do not pay fees for official hygiene controls, although

the CA are considering whether these should be introduced.

Table A2.108 Sub-option A1: Impacts in the United Kingdom of extending the scope of mandatory fees


Efficiency -- Costs of collection of fees could, in some cases, exceed the receipts recovered.

Simplification -- Article 27 should be simplified and clarified; its remit should be cross-sectoral

and encompassing all food and feed establishments for which approval status is

required; at the same time careful consideration should be given to including in

such a fee system other food and feed registered establishments.

Comparability - There would be an increased need for clear definition of all the cost components

of additional mandatory controls for which fees would be collected. Existing

mandatory fees are not charged by some MS - this must be corrected before

any additional fees considered.

Streamlining - In essence all fees are mandatory as they are paid for out of taxation. Great

care would therefore be needed if the scope for mandatory fees was increased

to ensure that businesses were not paying twice.

Accountability -- Clarity on who is covered by mandatory fees is needed, for example currently

some approved establishments under 853/2004 are covered by statutory fee

systems whilst not others. This could mean that some costs for controls

currently borne by government (e.g. some TSE controls) could be transferred to

industry. The implementation of statutory fees should be considered not on a



commodity basis but on the applicable legislation (e.g. whether they fall under

853/2004 or not)


The UK CA is currently consulting on full cost recovery for charging in the meat sector and

considering charges for all other OCs. With the current pressure on government

departments to reduce costs and improve efficiency there is likely to be more consideration

given to recover full costs wherever possible. Industry however is not convinced that they

should shoulder the costs which they consider to be unfair and where they are given no

choice as there is a ‘state monopoly’ on enforcement.

Table A2.109 Option A2: Impacts in the United Kingdom of requiring full cost recovery


Efficiency -- The requirement for full cost recovery, of itself, provides no incentive for the

competent authority to improve the efficiency or reduce the cost of delivery of official

controls.

Simplification -- Move to full cost recovery could have significant business impacts which are likely to

result in increased costs to consumers, and also the potential to lead to conflict with

official control bodies.

Comparability -- Inspections are not a subsidy (as quoted by FSA) they are a cost imposed which will

affect EU MS FBOs vis-à-vis imports. Any decision on cost recovery must ensure

agreed cost sections are the same in each MS.

Streamlining + If controls were risk based full cost recover would provide a bonus-malus system and

incentivise compliance thus streamlining enforcement.

Accountability -- Any movements towards full cost recovery in the food and feed sector will have to be

fully approved and impact assessed before an official UK position can be taken on

this specific point.


Very strong opinions were registered by industry regarding the FSA’s proposal to include

pension deficit costs in the eligible costs calculation. This proposal has now been dropped.

There was more agreement in this section than most other sections.

Table A2.110 Sub-option A3: Impacts in the United Kingdom of clearly defining eligible costs


Efficiency ++ Overhead recovery costs should be applied to FBOs which do not comply and

need a second inspection.

Simplification ++ Detailed lists tend to have a detrimental effect as they can still be interpreted on a number of different ways, potentially increasing the administrative burden on the CA due to increased analysis, recording and reporting.

Comparability ++ This is a critical concept, harmonization of the understanding of what is included

within the calculation of the fee is paramount, to ensure a more levelled playing

field but also to reduce the significant number of legal challenges currently

suffered by CA from stakeholder organizations. Only if cost categories are

tightly defined will this maximise the ' comparability' objective. Vague definitions

would lead to differential interpretations amongst member states. The need to

decide which of each section is centrally funded must be the same in all MS.

Allowing a single MS to determine its overhead cost will lead to unacceptable

variations.

Streamlining ++ The requirement to follow a widely recognized system like Activity Based

Costing, which is already used within the private sector could ensure that there

is a commonality of understanding and perhaps remove such different

interpretation which may streamline systems.



Accountability + It must be made clear what is not chargeable.


Table A2.111 Option A4: Impacts in the United Kingdom of the introduction of time-based fees for which the continuous of systematic presence of official controls in required


Efficiency ++ This is current FSA system at slaughterhouses which FSA claim has encouraged

efficiency and effectiveness on the usage of official time by Food Business

Operators, but this is disputed by FBOs. Could disadvantage SMEs. Flat rates

based on actual costs are a way to reduce administrative burdens.

Simplification - FSA consider time-based fees would simplify – industry does not concur. Flat

fees could lead to distortion in costs between different sizes of operator -

disadvantages small establishments with slow throughput.

Comparability 0 FSA consider would provide some comparability – industry does not concur.

Streamlining + Industry is keen to see more radical changes in the EU meat inspection system to

implement a modern, risk-based system.

Accountability - Time based fees for audit might be acceptable as larger, higher risk

establishments would take longer to audit. Wide divergence of opinions.


This was considered by most respondents to be desirable but given the current economic

climate and present structures to be very unlikely to be implemented, and therefore all

scores indicated no impact.

Table A2.112 Option A5: Impacts in the United Kingdom of requiring ring-fencing of resources


Efficiency 0 Would assist with ensuring adequate resources are available to carry out official

controls.




Accountability 0 Particularly important when resource allocation is determined at local level for

activities that are carried out as a national benefit rather than for a local need.


There was consensus that a truly risk-based and proportionate system would in effect

become a bonus-malus system as poorly performing businesses would be subject to more

frequent inspection and thus have higher costs. At present many retail FBOs are

uninspected and unscored. Only a small proportion of the illegal meats imported into UK are

detected and destroyed.

Table A2.113 Option A6: Impacts in the United Kingdom of incorporating bonus-malus principles


Efficiency ++ The ultimate objective of official controls is to improve consumer protection; therefore

fees could not only ensure that adequate resources are available to tackle more time

consuming non compliant establishments, but as a tool that encourages compliance.

Simplification ++ A truly risk-based system would simplify a bonus-malus system.



Comparability ++ For true comparability the system would need to be uniformly agreed across MS,

although there is still a strong argument for MS flexibility.

Streamlining ++ A truly risk-based system would streamline a bonus-malus system.

Accountability ++ The CAs support the principle that fee systems are a tool that can be used to protect

and incentivise consumer protection. Any extra resources that CA need to allocate

due to non compliance from FBOs should be fully recoverable via fee systems as

taxpayers should not be subsidizing establishments that increase their risk as

consumers.


There was wide agreement that transparency was desirable and essential, although as with

other sections lack of full agreement between CA and Industry.

Table A2.114 Sub-option A7: Impacts in the United Kingdom of introducing transparency and reporting requirements


Efficiency + Official controls need to be both efficient and effective. If costs are minimised without

regard to effectiveness levels of public protection may be compromised.

Simplification - The CA already provide such information for those official controls for which there is a

well developed fee system (e.g. VMD; FSA), the main issue will be if we needed to do

so for official controls currently provided by local authorities which would increase the

overall administrative burden.

Comparability ++ There must be full transparency on the part of member states and competent

authorities as regards the composition of fees and how they are set to allow

comparisons. Reports are made of vets from eastern MS being employed at near the

national minimum wage and the full authorised professional UK rate being claimed by

the contractor. If correct will lead to undue costs placed on the FBO.

Streamlining - In MS with devolved regions, it may be difficult and costly to ascertain charging

system at different levels of government. For example there is currently no reliable

system for the CA to gather actual costs of hygiene enforcement by local authorities.

Accountability ++ Unanimity on this element. Industry comment - more transparency would resolve the

present problem in the UK of FSA seeking full cost recovery without providing

transparency on what costs it wishes to recover. CA Comment - those central

government departments that deliver or are the CA of official controls for which a fee

is being charged already publish financial details covering financial information via

their annual report of accounts.


As with previous sections there was a wide difference in opinions about this issue – the CA

consider they consult widely and listen to industry views, whereas industry feel their views

are not taken into account. Again the meat industry is the sector where opinions are most

strongly expressed.

Table A2.115 Sub-option A8: Impacts in the United Kingdom of providing for industry participation


Efficiency ++ All charging requires legislative change which requires consultation on options. Amending 882 might improve efficiency but could adversely affect effectiveness.

Simplification + Industry has little influence over fee setting due to the highly complex of the UK system for hourly rate charging. They do have some influence over the number of inspectors, but none for instance on whether an inspector is an employed inspector on over-time or a contract inspector on plain time, or how long an audit takes.

Comparability ++ The Commission should provide Member States with the flexibility to develop their own policy.



Streamlining 0 No impact identified.

Accountability ++ ‘Business agreements’ are legal agreements between FBOs and the CA. This system has proved to be useful on those instances where regular official presence is required (e.g. abattoirs). Its usefulness is more difficult to ascertain where risk based OCs are delivered. All acts of UK Government have an in built appeal process. In terms of revising 882, the appeal system would need to be independent and have industry representation.

A2.6.10 Sub-option A9: introduce exemptions and reductions for micro-enterprises

Exemptions for smaller businesses were generally welcomed but there was concern over

definitions. The point was made also that a truly risk-based and proportional system would

mean a lower burden on smaller businesses.

Table A2.116 Sub-option A9: Impacts in the United Kingdom of introducing exemptions and reductions for micro-enterprises


Efficiency + The CA’s calculations indicate the total financial impact of allowing for

discounts for SMEs result in subsidy of roughly at around 5% of total cost for

delivery of the service, a manageable amount when taking into account the

value and employment that such business provide within local communities.

Simplification + Whilst some responses indicated that simplification would result it’s not clear

how this would be achieved.

Comparability + Clear EU-wide definition is required to avoid unfair competition.

Streamlining + Similarly whilst some responses indicated that streamlining would result it’s

not clear how this would be achieved

Accountability + MS should be able to develop actions plans to ensure that fee setting

mechanisms are not disproportionately detrimental to SMEs and the CA

considered that MS should maintain a level of flexibility on their classification

of SMEs- this was not supported by industry who favoured clear, EU-wide

definitions.


There were differing views expressed from competent authorities and from industry, with the

latter more supportive as this could potentially create a more level playing field, especially if

charges were based on throughput numbers.


Table A2.117 Option B1: Impacts of full harmonisation in the United Kingdom where the same fee rates apply in each MS


Efficiency - There were different scores given by respondents. The CA commented that

significant disparities on cost of living index across the EU will result on some of

the MS achieving significantly greater cost recovery than others. One industry

respondent commented that one EU price might not necessarily provide all

member states with adequate financial means - therefore may have variable

impacts in relation to 'Efficiency' and 'Comparability' objectives.

Simplification + The ‘per number’ basis would be simpler, so more beneficial for small businesses.

Comparability -- The only basis for this system to remain (as a possibility to be discussed) would

be at import points for food and feed as a way to discourage an artificial effect on

trade routes. This option does not increase transparency or harmonisation since

MS who disagree with the philosophy of charging will find a way to disguise



subsidy, at central or local government level.

Fee rates set in Euros are proving problematic to those countries that are not

within the euro area due to currency exchange fluctuations.

Streamlining ++ Set fees at EU level would put pressure on profligate CAs to maximise efficiency

of delivery and to negotiate more risk-based controls that would require less input.

Accountability 0 Each Member State should retain a level of flexibility to develop their own fee

setting mechanisms and achieve a level of cost recovery within agreed

boundaries as they are accountable to their own Government.


There was more agreement that this would be more equitable, but similar problems to full

harmonisation were envisaged.

Table A2.118 Option A2: Impacts of full harmonisation in the United Kingdom where fee rates adjusted using a cost of living index apply in each MS


Efficiency - As with previous option: although this takes into account differences on cost of

living index it still fails to address some of the main shortcomings presented with

current system.

Simplification - The system might be rather complex, bureaucratic and subject to on-going

challenge. The system would still need to be sensitive to currency exchange

rates and would need to be amended frequently to take into account economic

growth indicators.

Comparability -- Significant disparities on salaries, working conditions, number of personnel,

structure and organization of official controls and industry across the EU will

make it difficult to find an adjusted rate that can work throughout EU 27. This

system would be difficult to enforce and possibly result in even greater distortion

than at present.

Streamlining ++ As above.

Accountability + Allows more flexibility and accountability.

Table A2.119 Option B3: Harmonise fees in the United Kingdom for certain import controls


Efficiency 0 No impacts identified

Simplification - FSA support harmonization of outcomes, but believe that with significant

differences in the organization of OCs across and within MSs there is no one

fee system that will suit them all, unless based on actual costs

Comparability - Principles applicable to import controls should be treated differently to those for

other official controls due to the importance of trade routes and the need to

reduce "BIP or DPE shopping". CA should be allowed to work on a full cost

recovery basis with a minimum fee level set in EU law. Clarity of what official

controls are to be included with the fee system: surveillance and monitoring are

an integral part of the delivery of OCs and therefore should be included.

Streamlining - In the current financial situation, there is pressure to reduce sampling and

analysis activity for which costs cannot be recovered, this may impact on the

level of consumer protection, therefore fee systems should be developed in a

way that incentivises and enhances the level of consumer protection.

Accountability - This option implies that the operator should pay rather than government. It does

not address the fact that this option, as with the others, cannot be harmonised.

A2.6.13 Option C: Repeal Article 26-29 of the Regulation (full subsidiarity)



This option was considered to be against the principle of greater EU harmonisation and

would do nothing to put pressure on profligate CA raising charges and causing inter MS

distortions.

Table A2.120 Option C: Impacts of full subsidiarity in the United Kingdom where fee rates are set differently in each Member State


Efficiency -- Considered difficult to implement higher levels of cost recovery with full

subsidiarity. Full subsidiarity would CAs to recoup the full cost of inefficiently

delivered official controls and would remove drivers to achieve efficiency.

Simplification 0 Simplification would be totally dependent on MS approach, so may be simpler or

more complex.

Comparability -- It will remove the underpinning support to MS for their different fee systems, may

distort internal market, increase pressure on countries nearer full cost recovery

from countries with reduced (or no) charges.

Streamlining -- Ultimately could result on failure to provide required official controls due to lack of

required finances.

Accountability -- The current de-regulatory UK government may be unwilling to introduce charges

in some specific areas of official controls. Full subsidiarity may not lead to greater

accountability.


Currently it is unclear which official controls are to be included within the fee system (animal

health and welfare, TSEs, animal by-products, animal identification), therefore it is not only

key to define which sectors of the food industry are covered by fees but also which statutory

OCs are included within it.



A2.6.14.1 United Kingdom: summary table of option analysis

Table A2.121 United Kingdom: summary table of option analysis





fees

-- -- - - --

A2 Full cost recovery -- -- -- + --


costs

++ ++ ++ ++ +

A4 Time-based fees ++ - 0 + -

A5 Ring-fencing resources 0 0 0 0 0

A6 Bonus-malus system ++ ++ ++ ++ ++

A7 Transparency & reporting + - ++ - ++

A8 Industry participation ++ + ++ 0 ++

A9 Micro-enterprises + + + + +


fees

- + -- ++ 0


living adjusted

- - -- ++ +

B3 Import fees 0 - - - -

C Full subsidiarity -- 0 -- -- --



Annex 3 Responses from EU level industry stakeholders

A3.1.1 Introduction

This annex reports results of consultations with EU-level industry stakeholders. It was

informed by six interviews with international and EU-level industry stakeholders and 48

questionnaires.


A3.1.2.1 Sub-option A1: Extending the scope of mandatory fees

Annex IV and V of the Regulation specify activities for which fee collection is mandatory, for

domestic production and imports respectively. The FCEC evaluation (FCEC 2008a) found

that 18 Member States collect fees for all activities, while the remaining 9 Member States

collect such fees only in part.

Table A3.122 Sub-option A1: Extending the scope of mandatory fees


Efficiency ++ Extending the scope of mandatory fees could improve the financing of OC

activities in MS that do not charge for non-mandatory activities.

Simplification + Extending the scope of mandatory fees could help to simplify the OC system

across the EU.

Comparability ++ Extending the scope of mandatory fees would improve comparability of the OC

system between MS across the EU.

Streamlining -- Increasing the scope of mandatory fees could increase the administration

burden on CAs by increasing the OC activities they have to perform. It could

also increase compliance costs for FBOs.

Accountability - The option could reduce accountability as CAs would not have to justify why

they are conducting certain controls.

A3.1.2.2 Sub-option A2: Requiring full cost recovery

The rationale for the charging and collection of fees is to cover the costs of official controls,

and meet the requirements of the Regulation to ensure adequate financial resources are

available (Article 26). However, the share of the costs of official controls covered by fee

revenue ranges from 20 per cent (Estonia) to 92 per cent (Finland) (2007 figures) (FCEC

2008a). At least 14 Member States have indicated that fees are insufficient to cover the cost

of official control activities (FCEC 2008a). Only 7 Member States claim fees cover costs,

and a further 6 claim that this may be occurring in some cases (FCEC 2008a).

Table A3.123 Sub-option A2: Impact for EU of requiring full cost recovery


Efficiency ++ Would ensure that CAs are adequately financed.

Simplification -- Would complicate the legal framework as it would require that CAs are aware of

the actual costs of OCs.

Comparability + Would improve comparability between MS as actual costs would have to be

explicitly defined.

Streamlining -- Would increase CA admin burden as actual costs would have to be understood

and recorded. Likely to increase fees dramatically in some MS.

Accountability - Could reduce accountability as CAs would not have to justify the cost of control

activities.

A3.1.2.3 Sub-option A3: Clearly defining eligible costs



The official control fee should reflect the actual costs incurred by the CA in conducting

control activities. To facilitate comparable calculations by Member States, costs should be

calculated based on cost categories specified in Annex VI; staff salaries; and staff costs

including overheads; laboratory analysis and sampling. The current definition of eligible

costs is perceived as vague, which results in Member States considering it their right to add

costs that are not necessarily justified in that they are directly linked to official controls

(FCEC 2008a).

Table A3.124 Sub-option A3: Impact for Europe of clearly defining eligible costs


Efficiency + Likely to improve the financing of official controls as the option would clarify

what activities should be charged for.

Simplification ++ Likely to simplify the legal framework for OCs by clarifying what OC activity CAs

can charge for.

Comparability ++ The option would be likely to improve comparability between MS as each CA

would include the same list of costs when calculating fee rates.

Streamlining + Could increase or decrease compliance costs depending on impact on fee

rates; will depend on difference between current definition of eligible costs at

MS level and revised definition. However, clearly defining eligible costs are

likely to result in OC fees that closely reflect actual costs.

Accountability + Likely to improve accountability as CAs may restrict charges for the defined

costs.


The fee calculation method used by Member States is generally not transparent; it is unclear

whether the costs used by Member States reflect the actual costs directly associated with

carrying out the official controls (FCEC 2008a).

Time based fees are based on the actual time during which controls are performed,

multiplied by the fee for the staff performing the control. The staff fee can be contentious as

it can differ based on what is included in the calculation, for example; travel time, staff

training costs, staff overheads (i.e. building cost, support staff), and holidays.

Flat fees can be calculated on a throughput basis (i.e. per tonne or per animal) at a level that

reflects actual costs, or where applicable, at the amounts specified in section B of Annex IV

and V of the Regulation (‘minimum rates’). A previous evaluation of the official control

system (FCEC 2008a) found that among the EU-27, 18 of 27 CAs use a mix of flat rates and

minimum rates. An additional 6 Member States use minimum rates for the activities outlined

in Annexes IV and V (but do not collect fees for any other activity). Only 3 Member States

use flat rates throughout all activities for which fees are collected.

Member States’ Border Inspection Posts (BIPs) can charge different rates depending on

whether they base their fees on the minimum rates specified in Annex IV of the Regulation,

or whether they use flat rates based on actual costs. The FCEC evaluation (FCEC 2008a)

found that 7 Member States charge flat rates, and 3 – 5 other Member States charge a

combination of flat and minimum rates on imports (i.e. flat rates on some imports and

minimum rates on others). The use of differing rates could potentially distort the internal

market, but whether this distortion will actually occur will depend on a range of other factors

(e.g. transport costs and other logistical considerations). No evidence of any such

distortions was found (FCEC 2008a).

Table A3.125 Sub-option A4: Impact for EU of introducing time-based fees


Efficiency ++ Introducing time-based fees could help to incentivise CAs to improve the

efficiency of their OC activities. Flat fees could improve the financing available

for official controls by increasing the number of activities that CAs charge for.



Simplification - Recording the information necessary to calculate time-based fees could

complicate the OC legal framework in MS that do not currently use time-based

fees. Flat fees could complicate the legal framework in MS that do not

currently apply flat fees, or where the flat fee is significantly higher or lower

than the current fee.

Comparability + Time-based fees could help to account for varying costs structures across the

MS, as fees would be likely to bear a closer relationship to actual costs.

Specifying which activities should have flat fees, and how these fees should

be calculated, should help to improve comparability across the MS.

Streamlining -- Recording the information necessary to calculate time-based fees could

increase the administration burden in MS that do not currently use time-based

fees. In MS where fees do not relate to actual costs it could also increase fee

rates. Introducing flat fees could increase compliance costs for industry.

Accountability + Time based fees could improve accountability as the relationship between

control activities and fee revenue may become clearer. Flat fees could reduce

accountability in some MS by reducing the transparency of the relationship

between OC activity and fee revenue.

A3.1.2.5 Sub-option A5: Requiring ring-fencing of resources

In the majority of Member States, the revenue from collected fees is directed to the State’s

general budget, either in entirety (11 Member States), or in part (7 Member States) (FCEC

2008a). Only 9 Member States claim to be ring-fencing fee revenues for the CAs performing

the controls (FCEC 2008a).

Table A3.126 Sub-option A5: Impacts for Europe of requiring ring-fencing of resources


Efficiency + Could have a positive impact on efficiency in MS with fee levels that reflect

actual costs.

Simplification - Could complicate the legal framework as CAs often have responsibilities in

addition to, and alongside, their OC responsibilities. It would be complicated

to separate OC resources from other resources.

Comparability + Ring-fencing of resources would clarify which CAs are sufficiently funded by

fee revenues.


Accountability + Could improve accountability as the relationship between actual costs and fee

revenue would be clarified.

A3.1.2.6 Sub-option A6:Incorporate bonus-malus principles

The Regulation includes elements of a bonus-malus system. It includes the stipulation that

official controls should be carried out ‘on a risk basis with appropriate frequency’ (Article 3.1),

and also includes provision for time based fees.

While several Member States have time based fees, risk factors are not sufficiently taken

into account in the way systems for official controls are planned and implemented (FCEC

2008a).

Table A3.127 Sub-option A6: Impacts for Europe of incorporating bonus-malus principles


Efficiency + Likely to have positive effects on the efficiency of the OC system over the long-

term; it would help to ensure that inspections and controls are targeted where

needed to ensure high levels of food safety.

Simplification -- Likely to complicate legal framework in numerous MS.

Comparability - Likely to reduce comparability as bonus-malus systems could be significantly

different between MS, but would take account for cost differences in MS.



Streamlining ++

Could reduce both the admin burden and industry costs over long term by

providing dynamic incentive for both CAs and FBOs.

Accountability + Likely to improve accountability as CAs would have to justify inspections on the

basis of risks posed by an FBO.

A3.1.2.7 Sub-option A7: Introduce transparency and reporting requirements

Transparency and reporting is currently limited across the Member States; there is a lack of

precise information on how rates are set and what they include in different Member States

(FCEC 2008a).

Table A3.128 Sub-option A7: Impacts for Europe of introducing transparency and reporting requirements


Efficiency -- Likely to increase costs for CAs due to increase in admin burden.

Simplification -- Obligation to report to the Commission may place legal requirement on CAs to

collect data, complicating the legal framework.

Comparability - Improved transparency and reporting could improve comparability between MS.

However, due to the significant differences between OC systems in MS, it is

questionable whether increased data would facilitate a meaningful comparison

between MS.

Streamlining -- Likely to increase CA costs and may potentially increase industry costs as a

result.

Accountability ++ Would increase accountability of CAs as they would have to describe their

internal processes in detail.

A3.1.2.8 Sub-option A8: Provide for industry participation

Levels of industry participation are different between MS, but in general there is at least

some involvement of industry in the design of OC system. In some MS this is restricted to

consultation about OC legislation (e.g. Poland), while in other MS industry have a significant

input into the OC inspection process (e.g. Finland).

Table A3.129 Sub-option A8: Impacts for Europe of providing for industry participation


Efficiency - Could potentially reduce fee levels, decreasing the financing available to CAs.

Simplification - Likely to lead to legal challenge that could complicate the legal basis of the OC

system.

Comparability - If legal challenge resulted, and industry had a more significant influence on OC

fees, it could lead to increased differences between MS.

Streamlining - Could increase administration burden for CAs as they would have to engage

with, and respond to, industry representations.

Accountability ++ Would enable FBOs to force CAs to account for, and justify, their decisions.

A3.1.2.9 Sub-option A9: Introduce exemptions and reductions for micro-enterprises

The impact of introducing exemptions and reductions will differ according to the proportion of

micro-enterprises in individual Member States.

Table A3.130 Sub-option A9: Impact for EU of introducing exemptions and reductions for micro-enterprises


Efficiency -- Likely to significantly reduce the efficiency of the OC systems. The potential

reduction in fee revenue may have to be covered by other FBOs, which would




increase their costs.

Simplification -- Introducing exemptions or reductions for micro-enterprises could complicate the

legal framework in certain MS. For example, in MS where exemptions are

based on risk assessment, introducing this option could complicate the existing

legal framework.

Comparability - Likely to have a negative impact on comparability as MS will have different

proportion of micro-enterprises in relevant sectors.

Streamlining + It could reduce the administration burden for CAs, and also reduce FBO costs.



There are significant differences in how controls are applied and how fees are calculated to

recover costs; across the EU fee rates vary with a considerable range (FCEC 2008a). Fee

systems in Member States may be minimum and / or flat rate; flat rates calculated using

different calculation methods; or rates expressed on a throughput or time basis (there may

be multiple different factors influencing time based fees). There are also a range of control

activities covered by the various fee rates, that is, similar control activities may be charged

on one Member State but not in another.

Due to the variations and differences between Member States, there are concerns about

unfair competition leading to distortions within the internal market. These concerns relate to

inter- and intra- Member State comparisons, and also between sectors under the Regulation.

Harmonised fees could potentially reduce distortions between and within Member States.

A3.1.3.1 Sub-option B1: Fees for provision of controls are determined on a unified basis for the EU as a whole (i.e. the same fee rates apply in each Member State

Table A3.131 Sub-option B1: Impacts of full harmonisation for the EU


Efficiency -- If harmonised fees are set at a level that is low enough to be acceptable across

MS it is likely that it will result in the inadequate funding for performing OCs in MS

with relatively higher costs.

Simplification 0 This option could simplify legal frameworks across Europe as fees would not have

to be calculated to any specific formula. However it could also complicate the

legal framework in countries which have delegated powers for setting fee rates to

regional or local administrations.

Comparability -- Fully harmonised fees would not account for different cost structures in MS.

Streamlining -- Could reduce the administrative burden for CAs as they would not have to

calculate fees. However it could also increase compliance costs in MS with

comparatively lower costs than the average.

Accountability -- Harmonised fees could reduce the need for CAs to justify fee rates; they would be

specified centrally.

A3.1.3.2 Sub-option B2: Harmonised fees are adjusted for each Member State using a cost of living index

Table A3.132 Sub-option B2: Impacts of full harmonisation in EU where fee rates are adjusted for each MS using a cost of living index


Efficiency -- If harmonised fees are set at a level that is low enough to be acceptable across MS




it is likely that it will result in the inadequate funding for performing OCs in MS with

relatively higher costs.

Simplification 0 This option could simplify legal frameworks across Europe as fees would not have

to be calculated to any specific formula. However it could also complicate the legal

framework in countries which have delegated powers for setting fee rates to

regional or local administrations.

Comparability -- Fully harmonised fees would not account for different cost structures in MS.

Streamlining -- Could reduce the administrative burden for CAs as they would not have to calculate

fees. However it could also increase compliance costs in MS with comparatively

lower costs than the average.

Accountability -- Harmonised fees could reduce the need for CAs to justify fee rates; they would be

specified centrally.

Table A3.133 Sub-option B3: Impacts for Europe of harmonising fees for certain import controls


Efficiency -- Harmonised fees for certain import controls could reduce the efficiency of the

OC system; they could result in fee rates that are significantly lower or higher

than actual costs.

Simplification 0 Harmonised fees could simplify the OC legal framework in some MS, but

complicate it in others.

Comparability + Harmonised fees for import controls would improve comparability between MS.

Streamlining 0 Harmonised fees for import controls could increase or decrease compliance

costs depending on the difference between the harmonised fees and existing

MS fees.

Accountability - Harmonised import control fees could reduce accountability by reducing the

transparency of the relationship between actual costs and fee rates.

A3.1.4 Option C: Repeal Article 26-29 of the Regulation (full subsidiarity)

Full subsidiarity would involve repealing Articles 26 – 29 of the Regulation to enable the

development of Member States system for financing official controls. Doing so could, in

theory, help solve some of the problems related to specifying methods for calculating fees.

These problems, for example, include:

▪ The minimum fees included in the Regulation may result in fees that, in some Member

States, are higher than actual costs.

▪ The current definition of eligible costs / mandatory fees may reflect the needs and

requirements of the official control system in some Member States.

▪ The specification of how time based fees should be calculated may, in some instances

and in some Member states, fail to sufficiently consider the specific features of relevant

sectors.

Table A3.134 Option C: Impacts of full subsidiarity for EU


Efficiency - Lack of EU direction could increase opportunity for political interference in MS.

This could result in reduced fee rates.


Comparability -- Likely to reduce comparability as each MS will implement a different system.






Industry in Europe expressed the opinion that a lot of OC activity has a public good aspect to

it, and as such should be paid with from public funds. They thought that passing increasing

amount of OC costs to FBOs could reduce the incentives present for CAs to be as efficient

as possible in their operations. This issue was raised as a key point across numerous

options and sub-options; there should be a balance between FBOs and CAs to ensure that

both sides bear responsibility for improving the efficiency of the OC system.

The bonus-malus system was viewed as a logical progression for the OC system, and one

that would be likely to have a positive effect on efficiency (of the system) over the long term.

However, for a bonus-malus system to operate properly it should be introduced with

increased use of risk-assessment, time based fees, and clearly defined eligible costs. The

definition of eligible costs should be precise enough to ensure the comparability of OC

systems between MS.

Not all MS will have the institutional capacity to implement the options and sub-options

proposed. Stakeholders did not offer a solution for this issue, but highlighted that it should

be considered in the design of eventual options. For example, recording the data necessary

to determine actual costs may not be possible in certain MS, and as a result it would be

difficult to introduce time-based fees that were based on actual costs.



A3.1.5.1 EU industry: summary table of option analysis

Table A3.135 EU industry: summary table of option analysis



A A1 Extend scope of mandatory

fees ++ + ++ -- -

A2 Full cost recovery ++ -- + -- -

A3 Clear definition of eligible costs + ++ ++ + +

A4 Improve the current system:

Time-based fees ++ - + -- +

A5 Ring-fencing resources + - + 0 +

A6 Bonus-malus system + -- - ++ +

A7 Transparency & reporting -- -- - -- ++

A8 Industry participation - - - - ++

A9 Micro-enterprises -- -- - + 0

B B1 Full harmonisation, unified fees -- 0 -- -- --


living adjusted -- 0 -- -- --

B3 Improve the current system:

Import fees -- 0 + 0 -

B Full subsidiarity - 0 -- 0 0



Annex 4 Administrative burdens

A4.1 Administrative burdens associated with the options for amending Regulation 882/2004 with respect to fees charged for official controls

The tables below describe the likely administrative burdens associated with the options for

amending the Regulation with respect to fees charged for official controls. In general it is not

possible to determine the direction (increase or decrease) of a likely impact as it will depend

on the specific situation of the Member State in question. Similarly, it is not possible to

provide a meaningful estimate of the additional time required for each activity under each

option. However the tables do provide an indication of the potential characteristics of likely

impacts to administrative burdens by the proposed options, and where these impacts are

likely to be experienced.



Table 5.20 Administrative burdens associated with sub-option A1: extending the scope of mandatory fees

Admin activities Activity

involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required

Familiarising with the information obligation Increase CA – Skilled labour

Training members and employees about the information obligations Increase FBO – Skilled labour

Retrieving relevant information from existing data No change N/A

Adjusting existing data No change N/A

Producing new data No change N/A

Designing information material Increase

CA – Skilled labour

FBO – Skilled labour

Filling forms and tables, including recordkeeping Increase



Holding meetings (internal/external with an auditor, lawyer and the like) Increase



Inspecting and checking (including assistance to inspection by public

authorities) Increase CA – Skilled labour

Copying (reproducing reports, producing labels or leaflets) No change N/A

Submitting the information to the relevant authority (e.g. sending it to the

relevant authority) No change N/A

Filing the information No change N/A

Buying (IT) equipment & supplies No change N/A

Other No change N/A



Table 5.21 Administrative burdens associated with sub-option A2: require full cost recovery


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required


Training members and employees about the information obligations No change N/A

Retrieving relevant information from existing data Increase CA – Skilled labour


Producing new data Increase CA – Skilled labour

Designing information material No change N/A

Filling forms and tables, including recordkeeping Increase CA – Skilled labour

Holding meetings (internal/external with an auditor, lawyer and the like) No change N/A


authorities) No change N/A




Filing the information Increase CA – Skilled labour

Buying (IT) equipment & supplies Increase CA – Skilled labour

Other No change N/A



Table 5.22 Administrative burdens associated with sub-option A3: clearly define eligible costs


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required


Training members and employees about the information obligations Increase CA – Skilled labour














Other No change N/A



Table 5.23 Administrative burdens associated with sub-option A4: introduce time-based fees


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required
















Other No change N/A



Table 5.24 Administrative burdens associated with sub-option A5: ring-fencing of resources


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required

Familiarising with the information obligation No change N/A



Adjusting existing data Increase CA – Skilled labour












Other No change N/A



Table 5.25 Administrative burdens associated with sub-option A6: incorporate bonus-malus principles


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required






Designing information material Increase CA – Skilled labour

Filling forms and tables, including recordkeeping No change N/A



authorities)

Increase /

decrease








Other No change N/A



Table 5.26 Administrative burdens associated with sub-option A7: introducing transparency and reporting


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required




Adjusting existing data Increase CA – Skilled labour






authorities) Increase



Copying (reproducing reports, producing labels or leaflets) Increase




relevant authority) Increase FBO – Skilled labour



Other No change N/A



Table 5.27 Administrative burdens associated with sub-option A8: provide for industry participation


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required

Familiarising with the information obligation Unknown



Training members and employees about the information obligations Unknown



Retrieving relevant information from existing data N/A

Adjusting existing data N/A

Producing new data N/A

Designing information material Unknown



Filling forms and tables, including recordkeeping N/A

Holding meetings (internal/external with an auditor, lawyer and the like) Unknown




authorities) N/A

Copying (reproducing reports, producing labels or leaflets) N/A


relevant authority) Unknown



Filing the information Unknown



Buying (IT) equipment & supplies N/A

Other N/A



Table 5.28 Administrative burdens associated with sub-option A9: introduce exemptions and reductions for micro-enterprises


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required










authorities) Decrease CA – Skilled labour

Copying (reproducing reports, producing labels or leaflets) Unknown CA – Skilled labour


relevant authority) Unknown FBO – Skilled labour



Other No change N/A



Table 5.29 Administrative burdens associated with sub-option B1: introduce unified fees for the EU-27


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required











Copying (reproducing reports, producing labels or leaflets) Increase CA – Skilled labour


relevant authority) Decrease FBO – Skilled labour

Filing the information Decrease CA – Skilled labour


Other No change N/A



Table 5.30 Administrative burdens associated with sub-option B2: adjust unified fees using a cost of living index


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required
















Other No change N/A



Table 5.31 Administrative burdens associated with sub-option B3: introduce EU harmonised fees only for certain import controls


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required
















Other No change N/A



Table 5.32 Administrative burdens associated with sub-option C: repeal Articles 26-29 of the Regulation (full subsidiarity)


involved

(Y/N)

Direction of

change

(increase/

decrease

Additional

time required

(if time

increases)

Skill level

required


Training members and employees about the information obligations Unknown



Retrieving relevant information from existing data Unknown CA – Skilled labour

Adjusting existing data Unknown CA – Skilled labour









relevant authority) Unknown FBO – Skilled labour

Filing the information Unknown FBO – Skilled labour


Other No change N/A



Annex 5 Control activity and associated industry data

This annex provides data from various sources which describe:

▪ Competent Authority fees collected for controls performed in EU MS as reported in the

study survey (section A5.1, page 272);

▪ Business statistics for selected sectors most affected by official control activity – meat,

fish, dairy and feed (section A5.2, page 282);

▪ Production and trade statistics (section A5.3, page 310);

▪ DG SANCO’s validated database on the current situation vis-à-vis official controls

(section A5.4 , page 316);

▪ Data on competent authority staff numbers (section A5.5, page 343);

▪ Information on control activity from Regulation 882/2004 Annual Reports as supplied to

the European Commission for Finland, the Netherlands, Poland and the UK (section

A5.6, page 346).





A5.1 Competent Authority controls performed in EU MS as reported in the study survey

Table A5.136 Controls performed by Member State (MS)

Control BE FI50 F251 FR* NL PL* UK52 UK53 BG ES IE IT LT SE NO54

Approval of establishments that produce

products of animal origin for human

consumption

A B

A B C

(municipalities, SPO)

A B

A B

D B

A B C

(local authorities, DARD)

A B

A B

Audit of fresh meat establishments (domestic

ungulates, poultry and

lagomorphs, farmed and wild gamed)

A B

A B C

(SPOs)

A B

A B

D B A B

C (DARD)

A B

A B

Inspection of fresh meat establishments

(including ante- and post-mortem inspection

and animal welfare, but not SRM controls and

TSE testing)

A B

A B C


A B

A B

D B

A B C

(local authorities, DARD)

A B

A B

Inspection of fresh meat establishments: SRM

controls and TSE testing A

A B C


A B

A B C

(BSE for fee,

sheep governmental, SRM

D A B

A B C

(DARDNI, Defra CA for TSE testing)

A B

A B

50 Finnish Food Safety Authority (Evira)

51 Association of Finnish Local and Regional Authorities (representing Municipal local Authorities)

52 Department of Agriculture and Rural Development (DARD), Northern Ireland

53 Food Standards Agency (FSA)

54 Associated Country of the EU




controls are part of

the regular work)

Checks at milk production holdings A B

C (municipalities, ELY-

centr)

A B

D

A B C

(no fee for milking

farms, fee for

processing and

residues)

D B

C (Local

Authorities and

DARDNI, AHVLA for dairy farms

A B

A B

Checks on production and marketing of fishery

products and aquaculture products

A B

C (municipal

ities)

A B

D A B

D C

(local authority)

C (local

authorities)

A B

A B

Checks at other food establishments approved

in accordance with Regulation 853/2004

A B

C (municipal

ities)

A B

A B

D

A B C

(local authoritie

s)

A B

A B

Checks on hygiene of foodstuffs at primary

production holdings

A B

C (municipal

ities)

A B

A B C

(we suppose primary=f

arms)

D B

A C

(local authoritie

s)

A B

A B

Checks on hygiene of foodstuffs at food

establishments other than establishments

approved in accordance with Regulation

853/2004

A B

C (municipal

ities)

A B

A B

D C

(local authority)

C (local

authorities)

A B

A B

Checks on animal health at holdings of origin

for live animals

A B

C (SPOs)

A B

A B

D A B

C (AHVLA)

A B

A B




Monitoring residues of veterinary medicines

and other substances

A B

A B

C (Evira)

A B

D A B

C (VMD) A B

A B

Approval of feed establishments A B

A B

C (Evira)

A B

D A B

C (local

authorities)

A B

A B

Checks at feed establishments A B

A B

C (Evira)

A B C

(fee for approved establishments)

D A B

C (local

authorities)

A B

A B

Approval of animal by-products establishments

A C

(Regional bodies & federal public

services)

A B C

(municipal veterinary

officer MVO, SPOs)

A B

A B

D A B

C (AHVLA)

A B

A B

Checks at animal by-product establishments

A B C

(Regional bodies & federal public

services)

A B C

(MVO, SPOs)

A B

A B C

(fee for approved establishments)

D A B

C (AHVLA)

A B

A B

Checks on imported live animals A B

A B

A B

D A B

C (AHVLA)

A B

A B

A B

A A B

A B

Checks on imported feed and food of animal

origin

A B

A B

D A B

D A B

C (Local

authorities)

A B

A B

A B

A A B

A B

Checks on imported feed and food of non-

animal origin

A B

A B C

(Customs)

D A B

D A B

C (Local

authorities)

A B

A B

A A B




Checks on live animals and goods transiting

the community

A B

A B C

(Customs)

A B

D A B

C (Local

authorities)

A B

A B

A B

A A B

A B

Other

C (Regions;

FPS Economy)

A B C


D

A B C

(fee for intra EU and 3rd

countries; if

certificate is issued; additional inspection

s)

A C

(CEFAS; AFBI)

A B

If ‘other’, please specify – 1:

Organic productio

n

Animal by-

product checks at

food establish

ments

See footnote55

Export certificatio

n living animals, semen,

ova, hatching

eggs

Shell fish monitorin

g and testing

Checks on

exported live

animals

If ‘other’, please specify – 2: Labels (geograph

ical indication

s, designatio

Export animal

products

Phytosanitary

control

55 Other controls in which membership has an interest include: Commercial quality control of agricultural and food products in production, marketing and import stage; Supervision

over the following markets: fresh fruit and vegetables, wine, poultry meat quality, fertilizers; Certification of hops and hop products; Supervision over classification of bovine and porcine carcasses in EUROP system; Control of the bovine meat from adult male bovine animals; Control of the marketing of the meat from bovine animals aged 12 months or less (granting special export refunds); Control of the reporting of the market data; Exempting of the operators at their request from the marking obligations, where eggs are delivered directly from the production site to the food industry; Control of the goose breeding and fattening conditions; Evaluation of commercial quality on FBOs request; Supervision over accredited certifying bodies in organic farming; Supervision over system of regional and traditional products; and Ex-post control according to the Council Regulation No 485/2008.




ns of origin,

specialities

guaranteed)

If ‘other’, please specify – 3: Other controls including animal welfare

(table 17 of

MANCP)

Reinspection after

incidental inspection

Checks on

identification of

animals and

animal welfare

CA responses to questionnaire

Key: A: My authority is the CA; B: My authority delivers the controls; C: Another organisation delivers the controls (name of other organisation in brackets); D: My membership

has a direct interest

*Competent authority answered the questionnaire directed at trade associations and other stakeholder groups



Table A5.137 Number of controls performed (checks) and costs by competent authority/ Member State - as collected through study survey

Competent Authority

Official Control

Bulgarian Food

Safety Agency (BG)

SG Sanidad Exterior

(MSPSI); SG

Acuerdos Sanitarios

y Control en Frontera

(MARM) (ES)

Department of

Agriculture,

Fisheries and Food

(IE)

State Food and

Veterinary Service of

Republic of Lithuania

(LT)

Swedish National

Food Administration

(HC) and Swedish

Board of Agriculture

(NHC) (SE)

Approval of establishments that produce

products of animal origin for human

consumption

682 FTEs required;

controls performed at 18

sites per year (18 visits

made per year)

n/a n/a n/a n/a

Audit of fresh meat establishments (domestic

ungulates, poultry and lagomorphs, farmed

and wild gamed)

682 FTEs required;

controls performed at

156 sites per year (156

visits made per year)

n/a n/a n/a n/a

Inspection of fresh meat establishments

(including ante- and post-mortem inspection

and animal welfare, but not SRM controls and

TSE testing)

682 FTEs required;


157 sites per year

(11,122 visits made per

year)

n/a n/a n/a n/a

Inspection of fresh meat establishments:

SRM controls and TSE testing

682 FTEs required;



made per year)

n/a n/a n/a n/a

Checks at milk production holdings

365 FTEs required;


10% of sites per year

(857 visits made per

year)

n/a n/a n/a n/a

Checks on production and marketing of

fishery products and aquaculture products

682 FTEs required;


sites per year (1,209


n/a n/a n/a n/a

Checks at other food establishments


853/2004

682 FTEs required;


979 sites per year

n/a n/a n/a n/a



Competent Authority

Official Control

Bulgarian Food

Safety Agency (BG)

SG Sanidad Exterior

(MSPSI); SG

Acuerdos Sanitarios


(MARM) (ES)

Department of

Agriculture,

Fisheries and Food

(IE)

State Food and



(LT)

Swedish National

Food Administration

(HC) and Swedish


(NHC) (SE)


year)

Checks on hygiene of foodstuffs at primary

production holdings n/a n/a n/a n/a n/a

Checks on hygiene of foodstuffs at food

establishments other than establishments


853/2004

682 FTEs required;




n/a n/a n/a n/a

Checks on animal health at holdings of origin

for live animals

365 FTEs required;


10% of sites per year


year)

n/a n/a n/a n/a

Monitoring residues of veterinary medicines

and other substances 1,047 FTEs required n/a

0.1 FTEs required;

annual costs to

competent authority/

delivery agent: €15,000

n/a n/a

Approval of feed establishments

38 FTEs required;



made per year)

n/a n/a n/a n/a

Checks at feed establishments

38 FTEs required;


170 sites per year (340


n/a n/a n/a n/a

Approval of animal by-products

establishments

682 FTEs required;



made per year)

n/a n/a n/a n/a



Competent Authority

Official Control

Bulgarian Food

Safety Agency (BG)

SG Sanidad Exterior

(MSPSI); SG

Acuerdos Sanitarios


(MARM) (ES)

Department of

Agriculture,

Fisheries and Food

(IE)

State Food and



(LT)

Swedish National

Food Administration

(HC) and Swedish


(NHC) (SE)

Checks at animal by-products establishments

682 FTEs required;


225 sites per year (1,261


n/a n/a n/a n/a

Checks on imported live animals

136 FTEs required;



made per year)

1.7 FTEs required;



made per year); annual

costs to competent

authority/ delivery agent:

€154,553.60

1 FTE required; controls

performed at 2 sites per

year (40 visits made per

year); annual costs to


delivery agent: €30,000

12 FTEs required;


sites per year

3 FTEs required

Checks on imported feed and food of animal

origin

136 FTEs required;




68 FTEs required;



visits made per year);

annual costs to


delivery agent:

€6,195,464

10 FTEs required;




costs to competent


€1,300,000

86 FTEs required;


sites per year

9.5 FTEs required

Checks on imported feed and food of non-

animal origin

136 FTEs required;



made per year)

73 FTEs required;


109 sites per year


year); annual costs to


delivery agent:

€6,699,899

n/a

88 FTEs required;


sites per year

n/a

Checks on live animals and goods transiting

the community

136 FTEs required;



made per year)

0.65 FTEs required;




n/a

86 FTEs required;


sites per year

9.5 FTEs required



Competent Authority

Official Control

Bulgarian Food

Safety Agency (BG)

SG Sanidad Exterior

(MSPSI); SG

Acuerdos Sanitarios


(MARM) (ES)

Department of

Agriculture,

Fisheries and Food

(IE)

State Food and



(LT)

Swedish National

Food Administration

(HC) and Swedish


(NHC) (SE)

costs to competent


€59,483

Other activities

Checks on exported live

animals: 15 FTEs

required; controls

performed at 1 site per

year (2,519 visits made

per year)

Animal welfare in animal

holdings: 365 FTEs

required; controls

performed at 10% of



Total control costs (NVS

for 2010) – €15,841,867

(of which for border

control – €744,574)

n/a n/a n/a n/a



Table A5.138 Administrative burden by competent authority/ Member State

Competent

Authority

Indicator

Federal Agency

for the Safety of

the Food Chain

(FASFC) (BE)

Voedsel en

Waren Autoriteit

(VWA) (NL)

Bulgarian Food

Safety Agency

(BG)

SG Sanidad

Exterior (MSPSI);

SG Acuerdos

Sanitarios y

Control en

Frontera

(MARM) (ES)

Finnish Food

Safety Authority

(Evira)

State Food and

Veterinary

Service of

Republic of

Lithuania (LT)

Department of

Agriculture and

Rural

Development

(DARD) (UK)

Average staff cost €64.74 per hour €1.86 per employee

per hour €20.42 per hour €42 per hour €3.31 per hour

OV slaughter:

€42.41 per hour

OA slaughter:

€24.69 per hour

Average incremental cost

of extending the scope of

reporting to include

information regarding the

financial resources

devoted to official controls

each year (i.e. reporting

through the annual report

that is based on Art.44 of

the Regulation)

Staff time: 836 hours

External costs: 0 n/a n/a

Staff time: 4 FTE

External costs:

€500,000

n/a n/a

Average incremental cost

of making public

information on fees,

modalities of payment

and other administrative

procedures for the official

controls for which

authority is responsible

Staff time: 836 hours

External costs: 0 n/a n/a n/a n/a n/a

Information channels

included in estimate

Internet/ website;

printed materials;

annual report

Internet/ website

Internet/ website;

printed materials;

internal documents



A5.2 Business statistics for selected sectors most affected by official control activity – meat, fish, dairy and feed

In 2008 there were over 60,000 enterprises operating in four major sectors56

covered by the

Regulation 882/2004—meat, fish, dairy and feed. These sectors are henceforth referred to

as “the industry”. Figure A5.1 shows the breakdown of the total number of enterprises by EU

Member State. In 2008 the number of enterprises operated was above 12,000 in each

Member State; France and Germany together share about 40% of the total number of

enterprises in the industry.

Figure A5.35 Total number of enterprises in EU MS57 in selected industries (2008)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Source: Eurostat

The number of enterprises reflect also aggregated sectoral turnover in EU Member States.

Germany and France had the greatest sectoral turnover in four sectors subject to official

controls.58

Business turnover in 2008 was €78.5 billion and €77.6 billion respectively (Figure

A5.2). The top five Member States in terms of sectoral turnover represented about 70% of

the total EU market in 2008.

56 Processing and preserving of meat and production of meat products; Processing and preserving of fish,

crustaceans and molluscs; Manufacture of dairy products; Manufacture of prepared animal feeds. 57

GR and MT are not included in the dataset. 2007 figures for CZ and FR. 58

Processing and preserving of meat and production of meat products; Processing and preserving of fish, crustaceans and molluscs; Manufacture of dairy products; Manufacture of prepared animal feeds.



Figure A5.36 Business turnover in selected industries in 200859 (million euros)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Source: Eurostat

There were over 1.5 million persons employed in the industry in 2008. Germany, France,

Poland, Spain and the UK employed the highest number of people: in 2008 they had a share

of 17%, 15%, 13%, 10%, and 9% respectively.

Figure A5.37 Total number of persons employed in 200860

59 GR and MT are not included in the dataset.

2007 figures for Processing and preserving of meat and production of meat products: CZ; Processing and preserving of fish, crustaceans and molluscs: SE; Manufacture of dairy products: CZ, FI.

Data are not available for Processing and preserving of fish, crustaceans and molluscs: CZ, CY, NL; Manufacture of dairy products: DK, LU; Manufacture of prepared animal feeds: CZ, PT. 60

GR and MT are not included in the dataset.

2007 figures for Processing and preserving of meat and production of meat products: CZ, FR; Processing and preserving of fish, crustaceans and molluscs: FR, SE; Manufacture of dairy products: CZ, FR, FI.

Data are not available for Processing and preserving of fish, crustaceans and molluscs: CZ, CY; Manufacture of dairy products: DK, LU; Manufacture of prepared animal feeds: CZ, FR, PT.



0

50,000

100,000

150,000

200,000

250,000

300,000

Source: Eurostat

A5.2.2 SME statistics

In 2008, there were approximately 45,000 SMEs operating in the industries covered by the

Regulation 882/200461

. Germany has the highest number of SMEs and in 2008 had a share

of 26% in the total number of European SMEs in the industry. Germany is followed by Italy

(17%), Spain (15%) and Poland (10%). Figure A5.4 shows total number of SMEs in the

industries in EU Member States.

Figure A5.38 Total number of SMEs in EU MS62 in selected industries (2008)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Source: Eurostat

61 This figure is the sum of total number of enterprises given their employee size (including the employee size

categories 0-9; 10-19; 20-49; and 50-249) in all sub-sectors and excludes CZ and FR due to data unavailability. 62

GR and MT are not included in the dataset. Figures for CZ and FR are not available.

Eurostat data on the number of enterprises are not available for some SMEs categories in certain sectors and for some Member States. Data gaps include: Processing and preserving of fish, crustaceans and molluscs: BE, CY, DE, HU, SK; Manufacture of dairy products: BG, CY, SK; Manufacture of prepared animal feeds: BE, CY, IE, SK.



The tables below describe the total number of SMEs by MS in each of the four sub-sectors.

As presented below, in most of the Member States the number of SMEs is higher in the

processing and preserving of meat and production of meat products sub-sector. Germany

represented 37% in total number of SMEs in 2008.



Figure A5.39 Total number of SMEs in EU MS in processing and preserving of meat and

production of meat products (2008)

0

2,000

4,000

6,000

8,000

10,000

12,000

Source: Eurostat

Figure A5.6 below shows that the number of SMEs is highest in processing and preserving

of fish, crustaceans and molluscs sector in Spain.

Figure A5.40 Total number of SMEs in EU MS in processing and preserving of fish, crustaceans and molluscs (2008)

0

100

200

300

400

500

600

700

800

Source: Eurostat



Figure A5.7 below shows that the number of SMEs is highest in manufacture of dairy

products in Italy. In Italy, the total number of SMEs in the sector was above 3,000 in 2008.

Figure A5.41 Total number of SMEs in EU MS in manufacture of dairy products (2008)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Source: Eurostat

In 2008 Italy had the highest number of SMEs operating in prepared animal feeds sector

(Figure A5.8). Over 500 SMEs operated in the Italian animal feed sector in 2008. Poland, the

UK, Germany and Spain also had a high number of SMEs in prepared animal feeds sector in

2008.

Figure A5.42 Total number of SMEs in EU MS in manufacture of prepared animal feeds (2008)

0

100

200

300

400

500

600

Sourc

e: Eurostat



Table A5.139 Share of SMEs in total number of enterprises in EU MS by sub-sectors (2008)63

Processing and

preserving of meat and

production of meat

products

Processing and

preserving of fish,

crustaceans and

molluscs

Manufacture of dairy

products

Manufacture of

prepared animal feeds

Total64

Total SMEs Share Total SMEs Share Total SMEs Share Total SMEs Share Total SMEs Share

AT 1,092 1,082 99% 6 6 100% 158 152 96% 56 55 98% 1,312 1,295 99%

BE 832 815 99% 56 4 7% 442 433 98% 149 139 93% 1,470 1,391 95%

BG 475 467 98% 31 31 100% 273 227 83% 106 106 100% 885 831 94%

CY 71 71 100% : : : 147 135 92% 38 32 84% 256 238 93%

CZ 1,467* : : : : : 146* : : : : : : : :

DK 147 138 94% 119 115 97% 75 74 99% 67 64 96% 408 391 96%

EE 53 50 94% 59 57 97% 31 28 90% 13 13 100% 156 148 95%

FI 204 194 95% 147 147 100% 52 49 94% 77 77 100% 480 467 97%

FR 10,410* : : 496* : : 1,457* : : : : : : : :

63 GR and MT are not included in Eurostat dataset.

64 Figures in Total column includes all available data.



DE 11,044 10,953 99% 233 26 11% 401 361 90% 420 411 98% 12,098 11,751 97%

HU 592 566 96% 13 11 85% 100 92 92% 196 193 98% 901 862 96%

IE 133 121 91% 68 68 100% 59 53 90% 58 50 86% 318 292 92%

IT 3,559 3,532 99% 442 426 96% 3,295 3,281 100% 579 513 89% 7,875 7,752 98%

LV 128 123 96% 108 104 96% 42 38 90% 16 16 100% 294 281 96%

LT 176 167 95% 66 61 92% 69 63 91% 25 23 92% 336 314 93%

LU 27 26 96% 0 0 0% 5 4 80% 0 0 0% 32 30 94%

NL 491 480 98% 115 115 100% 258 253 98% 182 177 97% 1,046 1,025 98%

PL 3,283 3,188 97% 410 394 96% 718 675 94% 461 455 99% 4,872 4,712 97%

PT 633 622 98% 211 209 99% 439 435 99% 128 126 98% 1,411 1,392 99%

RO 909 873 96% 41 40 98% 633 612 97% 128 126 98% 1,711 1,651 96%

SK 72 62 86% 8 3 38% 38 16 42% 60 16 27% 178 97 54%

SI 163 159 98% 5 5 100% 87 86 99% 16 15 94% 271 265 98%

ES 4,153 4,113 99% 689 678 98% 1,462 1,445 99% 837 343 41% 7,141 6,579 92%



SE 494 489 99% 214 213 100% 127 123 97% 100 99 99% 935 924 99%

UK 1,035 964 93% 343 334 97% 543 525 97% 426 423 99% 2,347 2,246 96%

Total 27,757** 29,255 98% 3,384*** 3,047 90% 9,454** 9,160 97% 4,138 3,472 84% 46,733 44,934 96%

Source: Eurostat

*2007 figure

**Sum does not include CZ and FR

***Sum does not include FR.





SME sectoral turnover were highest in France and Germany. SME turnover in these Member

States was €37.7 billion and €35 billion respectively. The share of the top 5 Member States

was approximately 73 per cent of the total in 2008 (Figure A5.9).

Figure A5.43 SMEs turnover in selected industries in 200865 (million euros)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Source: Eurostat

65 GR and MT are not included in the dataset. Figures for CZ are not available.

Eurostat data are not available for certain MS SMEs at different sizes, therefore these data are not included in the aggregate figures.



Table A5.140 Share of SMEs sectoral turnover in total sectoral turnover in EU MS (2008)66 (absolute figures in million euros)

Processing and


production of meat

products

Processing and

preserving of fish,

crustaceans and

molluscs


products

Manufacture of


Total67

Total SMEs Share Total SMEs Share Total SMEs Share Total SMEs Share Total SMEs Share

AT 3,276 2,432 74% 32 0 0% 2,394 949 40% 900 513 57% 6,602 3,893 59%

BE 5,267 4,192 80% 482 103 21% 4,241 1,888 45% 3,259 1,811 56% 13,248 7,993 60%

BG 897 693 77% 30 30 100% 372 255 68% 147 147 100% 1,445 1,124 78%

CY 325 325 100% : 0 : 234 98 42% 136 99 72% 695 521 75%

CZ 2,573* : : : : : 1,817* : : : : : : : :

DK 5,374 868 16% 1,761 1,299 74% : 141 : 2,973 422 14% 10,109 2,729 27%

EE 246 110 45% 124 73 59% 383 227 59% 67 4 7% 820 415 51%

FI 2,499 692 28% 160 160 100% : 0 : 439 439 100% 3,098 1,291 42%

FR 35,750 16,906 47% 3,140 1,640 52% 26,780 12,073 45% 11,978 7,076 59% 77,648 37,695 49%

DE 39,522 21,581 55% 2,533 689 27% 27,593 8,107 29% 8,882 4,705 53% 78,529 35,081 45%

HU 2,645 1,150 43% 3 1 32% 1,106 315 29% 926 631 68% 4,680 2,097 45%

IE 4,275 2,674 63% 373 373 100% 3,556 1,430 40% 1,082 514 47% 9,287 4,991 54%

IT 19,153 12,144 63% 2,114 1,198 57% 17,423 11,894 68% 6,000 4,220 70% 44,691 29,455 66%

LV 375 265 71% 218 145 67% 349 115 33% 51 0 0% 993 525 53%

LT 615 281 46% 232 62 26% 856 148 17% 339 87 26% 2,042 577 28%

LU 116 4 3% 0 0 0% : 0 : 0 0 : 116 4 3%

66 GR and MT are not included in Eurostat datasets.

67 Figures in Total column includes all available data



NL 8,248 616 7% : 299 : 9,642 186 2% 7,219 4,628 64% 25,109 5,729 23%

PL 11,800 6,143 52% 1,442 216 15% 6,064 2,213 36% 2,947 1,345 46% 22,253 9,918 45%

PT 2,199 1,467 67% 1,093 969 89% 1,703 563 33% : 1,515 : 4,995 4,514 90%

RO 2,481 1,144 46% 68 45 67% 1,053 384 36% 233 192 82% 3,834 1,764 46%

SK 703 273 39% 56 1 2% 585 276 47% 233 201 86% 1,576 750 48%

SI 670 417 62% 15 0 0% 316 15 5% 98 0 0% 1,099 432 39%

ES 19,637 12,292 63% 4,160 2,958 71% 10,659 5,018 47% 9,852 7,148 73% 44,308 27,416 62%

SE 3,502 1,852 53% : 288 : 2,752 385 14% 698 77 11% 6,951 2,602 37%

UK 16,624 5,364 32% 2,981 1,608 54% 9,609 3,564 37% 5,880 3,676 63% 35,092 14,212 40%

Total 186,197** 93,883 50% 21,017 11,570*** 55% 127,668** 50,099† 39% 64,338 37,933†† 59% 399,220 195,727 49%

Source: Eurostat

*2007 figure

**Sum does not include CZ.

***Sum does not include CY, NL and SE.

†Sum does not include DK, FI and LU.

††Sum does not include PT.





Figure A5.44 Share of SMEs in total number of enterprises in selected European industries68 (2008)69

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SMEs

Source: Eurostat

Figure A5.11 shows the total number of persons employed in SMEs in the sectors covered

by the Regulation 882/2004. Germany has the largest sector size in terms of the number of

persons employed, over 170,000. Spain, Poland, Italy and the UK followed Germany: the

total number of persons employed in these Member States varied from 96,616 (ES) to

53,097 (UK).

Figure A5.45 Total number of persons employed in SMEs70 (2008)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000



GR and MT are not included in Eurostat dataset. Data for CZ and FR are not available. 70

No data are available for CZ and FR.



Source: Eurostat

A5.2.3 Micro-business statistics

In 2008 there were approximately 31,000 micro-enterprises operating in the 4 sectors71

covered by the Regulation 882/2004. The total number of micro-enterprises varied from 15

(LU) to over 7,000 (DE) in 2008 (Figure A5.12). Most of these micro-enterprises were

located in Germany (23%), Italy (18%), Spain (14%) and Poland (10%).

Figure A5.46 Number of micro-enterprises in selected sectors in EU MS72 (2008)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Source: Eurostat

Figure A5.47 Number of micro-enterprises in processing and preserving of meat and production of meat products in 200873



GR and MT are not in the dataset.

Figures are not available for CZ and FR.

Data are not available for: Processing and preserving of fish, crustaceans and molluscs: BE, CY, DE; ; Manufacture of prepared animal feeds: ES, SK. 73

Data are not available in Eurostat for CZ and FR; GR and MT are not included in the dataset.



0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Source: Eurostat

Figure A5.48 Number of micro-enterprises in processing and preserving of fish, crustaceans and molluscs in 200874

0

50

100

150

200

250

300

350

400

Source: Eurostat

Figure A5.49 Number of micro-enterprises in manufacture of dairy products in 200875

74 Data are not available in Eurostat for BE, CY, CZ, DE, FR; GR and MT are not included in the dataset.

75 Data are not available in Eurostat for CY, FR.



0

500

1,000

1,500

2,000

2,500

3,000

Source: Eurostat



Figure A5.50 Number of micro-enterprises in manufacture of prepared animal feeds in

200876

0

50

100

150

200

250

300

350

400

Source: Eurostat

76 Data are not available in Eurostat for CZ, ES, FR and SK; GR and MT are not included in the dataset.



Table A5.141 Share of micro-enterprises in total number of enterprises in EU MS by sub-sectors (2008)77

Processing and


production of meat

products

Processing and

preserving of fish,

crustaceans and

molluscs


products

Manufacture of


Total78

Total Micro Share Total Micro Share Total Micro Share Total Micro Share Total Micro Share

AT 1,092 763 70% 6 2 33% 158 117 74% 56 25 45% 1,312 907 69%

BE 823 571 69% 56 : : 442 373 84% 149 76 51% 1,470 1,020 69%

BG 475 201 42% 31 8 26% 273 125 46% 106 47 44% 885 381 43%

CY 71 46 65% : : : 147 127 86% 38 28 74% 256 201 79%

CZ 1,467* : : : : : 146 : : : : : 1,613 : :

DK 147 89 61% 119 55 46% 75 49 65% 67 39 58% 408 232 57%

EE 53 20 38% 59 23 39% 31 11 35% 13 9 69% 156 63 40%

FI 204 142 70% 147 129 88% 52 29 56% 77 55 71% 480 355 74%

FR 10,410* : : 496* : : 1,457 : : : : : 12,363 : :

DE 11,044 6,558 59% 233 : : 401 207 52% 420 263 63% 12,098 7,028 58%

HU 592 334 56% 13 11 85% 100 53 53% 196 119 61% 901 517 57%

IE 133 26 20% 68 15 22% 59 20 34% 58 22 38% 318 83 26%

IT 3,559 2,495 70% 442 277 63% 3,295 2,469 75% 579 365 63% 7,875 5,606 71%

LV 128 62 48% 108 36 33% 42 15 36% 16 8 50% 294 121 41%

LT 176 69 39% 66 37 56% 69 46 67% 25 10 40% 336 162 48%

LU 27 14 52% 0 0 0% 5 1 20% 0 0 0% 32 15 47%

77 GR and MT are not included in Eurostat dataset.

78 Figures in Total column includes all available data.



NL 491 325 66% 115 64 56% 258 206 80% 182 96 53% 1,046 691 66%

PL 3,283 2,134 65% 410 280 68% 718 467 65% 461 343 74% 4,872 3,224 66%

PT 633 382 60% 211 112 53% 439 345 79% 128 52 41% 1,411 891 63%

RO 909 532 59% 41 25 61% 633 413 65% 128 88 69% 1,711 1,058 62%

SK 72 17 24% 8 3 38% 38 3 8% 60 : : 178 23 13%

SI 163 110 67% 5 2 40% 87 77 89% 16 9 56% 271 198 73%

ES 4,153 2,771 67% 689 356 52% 1,462 1,168 80% 837 : : 7,141 4,295 60%

SE 494 367 74% 214 180 84% 127 108 85% 100 91 91% 935 746 80%

UK 1,035 545 53% 343 189 55% 543 357 66% 426 263 62% 2,347 1,354 58%

Total 29,757** 18,573 62% 3,095*** 1,804 58% 9,454** 6,786 72% 3,241 2,008 62% 60,709 29.171 48%

Source: Eurostat

*2007 figure

** Sum does not include CZ and FR.

*** Sum does not include BE, FR, DE.



In terms of total sectoral turnover France had the greatest market in 2008. Sectoral turnover

of micro-businesses in France reached €7.3 billion in 2008, which was almost 38% of total

European micro-enterprise turnover in the sector. The top 5 Member States (FR, IT, ES, DE,

BE) with highest level of sectoral turnover represented 80% of the total EU figure.

Figure A5.51 Micro-business turnover in selected industries in 200879 (million euros)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Source: Eurostat

79 GR and MT are not in the dataset.

No data are available for CZ.

Data are not available for: Processing and preserving of fish, crustaceans and molluscs: AT, BE, CY, DE, FR, NL, PT, SI; Manufacture of dairy products: BG, DK, EE, FI, LU; Manufacture of prepared animal feeds: AT, ES, LT, LV, SI, SK.





Table A5.142 Share of micro-enterprises’ sectoral turnover in total sectoral turnover in EU MS (2008)80 (absolute figures in million euros)

Processing and


production of meat

products

Processing and

preserving of fish,

crustaceans and

molluscs


products

Manufacture of


Total81

Total Micro Share Total Micro Share Total Micro Share Total Micro Share Total Micro Share

AT 3,276 244 7% 32 : : 2,394 61 3% 900 : : 6,602 305 5%

BE 5,267 454 9% 482 0 : 4,241 153 4% 3,259 297 9% 13,248 904 7%

BG 897 33 4% 30 1 2% 372 : : 147 6 4% 1,445 40 3%

CY 325 26 8% : : : 234 27 11% 136 68 50% 695 121 17%

CZ : : : : : : : : : : : : : : :

DK 5,374 76 1% 1,761 51 3% 0 : : 2,973 59 2% 10,109 185 2%

EE 246 10 4% 124 15 12% 383 : : 67 4 7% 820 30 4%

FI 2,499 49 2% 160 33 20% 0 : : 439 36 8% 3,098 117 4%

FR 35,750 3,597 10% 3,140 : : 26,780 2,907 11% 11,978 812 7% 77,648 7,316 9%

DE 39,522 1,720 4% 2,533 : : 27,593 69 0% 8,882 158 2% 78,529 1,946 2%

HU 2,645 109 4% 3 1 32% 1,106 11 1% 926 47 5% 4,680 168 4%

IE 4,275 31 1% 373 14 4% 3,556 32 1% 1,082 53 5% 9,287 129 1%

IT 19,153 1,251 7% 2,114 309 15% 17,423 1,589 9% 6,000 579 10% 44,691 3,728 8%

LV 375 9 2% 218 3 1% 349 2 1% 51 : : 993 13 1%

LT 615 9 1% 232 5 2% 856 1 0% 339 : : 2,042 14 1%

80 GR and MT are not included in Eurostat datasets.

81 Figures in Total column includes all available data



LU 116 4 3% 0 0 : 0 : : 0 0 : 116 4 3%

NL 8,248 267 3% : : : 9,642 95 1% 7,219 222 3% 25,109 584 2%

PL 11,800 487 4% 1,442 52 4% 6,064 96 2% 2,947 117 4% 22,253 752 3%

PT 2,199 94 4% 1,093 : : 1,703 58 3% : 98 : 4,995 249 5%

RO 2,481 63 3% 68 2 3% 1,053 33 3% 233 2 1% 3,834 101 3%

SK 703 16 2% 56 1 2% 585 : : 233 : : 1,576 17 1%

SI 670 30 5% 15 : : 316 6 2% 98 : : 1,099 36 3%

ES 19,637 1,414 7% 4,160 178 4% 10,659 817 8% 9,852 : : 44,308 2,408 5%

SE 3,502 218 6% : 89 : 2,752 53 2% 698 77 11% 6,951 438 6%

UK 16,624 276 2% 2,981 64 2% 9,609 144 1% 5,880 247 4% 35,092 731 2%

Total 186,197 10,484 6% 13,722* 729** 5% 126,913**

*

6,151 5% 52,865† 2,784†† 5% 399,220 20,335 5%

Source: Eurostat

*Sum does not include AT, BE, FR, DE, PT and SI.

**Sum does not include SE.

***Sum does not include BG and EE.

†Sum does not include AT, LV, LT, SK, SI and ES.

††Sum does not include PT.





Figure A5.52 Share of micro-enterprises in total number of enterprises in selected European industries82 (2008)83

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro-enterprises

Source: Eurostat

In 2008, total number of persons employed by micro-enterprises in the sectors covered by

the Regulation 882/2004 was highest in Germany.

Figure A5.53 Total number of persons employed in micro-enterprises (2008)84

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Source: Eurostat



GR and MT are not included in Eurostat dataset. Data for CZ and FR are not available. 84

GR and MT are not in the dataset.

No data are available for CZ and FR.

Data are not available for: Processing and preserving of fish, crustaceans and molluscs: AT, BE, CY, DE, PT, SI; Manufacture of dairy products: BG, DK, EE, FI, LU; Manufacture of prepared animal feeds: AT, ES, LT, SI, SK.



Figure A5.54 Total number of enterprises and micro-enterprises in processing and preserving of meat and production of meat products85 (2008)

0

2,000

4,000

6,000

8,000

10,000

12,000

Total enterprises Micro-enterprises

Source: Eurostat

Figure A5.55 Total number of enterprises and micro-enterprises in processing and preserving of fish, crustaceans and molluscs86 (2008)

0

100

200

300

400

500

600

700

800


Source: Eurostat

85 Figure includes the Member States for which data are available both for micro and total number of enterprises.




Figure A5.56 Total number of enterprises and micro-enterprises in manufacture of dairy products87 (2008)

0

500

1,000

1,500

2,000

2,500

3,000

3,500


Source: Eurostat

Figure A5.57 Total number of enterprises and micro-enterprises in manufacture of prepared animal feeds88 (2008)

0

100

200

300

400

500

600

700


Source: Eurostat





Figure A5.58 Total number of SMEs and micro-enterprises in processing and preserving of meat and production of meat products89 (2008)

0

2,000

4,000

6,000

8,000

10,000

12,000

Micro-enterprises SMEs

Source: Eurostat

Figure A5.59 Total number of SMEs and micro-enterprises in processing and preserving of fish, crustaceans and molluscs90 (2008)

0

100

200

300

400

500

600

700

800


Source: Eurostat

89 Figure includes the Member States for which data are available both for micro-enterprises and SMEs.




Figure A5.60 Total number of SMEs and micro-enterprises in manufacture of dairy products91 (2008)

0

500

1,000

1,500

2,000

2,500

3,000

3,500


Source: Eurostat

Figure A5.61 Total number of SMEs and micro-enterprises in manufacture of prepared animal feeds92 (2008)

0

100

200

300

400

500

600






A5.2.4 Labour cost

Table A5.8 shows labour cost per employee in 2008. In 2008, Denmark had the highest level

of labour cost in three of four sectors covered by the Regulation 882/2004. The Netherlands,

Sweden Belgium and Italy were also the Member States with high level of labour cost per

employee in selected sectors.

Table A5.143 Labour cost per employee FTE in 2008 ('000 euro)93

Processing and

preserving of

meat and

production of

meat products

Processing and

preserving of

fish,

crustaceans

and molluscs

Manufacture of

dairy products

Manufacture of

prepared

animal feeds

Austria 34.3 33.4 47.0 48.8

Belgium 41.7 43.9 52.6 53.1

Bulgaria 2.6 2.3 3.6 3.4

Cyprus 18.5 : 26.3 21.0

Czech Republic 10.9 9.4 13.5 15.1

Denmark 53.8 47.7 : 55.8

Estonia 10.8 9.3 12.9 16.3

Finland 40.8 35.2 : 47.4

Germany 26.1 33.2 47.0 48.8

Hungary 9.9 8.1 13.3 15.5

Ireland 36.4 31.5 49.8 40.2

Italy 39.1 37.8 41.4 49.5

Latvia 7.3 5.6 10.2 8.3

Lithuania 6.9 8.0 10.5 14.0

Netherlands 43.6 : 51.8 55.9

Romania 4.8 4.4 5.7 8.5

Slovakia 9.2 10.9 12.5 16.7

Spain 27.8 23.9 38.1 34.8

Sweden 44.2 : 54.8 48.2

United Kingdom 28.3 21.9 34.0 38.7

Source: Eurostat

93 GR and MT are not included in the dataset.

No data available for FR, LU, PL, SI.

Data for Portugal that have been extracted from Eurostat have been omitted as they data are not reliable:

Data for PT: Processing and preserving of meat and production of meat products: 1,337.9; Processing and preserving of fish, crustaceans and molluscs: 8,235.4; Manufacture of dairy products: 2,123.0. No data available for Manufacture of prepared animal feeds for PT.



A5.3 Production and trade statistics

A5.3.1 Production

Table A5.9 shows the total number of slaughtering in EU Member States in 2010. Poultry

(over 6 billion units) and chickens (about 5.5 billion units) are the categories with the highest

number of animals slaughtered.

Top 3 producers of each animal type are;

▪ Adult cattle: France, Germany and Italy;

▪ Young cattle: Spain, the Netherlands and Denmark;

▪ Pigs: Germany, Spain and France;

▪ Sheep: UK, Spain and Greece;

▪ Poultry: France, UK and Spain; and,

▪ Chicken: UK, France, and Poland.

A5.3.2 Trade94

Given the data availability, pigs are the animals that are traded the most among EU Member

States. In 2010 approximately 17.5 million pigs are imported in the EU and about 13.2 million

pigs are exported to both other Member States and third countries. Germany is the Member

State with highest level of trade volume in the industry and trade of pigs forms the major part

of the German trade (Table A5.10).

94 Trade statistics have been extracted from ‘Agriculture and fisheries’ section of Eurostat, instead of ‘External

trade’ of Eurostat due to time constraint.





A5.3.3 Production Table A5.144 Meat production: slaughtering in EU MS in absolute values ('000 units) and share in the total (%95) (2010)

Adult cattle Young cattle Pigs Sheep Poultry Chickens TOTAL

Units Share Units Share Units Share Units Share Units Share Units Share Unit Share

AT 625 3.0% : : 5,692 2.3% 315 0.7% 74,315 1.2% 72,310 1.3% 153,257 1.3%

BE 487 2.3% 32 2.0% 11,896 4.8% 143 0.3% 307,956 5.1% 306,797 5.6% 627,311 5.3%

BG 18 0.1% 3 0.2% 548 0.2% 603 1.3% 53,226 0.9% 46,451 0.9% 100,849 0.9%

CY 10 0.05% 6 0.4% 734 0.3% 132 0.3% 13,773 0.2% 13,736 0.3% 28,392 0.2%

CZ 245 1.2% 2 0.1% 3,116 1.3% 9 0.02% 135,378 2.2% 132,755 2.4% 271,505 2.3%

DK 363 1.7% 130 8.5% 20,114 8.1% 85 0.2% 107,153 1.8% 107,151 2.0% 234,994 2.0%

EE 36 0.2% 1 0.1% 408 0.2% 5 0.01% 9,642 0.2% : : 10,091 0.1%

FI 262 1.2% 2 0.1% 2,248 0.9% 37 0.1% 54,822 0.9% 53,432 1.0% 110,802 0.9%

FR 3,494 16.6% 103 6.7% 24,935 10.1% 4,429 9.4% 996,100 16.5% 798,185 14.5% 1,818,244 15.4%

DE 3,399 16.1% 28 1.8% 58,154 23.5% 974 2.1% 683 0.01% 591 0.01% 63,829 0.5%

GR 190 0.9% 43 2.8% 1,832 0.7% 6,700 14,2% 116,069 1.9% 115,396 2.1% 240,203 2.0%

HU 100 0.5% 3 0.2% 4,610 1.9% 11 0.02% 149,418 2.5% 119,389 2.2% 273,530 2.3%

IE 1,710 8.1% 3 0.2% 2,657 1.1% 2,383 5.1% 83,140 1.4% 77,539 1.4% 167,431 1.4%

IT 2,930 13.9% 72 4.7% 12,908 5.2% 3,744 7.9% 548,068 9.1% 491,360 9.0% 1,059,082 9.0%

LV 77 0.4% 6 0.4% 316 0.1% 9 0.02% 15,101 0.3% 15,101 0.3% 30,609 0.3%

LT 168 0.8% 2 0.1% 703 0.3% 5 0.01% 40,613 0.7% 37,777 0.7% 79,267 0.7%

LU 25 0.1% 1 0.04% 134 0.1% 2 0.004% : : 0 0% 162 0.001%

95 Percentages are rounded to first non-zero decimal where the integer is zero.



MT 6 0.03% 0 0% 85 0.03% 3 0.01% 2,682 0.04% 2,682 0.05% 5,457 0.05%

NL 538 2.6% 245 15.9% 13,944 5.6% 582 1.2% 487,322 8.1% 479,015 8.8% 981,646 8.3%

PL 1,312 6.2% 3 0.2% 19,966 8.1% 49 0.1% 683,702 11.3% 591,907 10.9% 1,296,938 11.0%

PT 273 1.3% 65 4.2% 5,960 2.4% 983 2.1% 195,628 3.2% 179,605 3.3% 382,516 3.2%

RO 101 0.5% 21 1.3% 2,901 1.2% 218 0.5% 175,970 2.9% 175,825 3.2% 355,035 3.0%

SK 50 0.2% 0 0.03% 758 0.3% 84 0.2% 41,962 0.7% 41,956 0.8% 84,810 0.7%

SI 101 0.5% 2 0.1% 289 0.1% 9 0.02% 32,678 0.5% 29,437 0.5% 62,516 0.5%

ES 1,440 6.8% 721 46.8% 40,266 16.3% 11,179 23.7% 694,348 11.5% 585,613 10.7% 1,333,538 11.3%

SE 420 2.0% 38 2.4% 2,923 1.2% 250 0.5% 82,609 1.4% 78,507 1.4% 164,747 1.4%

UK 2,698 12.8% 8 0.5% 9,662 3.9% 14,173 30.1% 933,737 15.5% 905,030 16.6% 1,865,310 15.8%

TOTAL 21,074 100% 1,542 100% 247,758 100% 47,115 100% 6,036,094 100% 5,448,518 100% 11,802,101 100%

Source: Eurostat



Table A5.145 Annual foreign trade in 2010 ('000 units)

Total Imports Intra-EU Imports Total Exports

Adult

cattle

Young

cattle

Pigs Sheep Chickens Adult

cattle

Young

cattle

Pigs Sheep Chickens Adult

cattle

Young

cattle

Pigs Sheep Chickens

AT* : : : : : : : : : : : : : : :

BE 53 : 1,421 235 : 52 : 1,421 234 : 149 907 1 :

BG* : : : : : : : : : : : : : : :

CY 0 0 0 9 : 0 0 0 0 : 0 0 0 0 :

CZ* : : : : : : : : : : : : : : :

DK 0 0 0 0 : 0 0 0 0 : 1.4 0 8,209 1.9 :

EE 0.1 0 0.06 0 : 0.1 0 0 0 : 4.1 0 165 0 :

FI* : : : : : : : : : : : : : : :

FR 16 3 288 553 : 14 2.5 288 553 : 910 : 605 733 :

DE 53 : 12,172 39 : 53 : 12,172 39 : 118 : 2,415 45 :

GR* : : : : : : : : : : : : : : :

HU* : : : : : : : : : : : : : : :

IE* : : : : : : : : : : : : : : :

IT 21 1,060 1,619 1,377 : 20 1,060 1,619 1,377 : 2 0 3 0.004 :

LV* : : : : : : : : : : 5 : 169 : :

LT 19 : 44 0 : 19 0.2 42 0 : 3 0.033 443 0 :

LU 3 1.3 115 0.3 : 3 1.3 115 0.3 : 24 0 91 0.5 :

MT* : : : : : : : : : : : : : : :

NL* : : : : : : : : : : : : : : :

PL 11 0.1 1,754 1 : 11 0.1 1,754 1.4 : 29 0.7 243 74 :

PT* : : : : : : : : : : : : : : :



RO* : : : : : : : : : : : : : : :

SK* : : : : : : : : : : : : : : :

SI 3.4 : 3.2 : : : : : : : : : : : :

ES* : : : : : : : : : : : : : : :

SE* : : : : : : : : : : : : : : :

UK* : : : : : : : : : : : : : : :

TOTAL 180 1,064 17,416 2,215 0 173 1,064 17,411 2,214 0 1,245 1 13,249 856 0

Source: Eurostat

*No data available.



A5.4 DG SANCO validated baseline

Table A5.146 DG SANCO validated baseline, Belgium, Italy, United Kingdom, France, Poland and Germany

Issue to be

considered Belgium Italy UK France Poland Germany

Fees as a tool of

financing official

controls

Belgium's system is

based on the idea that

costs for official controls

need to be shared

between FBOs and MS.

So FBOs only contribute

to part of the costs and

the rest is financed with

the general budget (at

the moment around

40%FBOs-60%MS).

There are 2 types of

fees:

- retributions: these are

the areas covered by

mandatory fees and an

hourly rate between 40

and 60 euro is

applicable (depending

on the qualifications of

the inspectors) unless

the application of

throughput charges is

higher than that (these

charges are similar to

the mandatory fees in

882/2004).

- Contributions: paid by

all FBOs at the

beginning of the year

depending on size and

With the new legislation

of 2008 (Legislative

Decree 194/2008) Italy

intends to use the fees

to cover 100% of the

costs related to official

controls along the food

chain but with the

exclusion of retail, ABP,

primary production,

feed.

There are 2 types of

fees:

- mandatory fees under

Reg. 882/2004 are

calculated on a

throughput/quantity

basis (similar to Annex

IV and V) - fees are

provided also for import

of food of non-animal

origin

- fees for all the other

FBOs are calculated as

a flat rate contribution

paid at the beginning of

the year depending on

size/category (from 400

to 1500 euro /year)

UK mainly collects the

mandatory fees.

From 9/2009 a time-

based fee has been

introduced in the meat

slaughterhouses and

cutting plants

The fee to the

establishments varies

depending on their

size, as the percentage

of cost recovery was

originally based on

previous charges that

hinged on livestock and

throughput units.

The aim is to reach

100% coverage of

costs in a few years.

Fees are not applied in

the dairy sector.

According to UK the

fact that they did not

apply those fees prior

to Reg. 882/2004

exempts them from this

obligation.

There are differing

levels of fees being

applied on the fish

sector as it is

France only collects

mandatory fees.

Fees are based on cost

recovery. For import on

the basis of the costs

calculated the year

before (BIP by BIP)

and then adjusted for

the next year to cover

100% costs. For

domestic production

following rules similar

to the national rules on

VAT. Rates are slightly

below minimum fees in

Reg. 882/2004.

From June 2010 a fee

has been introduced for

the authorisation of

animal feed producers.

From 1 January 2010,

fees for controls on

slaughtering and

aquaculture production

now include also costs

related to the control of

residues of veterinary

medicines (before they

were separately

charged). In the fish

and aquaculture

Poland collects all the

mandatory fees under

Reg. 882/2004 at the

minimum levels

indicated (some

differences are due to

the exchange rate).

In the veterinary area

some non-mandatory

fees are set (feed,

certification, ABP, etc.).

In 2009 Regulation of

the Minister of Health

656/2009 introduced

fees for all official

controls performed on

FBOs dealing with food

(and not included in the

veterinary sector).

In this way fees cover

the whole food chain

(apart from primary

production)

Fees are under the

responsibility of each

Lander and therefore

systems vary greatly.

In general they only

cover mandatory fees

but a significant

number of Landers

cover also non

mandatory fees in the

areas of food safety

and animal health. Also

approval of plants is

mentioned among non

mandatory fees.



Issue to be


sectors. They cover

routine inspections

throughout the year

regardless if inspections

take place for a specific

FBO.

Out of office hours

activities have, in certain

cases, a surcharge.

acknowledged that the

actual administrative

burden of running the

fee system in some

establishments is

greater than the fees

collected

An exercise to improve

efficiency of the

inspection services in

the meat sector is on

going and has led to a

decrease of costs.

However fees are

growing at the moment

because:

- UK aim at increasing

cost coverage towards

100%

- the weak pound.

sectors a process of

aligning the mandatory

fees to the

requirements of

Regulation 882/2004 is

on-going.

Costs covered with

fees

2005: 42% of total costs





2005: 50% estimate

2006: 50% estimate

2007: 50% estimate

From 2009 fees are to

be applied with an

automatic 20%

increase, then after the

end of the year the

actual cost is calculated

and the automatic

increase/decrease is

re-calculated to reach

100% cost coverage.

A 0.5% increase is

meant to cover costs

related to the

Annex VI is the

reference including

social security costs

and overheads.

In the slaughterhouse

and cutting plant sector

the following level of

cost recovery was

achieved

2007:41%

2008:43%

2009:44%

2005: For import: 3.8

million costs - 3.7

million recovered


million costs - 4.4

million recovered


million costs - 4.21

million recovered

For domestic

production: 70%

estimate (80 million

euro costs, 56 million

recovered) => 45 %

estimate (125 million

euro costs, 55 millions

2008: CA claims 100%

cost coverage (no

data)

No data



Issue to be


implementation of

MANCP and ring

fenced for this purpose

to the Ministry of

Health.

recovered)

For import: around

100% (but in general

rental costs are not

included here and paid

by operators directly.

This accounts for about

20% of total costs)

Non-mandatory fees

Covered by the

contributions paid by all

participants to the food

chain at the beginning of

the year.

Covered by the flat

rates contributions paid

by FBOs at the

beginning of the year +

fees on import of food

of non animal origin.

Only specific areas:

approval of irradiation

facilities, pesticide

residues programme

(fee on chemical

industry), sampling and

testing of raw cow milk

in England and Wales

No. Fees for export

certification and

authorisation of plants

are being considered

inside and outside of

the EU

A fee for animal by-

products during

slaughter is collected

on national basis (part

fee part subsidy).

In the veterinary area.

They refer mainly to

certification (export,

health), feed

(domestic), ABP,

emergency slaughter

outside plant, genetic

materials, markets, and

animal quarantine.

Outside the veterinary

area, Regulation

656/2009 introduces a

fee for official controls

on food other than

veterinary area.

Charged in some

Landers.

Activities covered

The whole food chain

(also primary

production).

Also activities carried

out on FBOs request are

subject to fees (e.g.

export certificates) - a

combination of cost per

certificate and hourly

rates.

In general

authorisation/registration

requests are not

The food chain with

exclusion of retail, ABP,

feed and primary

production.

Authorisation of

establishments (also

feed) is subject to a flat

rate fee.

Export certification is

subject to hourly rate of

50 euro.

Out of office hours

activities have a

Only mandatory areas

under Reg. 882/2004

(with the exclusion of

dairy sector and the

few exceptions

mentioned above)

Only mandatory areas

under Reg. 882/2004

(with some exceptions)

The whole food chain

(apart from primary

production) but with

specific systems for

veterinary and non

veterinary areas.

Mainly veterinary area

but in some Landers

also food safety in

general (whole food

chain).



Issue to be


covered by fees even if

they require an

inspection on the spot.

However the

authorisation of some

establishments

(agreement) is subject

to a fee.

surcharge (30%).

Italy is considering the

possibility to extend

fees also to the

transhipment part of

import.

Calculation method

For retributions, the

hourly rates/throughput

fees are determined by

legislation.

For contributions a

declaration is made

every year (also

electronically) and

yearly fees depend on

size and sector (from

50eur up to 11,000).

All fees are calculated

on the basis of Annex

VI of Reg. 882/2004

(including social

contributions) and

reviewed at least every

2 years to ensure

coverage of 100% of

costs.

For administrative costs

a reference is made to

them being "linked to

the controls carried

out".

Fees are calculated on

the basis of annex VI of

Reg. 882/2004

including social

contributions and

overheads. In the meat

slaughterhouses and

cutting plant

establishments fees

are calculated as a

percentage of actual

costs, the percentage

being paid will differ

depending on the size

of the business,

therefore it takes into

account livestock and

throughput units. In the

case of the percentage

that is being charged

being lower than the

EU minima, charges

will then be increased

to meet EU minima. In

the fish sector

guidance provided to

Local Authorities

For import the following

elements are

considered: rental

costs for BIPs if not

already paid by

operators, equipment,

training, cleaning,

travelling expenses,

salaries of staff directly

involved in controls,

and sampling.

For domestic

production salaries of

staff directly involved,

training, property

charges, and

operational costs

including sampling.

In the veterinary area:

fees include the costs

for salaries of

personnel involved in

controls, administrative

costs related to

controls, training of

inspectors, sampling

and testing. Minimum

fees are used for areas

covered as mandatory

by Reg. 882/2004.

Specific fees for

veterinary non

mandatory fees


area: fees include

transport costs,

document control,

sampling and testing,

verification procedures.

Flat rate of 45 PLN (13

EUR) is charged per

control + 15 PLN (4

EUR) per hour +

sampling + testing

In general a mix

between minimum fees

and cost based fees is

used. Costs are

calculated but then the

minimum fee acts as a

lower limit (apart from

Bavaria). In some

Landers fees are

calculated for each

establishment. In some

Landers also maximum

ceilings are included.

The costs recorded the

previous year are the

basis for the fees in the

following one.

For some fees (e.g.

authorisation of plants)

a hourly fee is set (with

min and max) at 44

euro/hour + travel



Issue to be


explains a calculation

method that is based

on relevant 882/2004

annex.

(specific rates).

Specific rates are also

set for import.

Small/disadvantaged

FBOs

Some small

establishments and

businesses are

exempted from payment

or payment reduced.

Some flexibility is

mentioned in the basic

law with a reference to

paragraphs 5 and 6 of

Art. 27 Reg. 882/2004

but that cannot

derogate 100% cost

recovery. Unclear if

specific rules are

needed.

A discount is calculated

on the time-based fee

as the percentage to be

paid decreases as

throughput and

livestock units

decrease.

Guidance on "Cold

inspection" have been

developed to maximize

CA efficiency

No specific rules but

the way fees are

applied seems not to

create particular

problems for them.

No specific rules. No specific rules

Transparency

All information is

available on line and

regularly updated.

www.afsca.be

Basic law is published

on the official journal.

Then information are

prepared and published

by local competent

authorities. No

centralized information.

The basic law prescribe

regular information to

the Commission on:

- calculation method

- figures on use of

income from fees.

All information is

available on line and

regularly updated.

www.food.gov.uk

Legislation is published

in the OJ.

Notes de service are

sent to the CA.

Relevant ministries

publish information

(Agriculture, Customs)

Legislation is published

in the OJ.


the OJ



Issue to be


Mechanisms to

increase efficiency

A bonus-malus system

is in place. If haccp

system of the FBO is

certified by accredited

bodies recognized by

AFSCA, then the yearly

contributions are

reduced by 50%. If not,

a malus of 20%(2009),

60% (2010) and 100%

(from 2011) is applied.

For poultry

slaughterhouses where

FBOs are involved in

controls the fees are

reduced.

Application of

mandatory fees can

take into consideration

previous record of

conformity, risk

category and efficient

own checks but cannot

derogate to 100% cost

recovery.

With the agreement of

States/Regions it is

possible to determine

time-based fees for

slaughterhouses on the

basis of minimum

inspection times to be

respected by the CA

(e.g. 4 minutes per

cattle).

CA and FBOs sign

Business Agreements

where the presence of

the CA is agreed. In

case of disagreements

a mechanism is in

place to solve them. If

the CA loses the case

and they believe an

increased presence of

the CA is all the same

needed, they pay for it.

FBOs can propose

changes to the way of

production in order to

decrease the need for

CA presence. This

system has ensured

that the pressure to

ensure efficient and

effective delivery of

OCs has been shared

with FBOs.

No specific rules. No specific rules. No specific system in

place.

A system of

categorization of meat

establishments

according to risk is

being tried in some

Landers in order to

modulate frequency of

inspections to the

related risk category.

Industry is asking for

consultation on the

setting of fees in order

to increase efficiency

and risk based

approach. Salaries are

one of the biggest cost

but industry is not

involved in their setting

(only CA and trade

unions)

Reward/penalize

systems

See above. For the

mandatory fees a

specific system is not in

place apart from an

increase in the fees in

case animals with

unclear identification

(slaughterhouse)

See above The UK was to further

develop a fee system

that clearly takes into

account FBO

compliance levels

when setting the fee

system. Unclearness

within the UK as to the

legal meaning and

scope of articles 27

and 28 has previously

hampered

developments on that

A bonus malus system

is being considered.

Slaughterhouses are

classified in 4

categories depending

on level of compliance.

The first 2 categories

would have a bonus,

the others a malus.

No specific rules. No specific rules



Issue to be


front.

Fees for several

controls at the same

place

/ The principle included

in Art. 27.7 of Reg.

882/2004 is repeated in

the basic legislation

clarifying that the single

fee to be applied is

based on the recovery

of actual costs.

No specific rules. In

general fees take into

consideration the

proximity of

slaughterhouses and

cutting plants which is

to be considered in line

with Art. 27.7 of Reg.

882/2004.

No specific rules No specific rules. No specific rules

Operators charged The FBOs The FBOs the FBOs The FBOs The FBOs The FBOs

Ring-fence

Ring-fenced for AFSCA

activities

95% of the income from

fees on domestic

activities is ring fenced

for the local CA and

laboratories. 5% is for

regional and central

authorities to cover

costs related to

implementation of

MANCP.

20% of the income from

fees on imported

products is ring fenced

for the CA. 80% goes

to the general budget.

In part. Controls carried

out by Food standards

agency operations in

slaughterhouses and

meat cutting plants are

ring fenced (collected

and used within the

agency).

The rest of the sectors

when monies are

collected this is done

through Local

Authorities and kept

within the authority.

Fees for import are ring

fenced but not for

domestic production.

All fees are reversed to

the general budget. A

direct budget line is

against national tax

legislation.

Fees go to the general

budget.

Fees for veterinary

controls are ring-

fenced for the CA

when contractors are

used.

In general fees are

collected to be directly

used to finance the

official controls (they

are in fact mainly

based on full cost

recovery).

In those Landers where

fees go to the general

budget in any case

they are earmarked for

the CA.



Issue to be


Art. 28 - non-routine

checks

Inspections which reveal

non-compliances are not

charged per se.

However the costs

related to sampling and

analysis and further

enforcement actions

(destruction, treatment,

etc. ) are paid by the

FBOs.

Controls under Article

28 (and on the basis of

EU emergency

measures) are charged

to the operators with an

hourly rate of 50eur +

costs of analysis (rate

calculated on the basis

of Annex VI Reg.

882/2004).

UK has a very

restrictive

understanding of Art.

28 which leads to its

application only in

extreme cases of non

compliances which

lead to a risk for

consumers. So, in

general, additional

controls are not

charged to FBOs even

if they reveal non-

compliances as it was

felt at a UK level that

art. 28 was not drafted

to that effect, and that it

was unclear whether

art. 27 applied instead.

No specific rules No specific rules. No specific rules

Information sources

AFSCA website

Questionnaire submitted

in 2008 (fees study)

Legislative Decree

194/2008

Case study in the 2008

fees study

Web sites of a few local

authorities

FSA web site

Case study in 2008

fees study

Questionnaire

submitted in 2008 (fees

study)

Information received

from UK CA after

working group with

MSs

Case study in 2008

fees study

Questionnaire


study)

Information received

from France after an

FVO inspection

Notification from

France under Art.

27.12

Case study in 2008

fees study

Questionnaire


study)

Notification from

Poland under Art.

27.12

Case study in 2008

fees study

Questionnaire


study)

Notification from

Germany under Art.

27.12

Table A5.147 DG SANCO validated baseline, Slovakia, Estonia, Latvia, Lithuania, Bulgaria and Cyprus



Issue to be

considered Slovakia Estonia Latvia Lithuania Bulgaria Cyprus

Fees as a tool of

financing official

controls

Fees included in

Annexes IV and V are

collected at the

minimum rates.

Non mandatory fees

are also collected for

import of food of non-

animal origin,

veterinary controls of

animals, hatching eggs,

germinal products and

animal by products

(also with reference to

export). These fees

are collected as time-

based fees.

Fees included in

Annexes IV and V are

collected at the

minimum rates.

Outside these sectors:

- food sector: FBOs are

charged using a time

based fee

- feed sector: rates are

calculated quarterly on

the basis of quantities

produced/exported

- veterinary sector other

than Annexes IV and V:

a time based fee is

used.

Fees cover all

mandatory fees (but not

milk) and some minor

activities outside these

sectors.

Specific rules and

calculation method

apply for fees in the

residues area (Dir.

96/23).

The other sectors are

either covered with the

minimum fee or a flat

rate based on actual

costs (depending on

the activity)

Fees cover all

mandatory fees and


outside these sectors.

Flat rate fees are


of actual costs.

Fees cover all

mandatory fees and



Flat rate fees are


of actual costs.

Fees cover all

mandatory fees and



Minimum fees are

followed apart from

cutting plants where an

hourly rate is used.

Costs covered with

fees

2005: 52%

2006: 55%

2007: 51%

2005: 31%

2006: 28%

2007: 20%

100% (according to the

CA)

100% (according to the

CA)

2005: no data

2006: 25%

2007: 29%

No data (CA state that

fees do not cover costs

but no data are

available)

Non-mandatory fees

Non mandatory fees

are also collected for

import of food of non-

animal origin,

veterinary controls of

animals, hatching eggs,


animal by products


export). These fees

are collected as time-

based fees.

The whole food and

feed chain is covered

but fees are calculated

in different ways

according to sector.

Fees cover issuing of

health certificates and

permits. Fees cover

also import of food

contact materials and

feed of non-animal

origin

Fees cover issuing of

specific certificates

Fees cover animal

welfare controls and

import of feed of non

animal origin,

Fees cover export

certificates and import

of products of animal

origin outside




Issue to be


Activities covered

mandatory fees, import

of food of non-animal

origin, veterinary

controls of animals,

hatching eggs,


animal by products


export).

The whole food and

feed chain.

Only mandatory fees


outside them.

Only mandatory fees


outside them.

Only mandatory fees


outside them.

Only mandatory fees


outside them.

Calculation method

Minimum fees for the

mandatory ones.

For import controls on

food of non animal

origin, veterinary


hatching eggs,


animal by products


export) a time based

fee (hourly) is


of the items included in

Annex VI of the

Regulation.

Fees under Annex IV

and V are collected at

the minimum rates.

Feed sector: fees

depend on quantity and

quality of feed.

Other veterinary fees

and food sector: hourly

fee calculated on the

basis of average

remuneration of a

supervisory official +

average administrative

and economic costs

relating to carrying out

the inspection. The

remuneration refers to

an official working for

the local CA or at BIPs

- the average refers to

remuneration in the

previous year.

The administrative and

economic costs are the

average cost per official

with reference to the

items listed in point 2 of

Covering the costs

mentioned in Annex VI

(administrative costs

are included adding

10% to the direct costs)

Covering the costs

included in Annex VI

(including social

security of inspectors).


the basis of actual

costs and can go below

minimum fees if costs

are lower.

Covering the costs

included in Annex VI

(including social

security of inspectors).


the basis of actual

costs using average

costs and a specific

hourly fee per inspector

(10 BGN)

Minimum fees for all

mandatory sectors

apart from cutting

plants where an hourly

fee is used (calculated

on the basis of the

salaries of inspectors)



Issue to be


Annex VI to the

Regulation and related

to the inspection

activities.

Every year the hourly

fee is updated taking

into consideration the

costs of the year

before.

Small/disadvantaged

FBOs

No specific rules (CA

feel that different rules

would put some

business categories at

disadvantage

compared to others -

there is also the need

to maintain a minimum

level of income for

official controls).

Fully considered in the

food sector and partly

considered in the

veterinary area with the

use of a time based fee

outside Annexes IV and

V.

No information No information No information. No information

Transparency

Relevant legislation is

published in the official

journal.


the OJ.

No information Basic law (Resolution)

and annual updates are


journal

No information. No information



Issue to be


Mechanisms to

increase efficiency

No specific rules. No specific rules. No information No information No information. No information

Reward/penalize

systems

No specific rules. No specific rules. No information No information No information. No information

Fees for several


place

CA applies only one fee

in slaughterhouses with

annexed cutting plants.

No specific rules. No information No information No information. No information

Operators charged

FBOs

In the milk sector only

dairy farms (not

processors) are

charged.

FBOs FBOs FBOs FBOs FBOs

Ring-fence


budget and only in part

it goes back to the

competent authorities

Fees (except for feed

control) are used

directly to finance

official controls. Fees

for feed control go to

the general budget.

Yes, fully. Fees go to the general


it goes back to the




it goes back to the




it goes back to the



checks

Specific legislation for

additional official

controls needed after

detection of non

compliance. FBOs are

charged using a time

based fee (hourly)

identical to the one

foreseen for import of

food of non-animal

origin and veterinary


hatching eggs,


animal by products


export). Costs related

FBOs are charged

using a time based fee,

in case of laboratory

investigations the costs

of these are added.

In the residues area, if

non compliance is

detected the costs of

the controls carried out

are charged to the

operators.

No information No information. No information



Issue to be


to sampling needed in

relation to the detected

non compliance are

also included.

Information sources

Case study in 2008

fees study

Questionnaire


study)

Notification from

Slovakia under Art.

27.12

Estonia notification

under Art. 27.12

Questionnaire


study)

Questionnaire


study)

Questionnaire


study)

Questionnaire


study)

Table A5.148 DG SANCO validated baseline; Czech Republic, Denmark, Finland, Ireland, Greece and Spain

Issue to be

considered Czech Republic Denmark Finland Ireland Greece Spain

Fees as a tool of

financing official

controls

Fees cover all

mandatory fees and



Minimum fees are

followed for activities

within the EU and flat

rates, on the basis of

actual costs, for import.

Fees cover all

mandatory fees and



Flat rates are used and


of actual costs.

Minimum fees are used

for small abattoirs

Fees cover all

mandatory fees and





of actual costs.

Minimum fees can be

used for smaller

establishments under

the responsibility of

municipalities.

Ireland collects

mandatory and some

non-mandatory fees.

Minimum fees are

followed for imports of

animal origin. For meat,

a system of standard

unit charges (which

may or may not recover

the full cost of the

service). In the dairy

sector a flat-rate system

Fees cover all

mandatory fees and


outside these sectors,

with the exception of

the costs for the

approval of feeding

stuffs' establishments

that is covered by

annual fees. Flat rates

are used and calculated

on the basis of actual

Fees are under the

responsibility of each

Autonomous

Community, not all

control activities are

covered by rules or

specific provisions on

fees collection under

Reg. 882/2004. For

imports of different

products the fees are

under responsibility of



Issue to be


applies, based on the

quantity of milk

purchased on a monthly

basis. The level of

Inspection fee currently

applying for imports of

products of animal

origin exceeds the

minimum level

requirements under

Regulation (EC) No.

882/2004. The National

Standards Authority of

Ireland (NSAI) provides

official food control

services in premises

requiring recognition for

the extraction of natural

mineral water. A fee is

charged by the NSAI to

cover the costs of audit

and on site activities.

costs. the Central Competent

Authority and they are

different of the indicated

in the Reg.882/2004.In

this moment, it is

preparing a new rule on

reinforced controls in

the products of non

animal origin (Reg

669/2009) and a new

fee should be created.

Costs covered

with fees

2005: 36%

2006: 33%

2007: 28%

CA state full cost

coverage with the

exception of small

abattoirs where only

35% of costs is

recovered (this subsidy

is calculated in around

10 million DKK a year)

2005: around 100%

(20% for small plants)

2006: around 100%


2007: around 100%


2005: Meat: 48% Milk:

90% Animal Feed: 82%

2006: Meat: 38% Milk:


2007: Meat: 42% Milk:


Imports of animal origin:

27% 2009 Meat: 40%

Milk: 90% (approx)

Imports of animal origin

no change, Mineral

Water Establishments

50-70%

Fees do not cover

costs. No data available

(for the years before

2008 fees were not

collected).

In general the fees do

not cover the costs.



Issue to be


Non-mandatory

fees

Fees cover issuing

certificates and

approval and

registration of

establishments and

laboratories

Fees cover food and

feed of non animal

origin, food additives,

ABP, food contact

materials, animal

welfare during

transport, approval and

registration of

establishments

Fees cover all feed

controls and approval of

establishments

Yes for meat cold

stores supervised by

DAFF. The NSAI fees

for premises requiring

recognition for the

extraction of natural

mineral water.

Fees cover all type of

inspections in feeding

stuffs.

Charged in some

Autonomous

Communities. Also la

Agencia Española de

Seguridad Alimentaria y

Nutrición (AESAN) has

some fees on several

dietetic foods in relation

with the evaluation and

registration.

Activities covered

Only mandatory fees


outside them.

Mandatory fees and

some activities outside

them.

Mandatory fees and


them.

Mandatory areas under

Reg. 882/2004 and non

mandatory fees

charged for official

controls in cold stores

(See Appendix from

Ireland for further

information on rates)

Mandatory fees and

other minor activities

outside them.

Not all control activities

are covered by rules or

specific provisions on

fees collection under

Reg. 882/2004.In

imports they cover the

imports of food of

animal origin.

Calculation

method

Minimum fees for

domestic activities.

For import, flat rates are


of actual costs

according to the items

of Annex VI

Flat rates are calculated


costs. Small abattoirs

are charged minimum

fees.

A time based fee is

calculated plus a

starting fee for each

control which covers

associated costs).

Feed establishments

pay also an annual fee.

Analyses are charged

at cost.

For residues a quantity

based fee is calculated.


with a time based fee.

Smaller establishments

are under the

responsibility of

municipalities and they

can be charged on the

basis of costs or at

minimum fees

depending on the

municipality.

On what concerns meat

these fees are either a

fee per animal

slaughtered, a fee per

tonne of product going

through cutting plants

and independent cold

stores or an hourly

charge for time spent

supervising product in

processing plants,

integrated cold stores

and for overtime on

meat inspection work.

In the dairy sector a flat

rate system is followed,

fees are collected

according to quantity of



costs, according to the

criteria of Annex VI of


In principle, minimum

fees are applied. In the

dairy sector, flat-rates

and minimum rates are

both used. In imports

the calculation of fees is

based on the type of

product and the weight

and it is calculated by

telematique way.



Issue to be


milk produced and cost

of services on a

monthly basis.

Small/disadvantag

ed FBOs

No information Small abattoirs are

charged only minimum

fees and the extra costs

are paid with the state

budget.

Smaller establishments

in municipalities can be

charged minimum fees

instead of at cost.

Some small

establishments are

exempted from

payment or payment

reduced

The budget for the cost

of controls has been

planned and it was

allocated according to

the amounts that each

establishment produced

and disposed.

There are no

exemptions for the

small establishments.

Transparency

No information No information Relevant legislation is


journal and on the

EVIRA website

Relevant legislation is

accessible on the

website www.fsai.ie and

www.irishstatutebook.ie

No information Basic laws and annual

updates are published

on the official journals

of the State (imports

and fees of AESAN)

and the Autonomous

Communities. For the

imports is also in the

web page of Ministerio

de Sanidad y Politica

Social. Also some

Autonomous

Communities and



Issue to be


AESAN have developed

informatics applications

in their web pages.

Mechanisms to

increase efficiency

No information No information No information A working group has

been established to

review and evaluate the

fees charged by the

Department of

Agriculture, Fisheries

and Food for the

provision of official

controls and inspection

services in the meat

and dairy hygiene

sector as required

under EU legislation

No information Industry is asking for

consultation on the

setting of fees when a

basic law or an update

is preparing.

Reward/penalize

systems

No information No information No information Not applied No information Application of

mandatory fees can

take into consideration

previous record of

conformity, risk

category , efficient own

checks and other items

(not working at night

,administrative support)

but cannot derogate to

100% cost recovery.

Fees for several

controls at the

same place

No information No information No information Not applied No information There is not a general

rule. In some case is

charged a single fee

(the highest).In other

cases there is an

accumulation of the

fees.



Issue to be


Operators

charged

FBOs FBOs FBOs FBOs of approved meat

and milk establishments

and importers of food of

animal origin (for

imports of non animal

origin see details in

Annex)

FBOs FBOs included

importers or responsible

for the consignments.

Ring-fence



it goes back to the


Fees are used directly

to finance official

controls.


to finance official

controls in case of

controls under the

responsibility of

municipalities.

Otherwise it goes to the

general budget and only

in part it goes back to

the competent

authorities.


budget and only a

percentage is used to

cover the costs of the

controls carried out.


budget of the Ministry of

Rural Development and

Food and only a

percentage is used to

cover the costs of the

controls carried out.



it goes back to the

competent authorities.

Art. 28 - non-

routine checks


sector, when

inspections detect a

non compliance, the

cost of the analysis that

detected the non

compliance is charged

to the FBOs

No information No information Not applied No information In the most part of the

cases when there are

detections of non

compliance the

additional official

controls are charged

FBOs (operators

responsible for the non

compliance or importers

or FBO responsible for

the consignments).

Information

sources

Questionnaire


study)

Questionnaire


study)

Questionnaire


study)

Questionnaire


study);

notification from Ireland

under art. 27.12.

Questionnaire


study)

Questionnaire


study).Consult to

competent

authorities(June 2010).



Table A5.149 DG SANCO validated baseline, Luxembourg, Hungary, Malta, Netherlands, Austria, Portugal

Issue to be

considered Luxembourg Hungary Malta Netherlands Austria Portugal

Fees as a tool of

financing official

controls

Fees cover all

mandatory activities

and some other

activities outside them.



of actual costs; in the

case of import control a

fee below the minimum

rate is applied.

Fees are collected

according to the Fees

for Abattoir and

Veterinary Service

Regulations (LN

68/1986) (SL 35.10).

Implementing legislation

covers only red meat

inspection fees.

However, fees charged

by Border Inspection

Posts are collected

according to Annex V of

Regulation 882/2004,

under a minimum rate

system. SL 35.10 is

currently under review

to render collection of

fees for red meat

inspection in line with

minimum rates of

Annex IV of Council

Regulation (EC)

882/2004 and introduce

new fees for other

areas that are not

covered by Council

Regulation (EC)

882/2004 or SL 35.10

Fees cover mandatory

areas and some

activities outside them.

For imports minimum

fees are followed, for

other activities under

Annex IV of

Reg.882/2004, meat

and official controls on

residues a flat-rate

system is used. In fee

calculation the

principles of direct

benefit and

cost/effectiveness are

considered. For milk the

fee is below the

minimum rate because

the actual costs of

these official controls

are below the minimum

fee.

Fees cover all

mandatory fees and


outside them. Flat rates

are used and calculated


costs. The fees for

border checks are

calculated on a

minimum rate basis. For

small establishments,

fee setting is under

responsibility of the

different Landers.

Fees cover all

mandatory fees and

some other activities.

Minimum fees are

applied, with the

exception of plant

approval and inspection

on HACCP, where a

flat-rate is adopted. The

plant health fees, are

the minimal fees

according the EU

regulation.



Issue to be


Costs covered

with fees

2005: around 60%

2006: around 60%

2007: around 60%

2005: 36.5 %

2006: 36.9 %

2007: 39.4 %

2005: 75 %

2006: 86 %

2007: 81 %

2008/2009: 90% (est.)

CA state that fees

entirely cover costs,

with the exception of

border checks (no data

available). At the Swiss

border, lower fees are

charged in accordance

with an agreement

between the Ec and

Switzerland.

No data (CA state that

fees do not cover costs

but no data are

available)

Non-mandatory

fees

Fees cover inspection

of herds; certification

and control of animals

and animal products

transport; control of

animal exhibition,

competition; tuberculin

testing and sampling.

No, implementing

legislation is required.

Fees cover all official

controls and analyses in

FBOs (meat and feed).

There are also fees for

registration of other

food operators,

approval and

maintenance of

approvals for dairy and

milk products and eggs

and egg products.

Fees cover hygiene

checks in

establishments that are

subject to approval in

accordance with

Regulation (EC) No

853/2004 (processing;

milk; eggs; fish).

Fees cover certification,

slaughter, rabies

vaccination, medicines

and veterinary products

approval and licensing.

other fees cover official

checks in

establishments that are

subject to approval in

accordance with

Regulation (EC) No

853/2004 (processing;

milk; eggs; fish), and

subject to control under

Regulation (EC) no

1774/2002 and import

from third countries

(BIP, minimum annex

V).; considering

vaccines it is in place a

fee, due to lab control,

before release to

market/users. On the

import control of

foodstuffs of non-animal

origin and within the



Issue to be


scope of audits to verify

the traceability and

HACCP requirements,

operators support the

cost of the analysis.

Activities covered

Mandatory fees and


them.

The present

implementing legislation

directly covers only red

meat inspection fees.

However, fees charged

by Border Inspection

Posts are in line with

Annex V since July

2007.

Mandatory fees and


them. In general fees

are applied for all

official veterinary

controls and analyses in

approved FBOs and

border inspection posts.

Mandatory fees and


outside them.

Mandatory fees and


them.

Calculation

method


on the basis of the

actual costs. In the case

of import control, a fee

below the minimum rate

is being applied.

Fees under Annex V of

Regulation 882/2004

are collected at

minimum rates. Cost of

salaries of staff involved

in official controls are

included.

Minimum fees apply for

import activities. In the

areas under Annex IV

of Reg.882/2004, for

meat products and

official controls on

residues a flat-rate

system is followed. In

fee calculation the

following principles are

taken into

consideration: direct

benefit, a direct link is

Fees are charged on a

flat rate basis taking

into account the

duration, the position of

the person performing

the activity, the type of

activity and resources

used, and the type of

establishment,

distinctions being made

on the basis of

throughput. The fees for

border checks are

Minimum fees are

applied as defined in


Minimum fees apply

even if they can clash

with other criteria set by

the Regulation (e.g.

fees cannot be higher

than costs). For plant

approval, plant

inspection and HACCP

(under the Regulation

(EC) No 853/2004) a



Issue to be


needed between the

benefit of the control

activities for the FBOs

and the fee to be paid

for such activity; the

cost/effectiveness, fees

have to cover integral

costs, but never being

higher than the costs to

be covered in a (group

of) sector(s) or

activities. Most fees

have an hourly rate.

calculated, under a

minimum rate system,

on the basis of Annex V

to Regulation (EC)

882/2004.

flat-rate system on the

basis of the actual costs

is adopted. On the

import control of

foodstuffs of non-animal

origin a standard value

for issuing certificates

are applied to all

operators. In addition, if

the commodity is

randomly selected for

analytical control the full

costs of laboratory

analyses are billed

directly to the operator

Within the scope of

audits to verify the

traceability and HACCP

requirements; operators

support only the cost of

the analysis if sampling

is done.

Small/disadvantag

ed FBOs

No information Malta's largest FBOs

are to be considered

small enterprises as per

definition of SMEs. The

greater majority of

Maltese FBOs are

micro enterprises with

highly reduced activity

and personnel.

There are reduced fees

for AM and PM

inspections in very

small slaughterers

taking into

consideration their low

throughput.

In the case small

establishments,

Landers are responsible

for fee setting.

Some small

establishments (local

micro-economies)

outside from Annex IV

of Reg (CE) n.º

882/2004 have reduced

fees.



Issue to be


Transparency

No information Collection of funds by

the Agriculture and

Fisheries Regulation

Department for official

controls and meat

inspection are all

recorded in a general

direct accounting

system (DAS) under the

revenue vote. An

electronic receipt is

issued for each

payment. The system

falls under the Public

Service Auditing system

and is audited as part of

the normal audits that

take place from time to

time.

Legislation and fees are

published in OJ. This

information an further

information on

calculation method is

available on line

(www.vwa.nl)

No information No information

Mechanisms to

increase efficiency

No information We have combined

various controls to be

carried out during

inspections. This saves

sending numerous

teams of veterinarians

and officers to the same

establishments or farms

to carry out inspections

for different

issues/purposes.

> call fee and time

based fee (fee by

quarter of an hour): the

better the FBO

functions, shorter and

fewer official controls

are needed which

reduce the costs for

FBOs. > set of rules for

requests for official

controls by FBOs >

surcharges for i)

requests for controls

outside regular working

hours ii) overtime (on

top of original requested

time)




Issue to be


Reward/penalize

systems

No information No mechanism exists

for reward systems but

an administrative fine

procedure exists in the

parent Act (CAP 437)

for breaches of

regulations falling under

this Act.

If possible official

controls are risk-based

which in combination to

the time based fees

leads to less or more

charges to FBOs


Fees for several

controls at the

same place

No information The system of

compounding fees is

not adopted at present.

Just one call fee for the

same official; the total

time for each official is

charged according to

the applicable fee for

the specific control


Operators

charged

FBOs FBOs are charged.

Red meat slaughtering

establishments are run

by the state and

therefore only internal

paper transactions are

considered.

FBOs, BIPs, cattle

dealers, citizens who

need a veterinary

certificate

FBOs FBOs

Ring-fence


to finance official

controls.



return back to the


Fees are directly and

only used to finance

control activities.


to finance official

controls. In the case of

Border Checks they are

incorporated into the

State's General Budget.


to finance official

controls.

Art. 28 - non-

routine checks

No information At present there is no

extra collection of fees

for enforcement work

arising out of additional

official controls for non-

compliance.

All FBOs, BIPs and

cattle traders - including

retail - are charged for

additional official

controls according to

art. 28 of Reg.

882/2004.




Issue to be


Information

sources

Questionnaire


study)

Questionnaire


study) (Updated

30.06.10)

Questionnaire


study); questionnaire

submitted in 2010

Questionnaire


study)

Questionnaire


study) Decreto-Lei nº

154/2005 (plant health

inspection);Decreto-Lei

n.º 178/2008 e Portaria

n.º 1450/2009 (controls

according Reg.(CE) n.º

853/2004; n.º 183/2005

e n.º1774/2002)

Table A5.150 DG SANCO validated baseline; Romania, Slovenia and Sweden

Issue to be

considered Romania Slovenia Sweden

Fees as a tool of

financing official

controls

Fees cover all mandatory fees and some other

activities outside them. Minimum fees are used on

a time-basis that takes into account the salaries

and the training costs for the personnel. For

official controls on residues, FBOs dealing with

products of non animal origin and some general

activities a flat-rate is applied.

Fees cover all mandatory fees and some control

activities outside them. Minimum fees are

followed, except for official controls on residues

and all non-mandatory activities, where a flat-rate

system based on the actual costs is used.

Food: Full cost recovery (Meat in 2010 approx

95% cost recovery). General national system

where FBOs pay an annual fee for official

controls. Annual fees are based on annual control

time, which in its turn is calculated by using a

model for risk classification of FBOs, taking into

account type and size of the FBO's activities, the

risks involved and the FBO's past record. For

slaughterhouses and GHE (and, to a certain

extent, cutting plants) a different system applies,

with annual fees calculated by estimating control

hours per year multiplied by hourly rates based on

actual costs for control performed by official

veterinarians and official auxiliaries.

Costs covered with

fees

Fees entirely cover costs for FBOs processing

products of animal origin, but not for FBOs that

process, stores and trades products of non animal

origin. 2006:

60%

2007: 50%

100% (According to the CA) Food: Generally speaking, the aim of the fees

system is full cost recovery for all official controls.

The fees charged must be sufficient to finance the

official control deemed necessary, and fees may

not be used to finance other activities.

Administrative costs, training, overheads,

development of OC are included in the hourly rate.



Issue to be


Slaughter up to 200 tonnes per year is partly

subsidised (approx. total of 9 million SEK in

subsidies 2010).

Non-mandatory fees

Fees cover businesses of products of non animal

origin

Fees cover animal feed (control of approved

establishments) and official control not covered by

Annex IV of Regulation 882/2004

Fees cover all official controls on food (including

imports), pesticides and residues, and the import

of feed of non animal origin and animal by-

products. Animal welfare in slaughterhouses is

included.

Activities covered

Mandatory fees and some other activities outside

them.

Mandatory areas and some activities outside them

(animal feed for control of approved

establishments, official controls not covered by

Annex IV of Regulation 882/2004 - to be further

described).

Food: The whole food chain, except primary

producers.

Calculation method

Minimum fees are applied on a time-basis system

that considers the total cost/hour for the control

activities making the sum between the salaries of

the involved personnel/hour and the costs for

personnel training/hour. For what concerns

official controls on residues, processing, storage

and trading businesses of products of non animal

origin and some other general activities (cold

stores, repackaging units, en-gross market) flat-

rates are applied.

Minimum fees for the mandatory sectors, including

total costs under Annex VI to regulation 882/2004

and, in case of live animals in I/C trade, also the

costs covered by Regulation 1857/2006. For what

concerns official controls on residues (Directive

96/23) and all activities covered by non-mandatory

fees a flat-rate system is adopted.

Food: Fees are calculated on the basis of Annex

VI of Reg. 882/2004. Flat rates are used, they are

based on an hourly rate including travel costs and

out-of-office hours costs. Overheads, training,

administrative costs are included. Minimum

levels in EU-legislation are obeyed.

Small/disadvantaged

FBOs

In the amount of time calculation, the production

volume and the sector of activity are also taken

into account.

No information Food: Annual fees for control take into account the

size of the FBO's activities. Reduced fees apply

for small slaughterhouses, based on applicable

minimum fees according to Regulation 882/2004



Issue to be


Transparency

No information No information Laws and regulations on fees are published

officially. Guidelines on risk classification have

been published by the NFA. Detailed information

on the calculating of fees is published on the

NFA's homepage. Detailed info on calculation of

control hours regarding slaughter houses and

GHE is published on the NFA´s homepage. FBOs

and other organisations receive proposals for new

fee rules or fee levels and are given opportunity to

comment the proposals.

Mechanisms to

increase efficiency

No information No information Food: Risk-based approach to fees means that

the risks in the FBO's activities are reflected in

annual control time. System also takes into

account the FBO's past record, where compliance

or non-compliance can lead to a reduction or an

increase in the annual control time and annual

fees.

Reward/penalize

systems

No information No information See above. FBO's past record affects the annual

fee paid.

Fees for several


place

No information No information Food: Separate fees may apply for export

authorisation, control of imported foodstuffs and of

residues. Authorization covering several

activities, i.e. Slaughterhouse with annexed

cutting plant and/or production plant, will be

charged one fee calculated on volumes placed on

market from each separate activity, provided each

activity can be considered separate from the other

activities.

Operators charged FBOs FBOs Food: FBOs

Ring-fence

Fees are used directly to finance official controls. Fees go to the general budget and only in part it

goes back to the competent authorities.

Local and central authorities use fees directly to

finance their official controls. Fees may not be

used to finance other activities.


checks

No information No information Food: Article 28 is applied in all cases where non-

compliance leads to extra control. An hourly rate

applies. Costs for all types of control are covered.

Information sources Questionnaire submitted in 2008 (fees study) Questionnaire submitted in 2008 (fees study) Questionnaire submitted in 2008 (fees study)



A5.5 Competent Authority staff numbers

The Food and Veterinary Office (FVO) of DG SANCO has published, for the majority of

Member States, country profiles of official control systems. The quality of these reports

varies considerably; some are straightforward to read and understand, while others are

almost completely incomprehensible. The information contained in the reports reflects the

significant differences in official control systems between Member States; the reports

generally contain different data that is not amenable to simple comparison. However, the

reports are a useful source of information on the staffing of competent authorities across

Member States.

The data on staffing levels is presented in a variety of ways; to facilitate a comparison it has

been summarised by national, regional and local / departmental levels in Table A5.16 below.

Table A5.17 provides an example of the breakdown of veterinary staff, by qualified veterinary

numbers and approved auxiliary or technicians.

Some of the FVO reports have been updated recently (2010 / 2009) while others are older

(2007 / 2006). The information below therefore has to be treated with caution; it may be

dated in places. The table notes where Member State’s reports older than 2008.

Table A5.151 Breakdown of staff resources by competent authority level

Member State Number of CA personnel (FTE)

National Regional Local /

Departmental

Austria* 1,480 97296

Belgium 1,470 595

Bulgaria 3,262

Cyprus 571 (level unknown)

Czech Republic* 735 2,347 unknown

Denmark 3,701 1,558 154

Estonia 1,871 176

Finland 938 75 281

France 1,506 1,020 4,58097

Germany**

Greece 1,361 3,312

Hungary* 651 2,530

Ireland* 2,192 141

Italy 2,370 908 17,82698

Latvia**

Lithuania 753 (level unknown) 1,312

Luxembourg 55.25 (level unknown)

Malta 133

96 Laboratory and district level

97 A further 12,500 mandated part time staff are also employed at this level.

98 Figure includes data for local and laboratories – local figure excluding labs is 11,837



Netherlands* 2845 280

Poland 508 11,665

Portugal* 433 75599

Romania**

Slovakia**

Slovenia 138 438

Spain 1,848 7,680100

Sweden 2,552 245 553

United Kingdom 6,841 2,000

Total101

36,835 14,833 26,787

*Based on FVO published prior to 2008. **No country profile available.

Table A5.152 Examples of split between vets and non-vet staff

Member State Vets Non-Vets Level of organisation (Name)

Austria* 47 23

National

(Ministry of health, Family and Youth)

Belgium 179 143

Bulgaria

Cyprus 207 145 Unknown – “Veterinary Services”

Czech Republic* 61

44

27

47

Central level (SVA)

Central Level (Institute for State Control

of Veterinary Biologicals & Medicines)

Denmark

Estonia 158 122 National (Veterinary and Food Board)

Finland 286 459 Local (Food Control in Municipalities)

France

78 35

National

(Health Department of the armed

Forces)

Germany**

Greece 15

15

10

4

National (Directorate of Animal Health)

National (Directorate of Public Health)

Hungary*

Ireland*

Italy 385

374

188

607

National (ICQ)

Regional (RPS)

99 An additional 155 staff classed as National and Regional

100 A further 3,204 staff employed in “delegated competencies” where the level of authority is unknown.

101 Total figure excludes data which was included in Table A5.151 but where the level of employment was

unknown.



Latvia**

Lithuania

Luxembourg 33.25 22 All levels

Malta

Netherlands*

Poland 1,600 648

Regional/ District (Voivodship

Inspectorate of SPHSIS + Field Units)

Portugal*

Romania**

Slovakia**

Slovenia

Spain

Sweden

United Kingdom

*Based on FVO published prior to 2008. **No country profile available.



A5.6 Information on control activity from Regulation 882/2004 Annual Reports for four EU Member States

The information provided in this section is intended to demonstrate the range of information

available and quality of reporting in the Regulation 882/2004 Annual Reports. The four

countries represented here are chosen because they illustrate this range of quality and

information and they are also case study countries. The information presented is laid out

according to the categories of control activity within the scope of this study. The goal of this

exercise was to determine if information on control activity and the number of FBOs

inspected could be identified in a consistent manner for a significant number of Member

States in order to inform the analysis in this study. The study team’s conclusion is that the

information is not presented uniformly and often is not even understandable as an English

language document.

A5.6.1 Finland

The Finnish report was difficult to understand; it appears that it was translated directly from

Finnish into English by an automatic programme. Where it has been impossible to

understand the text, but it appears that it is likely to be relevant, it has been copied directly

from the report.

A5.6.1.1 Total control activity

Table A5.153 Total control activity

Authority and action Monitoring,

control and

surveillance

Monitoring

implementation

of transposition

Total

Control

TOTAL - Evira 203 217 420

Kasvint. conditions and kasvinterv 76 56 132

Animal health and welfare 62 10 72

Food Safety 65 151 216

TOTAL - Centres 0 51.5 51.5

Kasvint. conditions and kasvinterv 0 45.3 45.3

Animal health and welfare 0 6.2 6.2

TOTAL - Provincial governments 16.1 10.6 26.7

Animal health and welfare 8.8 7.6 16.4

Food Safety 7.3 3 10.3

TOTAL - Localities 0 490 490



Food Safety 0 253 253

TOTAL - Customs 2 73 75



Food Safety 0 58 58

TOTAL – Valvira 0 0.8 0.8

Food Safety 0 0.8 0.8

TOTAL – Defense 0 2.5 2.5

Food Safety 0 2.5 2.5

TOTAL – Aland 0 5.2 5.2





Food Safety 0 5 5

TOTAL – Authorised inspectors 0 47.3 47.3



Food Safety 0 8 8

TOTAL CONTROL ACTIVITY 221.1 897.9 1119

Adapted from: Annual Report 2008 under Regulation 882/2004 - Finland

Table A5.154 Food Control Checks - 2009

On-the-spot

inspections

Primary

producers

Manu-

facturers

& packers

Distri-

butors &

trans-

porters

Retailers Service

sector

Manu-

facturers

(selling is

primarily

a retail

basis)

TOTAL

Number of

establishments

1,300 3,212 3,267 12,854 32,384 288 53,305

Number of

establishments

inspected

150 2,020 967 4,730 16,039 92 23,998

Number of

inspections

210 6,541 1,873 9,821 23,219 120 41,784

Adapted from: Annual Report 2008 under Regulation 882/2004 - Finland

A5.6.1.2 Animal health

[Study team note: text selected directly from the 882 report]

EU animal health checks toteumaprosentti was quite satisfactory (85%).EU-el

äinsuojeluvalvontojen coverage continued to improve after the sheep and goats under

control and omissions of these species were found more frequently than average.Val-

vontakohteista 75% of the selected risk basis, the other sample. EU-el

äinsuojelutarkastuksia were 561 livestock farm and neglect was found 19% of the farms

(22% v.2008).Serious laiminly öntejä (ESL § 44) was found in two tilal la.Ep äilyyn based on

the results of inspections and responded to in previous years, were control plans based on

the results of a clear sti worse.Ä typical causes of failures are the high cost of compliance

and increased productivity in the sector requirements, including lack of awareness may be

the reason yksittä istapauksissa.El äinkuljetusten EU-live insuojelutarkastuksia was 275

pcs.Laiminly öntejä checks were found on the previous year (27%, 11% in 2008), the majority

of the deficiencies related to documentation.

Veterinarians production and use of medicines and medical surveillance records in 2009 can

not be regarded as sufficient. El äinlääkäreiden for itself, all designed in 19 TELLU cables

checks were conducted, but sample-based controls were only two county area, a total of 14

pieces (48 pcs v.2008). In addition, the suspicion, based on yet another vet checked status

and three veterinarians.El äinlääkäreistä the majority were found to have certain points of un

inspections.Deficiencies were, however, were generally mild and drug records.Lis concerned

being the health of future outbreaks of reserve holdings when supplying medicines

luovuttamisehtojen tymisessä were shortcomings in the transposition.One case was

transferred to Evira k äsiteltäväksi, because the language ytyi vet check.L for the others, by

the governments of veterinarians gave guidance to remedy the deficiencies.



A5.6.1.3 Animal welfare


Cross-compliance in the control was taken into account by the Commission in 2008 repairs

necessary criteria, as reflected in a country Rin control results.The control of the rest of the

changes implemented in 2010, when the national control settings have been changed. T

äydentävien the terms of the supervision of animal health and welfare policy entity (animal

registration and subscription ID, ie, animal welfare, salmonella control, prohibited

substances, animal communication) goals were reached, but all valvontoja not been

completed at the end during 2009.Altogether premises were inspected in 1401 pcs (1125 (ID)

and 276 (others).Support for proposed cuts of about 10% of the sample were of the

premises.N äistä 2% of the field of animal welfare cent.El äinten registration and labeling of

cross-compliance under the supervision of omissions (including the later s 0%) were found in

14% of the sample areas (farm 162).Change came through the knowledge of the authorities

of cases (the so-called extension of ten), the aid cuts proposed in 76% of premises

inspected (total 47 pieces).N äistä most concerned the welfare of live intensity.ID-control

laajennusval-vonnat eivä t been known for writing the report.K Ayton banned substances or

animal as regards the notification did not reveal any deficiencies.

A5.6.1.4 Animal feed

[Study team note: the report did not provide any relevant information]

A5.6.1.5 Animal by-products


A5.6.1.6 Live animals and live animal products


Live animals and animal food in the contaminant monitoring program was about 4 300

samples of nearly 20 000 animals in research production of banned substances, authorized

veterinary medicinal products and kontaminanttijää Mie show.Residue control program was

found only two of the äytettä who were qualified, they contain ystenvastaisia

kokkidiostaattijää Mie result.M ääräystenvastaisia results were less than 0.5%, which

corresponds to the target.The EIV ät included in the results of moose and reindeer in the

internal organs, which stated the rule in accordance with some of the cadmium-

overruns.Control program, the results are the same level as in previous years, and they

show ett ä animal medicine-related legislation has been complied with in Finland very much.

A5.6.1.7 Meat and meat products


Meat inspection was carried out in slaughterhouses Evira control plan in accordance with the

laws in force in accordance with.Meat inspection was carried out Altogether, 18:

Preparedness in the control of the slaughterhouse.N äistä 14 is a red meat slaughter

rastamoja and 4 poultry slaughterhouse.Preparedness plants supervised by the pass this

year äksyttiin 2009 283 485 334 kg of red meat and 94 of the 248 132 kg of poultry meat.Mp

ätyn the quantity of meat followed the previous years level.Meat inspection audited tietyilt ä

respect and audits will continue in 2010.

The 2009 statistics show that enforcement has been inadequate.Preparedness to carry out

meat inspection and sampling of the studies have been carried out in accordance with the

plan well, and meat inspection findings in respect of previous years the line.

A5.6.1.8 Imports


Of veterinary border inspection posts were made in 2009, a total of 2 548 at the border

control in the EU who lose lots of which batches of products (food and by-products) had a

total of 1 457Kauttakulkuerille (food and by-products), which is usually m ääränpää Russia,



543 inspections were made.All of Finland, Finnish or through other price of EU countries

imported product and eläväeläinerä t checked 100%.Ä rejected various ti-linpäätö svuonna

0.7%.More clubs were concerned being actively RAFF declarations and all the product

items, which had been RAFF declaration, later studied in P.Border controls were slightly less

than the previous year.Erist s still more left to the internal market, through a number of

shipments declined by 259 lot.

A5.6.1.9 Unapproved food establishments


A5.6.1.10 Fish, fish products and aquaculture


A5.6.1.11 Dairy products, eggs and egg products


Preparedness inspectors made of milk for EU aid for private storage of butter in the control

of export and storage (a total of 2.0 million. Kg) of 48 controls and the intervention milk

powder (a total of 1.5 million. Kg) controls 16

A5.6.1.12 Hygiene


Food-borne outbreaks in humans the number decreased in 2009 from the previous year,

salmonella, campylobacter and listeria infections, and increased slightly for yersinia

infections. Serious pathogens of EHEC infection m Erm clear sti ve increased compared to

prior years.Mit reads the common factor is motivated by EHEC infection demonstrated

exceptionally infection was suspected of mordant also directly intiloilla live.Food-borne

outbreak was reported in 1962, of which 60 were elintarvikev ä-flat (about 1 800 persons

became ill) and two domestic water-mediated epidemic (about 200 people became ill).Polish

pakastevadelmat were the cause of more than 20 s, causing an epidemic of more than 1 000

people ill.Evira stressed importers of their responsibility as part of the food chain to ensure

the safety of raspberries. Evira asked the European Commission's measures in the Finnish

consumers' health.Polish authorities, according to k äsittelyhygieniaan particularly in primary

production will continue to pay attention.

National salmonella control program, results showed further that in Finnish production

animals in the salmonella contamination was minimal (<1%) and the qualifications required

for the presence of strategic objectives with.Good än salmonellatilanteem-me because for

Finland to the EU accession guarantees issued in connection with the special permit tight

against salmonella later s import of meat and eggs.Non-EU countries to Finland imported el

äimistä salmonella in food is not found at all.Ensisaapumisvalvonnassa taken from the

authority AYT-tract salmonella was found on two specific guarantees covered by a lot (pork

and duck).Salmonella is reflected in the measures taken to combat human infections ko

timaassa obtained in quantities which remained t still low.My öskään the spring of 2009

linked to animal feedstuffs Salmonella Tennessee, the epidemic was not associated with any

cases of sick people, but the situation was effectively controlled surveillance, laboratory

testing laboratories and industry in close collaboration.

The incidence of EHEC bacteria teurasnaudoilla responded to earlier (0.6%). Positive of

slaughter came from seven farm.EHEC: s i studied in an exceptional manner in addition to

the five cattle from the farm to human suffering in order to determine the source of the

cases.Patients pauksista only one connection mode could be detected in

cattle.Campylobacter surveillance program surveyed broiler batches of 6% were

positive.Bacteria Rin replied to the incidence level of previous years.

In 2009, through the Commission's request for fresh herring histamiinikartoitus.All the

number were äytteet ystenmukaisia.Mapping shows the presence of histamine-ett s herring

is probably very low.



In 2008, started to vacuum-packed fish listeria project was completed. L. mono-cytogenes-

positive samples had a large proportion, 31%, but the samples, however, only a small

fraction, less than 2% above the EU law's requirement (100 cfu / g).Recurring l öydösten of

local supervisors checked the Finnish fish sectors listeria control and began the necessary

steps.

Evira instructed local authorities to control the re-adoption of the institutions in

matters.Supervisory authorities concerned being reminded lis Evira body of data reporting in

order to register a national body to keep up to date again a good k-symiseen related to major

changes. Plants uudelleenhyv äksymi-tion was päätö kseen the majority of

municipalities.Preparedness to pass this äksymien slaughterhouses re-adoption was

finalized during 2009.

Department of social control audits, the development of regional governments have started

with. Preparedness and the provincial government working group to prepare audits for the

procedure with all necessary instructions and lomakkeineen raporttipohjineen to be followed

in the year 2010 audi-toinneissa inoculation.

Preparedness approved hygiene skills testers for nearly 2 000 across the Finnish end of

2009. Evira started testers the knowledge audit.Audits of the basic basis was given plenty

of comments and suggestions to correct operation.Five part-mistestaajan äksyntä pass this

had to be canceled.Hygiene proficiency certificates, ns. hygiene passports, Finland is my

önnetty the end of 2009 more than 600 000 pcs.



A5.6.2 Netherlands

It is unclear whether the number of inspections reported independent of total control activity

are reported in hours or units of inspection. The inspection data provided does not total to

figures in Table A5.20. In addition, where control activity is reported outside the scope of

this study’s remit (as agreed with the Commission, see Table 2.1) they were excluded from

breakdowns in subsequent sections.

A5.6.2.1 Total control activity

In 2007 the VWA’s planning and responsibility changed from inspections based on numbers

to inspections based on standardised hours. Based on a comparison of the two approaches,

the VWA concluded that its work processes had improved, leading to an increased number

of inspections each year.

Table A5.155 Total control activity 2006-2008 (inspections)

Sector 2006 2007 2008

Inspection

numbers

Inspection

hours

Inspection

numbers

Inspection

hours

Food/feed safety 61,460 136,184 63,291 159,742

Beverages, catering,

tobacco

25,832 57,235 27,799 59,581

Inspection of cattle

transportation/meat/animals

(welfare)

26,636 26,706 26,548 17,354

Product safety 11,754 38,664 9,761 45,647

Import/external border

inspection posts

N/A102

9,835 3,461 11,790

Fish 2,761 7,428 4,071 2,896

Animal feed 3,391 8,900 3,061 12,345

Other 453 2,156 516 12,358

TOTAL 132,287 287,108 138,508 321,713

Adapted from: Annual Report 2008 under Regulation 882/2004 - Netherlands

Table A5.156 Total control activity 2006-2008 (samples)

Sample type 2006 2007 2008

Microbiology 51,366 66,151 41,703

Chemistry 75,312 61,995 33,263

Special samples 1,219 1,187 5,403

TOTAL 127,897 129,333 80,369



Table A5.157 Size of control stocks - 2008

Holding type Number of holdings (approximate)

102 In 2006, import inspections were included with the other inspection groups



Sheep and goats 46,000

Poultry 6,990

Pigs 19,430

Cattle 40,300

TOTAL 112,720


Table A5.158 Control activity related to animal health (identification and registration) - 2008

Category Number of inspections

Sheep and goats 1,400

Poultry N/A103

Pigs N/A104

Cattle 2,150

TOTAL 3,550105

Adapted from: Annual Report 2008 under Regulation 882/2004 – Netherlands


Table A5.159 Number of operators subject to controls - 2008

Cattle transporters Number of transporters

Short-distance transport 1,317

Long-distance transport 156

TOTAL 1,473


Table A5.160 Control activity related to animal welfare (checks at fresh meat establishments and on live animals during transport) - 2008

Inspection type Number of inspections

Welfare of hooved animals in slaughterhouses 433

Travel journals 8,769


Table A5.161 Number of holdings subject to controls - 2008 (as of 1 Jan 2009)

Holding type Number of holdings

Primary holding (pen animals) 5,550 (approximate)

103 No information provided

104 Included in the checks on animal welfare; pig checks are not reported separately under either animal health or

welfare 105

This total refers only to the inspections on sheep and goats and on cattle as reported in the Annual Report. No information is provided on poultry inspections for animal health. Pigs are inspected for health with animal welfare inspections and these are not reported separately from other animal inspections in any case. Some checks were performed on horses, but no numbers were provided – the report indicates that a limited number were performed because compliance had been good in previous years.



Primary holding (grazing animals) 35,000 (approximate)

Compound feedstuff holdings approved 79

Premix/additive holding approve 81

Other registered holdings 1,016

Carriers 860

Sheep 1,715

Traders 453

Approved holdings for animal proteins 84

Third countries for representatives 16

TOTAL 44,854


Table A5.162 Control activity related to animal feed - 2008


VWA Inspections at approved/registered

holdings

1,715

VWA Samples/analyses (national plan for animal

feeds (analyses))

3,960

AID Animal feed inspections, basis, tracing,

reports

626 (87 of which are for reports)

AID Samples/analyses (animal feed) 1,543 (samples = 393; analyses = 1,150)

TOTAL 7,844



Table A5.163 Number of holdings subject to controls - 2008


Primary holding (grazing animal holding) 35,000 (approximate)

Primary holding (pen animal holding) 5,500 (approximate)

Intermediate holdings 278

Storage holdings 69

Incinerators and co-incineration plants 29

Category 1/ category 2 processing businesses 1

Petrochemical businesses 1

Biogas installations 77

Composting businesses 37

Category 3 processing businesses 22

Technical businesses 124

Collection centres 13

Animal By-Products (ABP) usage authorisations

(Article 23)

354

Approvals for alternative processing methods 5

TOTAL 41,510




Table A5.164 Control activity related to animal by-products - 2008


VWA inspections at approved holdings 1291

VWA inspections of original businesses 1986

VWA inspections for destination checks 427

VWA stream guarantee inspections 266

VWA fur-bearing animal clinical testing

inspections

195

Provision of authorisations (Articles 8 and 23) 107

Samples/analyses (microbiological) 196

AID inspections of Destruction Basis 546

AID inspections of Intermediate holdings 77

AID inspections of Processing businesses 19

AID inspections of Anadest (compliance

measurement) – poultry

39

TOTAL 5149



Table A5.165 Number of holdings subject to controls - 2008


Export collection centres for pigs 17

Export collection centres for bovine animals 51

Export collection centres for sheep/goats 40

Washing points 168

Sperm extraction stations (SES) 59

Embryo teams 26

Traders 1,132

Approved establishments under Directive

92/65/EEC

9

Quarantine stations for birds, import from third

countries

38

Quarantine of birds 11

Approved poultry holdings 920

Staging posts 4

Registered circuses 1

TOTAL 2,476


Table A5.166 Control activity related to live animals and live animal products - 2008


VWA inspections of export collection centres 102

VWA inspections of washing points 2,034



VWA inspections of SES and embryo teams 121

VWA inspections of approved establishments

under Directive 92/65/EEC

10

VWA inspections of approved poultry holdings 695

VWA inspections of staging posts 0

VWA inspections of quarantine stations for birds 5

VWA inspections of circus registration 1

VWA destination checks 4,270

TOTAL INSPECTIONS 7,238

TOTAL INSPECTION HOURS 71,000 (approximate)


A5.6.2.7 Meat and meat products Table A5.167 Number of holdings subject to controls - 2008


Slaughterhouse for domesticated hoofed animals 241

Slaughterhouse for poultry 36

Slaughterhouse for cultivated game 23

Processing establishment for free game 22

Cutting plants for all types of meat 916

Meat product holdings 582

Meat preparations, minced meat and separator

meat

854

Processing establishments for processed

stomach, bladders and intestines, animals fats

and dripping, gelatine, collagen

54

TOTAL 2,728


Table A5.168 Control activity related to meat and meat products - 2008


VWA inspections for granting approvals 2,149

VWA HACCP system supervision inspections 3,933

VWA HACCP system supervision audits 1,063

TOTAL VWA INSPECTIONS 7,145

TOTAL INSPECTION HOURS 213,606

Samples/analyses – microbiological 56,047

Samples/analyses – trichinas 153,871

TOTAL SAMPLES/ANALYSES 209,918

AID meat-based inspections 382

AID report inspections 78

TOTAL AID INSPECTIONS 460


A5.6.2.8 Imports

Table A5.169 Number of centres subject to controls - 2008



Centre type Number of centres

Inspection centres (belonging to a BIP) 15


Table A5.170 Control activity related to imports


Checks on number of import batches of animal

products

53,774

Checks on number of specific laboratory tests of

animal products

1,494

Checks on positive laboratory results of animal

products

26

TOTAL CHECKS ON IMPORTS OF ANIMAL

PRODUCTS

55,294

TOTAL INSPECTION HOURS 11,790



A5.6.2.9 Checks on hygiene of foodstuffs at food establishments other than those approved in accordance with Regulation 853/2004

Compound products

Table A5.171 Number of businesses subject to controls - 2008

Business type Number of businesses

Food factory (unapproved) 2,480

Importer, wholesale trade, food storage

(unapproved)

3,929

TOTAL 6,409


Table A5.172 Control activity related to unapproved food establishments - 2008


System audits 39

System inspections 4,146

TOTAL 4,185


A5.6.2.10 Catering and non-industrial production



▪ Catering (excluding businesses no engaged

in preparation)

▪ Retailers (bakers, butchers, etc.)

▪ Supermarkets

▪ Institutional kitchens

100,000 (approximate)

TOTAL 100,000




Table A5.174 Control activity related to catering and non-industrial production establishments - 2008








Treatment and processing plant for fisheries

products

629

Factory ship 188

Freezer ship 18

Fish market 14

Wholesale market 13

Dispatch centre 39

Treatment centre 23

Nursery for salmonids, eel, etc 119

Nursery/farm for shellfish and crustaceans 98

TOTAL 1,141


Table A5.176 Control activity related to fish, fish products and aquaculture - 2008


VWA inspections 3,192


Samples/analyses – chemical 3,799

Samples/analyses - microbiological 532





Holding/business type Number of holdings/businesses

Laying hen farmers 1,258

Packing stations 92

Collectors 24

Wholesalers 111

Slaughterhouses 20

Cutting plants 166

Retailers 806



Factory producers (dairy producers) 184

Subsequent cheese producers 121

Small-scale producers and farm-based dairy

producers

324

Home sales (dairy products) 123

Storage sites for dairy products 28

Dairy farms 20,746

Goat dairy farms 652

Sheep dairy farms 100

TOTAL 24,755


Table A5.178 Control activity related to Dairy products, eggs and egg products - 2008


VWA inspections of COKZ quality assurance 5

VWA inspections of CPE quality assurance 13

Egg marketing inspections (poultry farmers) 1,225

Egg marketing inspections (packing

stations/collectors)

378

Egg marketing inspections (wholesalers) 29

Egg marketing inspections (retailers) 806

Poultry-meat marketing standards of Article 11

holdings

40

Poultry-meat marketing standards of

slaughterhouses/cutting plants

188

Control supervision 69

COKZ inspections of dairy holdings 960


COKZ Samples/analyses – microbiology 2,778

COKZ Samples/analyses – residues and

contaminants

2,649

TOTAL SAMPLES/ANALYSIS 2,778



A5.6.3 Poland

The Polish report contains extensive information on the number of “checks” conducted as

part of control activity. The report does not provide information on the number of controls

performed, or the time associated with these controls. Information relevant to the controls

listed in Table 2.1 was selected to create the tables below.

A5.6.3.1 Total control activity Table A5.179 Number of supervised businesses and number of checks conducted by the

Veterinary Inspection, by property type, 2009

Type of property Supervised Checked

Sections leading the slaughter of

domesticated ungulates (SI)

599 579

Meat-cutting departments engaged in

domesticated ungulates (SI)

767 749

Meat-processing sections domesticated

ungulates (S VI)

617 610

Sections leading the slaughter of poultry

and / or lagomorphs (S II)

176 173

Conducting cutting-sections of poultry meat

and / or lagomorphs (S II)

328 312

Sections of poultry meat processing and / or

lagomorphs (S VI)

141 139

Sections leading the slaughter of wild

animals, farmed (S III)

2 2

Sections leading cutting meat from wild

animals farmed (S III)

2 2

Meat-processing sections of wild animals

farmed

0 0

Engaged in sections cutting venison (S IV) 17 17

Sections leading processing venison (S IV) 10 10

Establishments exclusively engaged in

approved meat processing (S VI)

95 93

Establishments approved processing of

fishery products (S VIII)

248 238

Approved milk processing establishments

(S IX)

309 302

Sections leading the slaughter of ungulates 496 461

Sections leading cutting meat of ungulates 628 902

Sections leading meat processing

ungulates

641 606

Sections leading the slaughter of poultry

and lagomorphs

47 43

Conducting cutting-sections of poultry meat

and / or lagomorphs

63 59

Sections leading poultry meat processing,

and / or lagomorphs

13 10

Adapted from: Integrated Multi-Annual Control Plan for the Polish; Annual Report 2009 under Regulation 882/2004 – Poland



Table A5.180 Number of objects covered by the supervision of the State Sanitary Inspection in 2009.

Type of premises inspected Number

Food production facilities. 222,956

Food market facilities. 22,485

Transport food. 72,866

Catering establishments open. 33,368

Catering establishments closed type. 2451

Label objects and places of service marketing. 178,68

Adapted from: Integrated Multi-Annual Control Plan for the Polish; Annual Report 2009 under Regulation 882/2004 - Poland


The Polish annual report records the inspection of farms related to the presence of correct

identification and registration documentation. Identification and registration are core

components of the Polish plan to combat infection diseases of animals.

Table A5.181 Checks on the identification and registration, 2009

Controls at farm level Number

Cattle

Whole herds of registered premises on Polish

territory at the beginning of the reporting / review

713,697

Whole herds of cattle inspected premises 48,784

All checks made 49,409

Whole cattle registered in the Polish territory at

the beginning of the reporting / review

622,8185

Whole cattle herds visited the premises 875,743

Sheep and goats

All the seats in sheep and goats registered on

Polish territory at the beginning of the reporting /

control

17725

Whole herds of locations visited 647

All checks made 682

Whole pieces of sheep and goats registered on

Polish territory at the beginning of the reporting /

review

327491

Whole pieces of sheep and goats

inspected the premises in stocks

31956


A5.6.3.3 Animal welfare Table A5.182 Animal welfare inspections at slaughterhouses by the Veterinary

Inspection , 2009

Administrative level Number of inspected

slaughterhouses

Number of checks

District level 1114 2,775



Provincial level 139 141

Total 1,253 2,916



A5.6.3.5 Frequency of inspections at feed establishments by the Veterinary Inspection, 2009

Type of activity under scrutiny Frequency of periodic inspection

Category 1 rendering plant 1 time / month

Rendering plant categories 2 and 3 4 times / year

Intermediate plants 2 times / year

Incineration 2 times / year

Entities transporting service animal materials 1 time / year

Operators using by-products of animal origin

referred to in Article. 23 of Regulation 1774/2002

1 time / year

Entities engaged in the manufacture of pet food 2 times / year

Plants use a technical by-products of animal

origin

1 time / year

Operators using meat meal - bone as soil

improvers

after analyzing the risks, not less often than once

every two years

Operators using the processed animal protein in

the manufacture of animal feed for farm animals

Following the recommendations of the National

Programme for Control of Animal Nutrition

Entities nutrition collective (catering waste) 1 time / year with Sanitary Inspectorate after the

conclusion of the District Veterinary Officer of the

relevant agreement with the Inspectorate

Border Inspection Posts (BIP) One time / years

Slaughterhouses, cutting plants and processing

of red meat, white fish, eggs and dairy plants

2 times / year - carried out by inspectors' s food

hygiene


*This is the minimum frequency; the actual frequency is determined by the local inspector based on a risk

assessment and their knowledge of the establishment.

Table A5.183 Number of feed businesses subject to official controls, and number of inspections performed, 2009

Type of feed industry Number of business

operators to feed

Number of entities subject

to official control

inspection.

Manufacturers of feed materials 24627 893

Storage of feed materials 79 38

Manufacturers of additives, and

premixes bioprotein

. .

Manufacturers of compound

feed

362 337

Manufacturers of medicated

feeds

53 43.

Importers and representatives 9. 4.



of companies in third countries

Agents, distributors and

retailers

5884 4449

Livestock 506109 18857

Manufacturers of pet food 160 148

Other activities on feed 687 112

Total 538014 24925

Adapted from: Integrated Multi-Annual Control Plan for the Polish; Annual Report 2009 under Regulation 882/2004 – Poland







A5.6.3.9 Imports

There are 12 border inspection posts in Poland.

Table A5.184 Number of points examined, at import, by veterinarians 2009

Type of check Number of items

Consignments of products 10,658

Inspection of consignments of animals 498

Shipments of animals under transit (including the

transit from the temporary storage in customs

warehouses)

1,655

Number of points examined by veterinarians

shipments made in 2009 under the reimportu.

98

Number of points examined by veterinarians

shipments in 2009. under the export procedure

5,506












A5.6.4 United Kingdom

The annual report for the UK contains limited information about controls associated with the

meat sector; it does include information about the number of inspections of the dairy sector,

animal welfare and animal feed businesses. Information relevant to the controls listed in

Table 2.1 was used to create the tables below.

A5.6.5 Total control activity

Table A5.50 lists the number of Food Business Operators (FBO) subject to official controls in

the UK in 2009.

Table A5.185 Number of FBOs subject to official control in the UK, 2009

Business type Approximate number

Food businesses operators 600,000

Primary production holdings 195,000

Feed businesses 140,000 (including farms)

Adapted from: Single integrated national control plan for the United Kingdom January 2007 – 2011: Progress report in 2009 towards implementation – report for the European Commission


Animal Health is responsible for veterinary controls in the area of animal health in Great

Britain. The role is undertaken by DARD in Northern Ireland. Enforcement of legislation is

mainly the responsibility of local authorities.

Table A5.51 provide details of the Animal Health and DARD Veterinary Service inspections

carried out during 2009.

Table A5.186 Animal health inspections in Great Britain and Northern Ireland, 2009

Disease Number of inspections

Great Britain Northern Ireland

Bovine TB (surveillance herd

tests)

57,853 23,031

BSE 47 notifications

(no data on routine tests)

105,233

Scrapie 54 suspected cases

investigated with 2 day target

(no data on routine tests)

1,518

Salmonella 1,354 adult laying flocks

127 adult broiler flocks

259 breeding flocks

150 laying flocks

32 broiler flocks

Artificial insemination (bulls and

boars)

113 7 approved facilities, inspected

every 6 months

Animal by-products controls 6,734 (of 9,780 scheduled) 217

Brucella abortus in cattle - 23,135





There are approximately 140,000 feed businesses in the UK connected with the supply of

feeding stuffs for food producing animals. Table A5.52 breaks these businesses down by

type.



Table A5.187 Registered and approved feed businesses in the UK, 2008

Type of feed business Number of businesses

Primary producers 111,000

Manufacturers and packers 1,277

Importers 55

Distributors / transporters 1,037


A5.6.5.5 Inspection of feed, including imported feed

Inspections of feed business operators’ premises are conducted on a frequency of between

12 to 36 months. The main objective of the inspections are to ensure the appropriate quality

of feeding stuffs containing veterinary medicinal products and specified feed additives has

been achieved.

Table A5.53 lists the controls undertaken by the Animal Medicine Inspectorate in 2009. This

includes physical inspection of premises and equipment and taking and analysis of feed

samples. Visits are classified as:

▪ Scheduled: those planned, based on the number of feed business operators and current

inspection frequencies.

▪ Special/follow-up: those approved feed business operators’ premises for enforcement

purposes or to check that non-compliances noted at a scheduled inspection have been

rectified.

▪ Other: those to non-approved feed business operators’ premises for enforcement

purposes e.g. the unlawful incorporation of veterinary medicinal products into feeding

stuffs.

Table A5.188 Summary of official controls undertaken by AMI, 2009

Control type Number

Scheduled inspections 552 (of a total of 498 planned)

Special / follow-up visits 19

Feed safety incident investigations 15

Samples 119



Compliance with the transmissible spongiform encephalopathy (TSE)-related livestock feed

controls in Great Britain is monitored by Animal Health through the National Feed Audit

(NFA). In Northern Ireland, these controls are carried out by DARD.

The inspection programme is risk-based in accordance with Regulation (EC) No.882/2004.

The risk assessment establishes the level of visits needed to audit feed production and

handling standards throughout the feed supply chain. Feed samples are tested for

prohibited animal proteins. The number of inspections is provided in Table A5.54.

Table A5.189 Summary of 2009 inspection programme for controls of animal protein in animal feed in Great Britain

Stage Number of inspections comprising checks

on the presence of processed animal

proteins

Import of feed materials 30

Storage of feed materials 37



Feed mills 580

Home mixers/mobile mixers 226

Intermediaries of feeding stuffs 21

Means of transport 25

Farms keeping non-ruminants 67

Farms keeping ruminants 693

Farms keeping both ruminants and non ruminants 858

Total 2537





Internal Veterinary Auditors carried out routine audits in approved establishments in order

to assess and report on the effectiveness of arrangements and procedures

established by the Meat Hygiene Service (MHS) to ensure operator compliance with relevant

legislative requirements. The number and type of audits are listed in Table A5.55.

Table A5.190 Meat Hygiene Service audits of approved establishments in 2009

Audit Number of establishments

HACCP Follow up 17

Post-mortem inspection and collection and communication

of inspection results

24

Assessment of the implementation of the MHS enforcement

policy and procedures

20

New TSE rules for over-30 month and over-48 month bovines 21

Technical advice to support official and lead veterinarians 20

MHS Tuberculosis sampling and submission trials 5

Step 3 Changes to SRM controls 24


A5.6.5.9 Imports











Animal Health Dairy Hygiene (AHDH), on behalf of the Food Standards Agency (FSA), is

responsible for hygiene controls at milk production holdings in England and Wales.

Department of Agriculture and Rural Development for Northern Ireland Quality Assurance

Branch (DARD QAB) is responsible for milk hygiene controls on behalf of the FSA in

Northern Ireland and local authority food law enforcement services are responsible for

controls in Scotland.

During 2009 there were approximately 11,200 milk production holdings in England and

Wales, 3674 in Northern Ireland and 1,236 in Scotland. In Northern Ireland, DARD QAB,

on behalf of FSANI, is also responsible for hygiene controls at liquid milk processing

establishments, of which there were 10 in 2009.

The numbers of primary inspections and secondary inspections (to check on correction of

non-compliances) carried out in 2009 by AHDH, DARD and local authorities in Scotland

are given in Table A5.56.

Table A5.191 Summary of hygiene controls on milk production holdings in England Scotland and Wales, and liquid milk processing establishments in Northern Ireland, 2009

Primary inspections Secondary inspections

Milk production holdings

Animal Health and Dairy Hygiene 10,572 2218

Local Authorities in Scotland 275 78

Department of Agriculture and Rural

Development for Northern Ireland,

Quality Assurance Branch

3,383 1,769

Liquid milk processing establishments


Development for Northern Ireland,

Quality Assurance Branch

4 21


Controls at egg production units are carried out on behalf of the FSA by the Egg Marketing

Inspectorate in England and Wales. In Scotland they are done by the Scottish

Government's Rural Payments and Inspections Directorate, and in Northern Ireland by

DARD QAB. The number of inspections in 2009 is listed in Table A5.57.

Table A5.192 Summary of hygiene controls at egg production holdings and egg packing establishments in Northern Ireland in 2009

Country Primary inspections Secondary inspections

England and Wales 611

(target for 2009, of 1,884

registered egg production

sites)

Scotland 28

(of 285 registered egg

production sites)

Northern Ireland 96 31




Annex 6 Reporting cost estimates regarding financing of official controls

A6.1 Data from the survey

This Annex provides further detail on the methodology employed in order to develop a

Standard Cost Model (SCM) to measure the administrative burdens imposed on industry

through the legislative framework for official controls. The results of the SCM are shown in

Annex 1 and analysed in Section A1.1.7.

The data required in order to develop the SCM were collected through a combination of the

Competent Authority (CA) survey and analysis of data on official controls obtained directly

from Member State’s CAs.

The questionnaire asked CAs:

1. On average, what is the average staff cost per hour for those individuals involved in

reporting related to the annual report that is based on Art.44 of the Regulation (i.e. in the

context of the multi-annual national control plans mentioned in Art.41)? Please:

a. Include salary costs, other personnel costs (e.g. pension contributions) and

apportioned overhead costs; and

b. Provide a single figure where possible, averaged across staff roles (e.g.

management, technical, administration). If this is not possible, please distinguish

between staff roles, and indicate the nature of the role (e.g. management).

2. On average, what would be the incremental cost of extending the scope of reporting to

include information regarding the financial resources devoted to official controls each

year? (i.e. reporting through the annual report that is based on Art.44 of the Regulation.

Please indicate:

a. Total staff time required to complete the report; and

b. External costs associated with compiling the report.

3. On average, what would be the cost of making public information on fees, modalities of

payment and other administrative procedures for the official controls for which your

authority is responsible? Please indicate:

a. The total staff time required to make the information public; and

b. External costs associated with making the information public.

The questions asked in the survey were designed to collect data on CA staff costs of data

collection and monitoring related to control activity. Most of the CAs that completed the

surveys, however, did not provide this information. Out of 14 completed CA surveys

returned, only six provided information on staff costs, and only two of these provided

estimates of the incremental costs to report to the Commission on resources devoted to

official controls. Table A6.1 contains the cost information received from CAs through the

survey.

Table A6.193 Data for the SCM obtained through the survey

CA Response

Q1 Q2 Q3

Federal Agency for the Safety of

the Food Chain (FASFC) (BE)

€64.74 / hour Staff time: 836

hours

External costs: 0

Staff time: 836

hours

External costs: 0

Bulgarian Food Safety Agency

(BG)

€1.86 / employee /

hour

n/a n/a

SG Sanidad Exterior (MSPSI);



(ES)

€20.42 / hour n/a n/a

Finnish Food Safety Authority

(Evira)

€42 / hour Staff time: 4 FTE

External costs:

€500,000

n/a



State Food and Veterinary

Service of Republic of Lithuania

(LT)

€3.31 / hour n/a n/a

Department of Agriculture and

Rural Development (DARD) (UK)

OV slaughter:

€42.41 / hour

OA slaughter:

€24.69 / hour

n/a n/a

Direction générale de

l’alimentation (DGAI) – Ministère

chargé de l’agriculture

€29.50/hour n/a n/a


A6.1.2 Data from the UK

In addition to the time and cost information obtained through the survey, the UK CA (the

Food Standards Agency) provided a detailed response setting out the implications of

extending the scope of reporting (Q2 above). The FSA provide a baseline (based on current

costs) and three alternative scenarios for controls undertaken by local authorities. Two of

these scenarios include a description of the cost implications of different levels of data

collection, while the third describes potential costs but does not provide an estimate.

Baseline: Current costs of reporting (not incremental).

The FSA currently undergoes work to collate information for its annual accounts. For meat

specifically, this takes approximately 10 working days; split between a Senior Executive

Officer and a Grade 7 equivalent. Using wage rates from the ONS survey control guidance

(Table A6.2), the cost of the 10 working days is estimated to be between approximately

£2,700 and £3,500, including overheads. A range of costs is presented as the FSA does not

have accurate evidence as to exactly how the time is split.

If these figures were required in more detail, in a format different to how they are currently

collected, considerably more time would be required.

Scenario 1: Provision of total resource estimates for the UK as a whole, with no subdivisions.

The FSA estimated that producing the necessary figures for 2009-10 took approximately 5

days. This includes only the costs of collating the information; it does not include any time

for preparing a report. In addition, the 5 days does not include time for putting the

information in a standard format to report to the EU or the public.

The average cost of the time spent analysing and collating the necessary data is estimated

using wage rates from the Office for National Statistics (ONS) Survey control unit guidance.

The estimated split of time is approximately 2 days of a middle manager’s time and 3 days of

a junior manager’s time. Based on the hourly rates of both106

(Table A6.2), the total cost of

extending the scope of reporting to include information regarding the financial resources

devoted to official controls each year would be around £1,500.

Scenario 2: Precise figures of costs based on a flat rate per local authority.

If charges were implemented on a flat rate basis, the local authorities would not be required

to provide any additional information than is currently available. This would lead to no, or at

least limited, incremental costs at the local level.

Under this scenario costs are calculated using the same DCLG data as in Scenario 1, but

supplemented by LEAMS FTE and inspection figures. The FSA estimate that some

additional analysis would be required; it would take approximately 6 days of FSA analyst

time. This would result in a cost to the FSA of approximately £1,600 (Table A6.2).

106 The hourly rates are based on civil service “full economic” pay rates and up-rates each year based on the

Annual Survey of Hours and Earnings inflation rate (ASHE). http://www.statistics.gov.uk/statbase/product.asp?vlnk=13101

http://www.statistics.gov.uk/statbase/product.asp?vlnk=13101



As per Scenario 1, this cost does not include any time required to put the information into a

standard format for the EU or the public. This would require more time than scenario 1 as

the reporting would need to be at a local authority level.

Table A6.194 Civil service ‘full economic’ pay rates in 2010 / 2011

Civil service

grade /

position

FSA grade /

position107

Hourly

wage rate

(£)

Scenario 1 Scenario 2

Time

(days)

Cost (£) Time

(days)

Cost (£)

Director Director 91.24

Senior

manager

Grade 5 70.96

Middle

manager

Grade 7 48.99 2 685

Junior

manager

Higher /

Senior

Executive

Officer

37.18 3 780 6 1,606

Clerical Executive

Officer 23.63

Total 1,465 1,606

Source: Provided by the FSA as part of their contribution to the CA questionnaire.

The FSA outlined several caveats and limitations related to these calculations:

▪ DCLG figures are only available for food hygiene and for England. UK and food

standard figures would be estimated by scaling up based on FTEs.

▪ The calculation is based on definitions of food safety expenditure made by DCLG. If

there were precise rules about what to include when calculating costs (and these rules

required significantly different information from what was included by DCLG) it would

require a lot of additional work, for example additional reporting from over 400 local

authorities.

▪ The information currently held by DCLG on sales, fees and charges also includes other

income; precise details of charges to Food Business Operators (FBOs) are not currently

available. Precise figures for charges would require a lot of additional work, including

additional reporting from local authorities.

▪ The number of visits, premises and FTEs only relates to visits reported through LEAMS.

The costs may also include other food safety work undertaken by local authorities.

▪ The ability to provide information about the resources devoted to official controls

assumes that DCLG continues to produce food safety costs and that local authorities

continue to report through LEAMS.

Scenario 3: Precise figures of cost based on actual time spent on each business.

Collecting precise data on costs, based on actual time spent on each FBO, would require:







considerable.

107 The allocation of FSA grades across the five civil service positions is an assumption.



A6.1.3 Data from Finland The Finnish CA (Evira) stated that it would cost €500,000 and 4 FTEs to collect and submit information about the resources spent by CAs in the execution of official control activities. During interview, Evira stated that the €500,000 represents an initial investment to set up an IT system capable of collecting the necessary data at a local (municipal) level. Once the system was up and running, they estimated that it would require 4 FTEs on an ongoing basis. Both the Finnish and UK official control systems are highly decentralised. It is reasonable to assume that the cost of Scenario 3 above for the UK may be similar to Finland’s estimate.



Annex 7 Participants in the consultation

A7.1 Summary of responses received

At the time of writing, the research team had received 39 completed questionnaires. 11 responses were received from Competent Authorities in the

Member States and one was submitted by a Competent Authority in an Associated Country (Norway). The evaluators received 27 responses from trade

associations and other representative groups, of which one was an international organisation, 9 operated at the EU level and the remaining 17 were

national level associations. Respondents have also completed 29 options scorecards (Table A1). Tables A2 to A5 list all respondents by respondent type

(Competent Authorities and trade associations) and level of operation (international, EU level and national). Four respondents did not submit responses

to questionnaires, but presented written notes or comments. Where interviews have been conducted, these are indicated.

Table A7.195 Breakdown of responses received by questionnaire type

Questionnaire type Number of responses

received

Competent Authority Questionnaire 12

Other Stakeholders Questionnaire (for trade

associations and other representative groups)

27

Options Scorecard 29

Table A7.196 Competent Authority respondents

Respondent MS Interview Questionnaire returned Scorecard

returned

Written

comments

Imports only

Bulgarian Food Safety Agency BG

SG Sanidad Exterior (MSPSI); SG Acuerdos

Sanitarios y Control en Frontera (MARM)

ES N/A

Association of Finnish Local and Regional

Authorities (representing Municipal local

Authorities)

FI

Finnish Food Safety Authority Evira FI Scheduled



Respondent MS Interview Questionnaire returned Scorecard

returned

Written

comments

Imports only

Ministry of Agriculture and Forestry, Finland FI

Agence nationale de sécurité sanitaire (ANSES) FR Anticipated Anticipated Anticipated

Institut de Veille Sanitaire FR N/A Anticipated Anticipated

Ministère de l'Agriculture, de l'Alimentation, de la

Pêche, de la Ruralité et de l'Aménagement du

territoire

FR Anticipated Anticipated Anticipated

Department of Agriculture, Fisheries and Food IE

Ministry of Health – Department for Veterinary

Public Health, Nutrition and Food Safety

IT

State Food and Veterinary Service of Republic of

Lithuania

LT

VWA Voedsel en Waren Autoriteit (Food and

Consumer Product Safety Authority)

NL

Agricultural and Food Quality Inspection

Authority*

PL

Norwegian Food Safety Authority NO**

Swedish National Food Administration (HC) and

Swedish Board of Agriculture (NHC)

SE


Development, Northern Ireland (DARDNI)

UK

*Response sent to questionnaire for trade associations and other representative groups

**Associated country of the European Union (not a Member State)

Table A7.197 International Industry Associations and Other Stakeholder responses

Respondent Interview Questionnai

re returned

Scorecard

returned

Written

comments

Imports

only



The Grain and Feed Trade

Association (GAFTA)

Table A7.198 EU-level Industry Associations and Other Stakeholder responses


re returned

Scorecard

returned

Written

comments

AVEC

AIPCE-CEP Anticipated Anticipated* Anticipated*

CELCAA N/A Anticipated Anticipated

CES/ETUC N/A Anticipated Anticipated

CIAA N/A Anticipated* Anticipated*

CLITRAVI

Confederation of the Food

and Drink Industries of the

EU (CIAA)

COPA-COGECA

European Dairy Association

(EDA)

European Federation of the

Trade in Dried Fruit, Edible

Nuts, Processed Fruit &

Vegetables,

Processed Fishery Products,

Spices, Honey and Similar

Foodstuffs (FRUCOM)

EuroGroup for Animals

European Feed

Manufacturers’ Federation

(FEFAC)

Federation of Veterinarians of




re returned

Scorecard

returned

Written

comments

Europe (FVE) – UEVH

FEDIAF Anticipated Anticipated Anticipated

FESASS N/A Anticipated Anticipated

Nutreco

UEAPME N/A Anticipated Anticipated

UGAL Anticipated Anticipated Anticipated

*Questionnaire has been circulated to the association members. GHK may receive a direct response from the organisation.

Table A7.199 National Industry Associations and Other Stakeholder responses

Respondent MS Interview Questionnai

re returned

Scorecard

returned

Written

comments

Federal Association of

Food and Agricultural

Trades

AT

Eurogroup for Animals BE

Febev BE

Metro Group DE

Verband der

Fleischwirtschaft e. V.

DE

Dansk Erhverv

(Danish Chamber of

Commerce)

DK

Danske Slagterier,

S.A. (Danish Bacon &

Meat Council)

DK

SEEDYZ –

Association of Greek

EL




re returned

Scorecard

returned

Written

comments

Traders and Exporters

of Grain and Animal

Feed and Byproducts

ANAFRIC-GREMSA ES

Association Laitiere

Francaise (ALF)

FR N/A Anticipated Anticipated

Association Nationale

des Industries

Alimentaires (ANIA)


Confédération

Française de la

Boucherie Charcutiers

et Traiteurs (CFBCT)


Confédération

Nationale des

Charcutiers-Traiteurs

de France (CNCT)

FR N/A Anticipated Anticipated

Fédération des

Industries Avicoles

(FIA)


Fédération Nationale

de l'Industrie et des

Commerces en Gros

des Viandes

(FNICGV)

FR Anticipated Anticipated

Syndicat national des

inspecteurs en santé

publique vétérinaire

(SNISPV)

FR

Finnish Food and

Drink Industries'

Federation

FI




re returned

Scorecard

returned

Written

comments

Finnish Veterinary

Association

FI

Kesko Food Ltd. FI

Dutch Meat

Association (COV)

NL

Productboard for

Horticulture

NL

Frugi Venta NL

Agricultural Industries

Confederation (AIC)

UK

Association of

Independent Meat

Suppliers (AIMS)

UK

British Meat

Processors

Association

UK

Chartered Institute of

Environmental Health

UK

Food Solutions UK

NFU Scotland UK

Veterinary Public

Health Association

(VPHA)

UK



Annex 8 References

▪ Lepistö, O., Nevas, M. and Hänninen, M. 2010. Application of EU Legislation Concerning Food

Control Fees in Finland. Archiv für Lebensmittelhygiene, Vol. 61(5) pp.189-194.

▪ FVO, 2007. Final Country Profile of Poland; on food and feed safety, animal health, animal welfare

and plant health. European Commission, Directorate General for Health and Consumers, Food

and Veterinary Office.

▪ FCEC, 2008. Study on fees or charges collected by the Member States to cover the costs

occasioned by official controls. Final report. Part two: case studies. Food Chain Evaluation

Consortium. European Commission, Directorate General for Health and Consumers.

http://www.refdoc.fr/?traduire=en&FormRechercher=submit&FormRechercher_Txt_Recherche_name_attr=listeTitreSerie:%20(Archiv%20f%C3%BCr%20Lebensmittelhygiene)

Documents

Preparatory work to support the impact assessment on ... · E.3 The analysis suggests that the problems with the Regulation would best be remedied by improving the current system,