27 February 2013

Agriculture ministers met in Brussels on Monday to discuss the unfolding horsemeat scandal which shows the problem of regulating complicated international supply chains. More regulation is unlikely to be the answer

When the foot and mouth scandal broke, a friend of mine in government said that the basic problem was that cattle travelled all over the country before they were slaughtered. We are now discovering that “meat” has a eurorail pass before it gets to the shops or into the school dinner.

That means that what ends up on the plate depends on two things – the quality of regulatory enforcement in relatively far off countries – and the willingness and ability of each link in the “supply chain” to do proper assurance on the provenance of what it purchases and puts in its stage of the production process. Some very big brand names are now discovering that – despite their claims that their own assurance processes are much more rigorous than anything the government requires – they are left exposed. Meanwhile, both business and government are learning to love more effective regulation.

So far no one is known to have died and the main problem is the “yuk” factor. But if the regulation is so weak that horse or pig can enter a food chain masquerading as “beef”, it is reasonable to assume that other standards are not being very scrupulously observed.

Some lessons for government:

First, despite regarding regulations in abstract as “bad”, government needs to appreciate that individual regulations provide important safeguards which consumers – and business – value. One of the reasons why deregulation is so hard to do is that the abstract is hard to translate into the removal of specific protections.

Second, business assurance is not enough – particularly where a supply chain resembles a cross-national game of pass the parcel. Businesses are conflicted between the desire for quality and the imperative to compete.

Third, enforcement matters. The most humiliating piece of the horse meat saga is that it was not the UK Food Standards Agency that detected the initial unwelcome incursion of Black Beauty into the food chain – it was the Irish counterpart. Some commentators have attributed this to cuts in numbers of inspectors – others to the fact that Defra took back responsibility for food labelling in England from the FSA in 2010 as part of the public body reforms (though, bizarrely, it retained the responsibility in Scotland, Wales and Northern Ireland). In any case this seems to be forgetting the drive behind the post-BSE establishment of the FSA – to remove the surveillance of the food chain from the department that sponsors food producers.

The answer to this is not more regulation. The regulations seem clear. The answer is to enforce the regulations that exist. Unfortunately it is easier to write new rules than to find the public money for the inspectors to make sure they are observed. Rather than self-police, perhaps there is a case to fund enforcement through an industry levy.

One legacy of the horse meat scandal should be a better appreciation of the positive role properly enforced regulations can play in making the economy work.


But can't help feeling that by setting up the Food Standards Agency the Government took some of the pressure off the industry to test and regulate its own products?

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