Scottish Government

THE EGGS (MARKETING STANDARDS) (ENFORCEMENT) (SCOTLAND) REGULATIONS 2005

ANNEX III: REGULATORY IMPACT ASSESSMENT

1. Title of Proposal

The Eggs (Marketing Standards) (Enforcement) (Scotland) Regulations 2005.

2. Purpose and intended effect of measure

(i) The objective

Intra-Community trade in eggs is governed by EC Regulations to ensure transparency of the market. These Regulations make for the enforcement in Scotland of relevant provisions of EC Regulations on certain marketing standards relating to quality, grading and labelling as well as the production and marketing of eggs for hatching and of farmyard poultry chicks.

(ii) The background

Council Regulation 1907/90 (as amended) and Commission Regulation 2295/03 (which repeals 1274/91) prescribe minimum harmonised standards to facilitate trade and ensure EU consumers are provided with good quality hen eggs produced to a common standard. These EC Regulations cover grading by quality and weight (e.g. Class A/B), packaging, storage and transport, labelling and marking of eggs and packs, and Special Marketing Term (SMT) criteria which must be met before certain claims about types of farming can be made (e.g. free range, barn and cage). These EC Regulations do not apply to other poultry eggs (e.g. ducks and quail). EC legislation for the egg sector is currently executed and enforced in Scotland through The Eggs (Marketing Standards) Regulations 1995, from producer to wholesale level, by SEERAD's Egg Marketing Officers (EMOs). Retail sales are the responsibility of Environmental Health Officers and Trading Standards. Similar arrangements exist in England, Wales and Northern Ireland.

(iii) Risk assessment

These Regulations seek to provide for a full enforcement regime which would protect the consumer by enforcing high uniform standards and informative labelling and also protect UK producers against unfair competition. Potential risks to public health of failing to introduce the Regulations would extend to all members of the public who consume eggs.

3. Options

(i) Do nothing

This is not a realistic option. The EC Regulations are directly applicable and we are required to take all appropriate measures to ensure they are effectively implemented. We are also required by the Scotland Act 1998 to implement EC legislation where necessary into domestic Regulations. To do nothing would mean a failure to achieve this and the objective at paragraph 2(i) above. It would also mean a risk of infraction proceedings.

(ii) Introduce new enforcement Regulations but without consolidation of existing legislation

There would be no risk in simply introducing new enforcement Regulations, without consolidation, but this would not address the issue of confusion caused by the repeated amendment of existing legislation.

(iii) Introduce new Regulations, including consolidation of existing Regulations

This would provide for a full enforcement regime which would protect the consumer by enforcing high uniform standards and informative labelling and also protect UK producers against unfair competition. It would ensure that we meet the requirements of the Scotland Act. It would also tidy up the regulatory position in Scotland by consolidating existing legislation.

4. Proposed changes

The SSI will apply to Scotland only and incorporate the Eggs (Marketing Standards) Regulations 1995 (SI 1995/1544, as amended by 96/1725; 97/1414; and 98/1665), Council Regulations 5/01 and 2052/03; and Commission Regulations 2295/03; 818/04 and 1515/04.

5. Benefits

(i) Business sectors affected

The Regulations will affect 170 registered egg producer/packers in Scotland. Two are medium-sized businesses, the remainder are small-scale operators.

The Regulations also affect 8 hatcheries, two of which are not commercial and all of which are small businesses. There are also 70 hatchery supply farms, all of which are small businesses.

(ii) Option (i) - do nothing

This would not achieve the policy goal of enforcing EC Regulations, meeting the requirements of the Scotland Act or protecting UK producers. There would be no social or environmental benefits or distributional impact.

(iii) Option (ii) - introduce new enforcement Regulations but without consolidation of existing legislation

This would provide for a full enforcement regime which would protect the consumer by enforcing high uniform standards and informative labelling and also protect UK producers against unfair competition. It would meet the requirements of the Scotland Act with regard to implementation of EC legislation. It would not achieve the policy goal of tidying up - and therefore clarifying - existing legislation. There would be benefits for public health - for the population at large - through enforcement of marketing standards. There would be no environmental benefits or distributional impact.

(iv) Option (iii) - introduce new Regulations, including consolidation of existing Regulations

This would achieve the policy goal by providing for a full enforcement regime which would protect the consumer through enforcement of high uniform standards and informative labelling and also protect UK producers against unfair competition. It would meet the requirements of the Scotland Act. It would tidy up - and therefore clarify - existing legislation. There would be benefits for public health - for the population at large - through enforcement of marketing standards. There would be no environmental benefits or distributional impact.

6. Costs

Option (i) - do nothing

There would be no costs.

Option (ii) - introduce new enforcement Regulations but without consolidation of existing legislation and Option (iii) - introduce new Regulations, including consolidation of existing Regulations

The costs for these two options would be the same.

Economic

Costs to the industry surround the stamping of eggs and are minimal.

There are 170 registered egg producer/packers in Scotland. The largest of these, - 5 businesses producing about 80% of eggs produced and sold as Class A - already employ the use of inkjet equipment for applying marks to eggs. The cost implications for these packers is therefore minimal and relates to a marginally increased ink usage and additional time to change inkjet settings when grading eggs from different production sites.

5 businesses pack between 108,000 and 360,000 eggs per day. They have purchased inkjet equipment ranging in price from about 5,000 to 8,000 dependent on inkjet type, level of computerisation and degree of application.

The remaining 160 or so registered egg producer/packers have purchased a mixture of automated, semi-automated and manual stamping equipment at a total cost of about 52,000. This is based on equipment fitted to egg-graders costing between 1,300 and 1,800, multiple hand-stamps at between 350 and 1,400, single purpose built hand-stamps at between 59.38 and 152.57, and stationers stamps at less than 20.

The recurring costs are ink, maintenance of equipment, setting automated equipment or time spent marking with manually operated equipment. These costs vary tremendously depending on type of equipment, throughput and type of ink (water, oil or alcohol based).

There are no additional costs for hatcheries because there are no new marketing requirements. The Regulations lessen costs by allowing for increased flexibility in the marking of eggs for hatching.

Environmental

None identified

Social

The proposals will protect public health.

7. Issues of equity and fairness

The proposals are equitable and fair in the way that they affect individuals and businesses within the eggs industry i.e. producers and packers and hatcheries. No key groups or businesses will be disproportionately affected. The proposals are proportionate to the need for clear consumer information and hygiene and health controls.

8. Small Firms Impact Test

All but two egg producer/packers and all hatcheries qualify as small businesses. There will be very little impact on small businesses as most of the costs apply to medium to large-scale production. The Executive has regular dialogue with the representative bodies - NFU Scotland and the Scottish Egg Producer Retailers' Association. There has not been detailed consultation with individual egg producers/packers and hatcheries but discussions with the representative bodies suggest that the industry is supportive of the proposals.

9. Competition assessment

The businesses in the sector are almost all small. The largest 3 businesses in the producer/packer sector hold around 85% of the market share. In the hatchery sector, one company holds around 90% of the market share. A competition filter has been completed and this confirms that the proposal is likely to have little or no effect on competition in either sector. Details are at Annex 1.

All EC Member States are required to adopt the practices under the relevant EC Regulations. Monitoring systems are required in each Member State to ensure that the provisions of the legislation are complied with. Intra-Community trade is thereby facilitated by these Regulations and imports from third countries are also subject to the standards laid down.

10. Enforcement and sanctions

Proposals will be enforced by Executive Egg Marketing Officers (EMOs) as part of their remit to enforce the Egg Marketing Standards Regulations. Retail sales are the responsibility of Environmental Health Officers and Trading Standards.

Failure to comply with the Regulations could result in a person being liable on summary conviction to a fine not exceeding level 5 on the standard scale.

11. Monitoring and review

The EMOs will oversee the enforcement of these Regulations. Responsibility at the retail level will rest with Environmental Health Officers and Trading Standards. The marketing standards for eggs are constantly monitored by the EC Eggs and Poultry Management Committee; papers or proposals resulting from their deliberations - and likely to affect the industry - will be the subject of SEERAD consultation with interested parties. There will be a review of the Regulations and corresponding RIA within 10 years of the Regulations being laid.

12. Consultation

i) Within government

There has been consultation with the other UK administrations (i.e. Defra, NAWAD and DARDNI) and the Food Standards Agency.

ii) Public consultation

The consultation document to which this RIA is attached will be circulated widely to trade and interested bodies. The question of enforcement has also been discussed regularly with relevant parts of the industry.

13. Summary and recommendation

The EC Regulations, although directly applicable, need to be fully enforceable in order to protect the consumer and reputable producers from unfair competition. This can only be achieved through the establishment of a full enforcement regime, as envisaged by the Regulations.

Declaration

I have read the regulatory impact assessment and I am satisfied that the benefits justify the costs

Signed……………………………

Date

Minister's name, title, department

Contact point: Marie Coventry, Agriculture Policy Division, Room 262, Pentland House, 47 Robb's Loan, Edinburgh EH14 1TY

ANNEX 1: COMPETITION FILTER TEST