The Scottish Government

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Regulatory Impact Assessment

1. Title

Marketing Requirements for Fruit Propagating Material and Plants - revision of Directive 92/34/ EEC on the Marketing of Fruit Plant Propagating Material and Plants

2. Purpose and intended effect

Objectives

To update the existing regime to take account of scientific and technical developments and to improve harmonisation and consistency. The intended effect would be to improve consistency in relation to the quality of material being marketed, with benefits for both propagators and their customers.

Background

Existing requirements on the marketing of fruit propagating material and plants are outlined in Directive 92/34/ EEC. The Directive includes certain obligations on those who produce and market propagating material (propagators) and fruit plants and sets out monitoring requirements. The Commission wish to update them, to take account of scientific and technical developments, and to improve consistency and harmonisation.

Rationale for government intervention

Government intervention is necessary to ensure compliance with the minimum conditions specified, to facilitate trade and to minimise the risk of spreading harmful organisms. The intended effect would be improved consistency in relation to the quality of material being marketed, with benefits for both propagators and their customers.

3. Consultation

Within Government

Yes - discussions with colleagues in colleagues in Regional Delivery Division who undertake inspections and as consultation undertaken throughout the UK with colleagues in Defra, PHD, National Assembly of Wales and Department of Agriculture and Rural Development Northern Ireland.

Public consultation

Yes - interest in this topic limited to specific sectors of the Scottish horticultural industry involved in and with soft fruit plants and propagating material but all in this particular area were sent copies of the consultation paper.

4. Options

The Commission has undertaken an Impact Assessment and an EU wide consultation process, which identified four options:

i. replacing the existing legislation with general legislation on marketing

ii. retaining the existing legislation

iii. self regulation, using voluntary agreements, codes of practice etc

iv. updated legislation to introduce simplifications, incorporate the results of scientific and technical developments, and to improve harmonisation regarding the different categories of material being marketed. This would include measures to simplify current arrangements (e.g. registration rather than accreditation of suppliers), but also measures to improve the overall quality and consistency of material being marketed, which in some cases would increase the burden on suppliers and Government. In particular, all propagating material and fruit plants must either be officially certified or officially inspected as so-called CAC (Conformitas Agraria Communitatis) material. Harmonised conditions would be introduced for these different categories, whereas only requirements for CAC have been established at present, with any certification arrangements being left for Member States. Only random checks are required for CAC material at present.

An EU wide consultation exercise was undertaken, following which the Commission has decided to pursue option (iv). This is the only option being considered and therefore this Regulatory Impact Assessment considers the evidence relating to this option, as well as the option of maintaining the status quo (option (ii)).

Benefits

Option (ii) - status quo

The no change option would mean that suppliers would not be faced with revised procedures or additional costs.

Option (iv) - updated legislation

This option would address any obsolete requirements in the current Directive ( e.g. laboratory accreditation) and provide the opportunity to introduce revised requirements on the basis of experience in other sectors ( e.g. registration of suppliers, rather than accreditation). Transparency would be improved and trade and introduction of new varieties would be facilitated between Member States and with third countries. At present, comparisons of the variety purity and health status between Member States' certified material is very difficult. There would be reduced risk of harmful organisms being distributed and improved protection in relation to plant breeders rights (through clearer variety requirements). End-users should receive higher quality material, which would require reduced pesticide applications, with financial and other benefits for operators (including reduced costs) and consumers (through a better quality end product and reduced residues). There would be improved consistency with other EU regimes. In terms of administrative burdens within the UK, there would be some increase to £60,000, mainly as more time would need to be spent co-operating with official inspections.

Costs

Option (ii) - status quo

Obsolete requirements would remain in force, as well as omissions in the legislation, causing practical and possibly financial difficulties for suppliers. The absence of fully harmonised arrangements would be out of step with other parts of the supply chain in this area and would mean that equivalence with third countries could not be established. Introduction of new material and comparisons of quality between different Member States' certified material would remain difficult. The opportunity to simplify appropriate conditions would be lost.

Option (iv) - updated legislation

There would be increased costs through greater official involvement and more onerous requirements in relation to CAC material being marketed.

At present, the only chargeable costs on marketing requirements relate to participation in voluntary certification schemes, but the revised legislation would require that all propagating material and fruit plants to be marketed must be officially certified or officially checked. Official inspections associated with certification in Scotland are currently charged at the rate of £94.50 for up to 0.5ha for Rubus, £95 for up to 0.5ha of Fragaria and £68.31 for up to 5,000 Ribes plants. Under the proposed new regime, chargeable inspections would be extended to those growers producing fruit propagating and planting material outside the scope of the certification scheme. At present, such inspections are generally carried out at the same time as those for other purposes (such as plant passporting) so there is no significant additional cost involved in such cases. There is no plant passporting requirement for Ribes however.

Summary of costs and benefits

A key objective of the proposed consultation exercise, apart from determining a UK negotiating position on the Proposal, will be to establish the scale of costs and benefits associated with the various options. In particular, the costs and benefits associated with option (iv) need to be assessed, given that the Commission are proposing this approach. A Cost: Benefit Analysis (CBA) was carried out in 2002 to determine the impact of a harmonised certification scheme in the UK, particularly on the strawberry sector. A key conclusion at the time was that the case for a harmonised certification scheme was largely dependent on the scale of any price differential between UK and other propagating material. However, there was not a strong case either for or against such a scheme, with only marginal net costs or marginal net benefits, depending on the scale of price differential. Other conclusions were that UK propagators would have greater access to EU markets, but equally EU propagators would have easier access to the UK market. Fruit growers would probably benefit most as there would be greater transparency and access to material, possibly at lower cost.

5. Costs and benefits

Sectors and groups affected

The main groups affected are those individuals and organisations producing and marketing fruit propagating material and plants. Plant breeders have an interest in the variety requirements. There is also a consumer and environmental interest, given the production methods for fruits and the fact that they are part of the chain which results in fruit for human consumption.

Details for UK top fruit (mainly apples, pears, plums, cherries) and soft fruit (mainly strawberry, raspberry, blackcurrant) production are in the tables below. The value of UK production is recorded in Agriculture in the UK 2005 as being £115 million for top fruit and £235 million for soft fruit. In Scotland in 2005 the value of soft fruit production was over £58 million.

Table 1: Top/soft fruit area planted and growers involved with top/soft fruit production - from statistical records of Defra/Welsh Assembly Government/Scottish Executive/Agriculture and Rural Development Northern Ireland

In relation to propagating material, it is estimated that over 90% of soft fruit material produced in England and Wales is certified under the current voluntary Plant Health Propagation Scheme, while less than 50% of top fruit material produced is certified. For soft fruit, around 5 million strawberry plants, 100,000 Ribes plants (blackcurrant, gooseberry etc) and 350,000 metres of Rubus plants (raspberry, blackberry) are entered for certification annually, by around ten propagators. For top fruit, around 7,000 plants are entered for certification annually, currently by two propagators. The total cost of the Plant Health Propagation Scheme is around £170,000 annually.

Scotland is not a major top fruit producer. However, the value of Scottish soft fruit (mainly strawberry, raspberry, blackcurrant) production in 2005 was recorded as being £58 million. In Scotland, 11 propagators participate in a soft fruit scheme, with 7,400 Ribes plants, 22 hectares of Rubus and 140,000 Foundation (i.e. high grade) soft fruit plants entered for certification in 2006. The cost of the scheme is £6,000 annually. This amounts to around 50% of soft fruit plant material produced in Scotland. The other 50% is inspected under the plant passporting arrangements.

Northern Ireland does not have a certification scheme.

The estimated position on costs and benefits of the various options is summarised below (Table 2):

(Table 2: Estimates of Policy and administrative costs associated with the Proposal for the UK )

Small Firms Impact Test

Businesses affected by the Proposal largely fall into the category of small businesses. The Proposal inherently provides for different sizes of businesses, as the impact of requirements such as monitoring and labelling etc will be proportionate to the number of plants being produced and marketed. Additionally, some specific exemptions (e.g. from registration and official checks) are provided for small businesses operating locally. However, further comments from trade organisations or individual businesses are welcomed as part of the consultation process.

Legal Aid Impact Test

The Proposal does not create new criminal sanctions or civil penalties.

Test Run of business forms

Whether or not any new forms will be introduced as a result of the recast of Directive 92/34 will depend on the outcome of this process. If new forms do result it is currently envisaged that they will be straightforward and easy to complete.

Competition Assessment

The following initial assessment has been made.

Would the Proposal:

• Directly limit the number or range of suppliers?
• Indirectly limit the number or range of suppliers?

The Proposal imposes certain obligations and responsibilities on suppliers, but does not directly or indirectly restrict the number or range of suppliers able to operate in the market place. Any business or individual can apply for official registration and providing they comply with the specified requirements, and have their plant material officially certified or inspected, they can market their material in accordance with the Directive.

• Limit the ability of suppliers to compete?
• Reduce suppliers' incentives to compete vigorously?

The Proposal is more likely to enhance competition, as it will provide a minimum baseline for the marketing of plant material, and will improve consistency and transparency in relation to the standards to be met.

Enforcement, sanctions and monitoring

Government officials would ensure compliance with the revised legislation which would require that all fruit propagating material and fruit plants to be marketed must be officially certified or officially checked. If not complied with producers would be unable to market the produce and this would be monitored as part of existing system. At present, comparisons of the variety purity and health status between Member States' certified material is very difficult. There would be reduced risk of harmful organisms being distributed and improved protection in relation to plant breeders rights (through clearer variety requirements). End-users should receive higher quality material, which would require reduced pesticide applications

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