Gildernew concludes review of the LMC
Minister Michelle Gildernew MP, MLA has decided that the Livestock and Meat Commission (LMC), which is a Non-Departmental Body of her Department, will be reformed to enable it to deliver future services to support the expansion of the red meat industry.
This decision evolves from the strategic review of the LMC initiated by the Minister in August 2009. The conclusion of that review made a number of recommendations, the central one being that there would be advantages if the LMC was to be abolished and re-configured as a commercial organisation. The Minister then commissioned a business case to consider all the implications of these recommendations, including the cost to her Department. That business case has been completed and considered carefully by the Minister.
Speaking after her meeting with the LMC Board to discuss the findings of the business case and her decision on the best way forward, she said: “At the root of this process was the objective of finding a better way for delivering the LMC’s services to those stakeholders who pay a levy to it. The process has been longer and more complicated that any of us imagined at the outset and I appreciate the contribution that the LMC has provided. I understand also that the intervening period has been an uncertain one for LMC staff but today brings a conclusion and a direction on the way forward as we move into 2011.”
The Minister explained that based on the information available, to abolish and then establish a commercial organisation would result in a significant affordability issue for her Department which, in the current economic climate, was not possible. She said: “All the information concludes that, putting affordability issues aside, a commercial organisation remains the preferred solution to many of the current problems. However, I cannot ignore the financial consequences of doing so, particularly as it is likely to bear a resource pressure in the region of approximately £5million on the Department. This is due to the likely pension cessation liability that would be due on dissolving the LMC and is based on an actuarial assessment carried out in January 2010. Although it is an estimate at a given point in time, it indicates the quantum of what would be a significant resource pressure for my Department. The LMC’s assets fall short of the implementation cost and it is not possible for the Department, in the current economic environment, to provide the necessary resource cover.”
In this context the Minister drew attention to the Executive’s draft budget noting that her Department is facing significant budgetary challenges over the next four years and will have to make significant savings to fund pressures.
The Minister said: “I am not ruling out commercialisation in the longer term and I accept that the status quo is not acceptable either. Therefore, in line with the business plan’s recommendations, I agree that improvements should be realised by reforming the LMC within the existing framework. I fully understand that this falls short of our expectations but in the current circumstances I believe that it is the most practical and affordable approach.”
She added that the LMC’s guaranteed income of around £1million from its statutory levy was a vital element in helping the industry through these difficult times: “Currently the LMC collects almost £1million from a statutory levy and I believe that this needs to be used to maximum effect for the red meat industry. For example, I know that many in the sector are keen to identify new export markets. The LMC is expertly placed to provide a strategic marketing and research role to advise industry on new lucrative markets. This could make a critical contribution to the expansion of our industry at this difficult time, which has been highlighted recently by NIFDA.”
The Minister also said she recognised that under the existing NDPB framework, the LMC is constrained by strict EU Rules on the promotion of local produce. She said that the Department would work with industry to explore the potential for private enterprises such as NI Good Food to promote the quality of local produce in a way that complements rather than adds a further financial burden on the industry. She also said that DARD would explore all options available to optimise flexibility that could be brought to the treatment of LMC reserves within Government Accounting Rules.
In conclusion, the Minister said: “We share a common goal of wanting a thriving and sustainable agri-food industry. If we can work together to achieve this then the prospects for increasing food production and the industry’s contribution to the economy become more likely. I would like to take this opportunity to thank the LMC and industry for their contribution to this process and we look forward to continuing our work with them.”