National Quality Policy Report: Germany

Transcription

1 National Quality Policy Report: Germany Tilman Becker, Eckhard Benner and Kristina Glitsch May 1997 Project Quality Policy and Consumer Behaviour FAIR-CT

2 This study is part of the project QUALITY POLICY AND CONSUMER BEHAVIOUR TOWARDS FRESH MEAT Project coordinator: Tilman Becker Institut für Agrarpolitik und Landwirtschaftliche Marktlehre, University of Hohenheim The study has been carried out with the financial support from the Commission of the European Communities, Agriculture and Fisheries (FAIR) specific RTD programme, CT , Quality Policy and Consumer Behaviour. It does not necessarily reflect its views and in no way anticipates the Commission s future policy in this area. This manuscript presents only some of the results. Other studies can be downloaded from

3 Table of Content SECTION I INTRODUCTION... 1 SECTION II INDUSTRY STRUCTURE AND QUALITY POLICY ISSUES... 2 Section II.1 Pork... 4 Section II.1.1 Supply by Source... 4 Section II.1.2 Production... 4 Section II.1.3 Meat Industry... 7 Section II.1.4 Retail...12 Section II.1.5 Trade...13 Section II.1.6 Inter-relationships along the supply chain...15 Section II.1.7 Consumer Demand...16 Section II.1.8 Quality Policy Issues...17 Section II.2 Beef...22 Section II.2.1 Supply by Source...22 Section II.2.2 Production...22 Section II.2.3 Meat Industry...23 Section II.2.4 Retail...29 Section II.2.5 Trade...30 Section II.2.6 Inter-relationships along the supply chain...32 Section II.2.7 Consumer Demand...33 Section II.2.8 Quality Policy Issues...34 Section II.3 Chicken...38 Section II.3.1 Supply by Source...38 Section II.3.2 Production...38 Section II.3.3 Meat Industry...40 Section II.3.4 Retailer...43 Section II.3.5 Trade...44 Section II.3.6 Inter-relationships along the supply cain...46 Section II.3.7 Consumer Demand...47 Section II.3.8 Quality Policy Issues...48 SECTION III INSTITUTIONAL ARRANGEMENTS Section III.1 Government...51 Section III.2 Non-government...52 Section III.2.1 Centrale Marketinggeselschaft der deutschen Agrarwirtschaft...52 Section III.2.2 FCL, QMA and AGRIZERT...54 Section III.2.3 Aktionsgemeinschaft Deutsches Fleisch (AGF)...56 Section III.2.4 Der Bund für Lebensmittelrecht und Lebenslmittelkunde e.v. (BLL)...56 Section III.2.5 Das Deutsche Institut für Gütesicherung und Kennzeichnung e.v. (RAL)...57 Section III.2.6 Die Deutsche Lebensmittelbuch-Kommission...58 Section III.2.7 Arbeitsgemeinschaft Ökologischer Landbau (AGÖL)...59 Section III.2.8 Euro Handelsinstitut e.v. (EHI)...60 SECTION IV QUALITY POLICY Section IV.1 Overview of quality policy...62 Section IV.1.1 Statutory...63 Section IV General...64 Section IV Agriculture...64 Section IV Food...66 Section IV.1.2 Voluntary...67 Section IV Private...67 Section IV Brand name programs...67 Section IV Quality management...68 Section IV Designation of origin and traceability...72 Section IV Public...72 Page

4 Section IV Seal of inspection...72 Section IV Designation of origin...73 Page Section IV.2 Product standards...74 Section IV.2.1 Labelling requirement...74 Section IV.2.2 Conformity (e.g. Carcass classification)...76 Section IV.2.3 Origin (Traceability, Geographical origin)...77 Section IV.2.4 Residues (Hormones, Pesticides)...81 Section IV.2.5 Additives...83 Section IV.2.6 General food safety standards...83 Section IV.2.7 Others...84 Section IV.3 Process standards...88 Section IV.3.1 General Food Standards...88 Section IV.3.2 Agriculture (welfare, organic standards)...88 Section IV.3.3 Slaughter/Processing (ISO 9000, meat hygiene standards)...91 Section IV.3.4 Retail...93 Section IV.3.5 Others...94 Section IV.4 Integrated Standards...96 Section IV.5 An Explosive-Effect of Quality Policy SECTION V CONCLUSION SECTION VI REFERENCES SECTION VII APPENDIX

5 Illustration Index Page Illustration 1: Shares of Gross Production...2 Illustration 2: Market Share of Pig Slaughter Enterprises...8 Illustration 3: Main Trading Partners regarding Import of Pigs and Pork...14 Illustration 4: Main Trading Partners regarding Export of Pigs and Pork...15 Illustration 5: Purchased Meat according to the level of consumers...17 Illustration 6: Market Share of Beef Slaughter Enterprises...26 Illustration 7: Market Share for Fresh Red Meat according to Source of Supply...30 Illustration 8: Market Share Of Food Retailer...30 Illustration 9: Main Trading Partners regarding Import of Cattle and Beef...31 Illustration 10: Main Trading Partners regarding Export of Cattle and Beef...32 Illustration 11: Purchased Red Meat according to the Level of the Consumer...34 Illustration 12: Market Share of Chicken Slaughter Plants...41 Illustration 13: Market Share of Chicken Retail...44 Illustration 14: Main Trading Partners regarding Import of Chickens and Chicken...45 Illustration 15: Main Trading Partners regarding Export of Chickens and Chicken...46 Illustration 16: Purchased Poultry according to the Level of Consumer...47 Illustration 17: Purchased Fresh Chicken...48 Illustration 18: Quality Policy in Germany...62 Illustration 19: EHI Label...75 Illustration 20: AGF Origination Protection System

6 Table Index Page Table 1: Proceedings of Agricultural Sales...3 Table 2: Balance Sheet for Pork...4 Table 3: Farm Production of Pork...5 Table 4: Average Stock Size of fattening Pigs...5 Table 5: The Stock-Size Distribution of fattening Pigs...5 Table 6: Average Stock Size of breeding Pigs...5 Table 7: The Stock-Size Distribution of breeding Pigs...6 Table 8: Number of Livestock and Red Meat Production Groups...6 Table 9: Margins for fattening Pigs...6 Table 10: Slaughtered Pork...7 Table 11: Average Productivity of Pork Slaughtering...7 Table 12: Pig Quality Grades (in percent)...8 Table 13: Pork Taking off according to Manner of Settlement...9 Table 14: Margins of Pig Commerce...9 Table 15: Pork Processing Industry...10 Table 16: Pork Processing...10 Table 17: Processing Industry of Red Meat...11 Table 18: EU-approved Red Meat Processing Enterprises...11 Table 19: Number of Outlets (1993)...12 Table 20: Number of taxable butcheries...12 Table 21: Imports of Pigs and Pork...13 Table 22: Export of Pigs and Pork...14 Table 23: Marketing channels in % of total pig slaughtering...15 Table 24: Vertical integration of Pork Production...16 Table 25: Market Shares of Contract Pig Production...16 Table 26: Market share of purchased red meat...17 Table 27: Human infection...18 Table 28: Notifitable Salmonella Infection verifiably caused by Food Contact...18 Table 29: Rate of infected Red Meat...18 Table 30: Residues Inspected Pork...19 Table 31: Heavy Metal Loading of Pork...19 Table 32: Number of Notifitable Animal Diseases affected Pig Producers...20

7 Page Table 33: Number of Complained Pigs during Official Food Inspection...20 Table 34: Nutrition Value of Pork...21 Table 35: Average Slaughter Weight of Pigs...21 Table 36: Balance Sheet for beef...22 Table 37: Farm Production of Cattle...23 Table 38: Average Stock-Size of Cattle...23 Table 39: Stock-Size Distribution of Cattle...23 Table 40: Slaughtered Beef...24 Table 41: Structure of the German Slaughter Economy...24 Table 42: Size Distribution of the Slaughter Economy in the Former FRG Table 43: Average Slaughtering Productivity...25 Table 44: Average Slaughter Productivity for Beef...25 Table 45: Cattle Quality Grades...27 Table 46: Beef Taking off according to Manner of Settlement...27 Table 47: Margins for Beef Commerce...28 Table 48: Number of EU-approved Red Meat Cutting Plants...28 Table 49: Beef Processing Industry...28 Table 50: Processed Beef...29 Table 51: Import of Cattle and Beef...31 Table 52: Export of Cattle and Beef...32 Table 53: Marketing channels in % of total slaughtering...33 Table 54: Vertical Integration of Cattle Production...33 Table 55: Market shares of Cattle Contract Production...33 Table 56: Market share of Purchased Beef...34 Table 57: Residues Inspected Cattle...35 Table 58: Residues Inspected Beef...35 Table 59: Heavy Metal Loading of Beef...36 Table 60: Animal Diseases Affected Cattle Farms...36 Table 61: Complained Cattle during Official Inspection...37 Table 62: Nutrition Value of Beef...37 Table 63: Average Slaughter Weight of Cattle...37 Table 64: Balance Sheet for Chicken...38 Table 65: Farm Production of Chicken...38 Table 66: Average Stock-Size of Chicken Farms...39

8 Page Table 67: Stock-Size Distribution of Chicken Farms...39 Table 68: Number of Poultry and Eggs Producer Groups...39 Table 69: Slaughtered Chicken...40 Table 70: Number of Poultry Slaughter Plants...40 Table 71: Size Distribution of Chicken Slaughter Plants...41 Table 72: Average Slaughtering Productivity of Chicken Slaughter Plants...41 Table 73: EU-approved Poultry Cutting Plants...42 Table 74: Margins of Chicken Slaughtering (in DM/kg)...42 Table 75: Chicken Processing Industry...42 Table 76: Processed Chicken...43 Table 77: Import of Chickens and Chicken...44 Table 78: Export of Chickens and Chicken...45 Table 79: Marketing channels in % for Chickens...46 Table 80: Vertical integration chickens production...47 Table 81: Market Shares of Chickens Contract Production...47 Table 82: Rate of Salmonella Infected Poultry...48 Table 83: Residues Inspected Poultry...49 Table 84: Residue Inspected Poultry Meat...49 Table 85: Animal Diseases affected Poultry Farms...50 Table 86: Nutrition Value of Poultry Meat...50 Table 87: AGÖL...60 Table 88: Euro Handelsinstitut e.v Table 89: National Residues Inspection...83 Table 90: Accredited Enterprises according to ISO Table 91: CMA Seal of Inspection Beef...96 Table 92: CMA Carcass Quality Cattle...97 Table 93: CMA Meat Quality Beef...98 Table 94: CMA Carcass Quality of Pork...99 Table 95: CMA Meat quality of Pork Table 96: Wiesenhof Quality Concept

9 Introduction 1 Section I Introduction In saturated markets, as is in the case of the fresh meat market in the European Union, consumer product awareness has become increasingly important for the market success of a product. Moreover, food safety and a minimum quality standard is taken for granted. Thus, institutional and organisational efforts to guarantee and to improve the quality of food and especially that of fresh meat have to be undertaken. Within the EU FAIR-Project: Consumer Behaviour and Quality Policy the institutional and organisational efforts of six EU member states are examined with respect to consumer awareness of fresh meat quality. With respect to meat consumption, beef, pork and chicken are mainly important in the European Union. Thus, the examination will be taken up these meat products. The present report is intended to be the National Report on Quality Policy in Germany for Part II of the EU FAIR-Project. As such, it is a background report for further analyses of the existing institutional and organisational requirements for quality management in the meat marketing chain. In order to accomplish these tasks, the report presents the following as its most important content: the structure of the German meat marketing chain an overall survey on the national regulations with respect to the meat quality policy the current state of the quality policy within the German meat economy. Finally, this report will conclude its findings of the German institutional and organisational efforts.

10 Industry Structure and quality policy issues 2 Section II Industry Structure and quality policy issues This report considers the importance and the quality policy of the following three sectors: Agriculture Food Production and Processing Retail. In order to give an impression of the importance of these sectors as a part of the whole German economy the respective shares of gross production are recorded. Illustration 1 shows that the three sectors are different in their development during the last three decades. Whereas the importance of the agriculture and the food production declined, the retail sector could gain in importance. Illustration 1: Shares of Gross Production Shares of Gross Production in Prices of 1991 % Food Production Agriculture Retail Source: [52], own calculation. The first stage of meat production is the agriculture. Considering the proceedings of animal sales gives an impression of the importance of meat production for the individual farmer (Table 1). The total proceedings of agricultural sales amounted to 57,298 in Sales of animal products shared in around 64% of all agricultural sales. Of that, sales of pork, beef and poultry production shared in around 56%.

11 Industry Structure and quality policy issues 3 Table 1: Proceedings of Agricultural Sales Proceedings of Agricultural Sales old total Meat 22,877 23,917 21,661 25,979 24,780 21,292 20,637 20,488 Animal production 36,371 38,985 35,591 42,621 41,047 37,322 36,240 36,711 Total 51,910 55,575 53,442 66,526 63,212 57,782 56,819 57,298 corrected* 1990=100 Meat 22,369 22,521 21,661 26,727 24,955 23,346 22,778 22,790 Animal production 35,563 36,709 35,591 43,849 41,336 40,923 40,000 40,835 Total 50,414 52,678 53,442 66,928 65,167 64,202 61,962 62,145 Source: [52], corrected. In prices from In 1993 there were a total of 606,100 farms. Around 77% of them kept animals which were 464,890. The farms which kept cattle shared in around 68%, breeding pigs were kept in around 20%, fattening pigs in around 50% and fattening chickens were kept in around 9% of all animal keeping farms. In 1992, 62,197 taxable enterprises produced and processed food. Around 40% off all operated in the meat sector. A special feature of the German meat economy are still butcheries. Around 88% of all meat producing and processing enterprises have still been butcheries, and in 1992 they had produced around 50% of the taxable turnover of all meat producing and processing enterprises. In 1993, 388,414 enterprises operated in the retail sector. Around 20% of all mainly run in the food retail sector. These food retailers produced around 36% of the total retail turnover. Around 8% of the food retailer mainly operated in the field of meat and meat products retail; they produced around 3% of the food retail turnover. In the following sub-section the importance of the three sectors regarding pork, beef and chicken production, processing and retailing are considered.

12 Industry Structure and quality policy issues 4 Section II.1 Pork Section II.1.1 Supply by Source In general, the production and consumption pattern can be described by the degree of selfsufficiency. The degree of self-sufficiency for pork steadily declined during the considered time period ( ). It declined by reason of a stronger increase of total consumption than the production increased. Table 2: Balance Sheet for Pork 1000 t slaughter weight Gross domestic production 3, , , , , , , ,426.9 Live animal import Live animal export Net production 3, , , , , , ,604 3,602 Meat import Meat export Consumption, total 3, , , , , , , ,482.1 kg/head Human consumption 3, , , , ,231.6 kg/head Degree of self-sufficiency % Source: [52]. Section II.1.2 Production In 1995, the German agricultural sector produced a total of million tons of meat (carcass weight). Of this amount, pigs were produced with a carcass weight (cw) of million tons. In the course of the reunification of the two Germanys, the production of pigs greatly increased for a short period of time. However, afterward it had decreased again back to about the level in 1985 measured in heads (see Table 3).

13 Industry Structure and quality policy issues 5 Table 3: Farm Production of Pork former FRG Germany t 3, , , , , , , animals Source: [52]. 37,324 38,018 44,639 40,017 40,771 38,727 37,198 With respect to fattening pigs, the stock size steadily increased in the considered time period and received an impetus in the course of the reunification (Table 4). Table 4: Average Stock Size of fattening Pigs Fattening pigs Source: [52]. The distribution of stock size was as followed. In 1993, 16.7% of the pigs were kept in stocks with less than 100 animals. On farms with 100 to 399 animals, 29.5% of the animals were kept. One third percent were kept on farms with 400 to 999 pigs, and 20.2% (91.3%) were kept in stocks of more than 1,000 pigs (Table 5). Table 5: The Stock-Size Distribution of fattening Pigs 1993 farms % animals in 1,000 s % , , , , , , >1,000 1, , Source: [52]. A differentiated picture is given by considering the farm distribution. Although farms with less than 100 pigs shared in 85.5% of all farms, they only kept 16.7% of all pigs. In contrast, farms with more than 400 pigs shared in 4.5% but kept around 56% of all pigs. Table 6: Average Stock Size of breeding Pigs Breeding pigs 16,9 19,3 20,9 28,5 31,6 Source: [52]. As well for breeding pigs, the average stock size increased over time (Table 6).

14 Industry Structure and quality policy issues 6 Table 7: The Stock-Size Distribution of breeding Pigs 1993 farms % animals in 1,000 s % , , , , >100 4, , Source: [52]. The distribution of stock size with respect to breeding pig keeping was slightly more balanced. The stock size distribution is recorded in Table 7. Table 8: Number of Livestock and Red Meat Production Groups former FRG Germany Groups Associations Source: [52]. An impression of the importance of producer groups and associations of producer groups can be given by considering the number of licensed groups and associations according to the Market Structure Law (Table 8). Unfortunately, a differentiation between pork and beef could not be done by reasons of available data. As well, the production and number of associated farms could not be recorded. However, obviously the market power of groups does not seem to be that high. In an examination [56], the margins of pig fattening were calculated. In the case of pig fattening, the margin are defined as the difference between proceeds of pigs and expenditure of feed and piglets. It is measured in DM/pig (Table 9). Table 9: Margins for fattening Pigs DM/pig Margin corrected = Source: [56] corrected margin in prices of 1980.

15 Industry Structure and quality policy issues 7 Evidently, the margins strongly fluctuated. Especially in 1993, the margin was to around 43% of the level of Compared with other years, this decrease was much more distinctly because of a distinct decline in pig price [56]. Section II.1.3 Meat Industry Slaughtering In 1995, pigs with a carcass weight of 3,505 million tons were slaughtered by private slaughterhouse, municipal slaughterhouses, wholesale slaughterhouses and butcheries (see Table 7). In the course of the reunification of Germany, a short, but considerable increase took place in the number of pigs slaughtered due to the reducing of the East German stocks. Finally however, the number of animals slaughtered decreased approximately to the level of 1985 (Table 10). Table 10: Slaughtered Pork former FRG Germany t 3,206 3,243 3,357 3,813 3,585 3,646 3,604 3, animals Source: [52]. 37,998 38,732 37,906 43,673 40,771 41,058 40,068 39,361 In 1993, in the region of West Germany, 367 plants slaughtered pigs and in the region of the former GDR, there was a total of 47 slaughterhouses. These yielded in average slaughtering productivity of 8,507 t cw by around 96,111 animals (see Table 11), for which [18] gives comparable values. Table 11: Average Productivity of Pork Slaughtering 1993 Number Average Productivity Capacity EU t cw animals approved Pork 414 8,507 96,111 60%? Source: [52], [49], own calculation. For size distribution of slaughterhouses by number of plants and proportion of throughput see section on beef.

16 Industry Structure and quality policy issues 8 The German slaughter economy is slightly concentrated. Of the total pigs slaughtered, the four largest slaughtering-businesses had a share of about 33% (Illustration 2). Around 20% of all pigs were slaughtered by butcheries [48] (see section on beef slaughtering). Illustration 2: Market Share of Pig Slaughter Enterprises Market Share of the TOP 4 Pig Slaughthering Südfleisch 6% Moksel 6% Westfleisch 8% Rest 66% NFZ 14% Source: [50], [51], [52], [53], [54]. The following shows the classification of pork according to grades. Grades E and U at 62% and at 29.6% respectively, are most distinctly represented. All other grades can be disregarded (Table 12). Table 12: Pig Quality Grades (in percent) Quality grade E U R O P M M V Source: [56].

17 Industry Structure and quality policy issues 9 In this case, it is interesting to observe that the production quantities of slaughtered pigs in the grades E and R have turned around during the considered time period. In 1980, the wholesale slaughterhouses and the meat industry had still took off around 13% of all pork not settled according to quality grades and slaughter weight. In contrast, they solely took off around 3% in that way in 1995 (Table 13). Table 13: Pork Taking off according to Manner of Settlement former FRG Germany QG, SW 17,124 20,510 24,021 29,925 27,252 27,800 27,579 28,578 SW 2,235 2, QG, LW LW 1,688 1, Total 21,668 25,653 25,856 31, , ,439 Source: [52]. QG: Quality Grade, SW: Slaughter Weight, LW: Live Weight. In the following, margins are defined as the difference between consumption price and agricultural producer price, calculated in DM/kg SW. Table 14: Margins of Pig Commerce Pork Margin corrected M-Spanne Source: [42], corrected margins in prices of In the period under examination, the corrected margins firstly fluctuated around the level of After 1989, an increase took place and reached a peak in 1993, afterwards they decreased again, and in 1995 the margin lay to around 23% over the level of 1983 (Table 14). Processing In 1995, the German meat processing industry processed 1,919 million tons of fresh pork with a value of about 5.6 billion DM German Marks by around 479 plants. For 1995, the total amount, the value of processed pork, and the number of plants are stated in Table 15.

18 Industry Structure and quality policy issues 10 Table 15: Pork Processing Industry Source: [52] Amount in 1000t Value in mill. DM Number Pork 1,919 5, ? EU approved The yearly processed amount of fresh pork is stated in Table 16. In general, the amount of processed pork steadily increased and during the analysed period, an increase of around 80% took place. Table 16: Pork Processing former FRG Germany t , , , , , ,919.2 Mio. DM 3, , , , , , ,643.5 corrected 3,042 2, ,7 3574,2 3652,9 3989,8 4861, Value/unit Development Development Source: [52] At first, the value of processed pork measured in prices from 1980 was more or less constant. Recently, the value increased up to around 60% in The value/unit ratio had been constant since However, it had increased to around 21% considering the whole period. The structure of the meat processing industry in general is hard to examine. On the one hand there is no differentiation between pork and beef.

19 Industry Structure and quality policy issues 11 Table 17: Processing Industry of Red Meat Processing industry Taxable plants Plants (>20 employees) integrated plants Plants (<20 employees) Sum EUapproved Butcheries 22,117* Source: [52], [44] * according to the official enterprise counting of And on the other hand, in one statistical reference different number of plants were stated (Table 17). For example in 1992, the total sum of 658 processing plants were recorded, but in the same reference 944 taxable plants were recorded and their number increased over time. One can say, no problem, of course, by reasons of economical advantages, there are more taxable plants than processing plant. However, by taking the number of EU-approved plants into account, there is a great difference in number and development. In 1997, 804 processing plants are EU approved, and in contrast the number of processing plants decreased during the time period under examination. Meat processing is an important field of activity for butcheries. According to the last business census for food processing enterprises 22,117 butcheries operated in that field in 1995 (see following subsection). As mentioned above, in the first half of 1996 there were 804 meat processing plants EU approved (Table 18). Unfortunately, they can not be sub-divided with respect to beef, pork or chicken. Table 18: EU-approved Red Meat Processing Enterprises 1997 EU-approved Total 804 Source: [44].

20 Industry Structure and quality policy issues 12 Section II.1.4 Retail The levels of final distribution of meat are subdivided as such: traditional food retail marketing hyper markets discounters department and commodity stores butcheries The number of places of sale in the category food retailers amounted in 1994 to a total of 78,227. An additional places of sale were 21,659 taxable butcheries with around 8,000 shops (Table 19). Table 19: Number of Outlets (1993) Commodity stores, Hypermarkets 2,023 Discounters 10,073 Supermarkets 9,635 The rest 41,900 Shops with service 12,200 Total 78,227 Butcheries* 32,589 Source: [52], * [48], 1995, incl. ca 10,472 branches. see section on pork. Considering the development of the number of butcheries over the time, it is obvious that their importance changed. Their number declined to around 26% since 1974 (Table 20). Nevertheless, they are still important. Table 20: Number of taxable butcheries Butcheries 29,584 24,029 23,153 22,623 21,828 21,098 19,905 21,659 22,117* Turnover mio DM 18,988 20,362 21,469 19,996 19,134 19,126 20,848 25,203 37,200** corrected 20,362 19,571 17,618 17,161 17,142 18,425 21,712 To = corr. Turover/plant Source: [52], corrected in prices of * last business census; ** [48].

21 Industry Structure and quality policy issues 13 Measured in prices from 1980, the total taxable turnover decreased in the time between 1980 and Afterwards the turnover increased to around 18% in A comparable picture is given by considering the turnover per plant. In contrast, the last business census yielded a number of around 22,117 butcheries by reasons of different survey method. According to the German Butcher Association the butcheries acquired a total turnover to around. 37,200 mio. German Marks in 1995 [48]. Section II.1.5 Trade Import Market In 1995, pork production was supplemented with million tons of imported livestock and 0.77 million tons of imported meat. In general, both, the live imports and meat imports, steadily increased. And in 1995, the live import was around 72% and the meat import was around 76% over the level of 1985 (Table 21). Table 21: Imports of Pigs and Pork former FRG Germany live meat Source: [52]. In general, the data on import and export of pork beef and chicken are still verifying the importance of the EU member states with respect to foreign trade. Especially in the field of pork, this can be proved. All of the pork import came from EU member states, and among them the main import countries are Netherlands (35%), Belgium/Luxembourg (30%) and Denmark (20%) (Illustration 3).

22 Industry Structure and quality policy issues 14 Illustration 3: Main Trading Partners regarding Import of Pigs and Pork Main Trading Partners regarding Import of Pigs EU-rest 15% World-rest 0% Belgium/ Luxembourgh 30% Netherlands 35% Denmark 20% Export Market Source: [52], fresh, cooled, deep-freezed. The export of live pigs had a volume of million tons, and of pork million tons were exported in 1995 (see Table 22). In this manner, the export of pigs lies at 2% under the level from The export of pork lies at an increase of about 158% over the level from Table 22: Export of Pigs and Pork 1000 t former FRG Germany live 21,7 25,2 64,5 42,2 48,4 31,8 24,7 meat Source: [52]. Again, EU member states are most important in foreign trade with respect to pork. The main export countries are Italy (41%) and Netherlands (6%) (Illustration 4).

23 Industry Structure and quality policy issues 15 Illustration 4: Main Trading Partners regarding Export of Pigs and Pork Russia 12% Export Countries for Pork World-rest 7% EU-rest 30% Italy 51% Source: [52]. Section II.1.6 Inter-relationships along the supply chain In this section, the importance of inter-relationships of the supply chain are examined. In order to accomplish this task, information on the importance of using whole sale markets, the degree of vertical integration and the importance of contract production will be given. Use of wholesale markets In 1995 no pigs were marketed by livestock markets of animals for slaughter, but 76.7% of the pigs were marketed by wholesaler slaughterhouses and the meat commodity industry. (see Table 23). Butcheries demanded around 20% of all slaughter pigs. Table 23: Marketing channels in % of total pig slaughtering 1995 Wholesaleslaughterhouses and meat processing industry Cattle-markets Butcheries Others Pigs Source: [48], [56]. Degree of Vertical Integration

24 Industry Structure and quality policy issues 16 The German pork production seems to be hardly integrated. In his examination, [10] gives estimates for 1992 which maintain that 9.5% of the line of production, and 14.4% of the fattening places for pigs respectively, were contractually-bound. (see Table 24). Table 24: Vertical integration of Pork Production % Pigs Line of production 9.5 places for fattening 14.4 Source: [10]. Importance of Contract Production In a survey the contractual bounding of the German pork production was examined in [25] maintains that the share of contractually-bound agricultural sales of pork comprises of 23.4% of all agricultural pork sales. About 50% of all contractually-bound pork sales were secured by butchers, while other brand name meat programs had a share of about 44% and other contractually bound sales had a share of around 6%. (Table 25). Table 25: Market Shares of Contract Pig Production Source: [25]. Pork total share butcher-brands other brandname programs other contractuallybound sales 23.4% 11.6% 10.2% 1.5% Section II.1.7 Consumer Demand In 1995, a total of million tons of meat was consumed in Germany. Of this amount pork shared in million tons. In 1987, the following view at level of the consumer is given (see Illustration 5). Sixty-three percent of the amount of available domestic meat (beef, veal, pork, sheep and goat) was sold to private households, while 28% went to large-scale consumers (canteens, snack stands, etc.). The remaining 9% was not specifically designated.

25 Industry Structure and quality policy issues 17 Illustration 5: Purchased Meat according to the level of consumers Purchased meat according to the level of the consumer large-scale consumers 28% REST 9% private households 63% Source: [46]. The largest share of fresh red meat purchased by private consumers was pork. Pork, in contrast to beef, was able to gain a share of the market of red meat ( ). Thus the market share of pork rose from 58% in 1993 to 65% within the first nine month of 1996 (Table 26). Table 26: Market share of purchased red meat * Pork Source: [24]. *Jan.-Sept For further information on consumer demand see [6]. Section II.1.8 Quality Policy Issues Human Safety The main problem with respect to human safety regarding meat consumption is its infection with salmonella. Table 27 details the number of infected human caused by animal contacting diseases. In the case of salmonella a great increase of infections took place by around 300% during the time period from 1980 to the early nineties.

26 Industry Structure and quality policy issues 18 Table 27: Human infection Salmonella Total 12,417 48,537 30,566 63,600 91, , , , , ,649 per 1000 human Hydrophopia Toxoplasmosis Brucellosis Leptospirosis Q-fever Trichinosis Source: [47]; until 1990 former FRG, since 1991 Germany. Afterwards the number of infections decreased to around 60%. In all cases, the infections were caused by food consumption. In 1994, 0,09% of all salmonella infected people died [43]. Table 28: Notifitable Salmonella Infection verifiably caused by Food Contact Cases Deceases , , , , ,113 n.a. Source: [47]; n.a. no yet availible. An impression with respect to salmonella infected red meat is given in Table 29. This makes evident that around 2,42% of all examined red meat is infected. Table 29: Rate of infected Red Meat 1994 Rate of Salmonella (Number of Sample) Red Meat 2.42 (9,734) Raw meat products 3.14 (19,717) Source: [47]. Other animal disease are not that important for human safety. Human Health Human health is affected especially by the residues content of meat. In the following the results of the recently published national residues inspection will be recorded.

27 Industry Structure and quality policy issues 19 The load of pork with residues are quoted in Table 30, according to the national residues inspection plan (see section on FOOD, in general). This inspection took 0.5%off all slaughter animals into account. In general, the load of meat with illegal substances further have increased [43]. Table 30: Residues Inspected Pork Inspection on residues at slaughterhouse level Anabolic Anti bacteria inflammation inhibitory substances total Clenbuterol inhibitory substancescreening specific methods Anti parasites Sedative pigs N P 2, , , , n Source: [43], N: Number of inspected animals P: Number of positive findings, n: no inspection required. Evidently, 0.4% of all inspected pigs are loaded by antibiotics and even 0.6% are loaded by Clenbuterol which has been recently forbidden by the EU. The loading with antibacteria is a problem as well. Another important residue is Chloramphenicol. In 1995, according to the same reference 3.2% of all examined slaughtered pigs are loaded with Chloramphenicol, although the application has been forbidden since August Table 31 quotes the loading of pork with heavy metals. According to [47] the loading of pork with heavy metals is constant over years in general. The comparison with data of partner countries probably will give a valuation of the German data. Table 31: Heavy Metal Loading of Pork Substance Sample size average Minimum Maximum Copper 2, Selenium 2, Zinc 2, Source: [47]. Animal Health According to the Animal Disease Law the number of farms with infected animals have to be recorded. Table 32 quotes the number of affected farms. Evidently, German farms have been stricken with swine fever again and again. However, the number of cases is not that high

28 Industry Structure and quality policy issues 20 compared with the seventies. In contrast to swine fever, brucellosis is not a problem in Germany. Table 32: Number of Notifitable Animal Diseases affected Pig Producers Aujeszky s Disease Brucellose of pigs Swine fever Source: [52], until 1992 former FRG, since 1993 Germany. Table 33 records the number of complained pigs carcasses during the inspection in the slaughterhouse. The complaint is caused by several animal disease. Evidently, the disease control has improved. Even though German pig producers had a problem with swine fever in 994, only 35 pigs were complained in slaughterhouses. Table 33: Number of Complained Pigs during Official Food Inspection Tuberclosis 4, ,912 10,213 2,544 5,458 2,801 2,028 1,977 Blood poisoning c. by Salmonella 1,147 2, , ,578 Swine fever 10,599 17, Swine erysipelas 10,548 5,784 3,960 4,340 3,071 2,965 2,006 Cysticercosis Source: [52]. In its examination, the Federal Institute of healthy Consumer Protection and Veterinary Medicine [43] gives estimates for 1996 regarding salmonella infection. The examination took place in slaughterhouses. According to the examination 6% of all pigs were infected with salmonella. Meanwhile, infection is said to be a smaller problem for slaughterhouses with bounded suppliers. Meat Quality In general, meat quality depends on the content of nutrition. Table 34 states this data according to a German examination. The comparison with data of partner countries probably will give a valuation of the German data.

29 Industry Structure and quality policy issues 21 Table 34: Nutrition Value of Pork Protein g/100g Fat g/100g Energy kcal / kj Average content / 730 Source: [15]. The average slaughter weight and its change over time gives an impression of the meat quality as well. The average slaughter weight of pigs declined in the time period during 1970 and 1980, probably caused by the consumer s expectation of lean pork (Table 35). After meat quality problems, such as PSE, arose, a steady increase of the average weight took place and is still increasing. Table 35: Average Slaughter Weight of Pigs kg/pig Source: [52].

30 Industry Structure and quality policy issues 22 Section II.2 Beef Section II.2.1 Supply by Source The degree of self-sufficiency of beef is constant over 100%, which is in contrast to pork and chicken. With exception to the short period of time after the reunification, an increase took place (Table 36). Table 36: Balance Sheet for beef 1000 t slaughter weight Gross domestic production 1,453 1, , , ,878 1, , ,542 Live animal import Live animal export Net production 1,453 1, , , , , , ,407.8 Meat import Meat export Consumption. total 1,327 1, , , , , , ,347.8 kg/head Human consumption 1, , , kg/head Degree of self-sufficiency % Source: [52]. Section II.2.2 Production In 1995, the German agricultural sector produced cattle with a carcass weight (cw) of million tons. In the course of the reunification of the two Germanys, the production of cattle greatly increased for a short period of time. Afterward, however, it decreased again back to about the level in 1985 (Table 37).

31 Industry Structure and quality policy issues 23 Table 37: Farm Production of Cattle old Farm Production cattle total t 1,453 1, , ,878 1, , , animals Source: [52]. 4,940 5,020 7,442 5,883 5,114 4,725 4,664 As well in the field of cattle keeping, the average stock size increased over time. And received a strong impetus in the course of the reunification as well (Table 38). Table 38: Average Stock-Size of Cattle Cattle 34,6 36,4 38,5 51,7 50,7 Source: [52]. In 1993, about three-fourths of all cattle were kept on farms with over fifty, but the number of farms only shared in around one-third (Table 39). Table 39: Stock-Size Distribution of Cattle The stock-size distribution of cattle 1993 farms % animals in 1,000 s % 1 to , to 49 92, to 99 70, >100 32, Source: [52]. Section II.2.3 Meat Industry Slaughtering In 1995 in Germany, cattle with a carcass weight of 1,347 million tons were slaughtered by private slaughterhouses, municipal slaughterhouses, wholesale slaughterhouses and butcheries. (see Table 40). Again, in the course of the reunification of Germany, a short, but considerable increase took place in the number of cattle slaughtered due to the reducing of the East German

32 Industry Structure and quality policy issues 24 stocks. Finally however, the number of animals slaughtered decreased approximately to the level of Table 40: Slaughtered Beef former FRG Germany t 1,497 1,493 1,729 2,062 1,726 1,508 1,358 1, animals Source: [52]. 4,970 4,976 5,431 6,949 5,609 4,801 4,329 4,250 In general, the number of slaughtering plants is hard to examine. The Statistical Yearbook Nutrition, Agricultural and Forestry records 206 plants for red meat and 54 for poultry and there are 396 or 60 integrated plants, but these are only plants with more than 20 employees (Table 41). In contrast, there are 2,013 taxable plants in the field of slaughtering (red meat and poultry), in In order to give an impression of the German slaughter economy in the following an examination is quoted. The slaughterhouse structure in Germany is characterised by the existence of municipal and private slaughterhouses (Table 41). The development of the total number of enterprises in the former FRG states shows a decline of about 19% during the time period from 1980 to However, different developments can be seen according to the structure of the slaughter economy. While the number of private slaughterhouses increased to about 26% during the same time period, the number of municipal slaughterhouses declined to about 70%. In all, there was a total of 435 slaughterhouses in 1993 [18]. Table 41: Structure of the German Slaughter Economy Number Private Municipal total EU-licence 262 Source: [18]. Shortly before the reunification of Germany, there was a total of 76 slaughterhouses in the GDR. In 1993, however, there were only 47 remaining [18]. In 1993 were 262 slaughterhouses EU-licensed, their number increased until the first three month of 1997 up to 295.

33 Industry Structure and quality policy issues 25 Table 42: Size Distribution of the Slaughter Economy in the Former FRG 1993 Size in 1,000 t cw Number % of all enterprises Share (%) of slaughtering < to to > total 388 private municipal Source: [18]. The same reference shows a differentiated picture according to the size of the slaughterhouse and its slaughtering productivity in the former FRG (Table 42). While about two-thirds of the slaughterhouses had an annual slaughtering productivity of less than 10,000 cw. In fact, only about one-fourth of the slaughterhouses had an annual slaughtering productivity of more than 20,000 tons cw, whose share, nevertheless, of the total amount of animals slaughtered was significant at around 72%. Table 43: Average Slaughtering Productivity in 1,000 t cw former FRG 11.4 former GDR 29.3 Germany 13.4 Source: [18]. The total average slaughtering productivity of a slaughterhouse lies at 13,400 cw (Table 43). Differentiated results show an average productivity of 11,400 tons cw in the region of the former FRG of which municipal slaughterhouses had a productivity of 7,000 tons cw and the private sector had a productivity of 12,300 tons (carcass weight). The average slaughtering productivity of slaughterhouses in the region of the former GDR amounted to 29,300 tons cw). Table 44: Average Slaughter Productivity for Beef 1993 slaughtering in average slaughtering capacity Cattle t cw animals t cw animals 1,466,000 4,662,000 3,648 11,597 40% Source: [18], [49], [52], own calculation.

34 Industry Structure and quality policy issues 26 In 1993, according to the quoted reference in the region of West Germany, 356 slaughterhouses slaughtered cattle. In the region of the former GDR, there were 46 cattle slaughterhouses. When slaughterhouses with a slaughtering productivity of less than 500 tons cw are neglected, the average slaughtering productivity amounts to around 3.6 thousand tons cw (Table 44) for which [18] gives comparable values. A special feature of the German meat economy is the significance of butcheries. In 1992, there were around 21,659 enterprises 1 with around 8,000 outlets. In total they produced a taxable turnover from around 25 Mio DM. Around 31% of the enterprises are slaughtering, partly in their own slaughterhouses and partly in private or municipal slaughterhouses. 73% of the selfslaughter enterprises have bought the animals from the farmer directly, 24% from the private livestock trader and around 8% from co-operative livestock trader [48] (see section on retailer in pork section). The beef slaughter economy is hardly concentrated. Of the total cattle slaughtered, the four largest slaughtering-businesses had a share of about 12% (Illustration 6). According to the German Butcher Association the market share of butcheries with respect of beef was around 10% in 1995 [48]. Illustration 6: Market Share of Beef Slaughter Enterprises Market Shares of Beef Slaughtering Südfleisch 4% Moksel 4% Westfleisch 2% NFZ 2% Rest 88% Source: [50], [51], [52], [53], [54], own calculation. 1 taxable

35 Industry Structure and quality policy issues 27 According to the categories of grade classification for slaughtered cattle, young bulls at 46.7% and cows at 38.5% were the largest share of the total (Table 45). Fundamental changes regarding cattle slaughtering have not taken place within the last twelve years. Table 45: Cattle Quality Grades Category Young cattle Oxen Young bulls Bulls Young cows Cows Source: [52]. In 1980 the wholesale slaughterhouses and the meat industry had still taken off around 40% of all beef which was not settled according to quality grades and slaughter weight. In contrast, they solely took off around 20% in that way in 1995 (Table 46). Table 46: Beef Taking off according to Manner of Settlement old total QG, SW 1,489 19, ,694 2,984 2,552 2,372 2,388 SW , QG, LW LW 234 Total 2, ,642 4,955 3,893 3,225 3,022 2,973 Source: [52]. QG: Quality Grade, SW: Slaughter Weight, LW: Live Weight. Margins are defined as the difference between consumption price and producer price, calculated in DM/kg SW (Table 47).

36 Industry Structure and quality policy issues 28 Table 47: Margins for Beef Commerce Beef Margin corrected Develop Source: [42] corrected in prices of The margins for beef steadily increased in the period under examination and in 1995 the corrected margin lay to around 61% over the level of Unfortunately, there are no data available regarding the total number of cutting plants. However, as stated according to national and EU regulations, there are 757 plants that got an EU-licence until the first three months of 1997 (Table 48). Table 48: Number of EU-approved Red Meat Cutting Plants 1997 EU-approved Cutting plants (pork + beef) Source: [44]. 757 Processing In 1995, the German meat processing industry produced million tons of fresh beef with a value of about million DM by around 345 plants (Table 49). Table 49: Beef Processing Industry 1995 Amount in 1000t Source: [52]. Value in mio. DM Number EU approved Beef 536 2, ? During the analysed period ( ), the amount of beef produced fluctuated at the level of A peak was reached during the course of the reunification (Table 50).