Market Survey HEADLINE PRODUCER PRICES. Inside this week. The outlook for UK red meat production. 04 May /17 GREAT BRITAIN LIVEWEIGHT

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1 UK Market Survey 04 May 12/17 The outlook for UK red meat production The latest AHDB market intelligence forecasts for the UK sheep, beef and pig sectors were presented at the Outlook conference in London on the 2 May. The forecasts indicate that sheep meat production will increase in and again marginally in Beef production is forecast to decline this year as supply constraints prevail, levelling in Pig meat production is forecast to increase in and 2013 driven by higher UK clean pig slaughterings in both years. Sheep meat UK ed Meat Production tonnes 2011 (f) 2013 (f) Beef and Veal Sheep Meat Pig Meat Forecasts in bold. All figures subject to revision Source: Defra, AHDB The results from the UK December 2011 livestock survey indicate that the national sheep flock has responded strongly to improved prices. The breeding flock recorded a two and a half per cent increase to reach million head; the highest point since There are also expected to be greater numbers of ewe lambs retained for first time breeding in, which will result in continued growth. The younger age profile of the flock and the continued rebuilding intentions are expected to keep culling rates comparatively low. The larger flock will result in these throughputs in increasing over time as there will be a larger pool of sheep to cull from. The lambing rate for the lamb crop is expected to be above 2011 levels. With ewe condition at tupping reportedly good and the very mild winter, coupled with good feed availability, in most regions scanning results are expected to have been better on the whole. Some disease concerns, the spell of bad weather in April and drought in the south and east of England are expected to have mitigated this increase HEADLINE PODUCE PICES GEAT BITAIN DEADWEIGHT Week ended Price p/kg Inside this week The outlook for UK red meat production Pence change on week Pigs GB DAPP (euro spec) GB DAPP (UK spec) GB Cattle Deadweight 4L Steers L Heifers Young bulls O4L cows GB Sheep Deadweight Old season SQQ lambs New season SQQ lambs GEAT BITAIN LIVEWEIGHT Week ended (Thurs/Wed) Price p/kg Latest Kantar household purchase data to 15 April Pence change All steers All heifers All young bulls All cows Old season SQQ lambs New season SQQ lambs (Continued on page 2)

2 to some degree. With a larger flock and improved lambing percentages the lamb crop is expected to be the largest since Although production in the first quarter of this year is lower, compared with the year earlier, it is expected to increase in the second half of. This will result in an overall increase for the year as increased lamb production offsets lower mutton production. The situation will be helped by higher carcase weights stemming from the excellent conditions and feed availability during the winter. Beef and Veal Beef and veal production is forecast to fall during as the reduction in calf registrations in 2010, brought on by increased feed costs and the decline in the breeding herd, will impact on the availabity of prime cattle for slaughter. The December census indicated that male cattle over two years of age were 12 per cent lower on the year, although this does reflect the increased cull bull throughputs in 2011 and shorter finishing periods. Those between one and two years of age were three per cent lower and those under one year old were down one per cent. In addition, the decline in the national herd, evident in the December census, is expected to reduce the number of cows and adult bulls slaughtered during and Cow slaughtering were at a historic high in 2011 as producers took advantage of the record prices on offer. The fewer slaughtering this year are projected to result in beef and veal production falling by almost four percent to 902,000 tonnes. However, some respite in cereal prices, and a subsequent increase in demand for calves at the end of 2011 and in the early part of has resulted in increased registrations. For the year as a whole total calf registrations are forecast to be higher than in 2011, with earlier finishing this may impact on production levels towards the end of the year. This trend is further evidenced by recent BCMS figures indicating that there are more males aged less than six months in the cattle population, likely to be as a result of the firm finished prices and the relative easing of feed costs. Pig meat With regards to pig meat production, the December 2011 census showed a fall in the size of the female pig breeding herd, offset by a substantial rise in the number of maiden gilts. This suggests that the size of the UK breeding herd is stable and it is likely to continue at a similar level over the next year. After that, prospects for the breeding herd will somewhat depend on the market response to the EU sow stall ban. In 2011, UK clean pig slaughterings were at their highest level since The main factor in the increase was improving sow productivity, with 21.3 pigs slaughtered per sow, up from 20.2 in Factors included high levels of sow replacement and improvements in husbandry, health and genetics. With these factors still in place, further productivity gains can be expected in the coming year. High feed costs mean that pigs are being finishing at slightly lower weights than last year. However, futures markets suggest that feed prices may fall later in the year, which could lead to increased carcase weights. The net result is that UK clean pig slaughterings in are forecast to be up by around two per cent compared with 2011, with a similar rise in pig meat production. A similar increase is likely in Further conference news In addition to the outlook for production the conference also looked at the economic challenges for the red meat and dairy sectors and the changing tastes and markets for consumers. Allan Wilkinson, Head of Agriculture at HSBC bank spoke about the wider economic climate, which in the week it was announced that the UK had reentered recession, could have relayed a sober message. However, there were some positive messages for the prospects for agriculture, particularly in terms of the export market. Mr Wilkinson also praised UK farmers, suggesting that their ability to modernise in the face of the challenges that may lie ahead was admirable. Giles Quick, director at Kantar Worldpanel, focussed on the consumer and retailer perspective. He reminded delegates of their position as a fundamental part of the UK grocery trade. However, Mr Quick painted a more subdued picture of the consumer position, where confidence is at a low ebb. Despite this, some positive messages were delivered. Kantar data shows that people eat at home more in times of economic uncertainty, offering a great opportunity for meal deals. In addition, he suggested to delegates that consumers are more likely to be looking out for number one, which translates into a desire to buy local British produce. Ken Boyns, Director of Market Intelligence at AHDB, discussed the impact of commodity prices and the challenge of continuing to increase supply to feed a more affluent population. He stressed the importance of technology and how UK farmers must be able to embrace this to avoid being put at a competitive disadvantage. 2

3 Cattle market trends p per kg dw GB 4L deadweight steer price J F M A M J J A S O N D Source: EBLEX / AHDB Estimated GB prime cattle slaughterings / J F M A M J J A S O N D per 100 kg dw Source: EBLEX / AHDB 300 M J J A S O N D J F M A EU deadweight cattle prices 2011/12 Germany (YB) Italy (YB) GB (Steers) Source: EU Commission France (YB) Ireland (Steers) 2011/12 Household fresh and frozen beef purchases 12 week yearonyear change in volume M J J A S O O N D J F M A Prices In week ended 28 April the overall prime cattle deadweight average price strengthened almost a penny on the week to 339.9p per kg. The average price of all categories of cattle increased on the week with the price of steers up a penny to 341.4p per kg while heifers were marginally dearer at 341.2p per kg. At 325.2p per kg, the average price of young bulls was up two pence on the week while 3 young bulls were back by a similar amount to 333.4p per kg, suggesting that the quality of young bulls may have improved. Cow prices have increased almost every week this year as numbers have been significantly down on the same period a year ago. However, in the latest week the overall cow price eased a penny to 266.7p per kg. Despite this the shortage of cull cows is likely to continue for at least the next few months, which will result in strong demand continuing and prices remaining firm. In the week ended 2 May the prime cattle average price at GB auction markets eased a penny on the week to 186.3p per kg. The average steer price increased a penny to 187.6p per kg while heifers were at a similar price to the week earlier at 190.1p per kg. Young bulls were three pence cheaper at 178.9p per kg. Consumption According to the latest Kantar Worldpanel data, in the 12week period ending 15 April, household purchases of fresh and frozen beef declined five per cent on the year to 69,800 tonnes. Expenditure increased six per cent to 480 million, as increased retail prices more than offset the lower household purchases. Household purchases of all cuts of beef were lower year on year largely as a result of the reduced number of price promotions. In the 12week period household purchases of frying/grilling cuts and roasting joints performed worst, down 13 and eight per cent respectively. The increased average price, driven by the fewer promotions continued to encourage consumers to switch to cheaper protein purchases, which in turn has resulted in increased chicken purchases so far in. In the 52week period, household purchases of fresh and frozen beef were marginally higher on the year at 303,000 tonnes. Expenditure increased six per cent to 1.96 billion as a result of a similar increase in the average retail price. Sales of second quality stewing beef were four per cent up on the year while household purchases of mince were at a similar level to the year earlier. Source: Kantar Worldpanel 3

4 Sheep market trends p per kg dw Deadweight SQQ clean sheep price J F M A M J J A S O N D Source: EBLEX / AHDB Estimated GB clean sheep slaughterings / per 100 kg dw J F M A M J J A S O N D Source: EBLEX / AHDB 350 M J J A S O N D J F M A EU sheep reference prices 2011/12 heavy lambs Source: EU Commission Spain France UK EU ave Source: EU Commission 2011/12 Household fresh and frozen lamb purchases 12 week yearonyear change in volume Prices In week ended 28 April deadweight lamb prices readjusted broadly in line with auction market prices. At 463.8p per the kg the new season lamb SQQ recorded a significant drop on the week, as did the old season lamb price at 426.9p per kg. The lamb trade has undergone a turbulent few weeks of trading. However latest NSL prices at GB auction markets do show some recovery. In week ended 2 May the NSL SQQ averaged 232.0p per kg, an increase of 13p per kg earlier levels as demand evidently improved. In contrast, in the latest week the OSL SQQ averaged 192.4p per kg down two pence on the week. The disproportionate increase in the NSL price against the OSL price can be attributed to some processors moving more towards new season processing, thus increasing demand for this product at the expense of the older lambs. It should also be noted that the old season trade continues to be hampered by too many overweight and overspec animals; this limits the marketing opportunities and means that demand is not as keen for this product. In contrast very few of the new season lambs fall into this category and are meeting a much better trade. Processors have been forced into buying old season lambs in recent weeks, however, the increased numbers of spring lambs forward is slowly bringing this to a close. NSL throughputs in the week were 55 per cent higher, indicating that there was no shortage of these animals. Wednesday 2 May also recorded the largest daily marketing of spring lambs so far this year at 5,500 head. Disruption to liveweight trade following bad weather over the weekend has reportedly added a boost to trading at auction in the early part of this week. Prices on Wednesday 2 May show a much more positive picture with the NSL SQQ up 26 pence on the week at 237.8p per kg. The OSL SQQ also increased, bucking the trend of the week, it increased five pence on the week to average 195.6p per kg. Consumption According to the latest Kantar Worldpanel data, in the latest 12 week period ending 15 April, household purchases of fresh and frozen lamb increased six per cent compared to the previous year. This was solely driven by increased purchases of leg roasting joints as a result of the Easter holiday period falling in this period in and not last year. As expected, promotional activity on leg roasting joints increased with many retailers offering half price incentives. In the latest four week period, this activity resulted in a 118 per cent increase in volume sales of leg roasting joints. In the 12 week period expenditure increased nine per cent to 155 million, as despite the increased promotions the average price of lamb increased by almost three per cent. Household purchases of all other lamb cuts continued the trend of being lower on the year, sales of lamb mince were 17 per cent lower and purchases of lamb chops and lamb steaks were both down around 20 per cent. In the 52week period, household purchases of fresh and frozen M J J A S O O N D J F M A lamb were nine per cent lower on the year at 70,000 Source: Kantar Worldpanel tonnes. Expenditure increased one per cent to 600 million as the increase in the average price on the year outweighed the decline in purchases. 4

5 Pig market trends p per kg dw J F M A M J J A S O N D per 100 kg dw GB DAPP Source: BPEX / AHDB 2011 Estimated GB clean pig slaughterings /11 J F M A M J J A S O N D Source: BPEX / AHDB 110 M J J A S O N D J F M A EU pig reference prices 2011/12 Denmark Netherlands UK EU ave Source: EU Commission 2011/12 Household fresh and frozen pork purchases 12 week yearonyear change in volume M J J A S O O N D J F M A Source: Kantar Worldpanel Prices The steady seasonal increase in finished pig prices continued in week ended 28 April, with the eurospec DAPP adding 0.57p per kg to average p per kg. This was four pence higher than a year earlier. Throughputs were little changed from a week earlier and remain above year earlier levels, even allowing for the extended Easter holiday this time last year. The average carcase weight in the DAPP sample increased by over half a kilogram to 78.95kg. This was the first time since January that the weekly average weight was heavier than the corresponding week a year earlier. The average probe measurement also increased slightly, to 10.6mm. The weaner market remains well balanced, with the average price having remained between 45 and 46 per head for nine consecutive weeks. The average price for week ending 5 May was three pence higher than the previous week at This is less than a pound higher than a year ago when prices were rising in response to increasing finished pig prices and falling feed costs. The recent strengthening of the pound against the euro has suppressed cull sow prices, which have now lost over three pence per kg from their peak in late March. In week ended 28 April, the average price was p per kg dw, down just over a third of a penny on the week but still over 16 pence higher than in the corresponding week a year earlier. Consumption According to Kantar Worldpanel in the 12week period to 15 April, expenditure on fresh and frozen pork increased by five per cent to 221 million, but volume purchases fell by four per cent to 44 million. educed promotional activity in the early part of the 12 week period resulted in a nine per cent increase in the average retail price which partially outweighed the decline in household purchases. Sales of pork belly and loin roasting joints were the only two cuts to demonstrate an increase on the year, up 15 and nine per cent respectively. The continued reduced promotional activity, on roasting joints in particular, continued to drive the decline in sales, with purchases of leg roasting joints over 12 per cent lower compared to the previous year and sales of shoulder roasting joints 21 per cent lower. In the 52week period household purchases of pork totalled 187,000 tonnes, marginally higher than in the corresponding period a year earlier. The number of households purchasing pork increased marginally on the year. As a result of this and a five per cent increase in the average retail price, expenditure increased six per cent year in year to 927 million. 5

6 GB household beef purchases Fresh and frozen beef 4 weeks ended: 12 weeks ended: 52 weeks ended: 15 April 15 April 15 April Expenditure ( million) ,961.6 annual change % Volume (tonnes) 22,048 69, ,279 annual change % Average price ( /kg) annual change % Penetration (%) Annual volume change % 4 weeks ended: 12 weeks ended: 52 weeks ended: 15 April 15 April 15 April Fresh and frozen beef st quality roasting nd quality roasting st quality stewing nd quality stewing Frying/grilling steak Mince Burgers and grills Chilled ready meals Frozen ready meals Fresh prepacked hot pies Fresh prepacked pasties Frozen pies/puddings Purchase profile 4 weeks ended: 15 April % volume share of all products with a beef content Estimated % beef content Estimated % share of beef volume purchases Fresh & frozen beef purchase profile 52 weeks ended 15 April Other 3% oasting joints 19% Fresh and frozen beef Burgers and grills Chilled ready meals Frozen ready meals Fresh prepacked hot pies Fresh prepacked pasties Frozen pies/puddings Mince 49% Stewing 14% Steak 15% Source: Kantar Worldpanel, derived from a sample of 25,000 respondents 6

7 GB household lamb purchases Fresh and frozen lamb 4 weeks ended: 12 weeks ended: 52 weeks ended: 15 April 15 April 15 April Expenditure ( million) annual change % Volume (tonnes) 8,095 18,283 69,875 annual change % Average price ( /kg) annual change % Penetration (%) Annual volume change % 4 weeks ended: 12 weeks ended: 52 weeks ended: 15 April 15 April 15 April Fresh and frozen lamb Frying/grilling chops Frying/grilling steak Leg roasting joints Shoulder roasting joints Stewing lamb Mince Chilled ready meals Purchase profile 4 weeks ended: 15 April % volume share of all products with a lamb content Estimated % lamb content Estimated % share of lamb volume purchases Fresh and frozen lamb Chilled ready meals Fresh & frozen lamb purchase profile 52 weeks ended 15 April Stewing 5% Steak 13% Other 7% Chops 17% Source: Kantar Worldpanel, derived from a sample of 25,000 respondents Shoulder roast 16% Leg roast 32% Mince 10% Earlier Easter affects Kantar results The latest four week Kantar Worldpanel period ending on the 15 April includes the Easter weekend. As Easter was towards the end of April last year, the corresponding period in 2011 did not. The Easter holiday period is the second most important occasion for roasting joints after Christmas and therefore when looking at the latest four week period; we would expect household purchases of roasting joints for all species to be higher than they were in the corresponding period last year. 7

8 GB household pork purchases Fresh and frozen pork 4 weeks ended: 12 weeks ended: 52 weeks ended: 15 April 15 April 15 April Expenditure ( million) annual change % Volume (tonnes) 14,217 43, ,585 annual change % Average price ( /kg) annual change % Penetration (%) Annual volume change % 4 weeks ended: 12 weeks ended: 52 weeks ended: 15 April 15 April 15 April Fresh and frozen pork Pork belly Frying/grilling chops Frying/grilling steak Leg roasting joints Loin roasting joints Shoulder roasting joints Bacon Pork sausages Fresh prepacked pork pies Fresh prepacked sausage rolls Chilled ready meals Sliced cooked meats Purchase profile % volume share of all products with a pig meat content 4 weeks ended: 15 April Estimated % pig meat content Estimated % share of pig meat volume purchases Fresh and frozen pork Fresh & frozen pork purchase profile 52 weeks ended 15 April Leg roast 14% Other 10% Belly 10% Chops 15% Bacon Sausages Sliced cooked meats Mince 3% Fresh prepacked pork pies Fresh prepacked sausage rolls Chilled ready meals Source: Kantar Worldpanel, derived from a sample of 25,000 respondents Shoulder roast 15% Loin roast 7% Steak 26% 8

9 Auction market prices Week ended: (p per kg lw) England and Wales Numbers Price Pence change Scotland Numbers Price Pence change Steers Light ( kg) Medium ( kg) Heavy (over 650 kg) All steers 1, Heifers Light ( kg) Medium ( kg) 1, Heavy (over 590 kg) All Heifers 2, Young bulls Light ( kg) Medium ( kg) Heavy (over 650 kg) All young bulls 1, All prime cattle 5, Cull cows Grade Grade Grade Grade Dairy sired (ungraded) Beef sired (ungraded) 1, New season lambs Light ( kg) Standard ( kg) Medium ( kg) Heavy ( kg) Others (over 52.0 kg) Standard Quality Quotation (SQQ) nc 5, , , Old season lambs Light ( kg) Standard ( kg) 2, , , Medium ( kg) Heavy ( kg) Others (over 52.0 kg) Standard Quality Quotation (SQQ) 22, , , , , , , , Total ewes ( per head) 21, , Pigs All Pigs Porkers (6075 kg) Cutters (5685 kg) Baconers (86104 kg) Others (over 104 kg) , Cull Sows Prices collected by AHDB Market Intelligence from auction markets 9

10 Deadweight Pig Prices Week ended: 28/04/ (p per kg dw) GB DAPP (EU) (a) GB DAPP (UK) (b) Price Pence change Mar on month on year Deadweight sow price Average weight (kg) of GB clean pigs in sample: All sample pigs on EU dressed basis All sample pigs on UK dressed basis Average probe (P2) of GB clean pigs in 10.6 Number of clean pigs in sample in GB 73,141 p per kg dw Pence change Northern Ireland Average Pig Price Prices by method and weight range EU spec up to 59.9kg kg kg kg 90.0kg and over All pigs Method 1 and Method 2 England & Wales Pence change Great Britain Pence change GB prices by weight and lean meat percentage EU spec Estimated Lean Meat Percentage 60 and over All pigs UK prices by EC grades EU spec Method 1 and Method kg kg kg Over 90 kg Grade S Grade E Grade U Grade Grade O Grade P Prices collected by AHDB from a sample of abattoirs. Weaner spot prices (30 kg) Week ended: 05/05/ ( per head) GB Weighted Average Price change Apr on month on year na = not available, nc = no comparison Data collected by AHDB Market Intelligence from a sample of marketing groups. 10

11 Store cattle prices earing calf prices Week ended: ( /head) Number sold Average price Price change Week ended: ( /head) Number sold Average price Price change Continental cross: Yearling steer 3, Fresian/Holstein bulls Yearling heifer 2, Hereford cross bulls month old steer 1, Hereford cross heifers month old heifer 1, Continental cross bulls year old steer 938 1, Continental cross heifers year old heifer 1, Prices collected by AHDB Market Intelligence from auction markets Deadweight sheep prices Week ended: (final) prices based on MLC Standard Dressed Carcase (p per kg dw) New Season Lambs New Season Lambs Weight range 12 16kg 2 3L 3H Weight range kg 2 3L 3H U U O O New Season Lambs SQQ ( ) Week ended: (final) prices based on MLC Standard Dressed Carcase (p per kg dw) Old Season Lambs Old Season Lambs Weight range 12 16kg 2 3L 3H Weight range kg 2 3L 3H U U O O Old Season Lambs SQQ ( ) Prices collected by AHDB from a sample of abattoirs GB slaughterings AHDB estimates ( 000 head) Week ended Mar 2011 Mar Jan/Mar 2011 Jan/Mar on year Steers Heifers Young bulls Steers/heifers/young bulls Cows and adult bulls Calves Ewes and rams Other sheep and lambs , , Sows 5 5 na 19.8 na 62.9 na Clean pigs , , Source: Defra /AHDB 11

12 Deadweight cattle prices Week ended: (p per kg dw) All steers Average all steers Total numbers U O Southern ,841 U O England and Wales Central ,438 U O Northern ,772 U O Scotland ,748 All heifers Average all heifers Total numbers U O , U O , U O , U O ,528 All young bulls U O Average all young Bulls Total numbers U O U O U O All cows Average all cows Total numbers U O U O U O U O Great Britain All steers All heifers All young bulls All cows Total numbers 13,799 7,378 1,982 3,119 Average price Pence change on week Mar on month on year England and Wales All steers All heifers All young bulls All cows 10,051 4,850 1,586 2, Prices collected by AHDB Market Intelligence from sample of abattoirs. All price quoted on the basis of UK spec 12

13 etail prices Week ended: England and Wales Scotland ange Average Pence ange Average Pence Beef change Price change (p per kg) (p per kg) Topside 5491, Topside 8001,390 1, Sirloin Steak 1,5492,598 1,958 3 Sirloin Steak 1,7003,200 2, ump Steak 8801,790 1, ump Steak 1,1111,950 1, Fillet Steak 2,2005,000 3, Fillet Steak 2,5594,600 3, Diced Stewing Steak 4401, Diced Stewing Steak 6091,290 1, Braising Steak Braising Steak 6001,290 1, Premium Mince Premium Mince 5491, Standard Mince Standard Mince Prices collected by AHDB from a sample of retailers Week ended: England and Wales Scotland ange Average Pence ange Average Pence Lamb Price change change (p per kg) (p per kg) Domestic Whole Leg 7491,680 1, Whole Leg 7501,320 1, Fillet End Leg 7321,580 1, Fillet End Leg 7501,400 1, Shoulder (Bonein) Shoulder (Bonein) Shoulder (Boneless) 6561, Shoulder (Boneless) 8001,299 1, Lamb Steaks 1,0002,248 1, Lamb Steaks 1,3001,800 1, Loin Chops 9901,984 1, Loin Chops 1,1991,777 1, Double Loin Chops 9901,984 1,280 1 Double Loin Chops 1,1991,777 1, Cutlet chops 8801,984 1, Cutlet chops 1,1992,292 1, Diced Lamb 5501,687 1, Diced Lamb 1,0991,320 1,261 6 Minced Lamb 5501, Minced Lamb 6601,320 1, Imported Cutlet Chops 1,0501,499 1, Cutlet Chops 1,4991,499 1, Fillet End Leg 8491,149 1, Fillet End Leg 1,0991,149 1, Loin Chops 7991,549 1, Loin Chops 1,5491,549 1, Shoulder (Bonein) Shoulder (Bonein) Prices collected by AHDB from a sample of retailers Week ended: England and Wales Scotland ange Average Pence ange Average Pence Pork Price change Price change (p per kg) (p per kg) Leg (Boneless) Leg (Boneless) Fillet End Leg Fillet End Leg Shoulder (Boneless) Shoulder (Boneless) Fillet of pork 4991, Fillet of pork 6991,599 1, Loin Steaks Loin Steaks 7991,350 1, Loin Chops Loin Chops Diced Pork Diced Pork Minced Pork Minced Pork 5081, Sausages Pork (Traditional) Pork (Traditional) Prices collected by AHDB from a sample of retailers ed Meat Market Intelligence AHDB, Stoneleigh Park, Kenilworth, Warwickshire CV8 2TL tel: fax: redmeatmi@ahdb.org.uk ISSN Agriculture and Horticulture Development Board. All rights reserved. While the Agriculture and Horticulture Development Board, operating through its EBLEX/BPEX divisions, seeks to ensure that the information contained within this document is accurate at the time of printing, no warranty is given in respect thereof and, to the maximum extent permitted by law, the Agriculture and Horticulture Development Board accepts no liability for loss, damage or injury howsoever caused (including that caused by negligence) or suffered directly or indirectly in relation to information and opinions contained in or omitted from this document. 13