* Corresponding author. Tel.: 0118 931 6478; fax: 0118 975 6467. Land Use Policy 16 (1999) 11 — 22 Modelling the impact of BSE policy on agriculture in England and Wales R. M. Bennett !,*, P. J. Jones " ! Department of Agricultural and Food Economics, The University of Reading, P.O. Box 237, Reading RG6 6AR, UK " Centre for Agricultural Strategy, The University of Reading, P.O. Box 236, Reading RG6 6AT, UK Received 6 April 1998; received in revised form 3 August 1998; accepted 5 August 1998 Abstract A dynamic model of United Kingdom (UK) milk and beef production and a linear programming model of land use in England and Wales were used to explore the likely impact on agriculture in England and Wales of measures to eliminate Bovine Spongiform Encephalopathy (BSE) in the UK. Three different scenarios were explored that reflecting uncertainties concerning the future demand for UK beef. Projections show marketed beef output up to 20% lower in 2000 compared to the 1995 level and an extensification of beef production in response to the BSE crisis. This extensification may have environmental benefits and mean that producers are better prepared to respond to Agenda 2000 reforms. The findings highlight the importance of restoring consumer confidence in UK beef and the complete removal of the worldwide ban on UK beef exports. ( 1999 Elsevier Science Ltd. All rights reserved. Keywords: BSE policy; Agriculture; Land use; United Kingdom Introduction On 20 March 1996, the Spongiform Encephalopathy Advisory Committee (SEAC) of the United Kingdom (UK) announced that the most likely origin of the new strain of Creutzfeldt-Jakob Disease (CJD) found in hu- mans was ‘‘exposure to Bovine Spongiform Encepha- lopathy (BSE) before the introduction of the Specified Bovine Offals (SBO) ban’’ (MAFF (1996a) which pro- vides a detailed chronology of events up to and including the 20 March 1996 SEAC announcement). This an- nouncement was followed by widespread adverse con- sumer reaction both in the UK and overseas. Demand for beef and beef products fell sharply, with initial falls of up to 50% in some Member States of the European Union (EU), such as Germany and Italy (MLC, 1996a). Beef consumption in the UK fell by 18% in 1996 com- pared to 1995. Following the SEAC announcement, the UK government imposed an immediate ban on animals over 30 months entering the human food chain. How- ever, pressures on health and agriculture ministers within the EU led quickly to the imposition of a worldwide ban on exports of UK beef and beef derivatives. Having failed in a legal challenge to overturn the worldwide ban, the UK government entered into a pro- cess of negotiation with EU agriculture ministers to agree a plan of BSE control measures that would lead to the lifting of the ban. Under the ‘Florence Agreement’ of June 1996 the UK undertook to implement a series of measures to eliminate BSE and enable progressive lifting of the worldwide ban on beef exports. These measures included the continuation of the ‘Over Thirty Month Scheme’ (OTMS) which excluded cattle over 30 months old from entering the food chain, the removal of SBOs from all cattle slaughtered, the prohibition of the use of ruminant protein in feed, the payment of a premium for the slaughter of male calves of specified dairy breeds (the ‘Calf Processing Aid Scheme’ — CPAS) and the selective ‘accelerated slaughter’ of up to 124,000 cattle which were deemed to be most at risk of infection with the BSE agent because they belonged to the same cohorts as confirmed BSE cases and may therefore have been exposed to contaminated feed. This ‘accelerated slaughter’ policy proved to be contro- versial because, for example, many veterinarians and cattle producers disliked the idea of prematurely killing 0264-8377/99/$ - see front matter ( 1999 Elsevier Science Ltd. All rights reserved. PII: S 0 2 6 4 - 8 3 7 7 ( 9 8 ) 0 0 0 2 8 - 3