2011

Michael Seals MBE - Chairman

Farms 250 acres arable and South Devon pedigree herd in South Derbyshire. Director England NFSCo. Director East Midlands

Development Agency. Chairman of Animal Health and Welfare Board for England; chairman of NROSO. Past Council Member

NFU and Committee Chairman.

Ian Campbell MBE - Director Intensive Sector (Pigs)

Retired Regional Manager of the National Pig Association. Director of Unitron UK Ltd. Chairman of the UK branch of the

European Pig Producers Association.

Neil Leach - Director

DEFRA Head of the Animal By–products Unit, with responsibility for advising on Government policy on animal by–products,

including the disposal of fallen stock. Responsible for developing the National Fallen Stock Scheme and a Director of NFSCo

since its creation in 2003.

Ian Duncan Millar MBE - Scottish Director

Farms a 300-acre mixed farm and a hill unit near Aberfeldy in Perthshire. Director of the Moredun Research Institute, and

Agricultural Valuer. Director of the Highland Glen Lamb marketing group. Chairman of the Beef and Sheep Farm Assurance in

Scotland until 2002.

Eifion Evans - Welsh Director

Retired practising veterinary surgeon in North West Wales. Former President of the British Veterinary Association.

Campbell Tweed OBE – Northern Ireland Director

A suckler cow and sheep farmer from Cairncastle, near Larne, on the County Antrim coast. He is currently chairman of the

Nuffield Farming Scholarships Trust and is a former president of the Ulster Farmers' Union. He has also served on various other

organisations including the UK Hill Farming Advisory Committee and the Northern Ireland National Sheep Association.

NFSCo Administration

Ian Potter heads the team which is responsible for the day to day running of National Fallen Stock CIC. His team offers a high

quality personal service to both members and collectors from the NFSCo offices in Stanton near Ashbourne in Derbyshire. Ian

and the team use their experience of the livestock industry to offer a quality service and to resolve any problems quickly and

efficiently.

The Board

Chairman’s Report2011 was a year of steady progress for NFSCo. Against a

background where farmers were selling their animals early to

capitalise on good prices, which resulted in fewer animals

dying on farm, NFSCo maintained its throughput, although

turnover was slightly down compared to previous years.

We made progress on our IT, our communications , our cost

cutting and value-for-money agenda, and continued to build

our relationship with our stakeholders. NFSCo has around 100

Collectors using the scheme and has regular meetings with

Collectors throughout the UK, as well as meetings with Lassa

and Collector groups to seek improvements in our systems and

service delivery.

In 2011 we welcomed two new collectors to the fold. We wish

these businesses well for the future.

However, 2011 was also a year where it became clear that

NFSCo has to gear-up for change, and to begin to instigate that

change with stakeholders. Rendering prices were volatile

through the year, and so too were fuel prices. This volatility

challenges us with the simple question: is the NFSCo once a

year retendering model flexible enough for the future?

The answer may well be that it isn’t. I believe we need to move

to a more flexible retendering system sometime, but what this

new system might be, and when it will be introduced are

difficult to determine right now. There will be cost, IT and time

implications to name but a few. The outcome, however,

clearly must be beneficial to members and collectors.

Nevertheless NFSCo has to proactively begin the debate and

drive the agenda. If it doesn’t then it risks being a victim of the

change agenda, rather than a setter of it.

As part of NFSCo’s development 2011 saw a review of

company management, with the outcome being the creation

of an operations Board with the Chairman and Ian Potter being

responsible for the day to day operations of the business,

advised on the financial aspects by Jane Hill of Saffery

Champness.

Developments by the company during the year also included

the expansion of Farmbuyer into the Collector service area,

and promoting the concept of farm/industry delivery on the

lines of the NFSCo model in a range of potential projects - from

the marketing of school milk to developing EID for fallen stock

in Scotland.

Two of our Directors, Nigel Joice from Norfolk and a founding

father -Walter Elliot of Northern Ireland - retired during the

year. The whole company wishes both well in their retirement,

and we are grateful for the time and resource they brought to

the development of NFSCo. In Northern Ireland Campbell

Tweed was appointed Director with specific responsibility for

that region, and we will, in 2012, consider the remaining

vacancy.

Finally, 2012 will bring huge changes on the animal health and

welfare fronts in England, which will bring opportunities and

challenges for anyone in the sector.

We look forward to continuing to work successfully with all our

stakeholders and allies throughout 2012.

Board meetings

During the year NFSCo held four Board meetings in each of the

four regions of the UK.

Strategic review of the business

In order to ensure that the company was operating with the

optimal and most effective structure, Suzanne Joyce, from

Spencer Harrison Ltd, carried out a strategic assessment of the

company in early 2011.

She made a number of recommendations, which the Board

agreed to implement.

Liaison with Stakeholders

There were also several meetings held with collectors and

their representative body LASSA during the year - either on a

one to one basis or at more formal meetings at the offices in

Ashbourne. Again these were well attended, and essential in

our communication with our Collector stakeholders.

January 2011 saw a stakeholder conference take place at

Ashbourne, where the Welsh Assembly’s Jackie Price; NFSCo’s

Ian Potter; FABRA’s Stephen Woodgate, and Bangor

University’s research scientist Dr Prysor Williams addressed

delegates on legislation, the future of NFSCo, rendering and

the option for bio-reduction of carcasses.

Isle of Wight Service commences

From 1 December 2011 NFSCo began collections from the Isle

of Wight, after the burial derogation was challenged by the EU.

This resulted in the derogation being lifted, requiring livestock

owners to dispose of their fallen stock by incineration or

rendering according to the Animal By-products Regulations.

During 2012 IC Services will carry out collections on the island

for NFSCo. To assist in the transition the Government has

provided funds to IC Services to set-up the collection service,

and to NFSCo to help with ferry costs.

Operational Summary

Michael Seals, right, chairman of NFSCo, was appointed as the Chairman of the new

Animal Health and Welfare Board for England (AHWBE) in 2011. His Board “will bring

together farmers, veterinarians, welfare experts and others from outside

Government and with DEFRA to make direct recommendations to Ministers on policy

affecting the health and welfare of all kept animals such as farm animals, horses and

pets”. He will also be dealing with the controversial issue of who pays for animal

health-related issues in the future. He views his new role as being complementary to

his NFSCo chairmanship.

“This is an opportunity for industry to work closely within Government producing

policies to move forward,” he says.

Additional role for Michael SealsAbove. Stakeholder conference January 2011.

Operational summary

Re-tendering - GB and NI

December 2011 saw the annual re-

tendering exercise take place. This went

extremely smoothly, with new prices

coming into force from 1 January.

During 2011 there were periods of

unexpected volatility in rendering prices,

but the market competition that is

created by the NFSCo model will help to

ensure competitive prices. The evidence

from the 2011/2012 tender is that

despite the volatility some collectors

reduced prices, some kept them the

same, and some increased them. One

part of the country - the North East -

moved over the year from being one of

the most expensive areas in the country

for collections to being one of the

cheapest (see table opposite). This was

largely thanks to a new collector setting

up in business and providing the only

real competition in many postcode

areas. This is clear evidence that the

NFSCo model to encourage competition

in the marketplace does work.

The approved collector list also saw

some collectors departing for one

reason or another – for some because

they have packed-up or decided their

future lies outside of the NFSCo scheme,

or as a result of them not coming-up to

scratch in terms of their professional-

ism, efficiency, fairness, competitive-

ness or trading relationship with us.

During the tender process some

collectors questioned the integrity of

the IT system, believing that some of

their confidential data may have been

compromised prior to the end of the

tendering deadline. NFSCo would like

to reassure all collectors that no

information was compromised at any

time. The IT system contains “trace

software” which can determine exactly

when access to the IT system took place,

and what records were accessed.

Collectors who would like to

interrogate our software to reassure

themselves over the confidentiality of

their records can do so at any time.

Compliance

In order to improve member’s compliance position,

traceability and record keeping, January 2011 saw NFSCo

once again distribute farmer’s 2010 Annual Compliance

Statement together with their Membership Certificate.

The Compliance Statement enables a farmer to show any

compliance inspector an up-to-date record of all fallen stock

collections made via NFSCo through the year.

A small administration fee of £4.65 + VAT was charged to

cover the report generation and printing of the statement.

Impact of competition -"Old v New"collector in area previously devoid

of competition from NFSCOcollector

48m + Female cows

"Old" "Old" "New" Region 2009 2010 2011 DH1 £65.00 £65.00 £45.00

NE20 £70.00 £65.00 £45.00DL8 £65.00 £65.00 £45.00NE46 £70.00 £65.00 £45.00NE26 £70.00 £65.00 £45.00DL6 £65.00 £65.00 £45.00DL12 £65.00 £65.00 £45.00TS27 £70.00 £65.00 £45.00

Adult sheep

DH1 £16.75 £12.05 £8.00NE20 £16.75 £14.25 £8.00DL8 £16.75 £12.05 £8.00NE46 £16.75 £14.25 £8.00DL6 £19.50 £15.00 £8.00DL12 £16.75 £12.05 £8.00TS27 £16.75 £14.25 £8.00

Operational Summary

NFSCo diversifies to reduce administration costs

Thanks to NFSCo’s unique business model, the skills of the staff

at Ian Potter Associates, and the investment in IT at the

Ashbourne offices, NFSCo is well placed to diversify into other

business areas.

Sales from Farmbuyer - a buying group scheme run in

conjunction with Anglia Farmers Ltd, the leading agricultural

purchasing co-operative in the UK - have continued to increase,

thanks to some excellent deals being offered and the

expansion of the scheme to Collectors.

NFSCo members have the opportunity to save money on a

wide range of goods, while NFSCo profits by spreading its

overheads and costs over a wider range of products, goods

and services.

NFSCo uses the added income and profits from Farmbuyer to

reduce the administrative costs of fallen stock collection. The

scheme started by offering discount on many commonly

purchased consumables, with the objective to introduce fuel,

fertiliser and other farm supplies and requisites in 2011.

Financial UpdateNFSCo is a Community Interest Company, with the profits

reinvested in the business to reduce the administrative cost of

fallen stock collection.

We operate an extremely efficient business, with just five full

time administration people running the scheme. Our income

is derived through an administration fee of £1.75 for members

who receive statements by post, or a reduced fee of £1.25 for

those opting for email invoicing – but only if a member uses

the service in the same month.

Turnover for 2011 was slightly down on 2010, as a result of a

small reduction in the number of animals put through on the

NFSCo scheme. This was largely due to good market prices for

adult cattle and sheep, and farmers choosing to market them

rather than keep them on farm.

Thanks to the efforts of Ian Potter’s administrative staff our

bad debts remain low, and other cost savings initiatives - such

as a drive to encourage email invoicing and e-membership -

benefited the bottom line.

To summarise, therefore, NFSCo’s financial position can be

described as being solid, and this provides us with a perfect

platform for our efforts to diversify into new areas and

increase our turnover accordingly.

Any member who wishes to see a set of detailed accounts

should request them in writing from our registered office:

c/o Saffery Champness,Unex House,Bourges BoulevardPeterboroughPE1 1NG

Communication with our main

stakeholders - collectors and farmers -

is of high priority to NFSCo, and this year

we began to comprehensively revamp

the website, which can be found at

www.nfsco.co.uk.

Other activity included sending

newsletters as and when we had

something worthy to say. In

2011 these were issued in

October and November prior to

the retendering process, for

example.

To save money the printing and

distribution were both handled

in-house.

Welcome to our new world-wide presence!

Communications

NFSCo has instigated and funded a Research

Fellowship with the Royal Agricultural College,

Cirencester to investigate what steps can be

taken to add value to products generated

from fallen stock, including the potential for

revisions to the Animal By-products Regulations.

Stewart Houston CBE, chairman of both the British Pig

Executive and the National Pig Association, is undertaking this

task, and his report will be presented in June 2012.

He intends to give clear guidelines as to how value can be

retained within the meat supply chain, and will seek to clarify

best practice across the species that has an

impact on freshness of carcase, plus what the

optimum bio-security measure are for the

collection and processing of carcases. He will

also advise on how these factors might guide

changes in legislation, as well as informing the discussions on

Cost Sharing and Responsibility.

The current debate in Europe would appear to open the door

to an acceptance that pig and poultry derived fertiliser or

protein represent little or no risk to humans in the transfer of

TSE agents, and may well be at the front of changed legislation.

NFSCo sponsors RAC Fellowship on fallen stock

National Fallen Stock CIC

Sallyfield Lane

Stanton

Ashbourne

Derbyshire

DE6 2DA

Helpline number: 0845 054 8888