Posting by Poultry World editor Richard Allison
One quarter of poultry producers believe they will stop production sometime in the next five years unless business conditions improve. That is the shocking finding from an exclusive survey carried out jointly by Poultry World and NFU.
Everyone recognises that many poultry businesses have been struggling for some time with higher cereal prices, but what is shocking is the scale of the problem and the total lack of confidence looking forward.
There is now a real risk that the sector could lose critical mass with few chick placings.
While there has been much focus on soaring feed costs, the survey also highlighted the mushrooming burden of legislation. Businesses have been hit by a succession of new rules which are adding costs. Most notably, last year’s implementation of Integrated Pollution Prevention and Control (IPPC) left many with huge bills and the egg sector now faces costs of new salmonella rules.
It’s no wonder that both egg and meat producers are lacking confidence when they cannot see beyond their current flock in terms of profitability.
Another worrying finding from the survey is the lack of succession with up to 61% of respondents with no successor. On a positive note, this offers a chance for new entrants, but again, a lack of confidence and hurdles, such as planning, stand in their way.
So what needs to happen?
The bottom line is that producers need a greater share of the margin, more contract security and less legislation. The maddening thing is that consumers do want British eggs and poultry.
First, supermarkets and processors must pass more of the margin down the chain to pay for the increased production costs. The time lag between feed price rises and higher prices paid for eggs and birds clearly demonstrates the need for a formal link between cost of production and prices paid to producers.
Second, the government must fully consider the cost of new legislation and keep its promise to cut red tape. Lord Rooker recently stated that he is committed to reducing regulation. He must stick to his promise - this survey emphatically demonstrates that it’s draining hard-earned cash out of the sector.
Let’s hope 2008 brings a recovery. It has to, as the survey shows no change will lead to a succession of producers exiting the sector, as has already happened in the pig sector.