Aviagen expands as poultrymeat market takes off

Breeding companies are having to run faster to keep up with the growth in broiler demand, as Philip Clarke discovers.

Just as the commercial broiler sector is working at full capacity to meet the growing demand for poultrymeat, so too are the breeding companies.

Aviagen, for example, has recently announced a major £7m extension of its flagship hatchery at Stratford, Warwickshire, to meet the extra call for great grandparent (GGP), grandparent (GP) and parent stock around the world.

“There is a steady increase in demand for chicken globally,” says Aviagen UK Limited (AvUKL) general manager Graeme Dear. “It is a low-cost product with no cultural barriers – a high-quality protein with the best feed conversion rates. As the world population grows to over nine billion, it is the one meat that can feed those mouths with the minimum environmental impact in terms of land use.

“But this puts more pressure on us, the primary breeders, to supply more GGP and GP birds around the world.”

To manage this more effectively, Aviagen in the UK restructured in 2012, creating two distinct businesses:

• Aviagen Limited is effectively the research and development part of the company, seeking to improve and produce pedigree, GGP and GP birds.
  
• AvUKL is one of the European sales and distribution businesses – taking GP birds from its sister company and producing parent stock (PS) for selling on to broiler breeders in the UK, Europe and across the globe.

“We mostly supply eggs to our own hatchery at Stratford to produce these parent birds, but we also send fertile eggs to other Aviagen businesses and customers in Europe, and further afield, to produce their own GP or PS flocks. Some prefer UK-origin eggs due to our strong biosecurity and quality reputation,” says Dr Dear.

Pedigree birds are all hatched in Aviagen’s own facility in Scotland, while GGP and GP birds are then produced either in Scotland or the North East of England on over 50 farms.

“As the world population grows to over nine billion, it is the one meat that can feed those mouths with the minimum environmental impact in terms of land use”
Graeme Dear, Aviagen UK general manager

All non-pedigree eggs are sent to the company’s central distribution centre at Lockerbie in Dumfries and Galloway before dispatch to either Stratford or the company’s other 12 associated hatcheries in mainland Europe and Russia.

This distribution centre has recently invested in a new Spides (Short Periods of Incubation During Egg Storage) system, which gives stored eggs a short temperature blast. This has been shown to reduce chick mortality from eggs that have been stored for longer periods.

All of these facilities are covered by a so-called “compartment” – an OIE/Defra-approved certification which means that, should there be an outbreak of avian influenza, or some other exotic disease, then the company would still be able to distribute its high-health eggs and chicks, even if the rest of the industry was hit by mandatory movement restrictions.

“We were the first company in the world to achieve this (in 2010) and are still the only operator in Europe to have that status,” says Dr Dear. “It would still be up to the receiving country to decide whether to accept the stock, but we would, in principle, be able to continue trading. In this way we enhance our security of supply, which is critical for day-old chick exports.

“As breeders we have a big responsibility in maintaining supply into the food chain, whatever the circumstances,” he adds. “There has been a lot of consolidation in this industry, so it is important we understand our responsibilities.”

Competition

On the subject of consolidation, Dr Dear is adamant that the broiler sector in general, and the breeding part of it in particular, remains competitive.

“There may only be just a few poultry genetics companies left in the world, but so long as you have more than one, you have competition,” he says. “You’re only as good as your product and, when we sit down to talk business with a customer, it certainly feels like we have competition. It is clear they want the best deal.

“But we also have to balance the sheer cost of running a massive breeding programme with the return we can get from the market. That cost is what has driven the industry towards consolidation.”

Part of staying ahead is also offering customers a mix of products. While the Ross 308 clearly rules the roost in Aviagen’s portfolio, the company has recently added the slower growing Rowan Range, to try and secure a share of the organic and free-range market.

This predominantly brown bird is Freedom Food and Beter Leven approved and is currently being rolled out to customers in the UK and Holland.

“We listen to our customers, and watch what’s happening in different parts of the world, and look to meet their needs. We are currently running at full capacity in the UK.”

Expansion

So what of the expansion at Stratford? The £7m investment will fund the construction of a new annex to the existing building that will add 400,000 places to the site’s egg-setting capacity, pushing it past one million eggs a week.

It is envisaged that the existing building will mainly be given over to hatching GGP and GP stock, while the new annex will focus on hatching parent stock. Storage capacity is set to double, while a Spides system will also be included, with the capacity to heat treat an entire lorry load of eggs at a time.

Planning permission has now been granted and building work started, and Aviagen hopes to have the expansion completed by the middle of next year. “The investment demonstrates the level of support we receive from our shareholders, who see the value of long-term investments.”

As for staffing, Dr Dear says the expansion will create up to 30 new jobs. “We expect to be able to fill them all locally – except perhaps for one or two specialist roles, including the new incubation manager. There will also be job development opportunities for existing staff and we may transfer staff from elsewhere.”

Generally, Dr Dear says finding the right calibre of people for work in the poultry sector is a challenge, and the breeding sector is no exception. “We have such a diverse range of roles within the company – from biogeneticists to poultry farm managers. But we are very involved in some of the industry schemes, including the scholarship scheme with Harper Adams. A lot of the students who come to us on placements end up getting a job with us.”

Given the positive prospects for the whole sector – and Aviagen within it – Dr Dear believes having a job in poultry is no bad place to be.

POTTED HISTORY OF AVIAGEN

Aviagen started life as Chunky Chicks in 1956, based just outside Edinburgh. It was established by noted breeders Rupert Chalmers-Watson and Fred Nichols, bringing in broiler breeding stock from the USA.

In 1978 Ross Breeders was set up in the USA, and in 1980 launched its Arbor Acres Classic, which became the world’s “standard” broiler breeder by the end of the decade.

The two companies were brought together under one roof in 1999, with Aviagen created as the holding company. Aviagen was then bought by the EW Group, a family-run holding company based in Germany in 2005.

Today the Aviagen Group consists of Aviagen Broiler Breeders (headquartered in Alabama, USA), Aviagen Turkeys and CWT Farms. It has offices in 14 countries and customers in 130.