In November, Poultry World reported on integrator Moy Park’s plans to expand production. Jake Davies gets more detail from agricultural director Alan Gibson
Sales up 20%, 400 new sheds in the pipeline and an expanding poultrymeat market. Good times for Moy Park?
We’ve seen strong organic growth at Moy Park over the last few years and this year has been no different. What we have to do is plan for the future; sheds take time to put up and we have a strategic plan in place to continue this organic growth.
But it’s prudent that we operate a disciplined supply chain. We as a company cannot afford to overproduce or oversupply the market. So any expansion has got to be in line with what the market can consume. Margins are incredibly thin and we operate in a very challenging environment.
Moy Park is now responsible for parent company Marfrig’s European operations. How has this affected the business?
Marfrig as a whole needed a single business unit in Europe. It’s an opportunity for us at Moy Park to offer world-leading beef to the UK market and share our poultry expertise with Europe. Also, if there’s product that the European market requires that can be Brazilian, we can offer that as well.
Will it create a market in Europe for British chicken?
There’s a market for everything. We do export to the continental market and have been doing so for many years, but this tends to be dark meat or wings.
Fresh fillet to Germany or Denmark, though? We are well positioned with our European division and it’s something very much on our agenda to explore.
But each market is unique. The German consumer wants predominantly German meat. Do I think we will be sending large quantities of British chickenmeat into Germany? Probably not. But I do think there’s a market there for dark meat – legs into a food service processor, for example.
Can we compete on price with Europe?
We don’t just sell chicken on price. We predominantly sell on provenance. Moy Park is very much in the brand protection industry – offering the assurance product will be to standard.
Because of the demand for dark meat in Europe, the value put on fillet is different to the value we put on it in the UK market, so it’s not just a price debate.
With only four big integrators, is there enough competition in the UK poultry market?
I would argue this is one of the sexiest, most interesting industries around
It is incredibly competitive. There is very strong competition between the retailers, and the consumer is very hard pressed. We’ve got to recognise that the consumer has less money to spend, but expects the same safe food of British origin. I think that the market is even more demanding that it’s ever been.
Within the industry itself I think there is great competition. The market has seen a great consolidation, simply because it wasn’t making money. Put quite frankly there has just not been enough margin or profit in the last 10-15 years.
So there’s been consolidation. But I can certainly say that any time there’s been an acquisition in Moy Park, it’s not got any easier to sell chicken. The market is still very demanding and expects competitive prices.
It’s a low margin industry, it’s tough and we are fighting as a business to be more efficient. We’re always restless.
How is your farming estate structured? Are you looking for contract growers or to build your own farms?
We have a blend. In England, it’s integrated company-owned farms. In Ireland farms are family owned, and predominantly contract. I think that works very well for both the Irish and the GB market
Moy Park has over 600 farmers in Northern Ireland and we’re looking for opportunities to grow. That’s across all parts of the integration. That will predominantly be through contract growers. But England is a different model.
It’s about being sustainable and we believe we’ve got a really good balance in the company and a good spread.
What are you looking for in a prospective Moy Park poultry farmer?
First of all we vet and talk with people who have an interest. Somebody that’s new, we would sit down and look at whether they have a good track record in agriculture, in business management, have got values aligned to Moy Park and ensure they understand what it is to grow chicken.
The margins are so tight you need to have a detailed mind and way of working. Chickens won’t rear themselves; you’ve got to have a real passion for it.
Next step is helping them through the planning process, environment process and relations with the bank. Once they’ve made the decision, we make that process as simple as possible for them.
We’ve worked with local governments in Northern Ireland and they’ve been really supportive in setting up fast-track planning processes and removing some of the red tape in order to support expansion.
And how does a contract work?
The model is quite straightforward; we will operate on a long-term relationship with the farmers, they will build houses to Moy Park specification and with a formula that gives them an income, and they will operate to agreed standards. We will provide technical support and with the growth in the market there’s an opportunity.
The tight control of nitrates in Northern Ireland has been cited as a barrier to expansion. How will Moy Park get around it?
It’s important to the future success of Moy Park and the industry in Northern Ireland. We have an appeal process under way with regards to Rose Energy (a litter burning power station that has failed to get planning). There is a government project looking at alternatives that we’re involved in.
It won’t be a roadblock to Moy Park expanding in Ireland, though. Everybody politically within Northern Ireland understands; a core part of the country’s economy is the agri-food sector, so we’re very confident that a solution will be found – we’re a big employer and Northern Ireland’s biggest private company, so the economics are there.
The expansion and intention to build 400 houses is a great incentive to find a solution.
What about the challenge campylobacter presents? Where will the solution be found?
This is a very important point for the industry and we’re trying to understand the key drivers for it. It is a multifactorial bacteria and we need to identify the three, four or five key areas, and then absolutely have a plan, which is what we’re working on.
What’s the latest on broiler shed enrichments?
As a business I think we’ve been market leading. For many years we’ve been involved in ways to enrich our chicken. We were first in the UK to bring in double-glazed windows, and have worked with Bristol University and Queens University Belfast to find what enriches a birds’ environment.
The process of enrichment isn’t just about the farm; it’s the whole integration. It’s about the quality of the chicks, the feed and management and housing. If you get those ingredients right, you can produce great chicken. I believe it’s much more important to get the fundamental inputs right.
That said, new sheds will all have windows, and we’re rolling out window conversions. As a business, we think they are good for the bird.
We’ve also got the youngest farming base in the UK. About 50% of our sheds are under 10 years and all of those will already be windowed. Most birds are now reared with some additional enrichment in sheds.
Attracting new entrants into the poultry sector is billed as one of its biggest challenges. What’s Moy Park doing to help?
I joined the company in 1987, when Moy Park took on eight graduates. Two of us are on the executive board today. There’s an example to anybody that if you come into the poultry industry, you can make a really good career out of it.
This year we’re bringing in 23 graduates across all different functions. We’ve also supported over 2,300 vocational qualifications. But we’ve got to do more to attract; as an industry, we’ve never done enough.
Our industry as a whole is intriguing, and I think it’s been seen as not that sexy. I’ll tell you this; I would argue that this is one of the sexiest, most interesting industries around.
The challenges, such as feed price and commodities inflation, are huge. Those are massive risks that come into our business, so we need phenomenally talented people to make sure we can commercially communicate that to our customers and work with them to find solutions.
Alan Gibson: Profile
Alan is agriculture and fresh poultry divisional director for Moy Park, responsible for all production of fresh poultry from day-old grandparent flocks through to shipping.
He joined the company in 1987 after graduating from Queens University Belfast with a BSc (Hons) in Food Science. He worked his way up through different areas of the business before being appointed to the Moy Park board in 2000 as purchasing director.
He took up the role of Convenience Foods divisional director in 2009, and more recently the position of Agriculture and Fresh Poultry divisional director in 2011, which includes both operational and commercial responsibilities.