Business outlook 2023: Low prices threaten poultry productivity

After several decades of strong growth, productivity is in danger of peaking in the UK’s poultry sector, while demand for poultrymeat globally continues to expand.

Over the 50 years since Andersons was established, poultry has been one of the fastest-growing sectors in UK farming and has changed beyond recognition, say Andersons partner Lily Hiscock and consultant Edward Calcott.

See also: 13 things every poultry farmer can do to save energy 

In the early 1970s, poultry production had started to undergo major change, moving away from a cottage industry to one that operated at scale.

In the egg sector, this was driven by the introduction of commercial battery cages and the first hybrid strains of layers.

In the broiler sector, the first specialist meat birds began to be sold. A 5,000-bird broiler house, with “chunky chicks” reaching 2kg at 63 days with a feed-conversion ratio of 2.5:1, was typical for the time.  

Production time halved

Nowadays, the typical UK broiler shed averages more than 45,000 birds, achieving weights in half the time seen five decades ago with a feed-conversion ratio of 1.5:1 or less.

These are huge productivity gains during a period when global poultrymeat consumption has more than doubled, to more than 52kg a head. Egg consumption has grown at an even faster rate.

However, the current change in production systems, being driven mainly by the retailers, appears to be pushing us back towards the 1970s.

A move to free-range production, the growth in barn birds and a ban on enriched colonies from most retailers by 2025 is not dissimilar to the pre-1970s systems, with deep litter housing and free-range being the norm in fold units moved daily.

In the broiler sector, there is a push for retailers to sign up to the “Better Chicken Commitment”.

This again goes back to days of old, with lower stocking densities, slow-growing breeds and extended slaughter ages.

Productivity threatened                                                

Many of these moves are being driven by changing consumer attitudes, marketing campaigns and aims for higher welfare. The problem is that it will almost certainly result in reduced productivity and production.

For example, converting an enriched colony shed to a barn system is at least 50% less efficient and the cost of production is often prohibitive.

A further challenge is presented in the form of avian influenza.

It is inhibiting growth of the free-range and organic sectors in the UK, with housing restrictions in affected areas sometimes in place for months.

All this comes at a time when demand is increasing and consumer wallets are being squeezed.

Poultrymeat consumption is expected to continue growing across the globe.

The Organisation for Economic Co-operation and Development and the Food and Agriculture Organisation of the United Nations are forecasting 13.1% consumption growth by 2030, driven by strong demand for cheaper proteins, deemed to be a healthier food choice.

Meanwhile, broiler and egg producers are struggling with rising production costs, notably for feed, energy, labour and interest charges, and sale prices are not covering those increases.

This is squeezing producers’ profit margins, which are vital to cover reinvestment, loan repayments and drawings.

If profit requirements are not met, the sector will fail to grow to match consumer demand and may even contract.

It is important that cost increases are matched proportionally by higher sales prices, otherwise new entrants to the sector will deem it unviable.

New-build activity is currently quiet; farmers are sitting on planning permissions due to the unattractive returns.

With demand for poultry products forecast to increase, and more floor area and growing facilities required to meet higher welfare standards, it is a sad state of affairs if farmers are not rewarded appropriately for their investments in a product with such promising demand forecasts.

With these challenges for the UK poultry sector, we need a little help from retailers. There is a need for better education in the industry and for consumers, to understand where their food comes from.

With a greater demand for eggs and poultrymeat, we need more production, not less.

Surely there is a place for higher-welfare housed systems alongside the less-intensive free-range and organic systems, providing a range of cost options for the UK consumer and highly productive systems for producers?