Clare Morgan is the first female chairman of the NFU Cymru Poultry Board. Debbie James went to meet her and her husband, Stephen, on their Pembrokeshire farm.
Is the recent downturn in free-range egg sales a blip, or has the market reached maturity?
I think we will see sales return, but it might be slow in happening. Egg sales are not recession-proof. Consumers do not have the same levels of income to spend on food. This has particularly been reflected in the sales of organic eggs. Some consumers have switched to free range and some free-range consumers have switched to colony eggs. At its peak, free range accounted for 53% of the market, but it is now below 50%. The decrease in free-range sales eased towards the end of 2012, but traditionally egg sales rise this time of the year anyway.
Are you making any money in the current climate?
We are covering our costs, but it must be remembered that ours is a new shed and system and 32,000 birds allow us economies of scale. If we drop to 290 eggs a crop then we would be losing money. We are currently paying over £300/t for feed; twelve months ago it was £235/t. The forward projected price is £300/t for the next 18 months. When we started the poultry business we knew there would be challenging times, but we have made a long-term commitment and have to try and manage our business accordingly.
How should egg producers deal with the constant price pressure being exerted by supermarkets? Would you consider dairy-style direct action?
I think the dairy sector handled the direct action very well, but this would not necessarily work for every sector. One of the reasons it worked so well is they had headline figures showing farmers going out of business and reducing in numbers. In contrast, free-range egg production has seen great growth in the past five years.
The dairy sector is also much larger in numbers than the egg sector – there were 3,000 farmers at the NFU-organised summit. The egg sector would struggle to get these sorts of numbers and a badly attended demonstration would send out a poor message. A longer-term solution, which the NFU is working on, is creating more balance in the supply chain so that each party gets their fair share of the profits.
Would you like to see greater use of cost-linked pricing?
In an ideal world, yes. Feed ratchets are a great idea in an open market where everything is transparent, as this would take the peaks and troughs out of the market place, enabling better long-term planning. But we are not in an open market and everything is not transparent. For a feed clause to work, it needs to be agreed throughout the supply chain. It would need the egg producer to fix a price with the egg packer, and the egg packer to fix a price with its customer. This is where problems arise, as a packer can rarely agree a price with retailers that guarantees a margin for all parties for a significant amount of time.
You use a multi-tier system – is there a danger of a public backlash, as it’s not what people think of as free range?
The first thing I would say to the critics of a multi-tier system is “come and have a look at our system and our hens, and the 8o acres of grassland they have access to”. We looked at both single and multi-tier systems, and decided on a bow leg Venconmatic system. What we particularly like about multi-tier is that the hens can roam through the system away from the dominant birds. More timid birds can thrive as there is a place for all.
One of the deciding factors for us was that the multi-tier system takes the fresh manure out three times a week. This has two advantages; firstly it reduces the smell and flies; secondly it allows us to use the manure on the arable and grassland rather than having it stockpiled. Chicken manure is a valuable nutrient and greatly reduces our reliance on artificial fertiliser.
How do you manage for feather pecking? Could you manage without beak trimming?
I think the use of the words “beak trimming” is unfortunate and it gives the wrong impression. Beak tipping would be better.
Our pullets are all beak-trimmed as chicks. Feather pecking can still occur, but not to such a degree. Good stockmanship and preventing the hens becoming stressed plays a major part. If we find a hen that has been pecked, she is taken to an isolation pen to recover.
When the EU unveiled the directive on beak trimming, Jim Paice announced that the industry would have to undertake trials to prove why the ban should not proceed. There are currently trials under way at Bristol University, but at present there are no large-scale producers involved. One problem is the lack of compensation if problems occur, which does not encourage participants.
People who oppose beak trimming also oppose lamb tail docking, castration and dehorning in cattle. In modern agriculture we need these measures to maintain high welfare standards. If a beak trimming ban is implemented we believe it could cost our business up to 20% more through greater mortality, stressed birds, increased labour and reduced production. We would need to be paid more for our eggs.
Is the current planning system for layer and broiler producers fit for purpose?
Our personal experience of the planning system has been very positive. When we were planning our shed we didn’t want it to create problems for neighbours or to the residential properties on our farm. Producers in other counties have experienced greater problems because the local authorities are conscious of the number of sheds being built. Ours was the first big unit in Pembrokeshire. If there were 10 producers all wanting to do what we had done our experience might have been more challenging.
The recent NFU confidence survey has egg producers at the bottom of the pile. Do you see any cause for optimism?
As farmers I think we are naturally optimistic, but the last few years have been very tough, with many factors all coming together. Firstly there has been rapid expansion in the free-range industry, which caused a surplus of eggs. Then the battery cage ban hugely distorted the European egg market. And global weather issues have pushed feed prices to record levels, putting huge pressure on egg producers’ margins.
But figures show egg consumption is on the increase. There has been some fantastic work done promoting egg and it is now perceived as a ‘super-food’ and efficient source of protein. Even the revival in home baking, due to shows such as The Great British Bake off, has had a very positive impact and we need to continue to be proactive. In the UK we now have a very modern, efficient egg sector.
What do you hope to achieve as NFU Cymru poultry board chairman?
One of the biggest battles we are fighting is to retain the poultry industry’s right to trim beaks.
As Welsh chairman I also want to continue to raise the profile of Welsh produce. Only 58% of food consumed in Wales is grown or produced in Wales.
There is still the concern that eggs and egg products imported into the UK are still not up to our high standard. There is a necessity for more accurate labelling and provenance on egg content used in products, so the consumer can make an informed decision. Where retailers and processors use Welsh egg, this needs to be highlighted.
A FARMING STORY
Clare and Stephen Morgan established their poultry business at Fenton Home Farm near Haverfordwest in January 2011.
They were also running an arable, beef and sheep enterprise and had heavily invested in converting their original stone barns into 11 residential properties, which they let on assured shorthold tenancies. The couple had also bought a second 300-acre farm in neighbouring Carmarthenshire, but the distance between the two farms was a challenge. They therefore made the decision to sell that farm and concentrate everything at Fenton.
Even though there were four remaining barns to be developed, they did not want to invest more in the properties. Like most businesses they had plenty of assets, but a lack of cash generation. They considered two options – dairying and egg production.
At the time, egg production was far more attractive. The Morgans, who are both Nuffield Scholars, invested £900,000 in a new shed and another £120,000 on 32,000 Lohmann Brown hens to stock it. Their bank had been encouraging them to go for a 16,000 bird system but, due to their distance from the market, they wanted to have sufficient numbers to make them viable to a pack house. The eggs are sold to Stonegate in Wiltshire.
The other enterprises consist of arable, commercial and pedigree Welsh Black suckler cows, breeding ewes and the property business, which they manage themselves. Clare is also a chartered surveyor and undertakes consultancy work. The couple has a young family – Huw aged nine, Evan aged seven, and five-year-old Tom. “We should have a good available workforce in years to come,” says Clare.