APPENDIX 4
Memorandum submitted by the British Egg
Industry Council (S 5)
LAYING HENS
INTRODUCTION
1. The British Egg Industry Council (BEIC)
is pleased to have this opportunity to provide evidence to the
Agriculture Committee on this subject. BEIC is extremely worried
about the costs which will arise from the recently adopted Council
Directive (99/74/EC) laying down minimum standards for the protection
of laying hens.
CAGES
2. The previous Council Directive (88/166/EEC),
whose provisions will remain in force until January 2003, established
a number of requirements for cages of which the most important
was that each hen in a cage had to have a minimum horizontal space
allowance of 450 sq cms (This means that five birds can be housed
in the standard European cage of 2,500 sq cms). Cages had to be
at least 40 cms high over most of the cage and 35 cms over the
rest.
3. Council Directive 99/74/EC has altered
the minimum space allowance rules on cages as follows:
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| 1. | 1 January 2003 | All new cages—enriched—750 sq cms/bird.
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| 2. | Same date | All existing cages—550 sq cms/bird.
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| 3. | 1 January 2012 | All cages—enriched—750 sq cms/bird.
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Enriched cages must include a nest, a litter area and a perch
and provide at least 45 cms of head room except over the nesting
area where a height of at least 20 cms must be provided.
ALTERNATIVE SYSTEMS
4. The present rules for alternative systems are set
out in Annex II of Commission Regulation (EEC) 1274/91 on marketing
standards for eggs. But the rules under the BEIC Lion and the
RSPCA Freedom Food schemes are considerably more stringent and
provide, inter alia, for a stocking density in free range and
perchery/barn houses of 12 birds per sq metre of floor space (compared
with 25 in the Commission Regulation).
5. The new Directive has altered the rules on floor space
allowances in housing for alternative systems as follows:
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| 1. | 1 January 2002 | New Systems—9 hens per metre2 of floor space.
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| 2. | 1 January 2007 | Systems in place between 3 August 1999 and 1 January 2002—as for 1.
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| 3. | 1 January 2012 | Systems in place on 3 August 1999—as for 1
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6. BEIC, RSPCA and Compassion in World Farming all protested
against the move to a lower stocking density in alternative housing
than in the Lion and Freedom Food schemes, pointing out that this
would act as a disincentive to producers wishing to move out of
cage systems into alternative systems.
COST EFFECTS
7. The effects of the Directive on EU costs of production
as compared with the costs for the usual 350 sq cms/bird (or less)
in battery cages in third countries is as follows:
| | Stocking Density in sq cms per Bird in Cages
| Captial Cost per Bird
| Running Costs per Dozen
| Percentage Higher Running Costs in EU
|
|
| 350 | £10.00
| 42p | n/a
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| 450 | £14.00
| 45p | 7%
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| 550 | £17.50
| 48p | 14%
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| Enriched 750 | £35.00
| 56p | 33%
|
|
| Barn (based on 12 birds/m2) | £14.73
| 56.2p | 33%
|
| Free Range (based on 12 birds/m2) | £20.61
| 66.4p | 58%
|
|
| Barn (based on 9 birds/m2) | £19.14
| 61.5p | 44%
|
| Free Range (based on 9 birds/m2) | £25.00
| 73.3p | 74%
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The calculations on running costs are based on the assumption
that EU producers will be able to buy feedingstuffs at the same
level of price as producers in third countries.
COMPETITIVE EFFECTS
8. The EU industry faces stiff competition from the United
States which has a very powerful and efficient industry where
all the birds are kept in battery cages with a very low space
allowance per bird. Even taking account of transport costs and
tariffs there is no way in which the EU industry will be able
to compete with the United States on price once the possibility
of keeping birds in unenriched cages ends on 1 January 2012.
9. In the Commission's communication on the protection
of laying hens—Com(1998) 135 final—they said that
if the EU import duty was further reduced by 33 per cent in the
years up to 2010 then the EU egg industry would no longer be competitive
if their costs increased by 10 per cent. In fact the minimum cost
increase as shown in the Table in para 7 will be between the battery
cage at 450 sq cms per bird and the enriched cage where running
costs will rise from 45p to 56p—an increase of 11p per dozen
or 25 per cent.
10. The shell egg market will continue to be partially
protected from third country supplies because of the freshness
requirements of the retailers. But this protection will not extend
to the egg products market. This market currently takes about
25 per cent of EU eggs and its market share was expected to grow
to about 40 per cent of the total market during the next decade.
In fact, it is the one part of the egg market which is showing
substantial growth.
11. Quite apart from the United States, India has been
building substantial dried egg processing plants and in Central
and South America birds are being moved out of free range and
into battery units often linked to processing plants.
12. It should be noted that it is not possible to provide
any protection in the egg products sector in the form of labelling
to give freedom of choice to the consumer. Egg products are not
sold direct to the consumer but to the food manufacturer who incorporates
them in manufactured food. By the time this manufactured food
ends up on the retailer's shelves the provenance of the ingredients
is lost.
13. It is clear that, unless some form of equivalence
is enforced on imports of third country eggs and egg products,
then 25-40 per cent of the EU egg market will be completely lost
to third country suppliers. This represents some 18 to 29 billion
eggs worth around £1 billion to £1.6 billion. There
would be a 25-40 per cent loss in employment throughout the whole
egg production sector from breeder farms, hatcheries, rearing
farms, laying farms, packing and processing companies, traders
and ancillary trades. As the egg industry is a substantial consumer
of cereals there will be a considerable increase in the EU cereals
surplus.
WTO
14. In these circumstances we were heartened to a certain
extent by the fact that the Agriculture Council, when they adopted
the new Directive, entered into their minutes:
"The Council and the Commission, emphasising the need
to ensure equivalent conditions of competition between EU producers
and those of third countries, stress the need to take into account,
at the international level, rules governing the welfare of animals,
which should constitute one of the fundamental points of the negotiation
mandate for the "Millennium Round" of the WTO negotiations".
15. The outcome of the WTO negotiations is one of the
factors that has to be taken into account in the review of Council
Directive 99/74/EC to be undertaken in 2005 (see Article 10 of
the Directive).
16. It is to be expected, however, that third countries
will vigorously oppose an expansion of the WTO criteria so as
to provide that eggs and egg products can only be traded between
countries with the same welfare standards. If this should prove
to be non-negotiable then no further reduction should be made
in the EU tariff protection for eggs and egg products; moreover
additional levies should be imposed on imports from third countries
which do not have the same welfare rules for hens as the EU.
26 October 1999
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