APPENDIX 34
Memorandum submitted by Deans Foods Ltd
(F 45)
Thank you for the opportunity to provide evidence
to the Agricultural Committee on Organic Farming. We are a company,
part of whose business is the production and marketing of organic
eggs for sale through the major multiple retail outlets in the
UK, herewith therefore is a summary of our views concerning our
industry.
The organic egg industry based on an estimated
national flock of approximately one million birds and representing
a value of approximately £50 million per year has developed
in response to our customer demand from the already established
free-range egg sector. With effect from August 2000 the industry
will be operating under the European Organic Livestock Regulation
1804/99, but until now has operated to within the very non specific
UKROFS standards and those of the various certification bodies.
Before going into any of the details of this document, it is worth
mentioning the following as it sets out the position the Regulation
will find us in:
(1) The UK, up to 1999, when the Regulation
was first published, produced in excess of 50 per cent of all
the free-range eggs in Europe. This sector of the egg industry
had developed as a result of the unique attitudes of the UK agricultural
sector and society towards animal welfare, food hygiene and efficiency.
We were as a result therefore perhaps the most experienced in
operating these types of systems within the European community.
(2) The egg market in the UK, either voluntarily
or otherwise, is already regulated by several sets of standards
including Egg Marketing Regulation 1274/91 (SMT) through MAFF
Egg Inspectorate, RSPAC Freedom Food, British Egg Industry Council—"Lion
Code of Practice", Welfare of Laying Hens Directive and the
supermarkets/customers own standards.
(3) The topography, climate and social history
of the UK has led to a unique agricultural structure. Mixed family
farms have been encouraged to diversify into free-range and organic
egg production where little other alternative is possible. The
enterprises complement the existing farming systems even if they
do not fit entirely into the "ideal" organic model and
they provide an addition to the farm income that helps maintain
the rural economy. The situation is not the same throughout Europe.
(4) We have a number of certification bodies
operating in the UK including UKROFS, but all apparently operating
to different agenda. There is no common objective and therefore
a variation in standards which the consumer has no chance of differentiating.
It has been in trying to address the latter
that we are sure the Regulation was drafted but when dealing with
poultry this has not been easy.
The organic egg sector represents only about
two per cent of the total egg market, with by far the majority
made up by the intensive sector. To us, this indicates the priorities
shoppers put on their choice when purchasing eggs. Despite wide
availability of free range and barn eggs often at very low premiums,
we see only slight swings in favour of these categories indicating
that they are usually persuaded by price alone. By inference therefore,
there is a limit as to how much those, other than the truly principled
will pay for organic produce. If the organic sector is to expand
it cannot allow premiums to get too high by continually adding
cost to the production. The demand for organic egg is strong at
the moment but the economy is booming and it still represents
a small percentage. Nobody knows how big it can get but it is
not a sector that can be switched on and off easily.
We have particular concerns therefore with the
Regulation and its effects on the already established industry
and its potential for expansion.
The Regulation provides the first specific standards
on organic poultry production in the UK but appears to have dismissed
current practice and included conditions and limitations that
have no scientific basis. It must be remembered that an egg laying
bird when it housed either at day old or point of lay on an organic
unit does not know that it is supposed to be organic. It is naturally
and genetically programmed to eat, lay and behave according to
its requirements, and it is only we consumers who dictate how
those requirements are met. Why therefore should an organic bird
be treated in welfare terms differently to others unless there
is scientific justification? Northern European states, if they
are able to operate true free range at all throughout the year
will all have problems maintaining welfare friendly conditions
with stocking densities as low as six birds /m2, We know from
experience the problems with the current lowest stocking density
systems of 7/m2, nor is there any evidence that lower stocking
densities necessarily reduce the risks of flocks becoming aggressive
or more susceptible to disease, again 15 years experience has
taught us this. The limit of 6/m2 is as much as arbitrary figure
as seven or nine or the industry free-range norm of 11.7/m2.
RSPCA Freedom Foods have set up a very practical
and credible standard for free range production based largely
on the FAWC report. It is under these standards that at least
95 per cent of free-range eggs are produced in the UK. These standards
have been on the whole adopted into the Welfare of Laying Hen
Directive (1999/74EC), which comes into force in 2002. The Organic
Livestock Regulation however chooses to differ on areas such as
pop-hole space, nest box space and perch space.
The second area of concern is the time scale
and effect of the introduction of the Regulation. Compliance with
minimum percentages of organic ingredients in the rations is to
be expected, and at current levels is achievable (80 per cent)
but the increases to 100 per cent by 2005 is dependent on the
development of suitable sources of raw materials. It is not as
simple an issue as producers being unwilling to obtain organic
ingredients unless prepared to pay for them but rather physical.
The estimated one million birds in the UK require 8,500 ha under
organic wheat to support them, when taking into account crop rotations
and possible land uses within those rotations the land requirement
increases to 32,000 ha. These sort of areas are not becoming available
fast enough and exclude the requirements of other livestock enterprises
and the knock on effects in other sectors. It is currently impossible
to grow soya for protein in northern Europe and other plant protein
crops have limitations in their suitability in certain livestock
rations. We have to accept therefore that raw materials are to
be imported but it is almost impossible to fulfil the ultimate
aims of organic agriculture which is to create a self sustaining
system based on the use of manures to help condition the land
for the production of crops. The imbalance at the present as highlighted
by the certification bodies is the rapid expansion of the organic
livestock sector without the equivalent growth in the arable sector.
While on the subject of time scales, it is also
a concern as to how the industry will meet the derogation in the
Regulation of producing 100 per cent organic pullets (ie from
day old). The current infrastructure of the whole industry including
breeder farms, hatcheries, pullet rearing sites, transport and
ultimately old hen processing has been developed in line with
best practice and to meet minimum standards in bird welfare, food
hygiene and efficiency. Firstly there are no guidelines in the
Regulation as to how pullets for egg laying are to be reared under
organic conditions. If they are expected to meet the same criteria
as the laying bird it only emphasis the lack of understanding
of the industry when compiling the Regulation. Secondly the fact
that a time scale is imposed without regard to the current position
again demonstrates the naivety of the draft.
The Regulation is clearly designed to return
organic agriculture back to "the good old days" with
small flocks, mobile houses, low input/low output systems. Unfortunately
the current market especially in the UK does not operate the same
as those "good old days". Approximately 80 per cent-85
per cent of all food products are purchased in the supermarkets,
while these organisations have their intentions to reclaim their
corner shop image they still require volume, consistency, quality
and ultimately value. Only recently in the news Iceland proposed
that they wish to convert all their range to organic and at no
premium. The driving force behind organic egg production although
I suspect this is not exclusive to eggs alone, is not whether
the production methods are better for the land, the bird or the
product but whether it is economically justifiable. Mobile units
that allow compliance with the regulation cost approximately £15/bird
more in capital than a conventional static building, flock sizes
limit the advantages of economies of scale with regard to labour,
organic feed costs approximately £100/tonne more than conventional
feed and the general down scaling of units in term of in puts
and out put only adds cost throughout the process. To impose standards
that are unrealistic and then as is being considered by UKROFS
now to enhance some of them unilaterally is going to damage the
development of UK organic farming. Firstly, there is the ever
present danger of imports and secondly the fact that the more
complicated the standards become the more difficult to police
and the easier to avoid which has a detrimental effect on the
integrity of the product. There must be provision for organic
eggs to be produced in "commercially" viable units despite
the connotations this term has with the "purists".
The danger of imports is very real, especially
since within the EU there are no barriers to trade on products
that comply with EU legislation. A European wide Regulation such
as 1804/99, which tries to harmonise production across a variety
of climates, topographies and cultures, has different effects
in different member states. While not suggesting that other member
states do not apply EU legislation, indeed in some countries their
internal standards and inspection systems are more rigorous than
in the UK but only because it is possible to achieve a higher
standard. If the same standard were to be imposed in another state
it would be prohibitively expensive if not impossible. In France
for example the minimum content of organic raw materials in poultry
rations is 90 per cent as oppose to 80 per cent in the UK (the
Regulation minimum) but in France they have access to organic
home grown soya which allows them to achieve that minimum. There
are in addition different internal standards within the UK out
with the Regulation that impose further constrictions on UK farmers
but which allow cheaper production in other member states. The
definition of "free range" in the UK is determined by
MAFF Egg Inspectorate under Egg Marketing Regulations (SMT) and
only applies when birds have access to one ha per 1,000 birds,
on the continent "Plein Air" their equivalent operates
to one ha per 3,500 birds. If the Regulation, as it appears to
do, only suits organic agriculture in certain favourable areas
of Europe it is neither enhancing the expansion of organic agriculture
world-wide nor is it just in the treatment of farmers in individual
states. Consumers from experience are not very patriotic in their
purchases and anyway may not even be in a position to know the
source of what they are buying.
We must now accept the Regulation and we appreciate
the need for organic agriculture to remain strictly controlled
and indeed to be enhanced as and when best practice allows, but
we must also raise the issue as to how it is policed in the UK.
The Regulation is bad enough in its draft as highlighted above
but the fact that UKROFS then have the ability to recommend further
enhancement really begs the question as what the long term future
is for organic production in the UK. It is our belief that a civil
service should operate impartially and on behalf of the industry
to which it is aligned by assisting the industry in adapting to
whatever European legislation is imposed. This process starts
at the initial negotiations, which when looking at the Regulation
now published demonstrates that the UK position was not well negotiated.
As industry members, we were never consulted, we were led to believe
that the early drafts, which we considered at the time were unrealistic,
would not be introduced, only to find them rushed through during
the German presidency almost unchanged. There was obviously no
appreciation of the Welfare of Laying Hen Directive, which must
have been being discussed at the time and no appreciation of the
Egg Regulation Special Marketing Terms already in force. The Regulation
was imposed on to UKROFS who had no previous poultry standards
with which to compare, they deliberately avoided drawing any up
knowing that EU legislation would be imminent and they therefore
had no basis from which to negotiate.
The UKROFS board had, and remains bereft of
poultry experience and yet poultry seems to have created the most
controversy, with the effect that the implications of the Regulation
we don't believe are fully understood to this day. There appears
to be at best inertia and at worst frustration being applied by
the board when it comes to interpretation of the Regulation mainly
because members appear keen to follow private agendas and objectives
rather than the impartial view one would expect. In the mean time
we have producers at various stages of conversion and production
with business plans and commitments who do not know which way
to turn. At a time when organic demand is increasing the last
thing the industry need is confusion that delays or prevents production
at least trying to keep pace. All "gold plating" of
the Regulation should be avoided and has been the pledge of the
Agricultural Minister.
The position now is stagnation. Producers are
not committing themselves to organic conversion for egg laying
units, not knowing if the operation is sustainable and economic
in the mid-term future. Some of those in conversion may not continue
if the derogation is denied them but meanwhile existing producers
are in a bonanza period with very good returns. The majority of
either converts or existing producers have done so entirely at
their own expense without any financial assistance, probably because
they were not eligible unless they committed themselves and all
their enterprises on the farm to organic, which they felt too
big a risk. Organic and free-range poultry compliments extensive
grazing of sheep and cattle especially in the mixed farming areas
of the south west and Wales, but the development of the other
sectors has not been at the same pace and outlets and infrastructure
do not lend themselves to complete conversion. The partial conversion
of farms is a necessary part of the process but will create problems
when standards insist on the disposal of manure onto organic land
only and the possible introduction of minimum percentages of feed
being produced on the unit. The implications are that some farms
are again more suitable for organic agriculture than others.
The industry is keen to assist in the development
of the standards and to participate in the enhancement of organic
integrity but it must not be dismissed when it represents such
a large percentage of the existing production base. It is hoped
that the views expressed above are considered in the debate and
we would be happy to provide more information if required.
21 June 2000
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