Select Committee on Environment, Food and Rural Affairs Appendices to the Minutes of Evidence


Memorandum submitted by the British Poultry Council (A21)


  1.  The British Poultry Council (BPC) is an independent trade association representing UK poultry meat producers including primary breeding, rearing, slaughter and processing of chickens, turkeys, ducks and geese, and slaughter and processing of spent laying hens. BPC does not represent egg producers. BPC Members account for around 90 per cent of UK poultry meat production.

  2.  UK poultry meat production is some 50 per cent greater in volume than pork and around twice the volume of beef and veal production. Poultry meat production is not subsidised under either the CAP or national programmes, nor is it controlled by quotas.


  3.  Export refunds are paid on 286,000 tonnes of mainly whole frozen chicken exported to the Middle East and the former Soviet States. Refunds are currently around

28/100kg. Most whole bird exports from the EU are made by a few French and Danish companies. This subsidised volume represents about one quarter of total EU annual poultry meat exports to Third Countries. UK poultry meat exports are mostly low value cuts and parts which have little or no market within the EU, such as wings and feet.


  4.  Tariffs apply to imports. As well as the basic tariff amount, additional tariffs are charged if the c.i.f. value is below a fixed Reference Price for that commodity. Essentially, under the provisions of the Safeguard Clause of the GATT Agreement on Agriculture, the lower the cif value compared with the Reference Price, then the higher the additional tariff. The method of calculation of additional tariffs is more complicated than this simple statement. These tariffs do not apply to all imports. There are very low, concessional tariff rates on relatively large quotas for poultry meat imports from East European countries. A further 18,500 tonnes of tariff-free imports are enjoyed by Brazil and Thailand, given as part-compensation in the GATT Oilseeds Panel settlement.

  5.  Imported poultry meat is mostly boneless and skinless chicken breast meat which is the highest valued cut in the UK (and EU) market. Imports are charged a basic tariff and in most cases are also required to pay an additional tariff. For imported chicken breast meat the total tariff represents around 55 per cent of the cif value. This level of tariff is appropriate to the cost of production of an efficient UK producer. However, exporters in Third Countries are adding 1.2 per cent of dry salt to chicken breast fillets exported to the EU to change the Customs classification from fresh or frozen poultry meat to a catch-all "other" classification. This greatly reduces the tariff payable to just 15.4 per cent of the cif value. In our view this practice amounts to fraud and the loophole must be closed. We also believe that this practice further encourages the dubious practice of adding very high levels of water to in some Member States in an attempt to compete with the very cheap lightly salted imports, as revealed by the FSA's recent survey of catering chicken breast meat packs.

  6.  Poultry meat imports into the EU have been increasing rapidly in recent years and are expected to exceed 500,000 tonnes this calendar year. Last year the UK imported 365,000 tonnes of poultry meat. We estimate that around 40 per cent of chicken breast meat eaten in the UK is now imported. These increases have been fuelled by the strength of the pound sterling against Asian and South American currencies and against the euro and by the growing cost of EU and UK legislation. Tariffs are calculated in euros and because of this, the relative tariff protection provided to UK producers has fallen as the euro has fallen against the pound. Both of these factors help to explain why chicken imports into the UK have continued to rise despite the application of seemingly high tariff and additional tariff amounts.

  7.  The agrimonetary system of the CAP provides for compensation to farmers for the fall in the value of euro farm subsidies due to currency movements. The same compensatory mechanism should be available to non-subsidised farmers for falls in the effective protection of euro tariffs due to currency movements.


  8.  The Ministerial Declaration agreed at the Doha meeting in October is unequivocal on the need to further liberalise market access particularly for goods from Developing Countries into Developed Countries' markets. It is generally held that this will be achieved by further substantial cuts in or elimination of tariffs on agricultural goods. In a meeting with NGOs (including BPC) just before the Doha meeting, Lord Whitty, DEFRA Parliamentary Secretary (Lords), confirmed that the UK Government wishes to see import tariffs abolished. He also indicated that the Government is not in favour of all "blue box" subsidies being removed and could envisage more "green box" subsidies in a WTO outcome.

  9.  The Government's position is extremely worrying for UK poultry meat producers. In the absence of any subsidies whether "blue box" or "green box", the tariff is the only form of protection open to the poultry sector. Removal of tariffs without ongoing assistance to compensate would be highly discriminatory against the poultry sector and other agricultural sectors which are currently unsubsidised. Fortunately not all Member State governments seem to share the UK Government's laissez faire approach on agricultural tariffs. It is a sad business that we have to rely on the policies of our competitors' Governments to protect the standards our own Government claims to stand for but is not ready to uphold in the face of ever increasing food imports.

  10.  Tariffs are a legitimate means of protecting certain values which are strongly held by EU society and reflected in EU laws governing EU producers. Employment conditions, animal welfare standards, and environmental controls all apply to the poultry sector and all add significant costs. Poultry and pig farming are the only agricultural sectors covered by the stringent environmental controls imposed by the Integrated Pollution Prevention and Control Directive despite being relatively low agricultural polluters compared with other livestock sectors. These are high added costs which are not required to be borne by poultry producers in Third Countries selling directly into the EU market to EU consumers.

  11.  This is not an argument for the reduction or removal of these high standards. Rather, it is a plea that these standards are not allowed to be undermined and eroded away by cheaper, "sub standard" imports forcing closure of UK farms, and processing plants. The poultry sector is the major rural employer in the UK. Enlightened EU employment laws provide no benefit to those without jobs. Ethical EU animal welfare laws have little effect if most of the products eaten come from livestock reared largely outside the EU. Having set high standards in legislation, it should be the moral responsibility of EU governments to uphold and protect those standards for all products entering the EU and not just for those produced within the EU.

  12.  Tariffs are the fairest and most transparent way of achieving this. In the case of poultry meat production, tariffs are not protecting an inefficient EU industry from more efficient producers elsewhere. The EU poultry meat sector is highly efficient in its operating procedures but it incurs higher costs because of the reasons outlined above. Costs are also higher in part because the high production subsidies and price supports enjoyed by other agricultural sectors over the years have become factored into the cost of land and various direct and indirect goods and services bought in by unsubsidised poultry producers. This effect is now significantly reduced, however.


  13.  The WTO Ministerial Declaration includes in the Agriculture section some general wording on taking non-trade issues into account. The EU Commission maintains that this will allow the EU's concerns over animal welfare and environmental standards to be included. However, no other WTO country is interested in including welfare and the UK Government's view is that it will fall off the WTO agenda. The alternative being considered is to create an EU payments system to compensate EU producers required meet higher welfare standards, and to allow sub-standard imports with low or zero tariffs but require them to be identified by appropriate labelling. Consumers will then be able to make informed choices.

  14.  The approach being proposed borders on the farcical. It should not be the EU taxpayer who pays extra for the standards required of EU products by EU law. It should be those whose products do not meet those standards who pay. This is properly the legitimate role of tariffs. Similarly, it is highly hypocritical of EU Governments to impose one set of standards and severe penalties on certain products but not on the same products from other sources, and to let the consumer decide which product they wish to buy. If this freedom for the consumer is morally satisfactory in the case of imported products then it must be satisfactory for the same products produced domestically in similar farming systems. Labelling the systems used rather than banning some systems might be a better way forward.


  15.  The UK poultry meat sector is highly vertically integrated and highly efficient in hatching, rearing and processing. However, it needs tariff protection to fairly compensate for the significantly higher costs of EU (and UK) legislation in order to compete with imports from Third Countries. The very short, integrated, and consumer-driven production chain of the poultry sector is often seen as a model for subsidised agriculture sectors to be more market oriented without subsidies. In removing production subsidies and pushing agriculture sectors to be market oriented the Government must retain the facility to protect those sectors against substandard imports through appropriate import tariffs.

  16.  The very extensive farming systems being advocated by some, in our view will require even greater levels of direct subsidy and tariff protection than the conventional systems they are seeking to replace. Policies to pay farmers to switch to production systems which consume considerably more natural resources such as water and feed and which are more inefficient in use of labour and capital assets are misguided and short term. Such systems are even less likely to be able to withstand the competitive pressure of products from similarly inefficient but considerably cheaper systems in developing countries that will have much greater access to the UK market.


14 December 2001

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