Memorandum submitted by the Department
for Environment, Food and Rural Affairs (X11)
EXECUTIVE SUMMARY
The Government recognises the importance of
the poultry industry, both the egg and meat sectors, to the UK
agriculture industry. It is a significant industry in its own
right, and the largest single market for UK grain. A high level
of integration through relatively short marketing chains makes
primary producers well attuned to market needs.
It is a largely self-reliant part of the agriculture
industry.
In 2002, the combined value of the industry
was over £1.5 billion.
A significant number of EU and national policies
impact on the poultry industry, inter alia, in the following
areas:
— Animal by products and waste disposal;
— Integrated pollution prevention and
control (IPPC);
— Animal health and welfare;
There is a significant amount of competition
from third country producers who enjoy substantial cost advantages.
Forthcoming WTO negotiations may make this problem more acute.
FUTURE POLICY
The Government readily acknowledges the poultry
sector's excellent track record of innovation and market orientation.
From the industry's perspective, the principal need is for Government
to avoid unnecessary burdens or obstacles, while ensuring that
standards—environmental, animal health and welfare etc—meet
public requirements. The Government's priorities in this sector
are therefore to:
— Continue to act where there is clear
evidence of illegal competition from third countries;
— Within overall government policy,
work to achieve a satisfactory WTO agreement;
— Domestically and in international
negotiations, strike an appropriate balance between need for regulation
and overburdening industry;
— In line with the Government's wider
Sustainable Farming and Food Strategy, continue to encourage industry
moves to look increasingly towards value added/premium products;
— Support poultry industry participation
in Defra's sustainability forum; and
— Continue to participate fully in
EU negotiations on animal welfare issues affecting the egg and
poultry industries.
INTRODUCTION
1. The Government recognises the importance
of the poultry industry, both the egg and meat sectors, to the
UK agriculture industry. It is a significant industry in its own
right, and the largest single market for UK grain. A high level
of integration through relatively short marketing chains makes
primary producers well attuned to market needs. The sector has
a proven record of innovation and its remarkable efficiency gains
over the last 30 years have been entirely industry driven. Poultry
processing is another key element of UK business. The poultry
meat sector is dominated by a small number of highly integrated
processing operations.
2. The overwhelming majority of poultry
meat production takes place in intensive systems although there
is a small but growing market for meat produced using alternative
methods. No data is available on the proportion of poultry meat
production in alternative systems. For eggs, whilst the use of
caged hens remains the principal means of egg production, increasing
consumer demand has created a significant market for eggs produced
in barn (a semi intensive production system) and from free range
hens. Organic systems represents a small part of both the egg
and poultry sectors. Retail sales of eggs and poultry are dominated
by the major retailers.
3. Poultry meat also accounts for a significant
part of the national diet. Poultry accounts for over a quarter
of all meat consumed in the home. It is easily the most commonly
eaten meat. Over the last 20 years, total meat consumption has
fallen by over 15% whilst poultry meat consumption has risen by
over one third.
4. Key Statistics
| Poultry meat |
| | |
| | 1998
| 2002(provisional) |
| Supply (Tonnes) | Chickens
| 1,153,000 | 1,205,000 |
| Boiling Fowl | 56,000
| 50,000 |
| Turkey | 294,000
| 232,000 |
| Value (£ million) | Fowls
| 892 | 821 |
| Turkey, ducks & geese
| 430 | 348 |
Supply (tonnes) | Imports
| 316,000 | 354,000 |
| Exports | 197,000
| 194,000 |
| | |
|
| Eggs | |
| |
| | 1998
| 2002(provisional) |
| Human Consumption | |
| |
| (Million Dozen) | Shell Eggs
| 662 | 716 |
| Eggs processed | 130 | 138
| |
| Number of fowls | |
| |
| (million birds) | 31.2 |
31.4 | |
| Eggs for hatching | |
| |
| (million dozen) | | 94
| 94 |
| Value (£ million) | |
381 | 476 |
| Prices (p/dozen) | 51.5 |
55.7 | |
| Supply (million dozen) | Imports
| 64 | 142 |
| Exports | 37 | 15
| |
UK Policy Objectives
5. Four of Defra's objectives are relevant to the poultry
industry:
Objective 1
Protect and improve the rural, urban, marine and global environment,
and to lead integration of these with other policies across Government
and internationally
Objective 3
To promote a sustainable, competitive and safe food supply
chain which meets consumers' requirements
Objective 4
Promote sustainable, diverse, modern and adaptable farming
through domestic and international actions
Objective 6
Protect the public's interest in relation to environmental
impacts and health and ensure high standards of animal health
and welfare
The Government's overall policy framework for the farming
and food sectors as a whole were set out in the Strategy for Sustainable
Farming and Food, published in December 2002. Key objectives are
supporting industry to achieve efficient and effective food chains
(an area where the egg and poultry sectors are already in the
lead); an international framework which meets UK needs and a shift
from production related support to public payment for public good;
and in terms of the regulatory framework, a new approach to both
the development and enforcement of regulation; and a clear focus
on the contribution English food can make to healthy living.
European Policy
6. The CAP regimes for eggs and poultry are light ones.
The limited export subsidies aim to maintain traditional export
markets rather than support prices. A limited minimum import price
system affords the EU poultry meat market some protection, but
this is strictly limited. Over time, WTO negotiations are likely
to lead to further reductions in all forms of market support measures
including export subsidies and import restrictions.
CAP Reform Proposals
7. CAP reform proposals are likely to lead to lower cereal
prices which should bring benefits to the poultry industry in
the form of lower feed costs.
8. The European Commission's "Long-Term Policy Perspective
for Sustainable Agriculture" includes proposals to expand
the Rural Development Regulation by adding Food Quality (subsidising
participation in certain assurance schemes) and Meeting Standards
(to offset partially the costs of meeting specific regulatory
costs) Chapters, together with the possibility of making animal
welfare payments in the Agri-Environment Chapter.
9. In parallel, in the Investment in Agricultural Holdings
Chapter, the Commission propose that investment aid could be paid
to help farmers to achieve new standards although farmers could
not simultaneously receive aid under the Meeting Standards Chapter,
for the same standard.
10. These new measures would in principle benefit the
poultry industry. However, the eligibility for aid and the potential
level of aid would be limited. Animal Welfare payments would only
apply to standards above the statutory minimum, and may also not
cover all additional costs incurred.
11. In practice, although the new Regulation may come
into force in 2003, no additional rural development funds will
be available in the EU until 2007 when "modulation"
proposals take effect. But significant additional sums are unlikely
to be available for UK rural development programmes in the early
years of a new system.
12. Payments under the new optional measures would be
competing for limited funds against other Rural Development options,
which could provide better value for money and more easily identifiable
public benefits. Public funds should only be used to generate
public goods. Policy decisions on which measures to take forward
in the next programming period (2007-13) will be made following
assessments of the cost and benefit of existing and new measures,
as well as the level of rural development funding available to
the UK.
IMPACT OF
GOVERNMENT POLICY
ON POULTRY
INDUSTRY
13. In introducing or administering legislation in relation
to the poultry industry, the Government adheres to two fundamental
tenets, ie that no unnecessary regulatory burdens should be placed
on industry and that there should be no "gold plating"
of European legislation. This section of the memorandum sets out
the key policy areas currently affecting the poultry industry.
Animal By-products Regulation
14. The new EU Animal By-products regulation came into
effect on 1 May affecting the permitted disposal routes for by-products
of the poultry industry, in particular in relation to the disposal
of fallen stock and also blood and feathers as by-products of
the slaughter process. The new regulation ends the possibility
of on-farm burial or burning of carcasses as a disposal method
for fallen stock and introduce new controls on the disposal of
by-products such as blood and feathers. Thus producers have to
dispose of their fallen stock by incineration or rendering and
abattoirs may no longer apply untreated blood to land. Similarly,
it is no longer permitted to dispose of feathers to landfill.
15. Much of the industry already had arrangements in
place for on-farm incineration or disposal of by-products via
renderers and therefore the new regulation should not affect their
competitiveness. However, some of the smaller producers and abattoirs
will be affected. With regard to fallen stock the government is
proposing a low cost voluntary subscription scheme which will
be open to all livestock farmers including poultry producers to
mitigate the increased costs of disposal. However, some of the
smaller poultry abattoirs, particularly those involved in the
seasonal trade, will have to bear some modest costs in switching
their disposal methods.
Integrated Pollution Prevention and Control ("IPPC")
16. IPPC is a regime for regulating industrial pollution,
established by a 1996 Directive. Emissions to air, water (including
sewers) and land, plus a range of other environmental effects,
must be considered together. This will help ensure a common basis
for the prevention and control of pollution from intensive poultry
production in all Member States.
17. Large intensive livestock producers (over 40,000
or more places) for poultry production will be subject to regulation
for the first time under IPPC. Those in production before 31 October
1999 must apply for an IPPC permit by 31 January 2007 in England,
Wales and Northern Ireland, and by 31 December 2006 in Scotland.
New installations must apply for an IPPC permit before they can
carry out their activities.
18. As intensive livestock industries are new to this
type of regulation, Government is working to minimise the burden.
For example in England and Wales particular effort is being directed
to helping first time applicants, and to streamline the process,
by enabling farmers to use a lower cost, "off the shelf"
permit if they can comply with Standard Rules. Regulators are
required by statute to recover the costs of regulation from those
they regulate, and therefore applicants are charged for their
IPPC permits in line with Treasury guidelines.
19. IPPC will also apply to processing plants with a
finished product capacity of more than 75 tonnes per day. Existing
installations will be required to apply for an IPPC permit in
2004 in England, Wales and Scotland (2005 in Northern Ireland).
New installations or those undergoing substantial change will
require an IPPC permit with immediate effect.
Animal Welfare
20. At a domestic level the welfare of farmed animals
is protected by statute, which makes it an offence to cause unnecessary
pain or unnecessary distress. Detailed standards are found in
the Welfare of Farmed Animals (England) Regulations 2000, as amended.
Similar legislation has been adopted by the devolved administrations.
In addition to the legislative requirements Defra also publishes
welfare codes, which aim to encourage farmers to adopt the highest
standards of husbandry.
21. There are specific rules for laying hens. Council
Directive 1999/74/EC bans conventional battery cages with effect
from 1 January 2012 and lays down minimum standards for hens kept
in other systems including enriched cages. A new welfare code
for laying hens, was introduced in July 2002.
22. The Government recognises the need to work with industry
to introduce improved standards. This is demonstrated by the action
plan in place to work towards eliminating the need for beak trimming.
Beak trimming is permitted in all systems until 31 December 2010.
In the meantime the industry is working on a Code of Practice
for beak trimming and breeding companies continue to work on breeding
programmes to prevent feather pecking and cannibalism. In addition
there is also research into the causes and management control
of feather pecking as well as a study to look at alternatives
to beak trimming.
23. The Government is committed to high standards of
animal welfare and it carried out a three-month public consultation
on the future of enriched cages in the second half of 2002. After
a thorough consideration of the responses, and the available economic,
scientific and veterinary evidence, Ministers concluded that there
are insufficient grounds at present to justify a unilateral ban
on enriched cages and to review the future of enriched cages on
an EU basis, when the Agriculture Council next considers the welfare
of laying hens directive in 2005. By then it is hoped the Government
will be in a stronger position to address some of the questions
on the welfare implications of enriched cages, and for any changes
to apply to all EU producers, not just those in the UK.
24. The meat chicken sector is the one major area of
livestock production not so far covered by EU farm animal welfare
standards. The European Commission has held working groups to
develop an outline for a Directive. Industry will be consulted
on the proposals when they become available, probably towards
the end of 2003. Defra is funding research in relevant areas including
leg health and stocking density. At a domestic level a new welfare
code was published in July 2002 to cover meat chickens and breeding
chickens.
25. Finally, Council Directive 99/74/EC provides for
a review of welfare legislation by 1 January 2005. The Commission
is charged to submit to the Council a report (drawn up on the
basis of an opinion from the Scientific Panel on Animal Health
and Welfare) on the various systems for keeping laying hens and
their health and environmental impact. The report will also take
into account the socio-economic implications of the various systems
and their effects on the Community's economic partners. EU proposals
will be put forward based on the report's conclusions and the
outcome of the WTO negotiations.
Disease control
26. Satisfactory disease control is a critical area for
the industry, and one in which there is close co-operation with
government. For example, there has been extensive liaison recently
over detailed contingency planning following the outbreak of Avian
Influenza in the Netherlands, Belgium and Germany. Outbreaks of
notifiable disease, in addition to the serious cost to individual
flock owners, have an adverse affect on trade (the industry is
a substantial exporter of hatching eggs and day old chicks). Exports
may be banned or severely restricted. The last outbreak of Newcastle
Disease in this country was in 1997, and of Avian Influenza in
1992. However, the recent containment at a quarantine centre of
Newcastle Disease in imported shrikes from West Africa, which
did not affect the UK's ND-free status, serves as a further reminder
of the importance of tight biosecurity and the need for constant
vigilance against disease.
27. Consumer confidence may be adversely affected with
a resulting drop in consumption of poultry and poultry products
when there are "food scares". The industry has expended
considerable resources in the control of salmonella of public
health significance, particularly Salmonella Enteritidis and Salmonella
Typhimurium, for more than 12 years in conjunction with a government
control programme and in conformation with the Directive on the
control of zoonoses (Dir. 92/117). This has resulted in a major
reduction of these pathogens in sectors of the industry.
28. The Food Standards Agency has set a target for the
reduction of foodborne disease by 20 per cent by 2006. Campylobacter
is an important human pathogen and is believed to be foodborne
and associated with chicken. The industry have been actively involved
along with Defra in working with the FSA to help develop a strategy
for the reduction of this pathogen at the primary production level.
The final strategy still has to be agreed but if measures are
to be recommended and subsequently implemented, they must be proportionate
to the public health risk and must not put the industry at further
significant disadvantage when compared with poultry industries
in other member states or third countries.
29. Further emphasis will be placed on the control of
diseases or infections of public health significance in poultry
when the new proposed regulation on the control of salmonella
and other foodborne pathogens comes into force. This will require
the industry to increase monitoring and to take action to reduce
the level of salmonella of public health significance to the specified
level or target for the EU. It will require certain additional
guarantees on salmonella status when live poultry and hatching
eggs are traded, and on poultry products in due course. In addition
to the above the draft Hygiene regulations, Food Hygiene regulation
and Feed and Food regulation will impact on primary producers
in this sector.
30. Additionally, there is a significant breeding sector
based in the UK which has a valuable export market: this may also
suffer if there are disproportionate burdens on these producers.
Marketing Standards Legislation
31. The Department's Egg Marketing Inspectorate is responsible
for enforcing EU quality standards in the egg and poultry sectors.
This includes ensuring that free range production units meet the
minimum criteria set out in EU legislation. A recent Better Quality
Services Review of the Inspectorate found broad industry support
for their work and approach.
INTERNATIONAL COMPETITIVENESS
32. For poultrymeat, the biggest threat to the UK industry
is low priced third country imports. Lower labour and land costs
as well as lower regulatory compliance costs mean that even with
import tariffs at their current level, UK and European producers
are finding difficulty in competing on price with third country
imports. Hitherto, this competition has been largely confined
to imports of chicken meat but there are signs that the EU turkey
market is now being targeted by third country exporters.
33. Because they are geared up principally for supplying
export markets, third countries also enjoy other competitive advantages.
For example, Thai exporters are able to ship breast meat to EU
where there is a strong market. The less highly valued dark meat
is exported to Japan (where there is a substantial demand) and
the remainder is consumed on the internal Thai market.
34. Currently imports from third countries are an important
source of raw material for EU processors. However, over time third
countries appear likely to move into further processing activities.
Because these industries will enjoy the similar land, labour and
regulatory benefits, EU processors may well experience increased
competition on European markets.
35. In line with overall UK policy, there is no prospect
of action to increase tariff protection or block imports. The
current WTO negotiations are likely to lead to higher import volumes.
UK poultry meat producers will therefore increasingly have to
rely on producing quality products which command a price premium.
The Government acknowledges that the industry is already well
aware of this and has an excellent record of product development
and innovation.
WTO Negotiations
36. The current Round of Trade negotiations was launched
in Doha in November 2001. In addition to strongly liberalising
commitments on market access, domestic support and export subsidy,
"special and differential treatment" for developing
countries shall be an integral part of the negotiations and non-trade
concerns will be taken into account. The Government fully supports
these commitments.
37. Although it proved impossible to reach agreement
on modalities for a new Agreement on Agriculture by the 31 March
2003 deadline set at Doha, all parties remain fully engaged with
a view to resolving outstanding differences in time for the WTO
Ministerial Conference (in Cancun) in September this year.
38. The inclusion of non-trade concerns in the Round
was a significant achievement for the EU. It paves the way for
CAP reform and the switch from trade-distorting production support
measures into measures aimed at long term sustainable development
including proposals for enhanced animal welfare. The EU has pushed
hard to have animal welfare provisions accepted as a legitimate
measure under the WTO "Green Box". The first draft of
agriculture modalities, produced by the chairman of the WTO agriculture
negotiations committee, contains an explicit reference to include
animal welfare payments within the Green Box. This is an important
issue for egg producers in particular who have a real concern
that they will have to compete against imports from third countries
where compliance with lower standards of animal welfare confers
a substantial cost advantage. The UK will continue to play an
important role in formulating EU policy in this area.
FUTURE POLICY
39. The Government readily acknowledges the poultry sector's
excellent track record of innovation. Significant Government intervention
in the way the egg and poultry industries operate would only hamper
their activities. From the industry's perspective, the principal
need is for Government to avoid unnecessary burdens or obstacles,
while ensuring that standards—environmental, animal health
and welfare etc—meet public requirements. The Government's
priorities in this sector are therefore to:
— Continue to act where there is clear evidence
of illegal competition from third countries
— Within overall government policy, work to achieve
a satisfactory WTO agreement
— Domestically and in international negotiations,
strike an appropriate balance between need for regulation and
overburdening industry
— In line with the Government's wider Sustainable
Farming and Food Strategy, continue to encourage industry moves
to look increasingly towards value added/premium products
— Support poultry industry participation in Defra's
sustainability forum
— Continue to participate fully in EU negotiations
on animal welfare issues affecting the egg and poultry industries.
Defra
April 2003
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