HC 830 The implications of the Welfare of Laying Hens directive for the egg industry

Written evidence submitted by the Department for Environment, Food and Rural Affairs (Defra) (EGG 19)

· Council Directive 1999/74/EC laying down minimum standards for the protection of laying hens, states that from 1 January 2012, laying hens cannot be kept in conventional (‘barren’) cages. This is implemented in English law in the Welfare of Farmed Animals (England) Regulations 2007 (S.I. 2007/2078).

· The ban on conventional cages represents a significant welfare advance across the European Union.

· Government is committed to complying with the 2012 deadline to have phased out the use of conventional cages and welcomes the efforts the UK laying hen industry has made to comply with the ban.

· Government is concerned that progress in other Member States may not be so advanced and takes seriously the UK industry estimates that 29% of the total EU flock may still be in conventional cages across the EU on 1 January 2012.

· We wish to protect compliant producers from any competitive disadvantage of illegal production in other Member States or indeed the UK. Additional measures need to be put in place at an EU level to prevent market disturbance.

· Very much welcomed the Commission’s invitation for officials to discuss compliance and enforcement of the conventional cage ban at a multi-stakeholder event on 19 January 2011 and for its agreement to consider a number of possible enforcement options proposed by Member States and stakeholders.

· Government will continue to play a full part in EU discussions on a practical enforcement solution so that this significant welfare advance is not delayed and compliant producers are not disadvantaged.

Introduction

1. This Memorandum sets out Defra’s response to the issues identified by the Committee for its inquiry into the egg industry and the implications of the EU Council Directive 1999/74/EC: the Welfare of Laying Hens. As the Directive has been implemented in separate but similar legislation across the UK and the issues are relevant across the whole of the UK laying hen industry this is reflected in the response.

2. Council Directive 1999/74/EC laying down minimum standards for the protection of laying hens, states that from 1 January 2012 on establishments with more than 350 laying hens, hens cannot be kept in conventional (‘barren’) cages. This has been implemented into English law since 2002, most recently in the Welfare of Farmed Animals (England) Regulations 2007 (S.I 2007/2078) and in similar legislation in Wales, Scotland and Northern Ireland. There is clear evidence that conventional cages are detrimental to hen welfare and therefore the decision to ban them by 2012 represents a significant welfare advance across the European Union. After 1 January 2012 EU laying hen production will have to be either in enriched cages, free range, barn or organic systems. Enriched cages, often termed ‘colony’ systems provide more space than conventional cages and are legally required to provide nest boxes, litter, perches and claw shortening devices. Both the Commission and the Government’s independent advisory committee, the Farm Animal Welfare Council, recognise the benefits of enriched cages and support their use. Of the alternatives to conventional cages, there is no scientific evidence to favour one production system over another. In terms of welfare, each has its own strengths and weaknesses.

3. The UK government is committed to complying with the 2012 deadline to have phased out the use of conventional cages. The UK laying hen industry is working hard to comply with the ban and has stated that Lion Code subscribers will be ready for 1 January 2012 and that there will be no conventional cage produced eggs marketed as ‘Lion’ from this date. Lion Code members represent 88% of UK production which includes free range, organic and barn commercial producers as well as cage producers. Some smaller cage egg producers have said they will not be investing in new equipment for 2012 and would leave the industry by 2012.

4. In respect of some other Member States, the Government’s concern is that progress in converting out of conventional cages may not be so advanced. The UK industry estimates that of the 251 million hens in cages in the EU, 103 million hens will remain in conventional cages across the EU on 1 January 2012 (which represents 29% of the total EU flock of 353 million hens) leading to large-scale non-compliance. Given these statistics, the UK industry is concerned that more time will be provided to producers in some other Member States to convert to alternative production systems, as if such action was not taken it is likely that the EU would have a massive egg shortage come 2012.

5. The UK government wishes to protect compliant UK producers from any competitive disadvantage of illegal production in other Member States or indeed the UK. Such behaviour would affect economic stability and fairness within the sector. Simply relying on infraction proceedings against non-compliant Member States will not be enough to deal with the commercially negative impact that the non-compliance would cause. Additional measures will need to be put in place to prevent market disturbance. We believe urgent consideration needs to be given at an EU level as to how to protect all those EU producers who are compliant and achieve the desired welfare improvements by 2012.

The implications of the Directive for the egg production, food processing and manufacturing sector:

6. The UK is the sixth largest producer of eggs in the EU. In 2010 there were almost 39 million laying hens in the UK. The table at Annex 1 shows the current numbers of hens in the UK at the end of 2010. We are 80% self sufficient in egg and egg products, with the remaining 20% imported from other Member States, in particular France, Netherlands, Germany and Spain. The majority of these imported eggs (66%) are imported as shell eggs for use by wholesalers, caterers and the food industry. The remaining 33% are imported as egg products (liquid / powered eggs). We have a small export market, predominantly to the Republic of Ireland.

7. The UK industry is dominated by a small number of large companies - the top four companies market over 60% of all eggs. Roughly 80% of all total UK egg production goes through just 20% of companies. The remaining 20% of production and marketing is done by the far smaller companies in the industry, largely dealing in localised and niche markets.

8. In 1999, caged egg production accounted for 78% of UK egg production and free range (including organic) just 16%. By 2010, 49% of laying hens (19 million) were housed in caged egg production systems and over 42 % (16 million laying hens) were housed in free range systems, with a further 3% in organic systems. Of this caged production, nearly 11 million (28%) are reported to be in conventional cages and over 8 million (21%) in enriched cage systems. This information is based on inspection data by Animal Health, the Government’s inspecting and enforcement body, and the most up to date estimates from industry suggest that the number of enriched cage places are more likely to be between 9 and 10 million. The growth in free range systems over the last decade has largely been driven by consumer demand.

9. At present, the British Egg Industry Council are predicting that the market split for 2012 could be 50% free range, 43% cage, 4% barn and 3% organic.

10. Waitrose (shell eggs and own label food products), the Co-op (shell eggs), Marks and Spencer (shell eggs and food products and Morrisons (own label shell eggs) have already stopped selling cage eggs or have indicated their intention to do so in the near future. Sainsbury’s no longer sell cage eggs and have stated that they will move to using eggs from non-cage systems in their own label food products by 2012. The two largest retailers, Tesco and ASDA, have both stated that they intend to continue to offer cage eggs for sale in their stores to satisfy the demands of their diverse consumer base.

11. The UK egg processing sector believes that there is an imminent competitive threat from products manufactured from shell eggs produced in conventional cages in the EU after 2012. Parts of the market for egg products are extremely price-sensitive and products produced in existing conventional cages are likely to have a significant cost advantage over those produced in new enriched cages, even after transport costs are added.

12. The UK industry is also concerned that with the increased costs of production, combined with significant reductions in import tariffs, imports of eggs and egg products from third countries will increase. Eggs from third countries produced in conventional cages will continue to be permitted to be marketed post 2012. Industry argue that the price differential is likely to be sufficiently attractive for many retailers to chose cheaper imported eggs – particularly those eggs destined for the processing/manufacturing sector.

13. In terms of cage manufacturers, three European suppliers dominate the UK enriched cage market and each are estimated to have a 30-40% share. These suppliers have reported that they are still being asked to quote for new systems. They have restricted the installation of the units to their own staff for quality control purposes, so it is likely that this will slow up the rate of conversion across the EU as we approach 2012.

How the European Commission plans to ensure compliance with the Directive:

14. The last survey the European Commission undertook at the end of 2008 revealed that only 7% of the hens housed in cages across the EU were in enriched cages. Until very recently the Commission has repeatedly restated its commitment to the 2012 deadline and argued that it would be down to the individual member state to ensure compliance and infraction proceedings would be undertaken in the event of non-compliance. At the end of 2010, however, there were signs that the Commission was beginning to accept the EU industry, the European Parliament and certain Member States, including the UK, that there might be a problem with non-compliance come 1 January 2012. Representatives from Member States, industry, animal welfare and consumer organisations were invited to attend an event in Brussels on 19 January to discuss compliance and enforcement of the conventional cage ban. The aim of the meeting was to give the Commission its first clear idea of the probable extent of non-compliance come 2012 and Member States views on possible enforcement options.

15. The Commission conclusions from this event were that the time frame for implementation of the conventional cage ban was feasible and that there was no appetite for allowing more time to phase out conventional cages. However, there was also a general concensus that the forecast by the European industry of 29% non-compliance would cause a significant problem, so the introduction of measures that would maintain transparency for consumers and a level playing field for all EU producers was favoured. Hence a number of possible enforcement options were proposed by Member States and stakeholders. They were:

16. These options for enforcement are currently being considered by the Commission. The Commission agreed to continue the dialogue with Competent Authorities and all the sectors concerned in order to ensure the proper enforcement of the legislation. Four working groups have also been convened to continue the discussion on this issue with Member States and interested parties.

Government support for the egg and egg products industry

17. The Government wishes to protect all those UK producers who have invested heavily in alternative production systems from the risk of any illegal production in the UK or in other Member States after 1 January 2012. Action would be taken under the Welfare of Farmed Animals (England) Regulations 2007, and its equivalents in the Devolved Administrations, which implement Directive 1999/74/EC and Commission Regulation EC No 589/2008 of 23 June 2008 laying down detailed rules for implementing Council Regulation (EC) No 1234/2007 as regards marketing standards for eggs This Government and previous Administrations have supported the UK hen industry in a number of ways:

18. In the Autumn of 2008, an awareness campaign of 14 meetings was held around England, aimed at helping existing cage producers make informed business decisions on whether to re-invest in egg production facilities and to outline the options available, together with supplying them with indicative costs for enriched and non-cage systems. It proved a very useful campaign with around 60-70 cage egg businesses attending the meetings.

19. In July 2009, the previous Administration issued a letter to industry and producers restating Ministers’ commitment to the 2012 deadline for the ban and to urge them to press ahead with their plans to convert out of conventional cages to alternative systems. Similar letters were sent by the Welsh Assembly Government and the Scottish Government.

20. In February 2009, Northern Ireland held an industry education and awareness event and in October ’09 held a meeting with the Ulster Farming Union and the laying hen industry in Northern Ireland to discuss the conventional cage ban.

21. In February 2010, Northern Ireland Ministers met with representatives from the laying hen industry to discuss the implications of the conventional cage ban

22. In July 2010, the Coalition Government wrote to industry to confirm that they were committed to the deadline for phasing out conventional cages. The Welsh Government has been actively raising awareness of the conventional cage ban through a magazine (GWLAD) which provides the latest agricultural news from the Welsh Assembly Government.

23. The Minister of State for Agriculture and Food met with the UK egg industry in October 2010 and spoke on this issue at the Egg and Poultry Industry Conference in November 2010. The issue of potential non-compliance come 2012 was raised at a bilateral with Commissioner Dalli in November 2010 to which Ministers from England, Scotland, Wales and Northern Ireland were present.

24. During September 2010 Animal Health (Great Britain’s inspecting and enforcement agency) in conjunction with veterinary advisors and officials from Scotland, Wales, England and Northern Ireland, conducted a UK-wide training programme for Egg Marketing Inspectors, Technical Officers, Veterinary Officers, and other Animal Health staff on the requirements set out in the EU Laying Hens Directive 1999/74 so as to achieve as consistent an approach to enforcement across the UK as possible. In addition, a programme of visits to enriched cage production sites is being undertaken to ensure that the transition to enriched cage production is supported and monitored.

25. In a letter from the Minister of State in September last year, he made it clear that we would oppose any derogation or delay to the deadline of 2012. The UK Government maintained pressure on the Commission to put measures in place to lessen the risk of market disruption come 2012 and to protect compliant UK producers from unfair competition from possible cheaper non-complaint production in other Member States. One of the options suggested was for an intra-Community trade ban that would restrict the sale of eggs, which continue to be produced from conventional cages after 2012, from being exported outside that member state’s border.

26. UK officials attended the stakeholder event in Brussels on 19 January and restated the views described above. We will continue to play a full part in any discussions in Brussels on a practical enforcement solution so that this significant welfare advance is not delayed and compliant UK producers are not disadvantaged.

27. In preparation for the 2012 deadline, it is the intention to revise the Codes of Recommendations for the Welfare of Livestock: Laying Hens in England, Scotland and Wales to take account of the ban on conventional cages and to provide more guidance on enriched cage and free range production, including up-to-date husbandry advice.

Financial assistance to the industry

28. Defra has and will continue to resist any requests by the industry for financial aid to be made available under the English Rural Development Programme to enable egg producers to convert out of conventional cages. The Government’s position is that rural development programme aid is not available for meeting minimum legal standards. It would also be totally unfair to all those producers who have already invested heavily in conversion to give those late in doing so any financial assistance.

29. The Scottish Government has provided grants under the Scottish Rural Development Programme to assist egg producers in the conversion from conventional cages.  Neither Northern Ireland or the Welsh Assembly Government has made any financial aid available for conversion.

February 2011

Annex 1

Number of holdings and laying hens by production system December 2010