Written evidence submitted by the National
Farmers' Union (NFU)
The NFU represents 55,000 farm businesses in England
and Wales involving an estimated 155,000 farmers, managers and
partners in the business. In addition we have 55,000 Countryside
members with an interest in farming and the country.
SUMMARY
— Difficulty
of securing credit to make re-investments due to financial crisis.
— Two
tier egg industry where smaller producers are unable to secure
funds and rapid consolidation of the industry.
— Wastage
of lifespan of existing infrastructure due to directive and potential
for future wastage if further regulations are enacted.
— Concerns
over implementation in other countries, there is significant evidence
that a vast proportion of the flocks of some countries and 29%
of all EU stocks will not meet the conditions required by the
directive by 1 January 2012.
— Concerns
over policing of directive as many countries are set to not meet
the requirements, doubts as to the effectiveness of some country's
"Competent Authorities".
THE IMPLICATIONS
OF THE
DIRECTIVE FOR
ENGLISH EGG
PRODUCTION
1. Within the UK a majority of cage housed laying
hens will be in enriched colony cages by the January 2012 deadline.
Significant investment has been required by egg producers to comply
with the Welfare of Laying Hens Directive. It has cost British
egg producers £400 million (around £25 per hen place).
2. The recent financial crisis and credit restrictions
have made borrowing for reinvestment difficult and this has been
further compounded by poor returns to egg producers and record
high feed and other input costs.
3. Alongside the huge capital costs involved
with erecting new enriched cage units there is also the associated
increased cost of production. An LEI study entitled "International
comparison of production costs of table eggs" (Van Horne,
November 2008) showed that cost of production was +8% higher for
an enriched system compared to a conventional cage.
4. The type of market commitment or confidence
required for this level of investment means that those with retail
contracts (limited to Lion production) or other large long term
market have felt confident to invest. This has led to accelerated
consolidation of the industry, with fewer producers and a much
smaller independent egg industry. Smaller egg producers, supplying
local markets and those with their own egg deliveries to local
businesses have been unable to secure the necessary levels of
finance, or garner customer commitment necessary for this long
term investment.
5. The directive will mean conventional cage
capital investment will be scrapped before it has reached the
end of its useful life. As an indication, research carried out
by the NFU in 2009 showed the average age of a broiler (meat chicken)
house was 27 years. Over 45% of broiler houses ranged from 30-50
years old. It is typical for poultry farmers to get in excess
of 30 years use from major infrastructural investment. By loading
the cage egg industry with all its capital investment in a small
time band, costs of production will be high, relative competitiveness
of UK and EU egg will be compromised and existing infrastructure
is being wasted.
6. The NFU is concerned future lobbying by NGO's
will be focused on a ban on all cage production. The RSPCA and
CIWF have both indicated this publically. There is a fear amongst
producers that investment in the enriched colony cage could also
be vulnerable to legislative condemnation before investment is
recouped. This must not be allowed to happen.
7. Industry forecasts suggest that 29% of EU
egg production will remain in conventional cages on 1 January
2012. This equates to 103.5 million laying hens or 83 million
eggs a day.
8. A study completed in April 2010 commissioned
by the European Parliament's Agriculture Committee on the future
of EU poultry meat and egg sectors, reported that "very large"
proportions of the flocks in Spain, Poland, Italy and Greece and
to a lesser extent the Czech Republic, Hungary and France are
not expected to make the 2012 deadline. UK Border agency figures
show that 27% of the UK shell egg imports come from Spain and
12.5% from France.
9. English egg producers have serious concerns
that if the Directive is not uniformly implemented across the
EU, after investing heavily in conversion to enriched cages to
meet the requirements of the Directive, they will be put at a
commercial disadvantage by imported non-compliant eggs and egg
products from conventional cages.
10. It is the NFU's belief that he UK egg market
is already being distorted as a secondary effect of the welfare
of laying hens Directive. Currently we have a two tier cage market
operating with those producers who are not converting running
their conventional cages up to the January 2012 deadline alongside
producers who have converted to enriched cages systems. Additionally
there has been accelerated expansion of the free range egg sector
to satisfy the predicted deficit in 2012, when conventional cages
are taken out of production. While it is hard to see how this
effect could be mitigated, it is another indication of the distorting
effect of 2012 ban. NFU figures (derived from Defra chick placement
figures) indicate that in December 2010 the national laying flock
was 33.3 million birds compared to 30.2 million birds in Dec 2009.
The average flock size between 2000 and 2009 was 29.5 million
hens. These figures clearly indicate that normal market signals
governing supply and demand are being confused and distorted.
This has resulted in overinvestment and oversupply in the UK egg
sector.
11. Despite current market difficulties, investment
in free range production shows the determination of the UK egg
industry to ensure the consumer still has access to high welfare
UK egg post 2012.
HOW THE
EUROPEAN COMMISSION
PLANS TO
ENSURE COMPLIANCE
WITH THE
DIRECTIVE
12. The European Commission has always stated
that it is up to the individual Member State to ensure proper
implementation of this legislation. This means that eggs which
are not produced in compliance with the Welfare of Laying Hens
Directive are not marketed according to Commission Regulation
589/2008/EC which lays down the detailed rules for the marketing
standards for eggs.
13. In theory these plans are robust and each
Member State should enforce the regulation and ensure only eggs
from legal systems carry an official production indicator. However
in practice this relies on the Competent Authority effectively
enforcing legislation and we would argue that those Member States
which have significant numbers of non-compliant producers have
already demonstrated they cannot be relied upon to robustly enforce
the directive in a timely manner.
DEFRA SUPPORT
FOR THE
EGG AND
EGG PRODUCTS
INDUSTRY
14. We are grateful for Defra's support for differentiation
of compliant and non-compliant cage, which would be essential
to facilitate an intercommunity trade ban. Defra must maintain
its commitment, and act to ensure only eggs and egg products from
legal systems, are traded within Europe and enter the UK market.
We are concerned however; that there is a lack of clarity from
Defra on what action will be taken in the UK.
16 February 2011
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