New report highlights mixed future for UK poultry sector

Farm accountants Andersons believe that while barn production could grow from its current 3% to 10% of the market by 2025, in most cases free-range may become the “commodity” egg offering. Andersons said the concern was that commodities tend to decline in value over time and this downward pressure will almost certainly be passed down to producers to erode their margins. In their report, poultry specialists Lily Hiscock and Ed Calcott said the 2-tier market would include a “standard” and “differentiated” offering, which was where there was opportunity for producers: “They need to tap into the growing culture for high welfare, environmental credentials, foodie culture and home cooking.

“The egg is a versatile, healthy offering which meets many of the demands of the younger “Gen-Z”. In the short term, producers should look to:

• Obtain contracts with stable pricing across the board (XL to Seconds), rather than going for the highest paying packer today;
• Develop a good relationship with your packer and meet their requirements – i.e. work together to develop “new” eggs and timing peak lay to meet demands;
• Focus on efficiency and high quality – fast turnaround times, reduced antibiotic usage, clean eggs with minimal seconds.

While the barn sector would grow in the next few years, through the conversion of existing colony sheds, most enriched colony producers are still paying off investment from 2012 and with barns requiring a lower stocking density (30-40% reduction in birds), the new investment does not look appetising or economically viable at over £18 per bird to convert these sheds.

Meat sector hit by Covid-19

Turning to the meat sector, the report said Covid-19 had hit the sector right across the poultry supply chain; from difficulties in securing wood shaving for bedding, acquiring PPE/dusk masks for farm staff and the unfortunate closure of some processing plants due to Covid clusters. “The latter has led to factories working together with extra shifts to take in additional birds to minimise the numbers which sadly had to be culled on farm. These shutdowns are costly and have a detriment on bird welfare and margins. There is current lobbying to allow factories to operate on a skeleton crew, rather than shutting down for two weeks to allow staff to isolate which will reduce the possibility of on-farm culling,” the authors claimed. They added that further mitigation might lead to reduced placings across farms by 10% to create spare processing capacity so companies can divert birds elsewhere should shutdown be necessary.

Poultry World