Written Evidence Submitted by the British Poultry Council – FSC0004

Why poultry meat is vital to UK Food Security

The British poultry meat industry is at the core of feeding the nation. A billion birds are reared every year, providing half the meat the country eats to some of the highest standards in food safety and welfare. We do this as an unsubsidised sector that directly employs over 34,000 people. The industry contributes £2 billion GVA to the UK economy and generates £1.5 billion in tax revenue to the exchequer.

The British Poultry Council is the trade association for producers of poultry meat from chickens, turkeys, ducks, and geese, addressing issues on all parts of the production chain: breeding, hatching, growing, and processing. Representing over 85% of UK producers, we are the voice of the British poultry meat sector.

As a trade association, we are unable to comment on specific retailer relationships with our member organisations. Instead, our evidence highlights overarching issues within the poultry meat industry that can assist the EFRA Select Committee in shaping their considerations regarding supply chain fairness.

BPC Response to Fairness in the Food Supply Chain Inquiry

1.         To ensure British business viability, domestic and international challenges to UK poultry production need to be addressed by Government. Like others in the food industry, poultry meat producers are facing unprecedented increased costs of production, including energy and feed prices, along with longstanding challenges like labour shortages. For the poultry meat industry specifically, this is in addition to the worst outbreak of Avian Influenza on record, which has only exacerbated these burdens. This has left poultry producers at a breaking point.

2.         The current situation is threatening the industry’s ability to deliver on future welfare, productivity, sustainability goals.

3.         The poultry meat industry operates in a highly integrated supply chain and its efficiency has developed over the last 30 years due to market powers of the supermarkets. One of the reasons that the industry is so highly productive and efficient is because of the dominance of the supermarkets within supply chains. We are aware that the UK position on supermarket relationship dynamics is different to practices observed in other parts of the world.

4.         Discrepancies within the Government’s energy support for the industry has put production and farming businesses within the supply chain at a disadvantage. Poultry processors are eligible for enhanced support, however, poultry producers, the ones who grow the birds and require significant energy to maintain their high animal welfare standards, are not.

5.         To maintain the poultry meat industry’s ability to put food on every table, we require an operating environment that’s fit for purpose. We believe that with the Government, retailers and supply chains working together, we can create new solutions to address the functionality of the marketplace.

Current situation

6.         The effectiveness and efficiency of the supply chain, and consequently the poultry meat industry’s ability to feed the nation, is being compromised as cost of production increases are not being returned through the marketplace. Our members have informed us that despite an approximate 18% increase in production costs for the industry, they are unable to recover these additional expenses, when products like the shelf price of fresh chicken to consumers has only increased about 12.5% (note that not all the 12.5% comes back down the chain to suppliers).

7.         BPC members are being severely financially disadvantaged and operating at either a loss or very depressed margins as profits in the supply chain are not finding their way to producers and suppliers. 

8.         This results in the tightening of production and reported shortages on supermarket shelves. We are already seeing this play out in real time: DEFRA figures from May 2022 and May 2023 illustrate a 11.4% drop in poultry meat production in the UK (measured as carcase weight). This is the most significant monthly year-on-year decline in recent years. BPC members have indicated that labour shortages are compounding concerns regarding production costs. The increasing shortage of workers has led to higher operational expenses for businesses, and factories have been compelled to scale back production in accordance with the available labour force.

9.         This current operating environment has fostered a lack of confidence in the poultry meat industry, and if changes are not made, will result in a significant problem for the UK’s domestic food supply and supermarket shelves.

10.     A drop in domestic production will ultimately result in supermarkets looking to cheaper and potentially lesser quality imports to fill their shelves, thus further undermining UK producers and the standards they operate to even further. The recent scenario of supermarkets importing Italian eggs serves as an example and has set a concerning precedent.

11.     As a result of prioritising short-term pricing over long-term food supply, consumers are protected from production cost increases. This has resulted in the prices that consumers pay for food not reflecting the cost of producing it, which is an unstainable system that will not keep Britain fed in the long term. Without changes to this system, what we risk is a further decline in our world-class domestic production with the closure of British businesses and an increasing number of people being unable to afford British food and the quality it embodies.

12.     Our members are mindful of the prevailing cost of living crisis and firmly stand against any shortcuts or compromises on their rigorous food production standards to cut costs. The industry is determined to maintain access to the safe and nutritious food it provides, however, focusing solely on consumer costs, fails to acknowledge large costs incurred elsewhere in the supply chain.

Proposed solutions

13.     If Government wants to uphold the UK’s resilient supply chains that it often praises, then food producers need clear Government policies that clearly identify their expectations from food supply chains, including those on self-sufficiency.

14.     There is no Government strategy for increasing productivity to help offset rising costs. Aiding food businesses with access to funding for investment in technology and automation would be welcome.

15.     Food touches upon various policy areas across Government departments and so, a clear national vision and framework for food in society that addresses the role of food and the current problems within the food industry would go far in providing confidence to the industry. By providing long term vision, the Government can help food producers work to ensure a sustainable and resilient food system for the future. Without this policy framework and clear Government direction, businesses are left merely focusing on surviving.

16.     Setting clear and consistent policies that back UK food producers will lead to long-term benefits for the environment, the economy, and society.

17.     This includes an acknowledgement of the importance of British poultry in realising a vision for a UK food system that feeds people nutritious food to some of the highest safety and welfare standards, contributes to their wellbeing, tackles social inequality, and ensures a liveable climate for all.

18.     By setting effective policies that support food production and the structures that it requires to be efficient and productive, the Government can pre-empt issues and situations like we currently find ourselves in. We see value in the consumer base being confident and knowledgeable in making informed food decisions and there is a role for Government within this. This can include a range of Government supported initiatives like access to cooking classes from an early age, and education in school about food choices.

19.     The need to keep prices low are symbolic of systemic problems within UK society, and if Government is serious about supporting food and access to it, then it needs to address the social inequalities that prohibit people from being able to pay a fair price for food.

20.     British food producers are essential to UK food security. When the Government safeguards and champions the standards these producers adhere to, both domestically and on the international stage, it sends a powerful message of support, indicating their commitment to backing British food producers.

21.     This includes animal welfare and environmental standards. BPC members are making great strides in investing in net zero and lower impact farms. For example, members are collecting carbon data and examining their emissions across supply chains to better understand and mitigate against impacts. Investment is also being made in biodiversity trials looking at the connections between the poultry industry and nature.

22.     When it comes to animal welfare, BPC members will continue to follow the science and currently, faster growing breeds make up 85% of the market because it is the most efficient, low impact production method. It maintains world class welfare standards and remains affordable for the consumer. There are no alternatives currently that can recreate that balance of innovation, productivity, and efficiency whilst minimising inputs.

23.     Slower grown products are available, but BPC members cannot produce them without an increased impact to both the environment and the cost of production. During a cost of production and a cost-of-living crisis, producers are struggling to see the returns for standard production, let alone slower growing which costs more financially and environmentally.

24.     Costs of production also include the increased cost to trade on an unlevel playing field. Since 1 January 2021 BPC members have faced unreciprocated restrictions and additional costs and burdens to trade with their largest and most important partner, the EU. UK businesses spent £60 million on additional administration in 2021, and £50 million in 2022; EU exporters have spent £0.

25.     UK import controls have been postponed four times, with Government citing cost and friction, despite seven years since the referendum and three years of the TCA to prepare. Whilst there is concern that EU food producers are not ready for UK import checks, they have been enjoying a competitive advantage. Exporters and importers want to avoid the stress additional checks pose to food supply, but the ongoing impact of unreciprocated checks is just as serious of a problem for accessible and affordable food.

26.     The current unequal and unhealthy trading position is eroding British business viability, adding to soaring production costs, risks undercutting domestic production with imports and threatens to push up the price of food in the UK during a cost-of-living crisis.

27.     By creating a level playing field, starting with a robust Sanitary and Phytosanitary agreement, and subsequently reducing costs and bureaucracy for both exporters and importers, the Government can provide crucial support to its food producers during this critical time where the future of UK poultry producers hangs in the balance.

July 2023

4