Heads or tails?
Published:  24 November, 2006

The threat of a sales backlash from avian flu plus looming cost increases serve as a stark reminder to the poultry trade of potential trouble ahead

Testing times lie ahead for the UK poultry industry with downward price pressure remaining a threat and imminent changes in legislation such as the implementation of new Integrated Pollution Prevention and Control (IPPC) regulations involving extra costs for producers.

Then there is what some in the industry believe to be the continuous threat of Avian Influenza (AI) potentially hitting the country's poultry livestock.

The British Poultry Council (BPC), the National Farmer's Union (NFU) and British Egg Industry Council (BEIC) are currently lobbying the government for a three-year waiver on the charges related to the IPPC regulations so that producers can re-coup losses caused by Avian Influenza and deal with other escalating production expenditure first, such as energy and feed costs.

IPPC COMPLIANCE

IPPC legislation seeks to reduce emissions from pig and poultry units and requires farms of more than 40,000 poultry to comply.

Industry is waiting for a response from Lord Rooker, minister for sustainable farming and food, as to whether government will allow the Environment Agency, which regulates IPPC, to temporarily lift the charges. The legislation is coming into force in all EU member states in October 2007 and the NFU and BPC fear that some British farmers could be forced out of business.

Charges include an initial application fee of £3,331 and an annual fee of £2,700 thereafter, which will pay for the inspection of the farm.

NFU poultry chief adviser, Maria Ball, says the regulations will affect 80% of the commercial poultry business.

"Some of our members have said that over the last year they have changed the size of their businesses so that they are below the threshold. Downward price pressure has meant that they are not able to expand and therefore they don't have the money to invest."

Ball stresses that the poultry industry is not against the costs of compliance but says it is more important, at this stage, for farmers to look at how they can comply with regulation rather than having the added burden of the annual charge and primary fee.

Richard Griffiths of the BPC, says: "At the moment the official word from Lord Rooker is that there will be a review of the situation and we do see that as a possible step forward.

"In the past we have been rebuffed but I hope that this time the government sees this as a serious issue."

TIME RUNNING OUT

However, he adds time is running out for a decision to be made, as producers have a deadline of 31 January 2007 to apply for the IPPC permit.Griffiths says that if a three-year waiver is granted he hopes there will be some negotiation after that time on the fees involved.

He adds: "We are in there fighting. It's one of those situations where you just don't know which way government is going to go."

Ball stresses it is vital for industry and government to work towards a better regulated industry by not allowing IPPC inspections to duplicate already implemented regulatory practices.

"Some farm assurance schemes already provide a vehicle for doing some of that work with regard to compliance.We must cut down on duplicated information.

"We must transpose information across and make sure we are cutting down on costs to the producer and to the government where we can," she adds.

A spokesman for Defra said the Environment Agency was required by statute to fully recover the costs of its regulatory activities from those it regulates and the government expected them to do so.

"Their fees are set at the lowest levels possible but these fees still enable them to maintain a level of regulation proportionate to the risk that intensive farming installations present.

"And let's be clear - these installations do have the potential for major pollution. It is unreasonable of the industry to expect taxpayers to cover the costs for the Environment Agency to regulate pollution that they produce," the spokesman adds.

The EA estimates that around 1,200 pig and poultry producers will be affected by the new IPPC regulations and if farmers do not comply they could face a fine of up to £50,000 and a possible three month custodial sentence handed down by the Crown Courts.

NECESSARY EVIL

Griffiths says the BPC is in agreement with the NFU that the IPPC regulations are necessary, adding: "We can see the benefits of the controls involved. However, for the most part, most of the requirements of the IPPC fall under our own good practices anyway...we are also questioning why the IPPC charges are so high when in other EU countries there are no charges."

The Defra spokesman said that some EU member states may not charge for IPPC permit applications, but may recover varying proportions of their costs from the regulated industry, while others bear the cost in general taxation.

David Thacker, a Norfolk broiler chicken producer and managing director of Crown Chicken, says: "The IPPC charges are an expense the industry could well do without.

"We have got all these external pressures - prices of raw materials going up and the pressures of imports from abroad.

"Any waiver on charges would be welcomed."

Griffiths says the current economic climate in the British poultry industry was sensitive and external pressures as well as the IPPC charges did not help.

He adds: "The IPPC financial pressure is putting a strain on an already delicate industry... on the farming side of things we are facing the possibility of small farms going out of business, and that is a real concern."

The media hype may have diminished, but there is still a very real risk of AI landing on Britain's shores, Griffiths says. He adds that since the migration season started in October the whole of the EU has been holding its breath.

Griffiths believes AI will arrive in Europe from Africa within the next six months and the British poultry industry would be foolish not to prepare.

However, he adds that the industry is more prepared for an outbreak than ever before. "We are hopeful that if there is an outbreak in this country or elsewhere in Europe that there will be more confidence to support the market," he says.

CO-OPERATION

The BPC is still working closely with Defra on the issue of AI. Defra has recently widened its wild bird surveillance area, with the extended area covering more than 1,200 sq km. More than 300 nature reserves, parks and reservoirs have been added to the list of sites where wild birds are tested for signs of AI.




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