EC rules criticized as Irish poultry industry struggles
Cheaper and often lower quality imports inhibit the progress of Irish poultry companies.
Murmurings and mutterings about European Commission (EC) rulings on poultry and how they impact negatively on particular EU (European Union) countries have been heard for a long time, but it has taken the current crisis in one of the EU's smallest members to bring the controversy and criticism out into the open.
Sales of chicken are booming in The Republic of Ireland, yet its poultry industry is facing trouble. EC rules hold the answer, according to a recent report in The Post.
Since the year 2000, half of Ireland's 12 chicken processors have collapsed while imports have increased their share of the Irish market from 10 to 60 percent. However, it was the narrow escape of Cappoquin Chickens, rescued from closure by Derby Poultry (United Kingdom) at the eleventh hour, which has brought things to a head in Ireland. It has provoked some of the most stinging and scathing criticism of EC rules and the EU that have ever been heard in relation to poultry.
Industry worries over future of Irish poultry
Typical were comments made by Vincent Carton of Carton Brothers (Manor Farm Brand), one of Ireland's oldest poultry companies and still family owned. Founding members of the Carton family started to deal in chickens in the early 1800s, and the business has survived world wars, recessions, political upheaval, and even the infamous Irish Potato Famine. But this does not make the owners any less fearful about what is happening to the Irish poultry industry. Manor Farm Brand is still very much in business, but the owners are extremely worried about the future of Irish poultry, said The Post.
The Irish poultry industry is in a state of crisis, with cheap imports from new EU-member countries like Poland and from outside the EU. Irish production is being ravaged, and under current labelling anomalies, many of these foreign chickens can be relabelled as Irish. As the biggest player in the Irish chicken market, Vincent Carton’s family business has most to lose. "Without a shadow of a doubt, more [Irish] companies will go out of business," said Carton.
Poultry companies struggle to survive
Carton Brothers has annual revenues of US$157 million, giving it a 20 percent share of the Irish poultry market. Each week, it slaughters 580,000 birds, which are sold in supermarkets and butchers across the country. However, Carton acknowledges that the company is struggling to make a profit. "The company has not generated enough money to recapitalise itself," he said.
Cappoquin Chickens was the latest in a steady stream of chicken processors to get into trouble. Two years ago, more than 300 workers at Castlemahon Food Products, the Limerick chicken company, lost their jobs when the company went bust. Castlemahon owed more than US$27.13 million to its backers and creditors. Since the start of this decade, more than 1,200 people in the sector have lost their jobs.
"We have had one company go out of business each year for the past six or seven years," said Ciaran O’Regan, director of Shannon Vale Foods, a well known chicken processor based in County Cork in southwest Ireland. "The poultry sector has been hit by a series of factors. Wheat and grain, which constitute about 65 percent of a chicken’s feed, have almost doubled in price over the past 12 months. Energy and water costs have also spiralled," O’Regan said.
According to the Irish Poultry Processors Association (IPPA), the average price of a whole chicken on sale in a supermarket is $7.45. Of that, the processor gets a cut of $1.17. "Margins are wafer thin,” said O’Regan. "We are dealing with crazy food prices and rising costs. When you put this together with the level of imports, the industry has become uneconomic." The biggest problem has been the surge of imported chickens from low-cost foreign economies. Both Vincent Carton and Ciaran O’Regan say they are happy to compete with overseas rivals, but the current system is giving their competitors an unfair advantage.
EU labelling laws inhibit Irish companies
Both Carton and O’Regan believe that current EU labelling laws inhibit the progress of indigenous Irish companies. Under the current system, chickens are labelled in the country where they are processed, rather than their country of origin. So a chicken slaughtered in Poland, but processed in Amsterdam, arrives in Ireland with a Dutch passport. The Irish poultry industry also maintains that some companies are exploiting further anomalies in the system by repackaging eastern European chickens as Irish. The official term which permits this peculiar situation is termed "substantial transformation." It allows a chicken to change nationality if it is seriously altered in production. In practice, this means a foreign chicken need only be dipped in breadcrumbs in Ireland to be deemed Irish. And to add insult to injury, the breadcrumbs do not even have to come from Irish wheat.
"We are fighting hard to survive but we are doing it with our hands tied behind our backs," said O’Regan, whose company processes about 90,000 birds a week. "We are competing against two types of imports. You have traditional imports that people know are from another country, and then you have imports that are disguised as Irish. In many cases, they are wrapped in green, white and gold packaging [Republic of Ireland’s national colours], given a Gaelic-sounding [indigenous Irish language] name, and even display a 'Shamrock Leaf' which is the Irish national emblem. But chances are that the chicken came from Poland or another east European country."
Industry fights for country-of-origin labelling
The Irish poultry industry has been lobbying its government to get the European labelling laws changed. It claims that many of the imported chickens do not conform to Ireland’s health and safety regulations. "A lot of the chicken coming in from overseas is stale by the time it gets here," said Carton. "Consumers are being duped and it’s about time this was exposed. There is a massive issue with sell-by dates. The regulations at the moment are crazy.” The government said recently that it was committed to the principle of country-of-origin labelling for poultry. National regulations requiring such labelling were drafted last year and have been advanced to the EC.
However, the EC has initially adopted a negative opinion of the draft legislation, although it has given the Irish government an opportunity to provide further information in support of its proposals. Carton plans to increase the lobbying over the coming months. "It is not about us being scared of low-cost imports," Carton said. "But there is something wrong with the fact that we are being crowded out of the market under these circumstances." According to the IPPA, most imported chicken is used by the catering industry or sold in butcher shops. Supermarkets generally buy Irish chickens, the association said.
Imports not held to same welfare standards
Ireland is not the only country in the EU complaining about an unlevel playing field. Poultry producers and processors in neighbouring United Kingdom (U.K.) are not only faced with unrestricted flows of cheap imports, but an increasing clamour from consumers, fuelled by the media and acquiesced to by national governments, for increasingly strict stances on bird welfare. These same standards are not imposed on countries exporting poultry products into the EU or for that matter all EU-member countries.
Ireland could now be facing the same kind of uneven playing field in relation to bird welfare with launch of a new booklet in Ireland entitled "Code of Practice for the Welfare of Broiler Chickens," produced by the Farm Animal Welfare Advisory Council (FAWAC) under chairmanship of Professor Patrick Fottrell. Minister for Agriculture, Fisheries and Food, Brendan Smith TD said the booklet will encourage all those engaged in the production and care of chickens kept for meat production (in Ireland) to adopt the highest standards of husbandry. It reflects new rules that are due to come into force by June 30, 2010. "In establishing rules for the welfare of broiler chickens, a balance must be maintained between various factors including health, economic, and environmental impacts. The welfare codes underpinning broiler welfare outlined in the booklet will assist flock owners to maintain high-quality standards and manage their enterprises responsibly," the minister said. But will foreign producers be held to the same standards? That is the question being asked by Ireland’s poultry industry.