Following noteworthy departure from the egg industry by independent free-range producers, broiler farmers are now in a difficult financial situation in the U.K.
Unlike the U.S. with full integration and a beneficial relationship between integrators and contractors, the U.K. industry is largely fragmented with individual farmers purchasing chicks and feed and selling broilers to packers with others serving as contractors.
The principal challenge facing farmers is the disparity between escalation in the cost of feed and other inputs and the unit revenue offered by packers who are attempting to preserve margins in a competitive and inflationary environment. In addition to feed and power costs that have soared since the commencement of hostilities in Ukraine, interest rates are severely impacting independent farmers. Over and above financial stress, farmers are concerned over ongoing highly pathogenic avian influenza.
Farmers and packers in the U. K. face competition from less expensive imports from the E.U. including from Poland with a low cost of production and also from Brazil. The U. K. received 742,000 metric tons of poultry meat in 2022, up 2.3 percent and experienced a 24 percent decline in exports to the E.U. down to 208,000 tons.
The Chairperson of the National Farmers Union Poultry Board noted, “Producers are in a really, really terrible position and are losing on each bird.” The National Farmers Union is calling on the government to intervene and to establish equitable price adjustments.
Although many farmers have contracts with packers that index payment to feed cost, power is an additional expense. It is noted that in the U. K. mortgages are not fixed for an extended term and farmers have been confronted with higher interest costs.
The economic plight of U. K. egg and broiler farmers could have been foreseen with the advent of Brexit, a disaster of incalculable proportions. This has been exacerbated by the disruption in trade caused by the invasion of Ukraine by the Russian Federation.