Select Committee on Agriculture Appendices to the Minutes of Evidence


Memorandum submitted by Deans Foods Ltd (F 45)

  Thank you for the opportunity to provide evidence to the Agricultural Committee on Organic Farming. We are a company, part of whose business is the production and marketing of organic eggs for sale through the major multiple retail outlets in the UK, herewith therefore is a summary of our views concerning our industry.

  The organic egg industry based on an estimated national flock of approximately one million birds and representing a value of approximately £50 million per year has developed in response to our customer demand from the already established free-range egg sector. With effect from August 2000 the industry will be operating under the European Organic Livestock Regulation 1804/99, but until now has operated to within the very non specific UKROFS standards and those of the various certification bodies. Before going into any of the details of this document, it is worth mentioning the following as it sets out the position the Regulation will find us in:

    (1)  The UK, up to 1999, when the Regulation was first published, produced in excess of 50 per cent of all the free-range eggs in Europe. This sector of the egg industry had developed as a result of the unique attitudes of the UK agricultural sector and society towards animal welfare, food hygiene and efficiency. We were as a result therefore perhaps the most experienced in operating these types of systems within the European community.

    (2)  The egg market in the UK, either voluntarily or otherwise, is already regulated by several sets of standards including Egg Marketing Regulation 1274/91 (SMT) through MAFF Egg Inspectorate, RSPAC Freedom Food, British Egg Industry Council—"Lion Code of Practice", Welfare of Laying Hens Directive and the supermarkets/customers own standards.

    (3)  The topography, climate and social history of the UK has led to a unique agricultural structure. Mixed family farms have been encouraged to diversify into free-range and organic egg production where little other alternative is possible. The enterprises complement the existing farming systems even if they do not fit entirely into the "ideal" organic model and they provide an addition to the farm income that helps maintain the rural economy. The situation is not the same throughout Europe.

    (4)  We have a number of certification bodies operating in the UK including UKROFS, but all apparently operating to different agenda. There is no common objective and therefore a variation in standards which the consumer has no chance of differentiating.

  It has been in trying to address the latter that we are sure the Regulation was drafted but when dealing with poultry this has not been easy.

  The organic egg sector represents only about two per cent of the total egg market, with by far the majority made up by the intensive sector. To us, this indicates the priorities shoppers put on their choice when purchasing eggs. Despite wide availability of free range and barn eggs often at very low premiums, we see only slight swings in favour of these categories indicating that they are usually persuaded by price alone. By inference therefore, there is a limit as to how much those, other than the truly principled will pay for organic produce. If the organic sector is to expand it cannot allow premiums to get too high by continually adding cost to the production. The demand for organic egg is strong at the moment but the economy is booming and it still represents a small percentage. Nobody knows how big it can get but it is not a sector that can be switched on and off easily.

  We have particular concerns therefore with the Regulation and its effects on the already established industry and its potential for expansion.

  The Regulation provides the first specific standards on organic poultry production in the UK but appears to have dismissed current practice and included conditions and limitations that have no scientific basis. It must be remembered that an egg laying bird when it housed either at day old or point of lay on an organic unit does not know that it is supposed to be organic. It is naturally and genetically programmed to eat, lay and behave according to its requirements, and it is only we consumers who dictate how those requirements are met. Why therefore should an organic bird be treated in welfare terms differently to others unless there is scientific justification? Northern European states, if they are able to operate true free range at all throughout the year will all have problems maintaining welfare friendly conditions with stocking densities as low as six birds /m2, We know from experience the problems with the current lowest stocking density systems of 7/m2, nor is there any evidence that lower stocking densities necessarily reduce the risks of flocks becoming aggressive or more susceptible to disease, again 15 years experience has taught us this. The limit of 6/m2 is as much as arbitrary figure as seven or nine or the industry free-range norm of 11.7/m2.

  RSPCA Freedom Foods have set up a very practical and credible standard for free range production based largely on the FAWC report. It is under these standards that at least 95 per cent of free-range eggs are produced in the UK. These standards have been on the whole adopted into the Welfare of Laying Hen Directive (1999/74EC), which comes into force in 2002. The Organic Livestock Regulation however chooses to differ on areas such as pop-hole space, nest box space and perch space.

  The second area of concern is the time scale and effect of the introduction of the Regulation. Compliance with minimum percentages of organic ingredients in the rations is to be expected, and at current levels is achievable (80 per cent) but the increases to 100 per cent by 2005 is dependent on the development of suitable sources of raw materials. It is not as simple an issue as producers being unwilling to obtain organic ingredients unless prepared to pay for them but rather physical. The estimated one million birds in the UK require 8,500 ha under organic wheat to support them, when taking into account crop rotations and possible land uses within those rotations the land requirement increases to 32,000 ha. These sort of areas are not becoming available fast enough and exclude the requirements of other livestock enterprises and the knock on effects in other sectors. It is currently impossible to grow soya for protein in northern Europe and other plant protein crops have limitations in their suitability in certain livestock rations. We have to accept therefore that raw materials are to be imported but it is almost impossible to fulfil the ultimate aims of organic agriculture which is to create a self sustaining system based on the use of manures to help condition the land for the production of crops. The imbalance at the present as highlighted by the certification bodies is the rapid expansion of the organic livestock sector without the equivalent growth in the arable sector.

  While on the subject of time scales, it is also a concern as to how the industry will meet the derogation in the Regulation of producing 100 per cent organic pullets (ie from day old). The current infrastructure of the whole industry including breeder farms, hatcheries, pullet rearing sites, transport and ultimately old hen processing has been developed in line with best practice and to meet minimum standards in bird welfare, food hygiene and efficiency. Firstly there are no guidelines in the Regulation as to how pullets for egg laying are to be reared under organic conditions. If they are expected to meet the same criteria as the laying bird it only emphasis the lack of understanding of the industry when compiling the Regulation. Secondly the fact that a time scale is imposed without regard to the current position again demonstrates the naivety of the draft.

  The Regulation is clearly designed to return organic agriculture back to "the good old days" with small flocks, mobile houses, low input/low output systems. Unfortunately the current market especially in the UK does not operate the same as those "good old days". Approximately 80 per cent-85 per cent of all food products are purchased in the supermarkets, while these organisations have their intentions to reclaim their corner shop image they still require volume, consistency, quality and ultimately value. Only recently in the news Iceland proposed that they wish to convert all their range to organic and at no premium. The driving force behind organic egg production although I suspect this is not exclusive to eggs alone, is not whether the production methods are better for the land, the bird or the product but whether it is economically justifiable. Mobile units that allow compliance with the regulation cost approximately £15/bird more in capital than a conventional static building, flock sizes limit the advantages of economies of scale with regard to labour, organic feed costs approximately £100/tonne more than conventional feed and the general down scaling of units in term of in puts and out put only adds cost throughout the process. To impose standards that are unrealistic and then as is being considered by UKROFS now to enhance some of them unilaterally is going to damage the development of UK organic farming. Firstly, there is the ever present danger of imports and secondly the fact that the more complicated the standards become the more difficult to police and the easier to avoid which has a detrimental effect on the integrity of the product. There must be provision for organic eggs to be produced in "commercially" viable units despite the connotations this term has with the "purists".

  The danger of imports is very real, especially since within the EU there are no barriers to trade on products that comply with EU legislation. A European wide Regulation such as 1804/99, which tries to harmonise production across a variety of climates, topographies and cultures, has different effects in different member states. While not suggesting that other member states do not apply EU legislation, indeed in some countries their internal standards and inspection systems are more rigorous than in the UK but only because it is possible to achieve a higher standard. If the same standard were to be imposed in another state it would be prohibitively expensive if not impossible. In France for example the minimum content of organic raw materials in poultry rations is 90 per cent as oppose to 80 per cent in the UK (the Regulation minimum) but in France they have access to organic home grown soya which allows them to achieve that minimum. There are in addition different internal standards within the UK out with the Regulation that impose further constrictions on UK farmers but which allow cheaper production in other member states. The definition of "free range" in the UK is determined by MAFF Egg Inspectorate under Egg Marketing Regulations (SMT) and only applies when birds have access to one ha per 1,000 birds, on the continent "Plein Air" their equivalent operates to one ha per 3,500 birds. If the Regulation, as it appears to do, only suits organic agriculture in certain favourable areas of Europe it is neither enhancing the expansion of organic agriculture world-wide nor is it just in the treatment of farmers in individual states. Consumers from experience are not very patriotic in their purchases and anyway may not even be in a position to know the source of what they are buying.

  We must now accept the Regulation and we appreciate the need for organic agriculture to remain strictly controlled and indeed to be enhanced as and when best practice allows, but we must also raise the issue as to how it is policed in the UK. The Regulation is bad enough in its draft as highlighted above but the fact that UKROFS then have the ability to recommend further enhancement really begs the question as what the long term future is for organic production in the UK. It is our belief that a civil service should operate impartially and on behalf of the industry to which it is aligned by assisting the industry in adapting to whatever European legislation is imposed. This process starts at the initial negotiations, which when looking at the Regulation now published demonstrates that the UK position was not well negotiated. As industry members, we were never consulted, we were led to believe that the early drafts, which we considered at the time were unrealistic, would not be introduced, only to find them rushed through during the German presidency almost unchanged. There was obviously no appreciation of the Welfare of Laying Hen Directive, which must have been being discussed at the time and no appreciation of the Egg Regulation Special Marketing Terms already in force. The Regulation was imposed on to UKROFS who had no previous poultry standards with which to compare, they deliberately avoided drawing any up knowing that EU legislation would be imminent and they therefore had no basis from which to negotiate.

  The UKROFS board had, and remains bereft of poultry experience and yet poultry seems to have created the most controversy, with the effect that the implications of the Regulation we don't believe are fully understood to this day. There appears to be at best inertia and at worst frustration being applied by the board when it comes to interpretation of the Regulation mainly because members appear keen to follow private agendas and objectives rather than the impartial view one would expect. In the mean time we have producers at various stages of conversion and production with business plans and commitments who do not know which way to turn. At a time when organic demand is increasing the last thing the industry need is confusion that delays or prevents production at least trying to keep pace. All "gold plating" of the Regulation should be avoided and has been the pledge of the Agricultural Minister.

  The position now is stagnation. Producers are not committing themselves to organic conversion for egg laying units, not knowing if the operation is sustainable and economic in the mid-term future. Some of those in conversion may not continue if the derogation is denied them but meanwhile existing producers are in a bonanza period with very good returns. The majority of either converts or existing producers have done so entirely at their own expense without any financial assistance, probably because they were not eligible unless they committed themselves and all their enterprises on the farm to organic, which they felt too big a risk. Organic and free-range poultry compliments extensive grazing of sheep and cattle especially in the mixed farming areas of the south west and Wales, but the development of the other sectors has not been at the same pace and outlets and infrastructure do not lend themselves to complete conversion. The partial conversion of farms is a necessary part of the process but will create problems when standards insist on the disposal of manure onto organic land only and the possible introduction of minimum percentages of feed being produced on the unit. The implications are that some farms are again more suitable for organic agriculture than others.

  The industry is keen to assist in the development of the standards and to participate in the enhancement of organic integrity but it must not be dismissed when it represents such a large percentage of the existing production base. It is hoped that the views expressed above are considered in the debate and we would be happy to provide more information if required.

21 June 2000

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