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The consistent income achieved from poultry production is a main factor helping to preserve the family farm structure within Northern Ireland (NI) agriculture.
Yet it is not a sector with any clear natural advantages over competitors – all the grain used is imported and the final product (poultrymeat and eggs) tends to be exported into Britain or other European markets.
Also, much of the resultant poultry litter cannot be readily used on NI farms due to concerns around botulism and rules relating to nitrates and phosphate limits, meaning it is often exported or processed through anaerobic digestion/incineration plants. The theory goes that an industry should either exist beside its raw material, or within its main market – neither applies to the NI poultry industry.
So how has it survived and prospered? It all comes down to people, and the willingness of the family farm to invest in the business and take ownership of bird performance. It also relies on full integration with a processor where producers are incentivised to achieve best practice, and in return, margins are protected. There are no riches to be had, but a poultry enterprise has kept many smaller farms in NI in business over the years.
Growth
Since 2000, the poultry industry has experienced the most rapid growth of any sector within NI agriculture. Between 2000 and 2009, turnover in poultrymeat processing went up 111%, while the egg sector saw 94% growth, compared with an average across the total food and drink industry of 58%. The most recent figures put turnover within the egg sector at £139m (€157), and poultrymeat at £710m (€802), which makes it the third largest sector behind beef and sheep, and dairy. In 2000, turnover in the sector stood at £284m (€321).
That rise in turnover is mainly due to expansion and growth at Moy Park, which is now Northern Ireland’s largest private sector business, and one of the leading food companies in Europe.
It started from humble beginnings, with a history that can be traced back to the time of the second world war when, as part of the Moygashel textile group it produced linen for parachutes. In the early 1960s the company decided to move into poultry farming, supplying table eggs and frozen whole chickens, and formed a new subsidiary known as Moy Park Ltd.
In 1968 the Moygashel business (including Moy Park) was sold to textile company Courtaulds. By the mid-1970s, Moy Park had moved out of table eggs, and opened a new processing facility in Dungannon, Co Tyrone. By the early 1980s it had also expanded facilities at Moira in Co Armagh to meet rising supermarket demand for fresh chicken and had bought its first production facility in England. At this stage the company was led by Trefor Campbell who then headed up a management buyout of Moy Park in 1984 after Courtaulds decided to streamline their business.
That was the start of a major growth phase for the company, moving into a new headquarters and production facility at Craigavon, and expanding into the French market by the early 1990s. In 1996, company directors agreed to sell to the US-based OSI Group.
During the phase of OSI ownership, perhaps most significant was the decision in 2004 to acquire two English poultry companies – GW Padley Poultry based in Lincolnshire and Dove Valley in Derbyshire. Those deals effectively doubled the size of the Moy Park business.
Brazilian owners
In 2008 OSI decided to sell Moy Park to Brazilian company Marfrig, one of the world’s largest meat processors. The deal also included OSI Brazilian operations along with a savoury snacks business in the Netherlands (Albert van Zoonen) and Kitchen Range Foods in England (supplier of mostly meat-free products).
In 2010, Moy Park acquired the O’Kane poultry business in Ballymena, Co Antrim, which had been a major supplier of chicken and turkey products, employing around 1,500 people.
The deal also included a feed business, McLarnon’s, outside Randalstown in Co Antrim.
In 2013, Marfrig decided to move its entire European business to be under the control of Moy Park. That decision meant that Moy Park, alongside its core poultry business, now had a beef processing plant in France supplying to McDonald’s, as well as other businesses supplying convenience foods, savoury snacks and desserts.
Moy Park is currently under the ownership of Brazilian-based JBS Foods, the world’s largest meat processor, after it acquired the business from Marfrig in 2015 in a deal worth around US$1.5bn (€1.3bn).
The latest accounts for Moy Park show that it generated £1.44bn (€1.65bn) turnover in 2016 (£1bn in Britain and Ireland), with a profit before tax of £40m (€46m). It operates from 13 sites across Europe, processing 5.5m chickens per week and also supplying around 25% of western Europe’s chicken parent market with eggs. Just this week news emerged that JBS is looking to sell Moy Park.
The company works with 800 farmer suppliers (600 in Northern Ireland), and employs more than 12,000 people (around half at three sites in Northern Ireland).
From humble beginnings, it is now a major player in the Northern Ireland economy.
Integrated model
At the centre of the expansion at Moy Park and of the poultry industry in Northern Ireland has been a fully integrated production model, where Moy Park has full control over numbers of birds on farm, genetics and feed. It means the industry is quickly able to adapt to changing consumer preferences and market demand.
The man behind that integrated model was former production director Eric Reid, who joined the company in 1966. He realised that rather than employing farmers to look after Moy Park birds, a much more successful option was to sell chicks to farmers, incentivise good performance and buy the birds back once ready for slaughter.
As well as the chicks, each producer pays for housing, electricity, water and for cleaning out and preparation for the next crop. All other inputs – such as feed, medicine, vaccines – are bought through Moy Park and held on account against each crop of birds.
Farmers are paid a basic management fee, and each year a producer committee sits down with Moy Park to discuss costs and also factor in an allowance for labour. The price paid for birds is regularly adjusted to ensure that average costs are covered, but additional allowances are only ever earned by the top 50% of growers. The better the management input, the greater the returns made.
Egg industry is going free range
New investment in the egg sector is following the recent trend away from enriched cages or colony systems to free range.
That is in response to pressure from retail customers, keen to be seen to support higher animal welfare standards. A recent online campaign in Britain led by a 14-year-old girl from Sheffield, Lucy Gavaghan, led to the major British retailers announcing in 2016 that they would stop sourcing eggs from enriched cage systems by 2025.
In Northern Ireland, figures from 2010 show that over 60% of hens placed were in caged systems. That has fallen to under 40% at the end of 2016. A total of 57% of birds (2.98m birds) are in free-range systems across 258 production sites, compared with 1.8m birds in enriched cages across 34 sites. There are also 28 sites producing barn eggs (330,000 birds) and 21 sites producing organic (120,000 birds).
While all the latest investment is in free range, there are increasing concerns that this could lead to short-term over-supply, at least until the intention of retailers becomes more clear.
The largest egg packer in Northern Ireland is Skea Eggs, which supplies many of the large British retailers. Operating outside Dungannon in Co Tyrone, the business employs more than 100 people, generating a turnover in 2015 of £61.7m (€71m) and profit after tax of £3.24m (€3.72m).
Other major players in Northern Ireland include Ready Egg Products based in Lisnaskea and Ballygarvey eggs in Ballymena. Ready Eggs supplies mostly the catering and sandwich market with processed eggs. In 2015, the company generated turnover of £40m (€46m) and operating profits of £3.6m (€4.1m). Ballygarvey eggs mainly supply smaller retail outlets with packed eggs, with turnover for the year ending September 2016 of £21.5m (€24.7m).
While all these businesses continue to grow, an interesting development in Northern Ireland has been the decision by egg packers based in Britain to take on direct farmer suppliers. Most of these eggs are understood to be destined for Noble Foods based in Oxfordshire.
South of the Irish border, the largest egg packer is Greenfield Foods, based in Smithboro, Co Monaghan. Packing around 5m eggs per week, the company employs 90 people, and its most recent set of accounts showed that it generated turnover of €36.5m and profits after tax of €3.7m.
Growth at Silver Hill Foods
Duck processor Silver Hill Foods has plans in place to further increase processing capacity over the coming years having already come through a period of accelerated growth.
Based in Emyvale in Co Monaghan, the company was established by the Steele family in 1962 and employs 200 people on the main site.
In the past five years, weekly processing output has increased from 36,000 ducks per week to 82,500 at present. A growth plan announced last year has a target output of 150,000 ducks per week within the next five years.
Silver Hill operates a vertically integrated supply chain with 21 farmer growers on both sides of the Irish border.
Duck is exported to 24 countries, with 70% of turnover coming from export markets. The UK market represents 45% of exports at Silver Hill.
Ducks are reared over 42-days and killed at 3.5kg body weight.
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