Leaving the EU: Poultry Producers

Jim Shannon Excerpts

Monday 13th March 2017 Commons Chamber

[Ian Paisley (North Antrim) (DUP)]

I declare that I am a member of the British Veterinary Association. It is a pleasure to introduce this Adjournment debate tonight, especially after the landmark Brexit Bill has finally passed both Houses. As we will be debating the effect of leaving the EU on the UK’s poultry meat sector, that is an important landmark.

I shall put the scale and importance of the poultry industry into some perspective for the House. UK agriculture contributes £46 billion to the economy, and for every pound invested in farming we generate £7.40. Poultry is a key part of that offering. The recent Oxford Economics report on the economic impact of the poultry meat industry included the following important facts. The poultry meat industry supported £4.6 billion of gross value added contribution to gross domestic product, which is the equivalent of 0.2% of the United Kingdom’s entire economic output. For every £1 million of economic activity that the industry generates, it supports a further £1.33 million elsewhere. In total direct and indirect employment, it supports 84,500 people throughout the entire United Kingdom, or 0.3% of the total UK workforce. The industry directly employs 37,300 people, and it supported £1.1 billion in tax contributions in 2014, or 0.2% of all tax receipts collected that year. If I were to say it is an important industry, I would be a master of understatement.

In Northern Ireland, we contribute to the vast industry I have described. In fact, one in every four chickens consumed is produced or processed in Northern Ireland. Moy Park is one of Northern Ireland’s largest employers; it is a major employer in our country. Of the 37,300 employees in the sector throughout the UK, 11,750 are employed by Moy Park. Of the £4.6 billion the industry contributes to GDP, Moy Park contributes £226 million in staff costs—a significant contribution given that Northern Ireland has a population of only 1.7 million. Of the 2,500 farms in the UK that produce poultry meat, 800 are contracted to the Moy Park supply chain. Northern Ireland accounts for more than a quarter of the 19 million birds that are slaughtered in the UK each week—in other words, 5 million birds a week.

[Jim Shannon (Strangford) (DUP)]

I thank my hon. Friend for bringing to the House for consideration an important issue for my constituency. Is he aware that the poultry sector does not receive any moneys directly from the common agricultural policy? Does he therefore feel that, post-Brexit, there is an opportunity for the poultry sector to grow, not only throughout Northern Ireland but particularly in Strangford?

[Ian Paisley]

I intend to come on to a number of challenges for the industry, but will also offer the Secretary of State for Exiting the European Union and the Secretary of State for Environment, Food and Rural Affairs the opportunity to address some of the issues. My hon. Friend the Member for Strangford (Jim Shannon) is absolutely right: most people think that the CAP supports every aspect of farming, but of course there are many areas that it does not, and that is why we need a new, British agricultural policy, tailor-made to the needs of farms across Great Britain and Northern Ireland. I look forward to that opportunity, which this House has helped to create through the legislation that was passed today.

Moy Park, which I mentioned, invested £27 million in its business in the last financial year to make it better, stronger, and more efficient and effective. Poultry is a safe, nutritious, affordable and enjoyable food, and is part of the UK’s staple diet. It also gives us the important luxury of food security: we know where it was raised and slaughtered, and how it gets from farm gate to plate. That food security gives us an important aspect of agri-food protection that we should cherish and encourage, and it is imperative that it be a priority in the Brexit negotiations that will follow the triggering of article 50. The purpose of this debate is to signal poultry’s importance and outline the challenges, which I want to address one by one.

The first challenge is the labour market. Of the industry’s 37,300 employees, 60% are non-UK workers. They make an obvious and valuable contribution to the United Kingdom and to the rich tapestry of the culture here. They will require certainty about their contracts. They are not employed in some low-skilled or semi-skilled industry; they are well educated, contribute to the towns and villages in which they live, and are employed in a sector to which it is difficult to attract our local, home-grown workforce. That sector will have a turnover of about 6,000 jobs a year going forward. It is important that the industry addresses that and ensures that it has access to a vibrant workforce. If the industry grows, more workers will be required, so the challenge must be met head-on. The Government must look at a favourable visa and immigration scheme that stabilises the situation and ensures that need is met in the coming years.

I will identify a number of key solutions that I hope that the Brexit Secretary and the Minister will have on their desk and will keep referring to as the United Kingdom’s Brexit negotiations go forward. I have mentioned one of them: a simplified work visa system that allows in workers who are needed in particular areas, such as the poultry sector, so that those workers’ rights are taken care of and they are provided with opportunities.

A UK food and farming policy that supports the promotion of UK farming at school and a greater focus on apprenticeships will encourage UK labour into the sector. It is clear that local workers will not go into the sector; we must encourage them by educating and training them, and by providing them with the opportunity to get into the sector. A UK food and farming policy that puts British food at the centre of public food procurement is also a necessity. Our hospitals, schools and prisons should serve British food; that is essential. We must have dedicated Government support for opening third-country markets to trade, supported by a strong British food brand. Government support for British food and farming, through focusing support on infrastructure and the regeneration of rural areas, should form part of the new British farm policy in a post-Brexit world.

We need a UK food and farming policy that backs UK food security and increases the self-sufficiency of the poultry meat sector—the only sector that could scale up quickly to meet food security demands. We are not producing enough poultry; demand for poultry is increasing. That creates a viable opportunity for a country that can clearly grow and harvest poultry, and efficiently and effectively process meat that the consumer likes. That is an opportunity that we should seize.

As I wish to leave the Minister with some time to respond to my points, I have just a few brief points to make on trade access. The major component of poultry costs is the feed. Feed is a commodity that is globally traded. The EU currently controls the tariffs, but that could change after Brexit to protect EU feed compounders. How the UK responds to those changes will impact on production costs one way or another. It is important that the availability of feed remains unrestricted. That will be a huge challenge for the Ministers in the future, and it is an area on which they must focus. We cannot have feed supplies being increased so much that it makes our poultry sector unviable. I hope that that will become a significant focus in the days ahead.

We also know that the imports of some poultry meat are essential, because our demand is so high. That creates an opportunity for us to increase production. If we are to import white meat, there is an issue with regard to tariffs. We hope to continue to trade with the existing nations in the EU after we leave. If the UK decides to increase the cost of purchasing white meat from the EU, this would be an opportunity for UK producers to increase production and provide a substitute for those imports. I hope that that opportunity will be considered.

We also export a lot of our dark meat and other co-products. I hope that we are allowed to continue to do that. When the UK is outside the EU, the UK wholesale prices of chicken could increase, making it difficult for local exports to compete with the unrestricted access available to EU members within the internal market without reducing their basic costs to remain competitive.

In addition to our dark meat exports, co-products represent almost 50% of our revenue sold offshore. We rely on Europe and other key global markets to trade the balance of our co-products and we face significant competition, thus the need to have a spread of sales channels at our disposal. Every support will be of the utmost importance to ensure that we have ready access to key global markets well beyond the EU.

Asia, and particularly China, hold great potential as a trading partner, and the Government should prioritise steps to open trade with this market for poultry products. Getting into the far east is absolutely critical for us.

I wish to make two other points before I sit down. America, both north and south combined, is one of the largest poultry exporters in the world. We must be able, in a post-Brexit environment, to compete in that world, which means that that we must also engage very heavily with America, both north and south, to be able to compete in that new global world.

The issue of environment and energy is very specific to Northern Ireland. Our poultry litter disposal includes a project where we export most of our poultry litter, a byproduct of poultry production, to the Republic of Ireland. Poultry litter can be exported to the Republic of Ireland for use in producing biogas in an anaerobic digester. Similarly, feathers are transferred from Northern Ireland to the Republic of Ireland for processing as there is no such facility in Northern Ireland. That means that we have something in common with the Republic, and an opportunity to ensure that, once again, the frictionless border that people talk about is properly addressed.

Finally, we wish to secure the best possible environment after we exit the EU. We support our Government wholeheartedly and wish them well in those negotiations. The terms that we secure should be equal to, if not better than, what we have in the EU. I know that our trade, our labour and our food security and finance will form a very important part of that negotiation.

The relative importance of the agri-food industry in Northern Ireland, which is at least twice that of the rest of the UK average by gross value added and percentage total employment, and the presence of a unique land border with the EU, emphasise the need for the region’s interests to be given due consideration and, therefore, to engage fully with the Northern Ireland representatives here who understand the industry and want to ensure that it is given fair wind.

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

I congratulate the hon. Member for North Antrim (Ian Paisley) on securing this debate about the effect of UK exit from the EU on poultry production. As the hon. Member for Strangford (Jim Shannon) pointed out, the poultry industry has traditionally not been supported through the common agricultural policy. It has tended not to receive subsidies and, as a result, has tended to be more market focused, productive, innovative and efficient.

The poultry industry is a dynamic and valuable sector, contributing around £3.3 billion annually to UK GDP. It is especially important in Northern Ireland, as the hon. Member for North Antrim explained. In 2015, the value of egg production to the UK was £681 million, and the value of poultry meat production was £2.2 billion. The industry supports about 73,000 jobs in the UK. The sector is even more significant for Northern Ireland. In 2015, the value of output for the poultry and egg sector was over £300 million, and the industry provided direct employment to more than 4,800 people. Moy Park, which is based in the hon. Gentleman’s constituency, is an important contributor to the economy. It is the largest employer in Northern Ireland, a major supplier to UK supermarkets and restaurants, and the owner of a range of well-known brands. It is clear that the poultry industry is an important part of our economy. As we negotiate to exit the EU, we will work hard to get the best possible deal for the sector.

The hon. Gentleman covered the issue of trade in great detail. Our aim for the future is to get the best possible trading relationship with the EU and the rest of the world. High-quality poultry and eggs are key components of many of the UK’s most famous brands and value-added exports. We already export our world-class produce around the world, with UK exports of poultry meat totalling £250 million in 2016. Obviously, there has been a setback more recently with the outbreak of avian influenza, but we do want to build on our success. Action is under way to promote UK food and drink overseas, break down trade barriers and open up new international markets. That is set out in the joint Government and industry “UK Food and Drink - International Action Plan 2016-2020” from the Department for Environment, Food and Rural Affairs and the Department for International Trade.

On exit, we want the best possible terms of trade between the UK and the EU. That includes, as the Prime Minister said, a bold and ambitious free trade agreement that removes as many barriers to trade as possible. Leaving the EU gives us an opportunity to forge our own free trade deals around the world. We will work with the industry as we shape the priorities and interests for the UK agri-food sector, and explore global trade opportunities.

Underpinning our ability to trade will be effective disease control, which will always be a DEFRA priority. Disease outbreaks damage the livestock industry and undermine confidence. The need to protect the country from the risks to animal health associated with international trade is a key objective for the Government. The UK’s exit from the EU will not change that. In fact, we will become more vocal on the world stage through forums such as Codex Alimentarius and the OIE, which set standards in international food safety and animal welfare. The Government have a manifesto commitment to promote high standards in animal welfare in future trade deals, and we intend to promote that agenda globally.

I turn to the UK-Ireland relationship, which is obviously of great importance to the poultry sector in Northern Ireland.

[Jim Shannon]

Just before the Minister moves on from global trade, my hon. Friend the Member for North Antrim (Ian Paisley) mentioned Northern Ireland’s trade with China. Northern Ireland has already done massive trade deals with pigmeat, and has shown that the market can grow. The poultry sector in Northern Ireland is another potential market for growth, and that backs up what my hon. Friend said. The Chinese market, in particular, could be developed greatly.

[George Eustice]

The hon. Gentleman makes an important point, and I wanted to come on to some other issues on trade, one of which is China. There are opportunities in relation to what is called the fifth quarter; it never ceases to amaze me that chicken feet are apparently a delicacy in China and can attract a high value there—far higher than in the UK. However, there are real opportunities to create value from parts of the carcase for which there is no market in the UK or, indeed, Europe.

Another point I would make is that, as the hon. Member for North Antrim pointed out, there has always been quite a worldwide trade in poultry. We consume more white poultry meat than we can produce, so we traditionally import white meat, but we have also exported dark poultry meat, which is in demand in other parts of the world.

We have set up the Great British Food Unit to break down some of these barriers to get access to markets such as China. The hon. Gentleman mentioned the cost of feed and the importance of making sure that we have open markets so that we can buy competitively priced inputs. Obviously, once we have left the European Union, it will be within our gift to decide our tariffs and the access we give to feed from other parts of the world, but the vast majority of animal feeds coming into Europe already come from other parts of the world, and we would probably not want to do anything that would disrupt that flow because it is crucial to the economics of the sector.

The final thing I would mention on trade is the US, which is a major producer and exporter. I am aware that there are concerns about the standards of production in the US. It has lower standards of animal welfare and lower standards of food safety, and it allows approaches that are not currently allowed in the European Union, such as chlorine washes. It is important, as we contemplate any future trade deal, that we do not put our industry at an unfair disadvantage, as the hon. Gentleman pointed out, and we will clearly take very earnest account of that as we consider future trade deals.

Let me turn to the UK-Ireland relationship. I begin by reiterating the reassurances provided by the Government’s White Paper on the UK-Ireland relationship. The UK and Irish economies are deeply integrated, particularly so in the case of food, farming and agriculture. The Irish Republic is the UK’s top destination for poultry meat, with £68 million of exports in 2016. Over 14,000 people regularly commute between Northern Ireland and the Irish Republic, and we recognise that for them the ability to move freely across the border is an essential part of daily life. Therefore, as the Prime Minister stated in her speech in January, we will work to deliver a practical solution that allows the maintenance of the common travel area with the Republic of Ireland, while protecting the integrity of the United Kingdom’s immigration system.

There are, of course, many specific issues related to the border between Northern Ireland and the Irish Republic, and we are working across Government and with the devolved Administrations to identify a potential solution to them. That includes looking at precedents in other agreements, and colleagues in the Government are considering the extent to which digital solutions could help to make sure that we have a frictionless border. They are keen to learn from free trade agreements in parts of the world that are not part of a customs union but that are nevertheless able to accommodate quite complex integrated supply chains, to see what lessons we can learn as we develop solutions to this particular challenge.

The hon. Gentleman mentioned labour, and I recognise that it is an important issue for the poultry industry. Last year, I spoke at the egg and poultry industry conference, where these concerns were very vocally laid at my door. I recognise that, particularly in the last 12 years or so, the sector has become quite dependent on migrant labour. The important thing is this: just because we are leaving the European Union and ending the presumption of the free movement of people, that does not mean that we are pulling up the drawbridge and ending all immigration. In fact, it is incredibly important that we put in place a new type of partnership with the European Union that enables us to control immigration, but that, crucially, allows us to enable some people to come here and work, be that on temporary work permits—that could be for some low-skilled people—or on longer-term permits, for some of the more skilled positions. The crucial thing is that it will be, in effect, in our gift to decide what those future policies would be and what arrangements we put in place. We do recognise that this is an important issue for the poultry industry, and we will take care to ensure that it and other sectors of the farming industry have access to the labour that they need.

The hon. Member for Strangford mentioned support for the industry. As we design a replacement for the common agricultural policy, we have been clear that we would like to look at the opportunities to promote higher standards of animal welfare and to see how we could incentivise that by rewarding livestock farmers who go above and beyond a regulatory minimum. That could involve some support for the poultry industry to enable it to invest in different approaches to animal husbandry that are better for welfare and might reduce our reliance on antibiotic use, which is another important challenge facing the sector.

The hon. Member for North Antrim mentioned encouraging new people to enter the industry and trying to inspire young people—the next generation—to get involved. I agree that this is important. We have an ambition as a Government to treble the number of apprenticeships. We have been looking at opportunities to use the apprenticeship levy in other parts of the supply chain, potentially enabling us to get more apprentices on to farms. There are projects such as Bright Crop that send young graduates into schools to encourage teenagers choosing their GCSEs to pick the subjects that might enable them to go into exciting careers in the food and farming sector. This is an important area that we are continuing to develop.

We have had a very free-ranging debate to end a rather long day here. The hon. Gentleman has made some important points. We do recognise the importance of this vital industry—a competitive industry—and we will ensure, as a Government, that as we design policies for after we leave the European Union, we get them right for our poultry sector.

Question put and agreed to.