Chicken production set to cease in the North East of Scotland
The Scottish chicken industry has been dealt another damaging blow as all four free range producers contracted to Hook 2 Sisters, the dominant processor in Scotland, have been terminated.
This latest announcement follows the termination by the 2 Sisters Food Group of several growers’ contracts in November 2013, and a further four terminations in August 2014 by Hook 2 Sisters when it took over. As a result, the number of independent chicken producers in Scotland has fallen from 28 to 17 and the number of chickens produced in Scotland will fall by an estimated seven million birds per year.
These three restructurings have not only devastated Scottish chicken production, but have put some 72 jobs in the rural North East of Scotland at risk including farm workers, catchers and cleaners who all work on the affected farms.
The loss of chicken production has also taken away a valuable and sizeable market for those providing the sector with feed, estimated at 35,000 tonnes.
Without a significant turnaround in sourcing policy and the creation of new processing facilities in Scotland, the production of 1.3 million free range birds in Scotland will come to an end by the end of September. This will devastate growers, their suppliers and hauliers, and reduce the choices available to Scottish consumers.
Coming just a few months after a major retailer made a commitment to sell a full range of Scottish chicken, this latest news appears to have torpedoed the ability of many retailers to sell free range Scottish chicken in their Scottish stores. The Union believes Aldi will be left as the only retailer sourcing Scottish free range chicken, thanks to a deal in June this year with three growers. That supply chain may come under threat as the parent stock of day old chicks supplying these farms is being discontinued.
At present, organic chicken production in Scotland will continue.
In the wake of the threatened rationalisation in November 2013, the Scottish Government produced a poultry plan to maintain the critical mass of the sector and to develop infrastructure and markets to safeguard future production. Unfortunately, six months later, no significant investment has been made to create a sustainable chicken processing hub and the sector is staring into an abyss.
Reacting to the news, NFU Scotland’s President Nigel Miller commented:
“Less than three months ago, Hook 2 Sisters assured us and their growers that a level of stability had been achieved and that the future of the sector was good provided that a cutting plant was built and integrated with the operations at Coupar Angus. The contract terminations in August and this month tell an entirely different story.
“Hook 2 Sisters vision was mirrored by the Scottish Government’s poultry plan and the initial feasibility studies which were commissioned. This process appears to have stalled at company and government level, and it is now vital we breathe new life into this process. Failure to do so will see Scotland’s ambitions to be a significant chicken producing nation not only slip away but we may be left with little, if any, chicken production in Scotland.
“Hook 2 Sisters must now be entirely open with their growers if anyone is to have confidence and be willing to invest. At the same time, the Scottish Government must be proactive in supporting crucial processing capacity.
“Research shows that 93 per cent of Scottish shoppers think it is important that Scottish poultry is available in Scottish shops. As this situation unfolds, it begins to look like this will become extremely difficult, if not impossible to achieve.
“One year ago there were 28 independent growers in Scotland. There are now 16, 13 of whom supply Hook 2 Sisters. This is a loss of nearly seven million birds per year. At a time when the UK retail poultry market is predicted to grow 26 per cent over the next five years, from £4.6 billion to £5.8 billion, it is unthinkable that the Scottish industry should miss out on this fantastic opportunity.”
Note to Editors
In November 2013, the 2 Sisters Food Group announced a restructuring of their Scottish chicken production and processing operations in Scotland, including processing sites at Letham and Coupar Angus.
Shortly after the restructuring plans were announced, 2 Sisters reported that they had sold the Letham processing factory to One Stop Halal.
In announcing the restructuring, 2 Sisters highlighted a number of key concerns:
Lack of cutting capacity restricting market access
High costs caused by the geographic spread of the supply base impacting on feed transport costs, catching and finished livestock transport
Ageing farm infrastructure (owned by 2 Agriculture)
During the period been December and the present time, the Scottish Chicken Growers Association, formed on the back of the restructuring announcement, has been highly active, demonstrating the competitiveness of the independent grower base.
In December 2013, Scottish Government produced poultry plan.
The potential market for chicken in Scotland is 1.4 million birds a week which is split 750,000 through the supermarkets and 650,000 through other outlets including food service, public procurement and butcher retail.
November 2013 – four growers in the North East had contracts terminated.
August 2014 – Four growers supplying Letham Factory (one stop Halal) had their contracts terminated. Currently discussing compensation.
August 2014 – PD Hook Inverurie hatchery shut.
September 2014 – Four Free Range Growers had contract terminated.