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'Crazy' EU Rules Decimate Irish Poultry

by 5m Editor
15 September 2008, at 6:59am

IRELAND - Sales of chicken are booming, but the Irish poultry industry is in a state of crisis because of 'crazy' EU rules.

Vincent Carton’s family business has survived wars, recessions, political upheavals and even a famine. His ancestors first started dealing in chickens in the early 1800s, and the company has been controlled by a Carton ever since.

Given the family heritage, it is not in Mr Carton’s nature to be fazed by short-term challenges or changing consumer patterns. According to The Post, his company, which owns the Manor Farm brand, has been around for a long time and has pretty much seen it all.

In recent years, however, Mr Carton has started to worry. The Irish poultry industry is in a state of crisis, with cheap imports from eastern Europe and beyond ravaging the indigenous Irish sector. Under labelling anomalies, many of those foreign chickens have been relabelled as Irish.

As the biggest player in the Irish chicken market, Mr Carton’s family business has most to lose.

"Since 2000, six of the 12 chicken processors in Ireland have gone out of business. At the same time, imports have increased their share of the market from 10 per cent to 60 per cent. Without a shadow of a doubt, more companies will go out of business,” said Mr Carton.

Carton Brothers has annual revenues of €117 million, giving it a 20 per cent share of the Irish poultry market. Each week, it slaughters 580,000 birds, which are sold in supermarkets and butchers across the country.

However, Mr Carton acknowledges that the company is struggling to make a profit. "The company has not generated enough money to recapitalise itself,” he said.

Cappoquin Chickens is the latest in a steady stream of chicken processors to go out of business. Two years ago, more than 300 workers at Castlemahon Food Products, the Limerick chicken company, lost their jobs when the company went bust.

Castlemahon owed more than €20 million to its backers and creditors. Since the start of this decade, more than 1,200 people in the sector have lost their jobs.

"We have had one company go out of business each year for the past six or seven years,” said Ciaran O’Regan, a director of Shannon Vale Foods, the Cork chicken processor. The poultry sector has been hit by a series of factors.

Wheat and grain, which constitute about 65 per cent of a chicken’s feed, have almost doubled in price over the past 12 months. Energy and water costs have also spiralled, Mr O’Regan said.

According to the industry lobby group, the Irish Poultry Processors Association (IPPA), the average price of a whole chicken on sale in a supermarket is €5.52. Of that, the processor gets a cut of 86 cents.

"Margins are wafer thin,” said Mr O’Regan. "We are dealing with crazy food prices and rising costs. When you put this together with the level of imports, the industry has become uneconomic.”

The biggest problem has been the surge of imported chickens from low-cost foreign economies. Both Mr Carton and Mr O’Regan said they were happy to compete with overseas rivals, but said the current system was giving their competitors an unfair advantage.

Both men believe that current EU labelling laws inhibit the progress of indigenous Irish companies. Under the current system, chickens are labelled in the country in which they are processed, rather than their country of origin.

So a chicken slaughtered in Poland, but processed in Amsterdam, arrives in Ireland with a Dutch passport. The Irish poultry industry also maintains that some companies are exploiting further anomalies in the system by repackaging eastern European chickens as Irish.

The official term is 'substantial transformation', which allows a chicken to change nationality if it is seriously altered in production. In reality, it means a foreign chicken needs only be dipped in breadcrumbs in Ireland to be deemed Irish.

"We are fighting hard to survive but we are doing it with our hands tied behind our backs,” said Mr O’Regan, whose company processes about 90,000 birds a week.

"We are competing against two types of imports. You have traditional imports that people know are from another country, and then you have imports that are disguised as Irish. In many cases, they are wrapped in green, white and gold packaging and given a Gaelic-sounding name. But the chances are that the chicken came from Poland or east Europe.”

The industry has been pressuring the government to get the European labelling laws changed. It claims that many of the imported chickens do not conform to Ireland’s health and safety regulations.

"A lot of the chicken coming in from overseas is stale by the time it gets here,” said Mr Carton. "Consumers are being duped and it’s about time this was exposed. There is a massive issue with sell-by dates. The regulations at the moment are crazy.”

The government said recently that it was committed to the principle of country-of-origin labelling for poultry. National regulations requiring such labelling were drafted last year and have been advanced to the European Commission.

However, the Commission has initially adopted a negative opinion on the draft legislation, although it has given the government an opportunity to provide further information in support of its proposals. Mr Carton plans to scale up the lobbying over the coming months.

"It is not about us being scared of low-cost imports,” Mr Carton said. "But there is something wrong with the fact that we are been crowded out of the market under these circumstances.”

According to the IPPA, most imported chicken is used by the catering industry or sold in butcher shops.

Supermarkets generally buy Irish chickens, the association said.