Committee told of 'collateral damage' to the egg industry

Members of a House of Commons committee have been warned about the potential threat that would be posed to the United Kingdom egg industry if conventional cage units in Europe were allowed to continue producing illegally following the introduction of a European Union ban at the beginning of next year.

Mark Williams, chief executive of the British Egg Industry Council, outlined the "collateral damage" that could be done to UK egg production unless illegal egg was prevented from entering the British market. His warning came during his evidence to the Environment, Food and Rural Affairs Committee. He was speaking to the committee as part of its inquiry into the implications of EU Council Directive 1999/74/EC: the Welfare of Laying Hens. This is the directive laying down the ban on conventional cages, which is due to come into force on January 1 2012.

Although egg producers in this country have made the investment necessary to move from conventional cage to enriched colony or free range, it is estimated that nearly 30 per cent of production in the EU will fail to meet the deadline. If that production is allowed to continue after the deadline, it is feared that the eggs may find their way onto the UK market, undercutting British producers and damaging the UK industry.

UK Environment Secretary Caroline Spelman recently helped to block an attempt by some EU member states to have the implementation of the ban delayed. Her call to ensure the ban was implemented on time was supported at a meeting of EU agriculture ministers by Germany, France, Spain and the Netherlands. However, many in the industry will continue to harbour doubts about what will happen on January 1 next year. If the EU strictly enforces the ban it could mean culling nearly one third of the EU laying flock or destroying the eggs they produce.

The House of Commons committee decided to hold its own inquiry into the issue after the egg industry organised a lobby at Westminster to outline its concern to MPs. The committee indicated that the issues it particularly wanted to consider were:

The implications of the EU directive for the egg production, food processing and manufacturing sector;

How the European Commission plans to ensure compliance with the directive;

Defra support for the egg and egg products industry.

The committee listened to evidence from a number of witnesses. One of those witnesses was Mark Williams. He told MPs it was vital that UK egg producers who had made the investment needed to comply with the new rules were protected from those who had failed to comply with the regulations.

"We are very proud to be part of an industry that has always taken the initiative here in the United Kingdom," he said. "Our egg producers and the other parts of the industry have made a phenomenal investment in meeting the requirements of the new laying hens welfare directive. If you look at it over the implementation period of 12 years, our industry will have invested £400 million in meeting the requirements of that directive. I believe that is the crux of the argument and why we are here today. That investment made by the UK industry must be protected from what we believe will be non-compliant production coming out of Europe in just under 12 months’ time."

Mark told members of the committee that the European Union’s own statistics indicated that some 29 per cent of commercial laying hens in the European Union would not be compliant with the directive on January 1 next year. "That is nearly one third - or, put into simple terms, 83 million eggs a day would have to be destroyed. The Commission has very clearly said - we totally support it on this point - that the directive will be implemented on time.

However, on 19 January it held a stakeholder meeting of various participants: the industry, welfare groups, consumers and retailers as well as member state representatives. I was part of that meeting. It became very clear that other options would have to be looked at. Some of those options we would support; other options we certainly would not support. But let me make it clear, madam chairman: as far as we are concerned we are working closely with our own Government here in the United Kingdom to make sure this directive is implemented on time."

He was asked by the committee chairman, Anne McIntosh, about which member states would fail to meet the deadline for the ban.

He said, "We know there are certain member states that physically cannot comply now from the very fact that equipment must be ordered; erection gangs must be contracted; and then physical erection has to take place. I could name the member states but prefer not to, but, if I generalise, the northern European member states in general will be ready and the southern and eastern countries will struggle," he said. "It is not all producers, because a lot of them in those countries will be ready, but the whole of their industry will not be ready - hence Poland, Romania and Bulgaria went to the Agriculture Council just over a week ago to ask for more time."

That is the attempt that was voted down by the United Kingdom along with a number of other states. Poland had previously asked for a five year delay, but the request was rejected. The European Union’s inspectors indicated after visiting Poland that it was unlikely to be ready in time for the start of the conventional cage ban.

Mark Williams told the committee. "In certain European countries the actual percentage of cage production is above 90 per cent, so consumers in those particular member states do not really place animal welfare considerations high up on their agenda. For example, by the beginning of next year free range will be 50 per cent of all eggs produced in this country. In the member state I am referring to, at the moment 95 per cent of all eggs are produced in a cage system. To change that industry to enriched or non-cage will take longer than the deadline that has been given to them." He said that this member state would normally receive government assistance with conversion but the financial crisis had hit the country particularly badly and the government had pulled back from providing grant aid.

Mark did not name the state, but went to say, "I can refer you to the stakeholder meeting on 19 January. The representative from the government of Poland noted that there were 452 production units in Poland using conventional cages. She said that 131 had enriched cages, but I believe she meant to say ’enrichable cages’. What it means is that it is still a conventional cage in which you would put the furniture of a nest box, perches and scratching area from the beginning of next year. But she clearly said that a phenomenal percentage of their hens would not be legal from the beginning of next year, hence their return to the Agriculture Council last week to ask for more time."

Mark said that, financial considerations aside, there had been no willingness to make the conversion in that country. "Why on earth would I invest in an enriched cage system in this particular member state when the cost of production is eight per cent higher? I have my competitors down the road who will probably carry on using a traditional battery cage. Straight away I am making myself uncompetitive. Therefore, you leave it and leave it and then the financial crisis comes along to compound an already difficult situation."

He said that punishments handed out by the European Union would not act as a deterrent to producers. "I refer you to an FVO mission to Poland at the beginning of last year that picked up non-conformity on the current stocking density in cages. The individual producer was fined in the order of €7,500. This particular business has 1.25 million hens. I would say that is not satisfactory. That fine would be classed as a business expense, so what is the incentive to do anything about it? There isn’t one."

Mark told the committee that UK producers needed protection. "I cannot stress enough the collateral damage that will be done to our industry from illegal product coming on to our shores from the beginning of next year unless measures are put in place. The two measures we clearly set out in our submission to you, madam chairman, are that, basically, the directive should be enforced to the letter and that, if more time is given or taken by producers in certain other member states, then that production must stay within their own borders."

He said the industry would also like to see a separate code to be stamped on the shell of eggs from conventional cages if they continued to be produced. Although Defra supported this measure, the EU Commission was "not listening" at the moment, he said.

Mark was asked whether employment could be affected by the issue. He said, "My personal view is that if we do not get this right, it will. Ladies and gentlemen, you will know better than I do what happened to the UK pig industry a few years ago. One thing we want to avoid collectively is for our successful UK egg industry to go along similar lines."

He said that about 10,000 people were employed directly in the industry. Another 13,000 were employed in ancillary industries like feed, veterinary and equipment, which were shared with the poultry meat industry. "There is no doubt that the impact will be severe," he said.

Mark told the committee that the biggest area of concern was egg products. This was echoed by Andrew Joret, vice chairman of the BEIC and technical director of Noble Foods. "Our big concern in particular, as has already been expressed by previous witnesses, is in the products area where eggs are an ingredient. That might be eggs coming over to be used in manufacture in the UK. Equally, it could be an egg product manufactured somewhere on the continent with locally produced egg that then comes over here. That is the bit we fear most."

He said, "Unless it is a very obvious product that contains eggs, such as a quiche, there is probably value in saying there is free range or cage egg in that quiche, but where you are talking about really hidden ingredients in rather obscure uses, most people will not realise that there is an egg product there, so how can they be concerned about the type of egg that is in there."

However, Andrew Opie, director of food and sustainability with the British Retail Consortium, said that despite these fears there was a trend amongst major retailers to move to higher welfare eggs in their products. "We have seen some retailers go to completely free range now for their processed products. Remember that egg is also an allergen, so it is labelled on all products. Therefore, if you wanted to look for egg or see whether it was in a product, you would be able to see that. I think that the growth will continue in processed areas. We have seen it a lot in pasta and areas like that; now we have seen it in quiches and more well-known products where you would expect to see eggs, but the growth definitely continues."

He said there was a demand amongst consumers for free range and this demand had held up very well even during recession. He said the indications were that this demand would continue into next year.

He was asked by one member of the committee how much pressure retailers were putting on food manufacturers to use higher animal welfare standards for eggs. He said, "It is definitely a process that they are all going through now. I have seen a couple of recent statements by retailers to confirm that is the case and I have spoken to them myself, so it is a case of going through the specifications with their suppliers and making sure that they source from the right places, but this is what they do day to day anyway."

He said he did not anticipate a problem with shell eggs because those sold by the major retailers in this country were 100 per cent UK. He said he thought a lot of the processed egg would also come from the UK. "Our main supplier base is UK farmers. The last thing we want to see is our own UK supply base hamstrung because it is being undermined by illegal imports. It is not something that we will entertain in our supply chain, so we do not see why they should also be subject to unfair competition. We would not have a problem with that. It will not affect our supply chains; we will still put the same products on the shelves as we do now, and we are taking steps to make sure that we do not take illegal eggs."

Egg products were highlighted as the potential problem area by David Bowles, director of communications with the RSPCA. He told committee members, "The RSPCA was clear that that would be the challenge way back in 1999. It is still a challenge. If you look at the Commission’s latest data, there are egg products coming from the USA, Argentina and India. All of those places are using cages. The USA is probably 95 per cent cages; India is probably 90 per cent. Therefore, there are real challenges, because they could undercut European producers."

He said the United Kingdom needed consumers to play their part in making the new EU regulations work. They were the people, along with retailers and processors, who could ensure that the conventional cage ban came into effect by choosing free range or barn eggs.