As egg producers pull out of production and planning applications to build new or extend existing units become few and far between, the sector is increasingly pondering its own future.
Specialist agricultural and rural planning consultants Ian Pick Associates has seen a drastic decline in the number of planning applications submitted.
“At the start of this year, I have seen the lowest number of applications for free-range egg housing than I have seen during 17 years of being in this business," Ian Pick said.
“From what we might call its peak in 2010, where we were running up to 50 applications at any one time, by contrast, we currently only have 2 live planning applications going through and one appeal."
Ian puts this down to the fact that egg production is just not making the margins required - some contracts are paying less than the cost of production. "We have seen many farmers get their fingers burned”.
He noted that the other aspects that are seriously curtailing applications, is the cost of building, which has increased well above inflation.
“Brexit, the war in Ukraine and inflation have led to phenomenal increases,” Ian added.
“Hefty increases in the cost of steel, wood, equipment and concrete have huge impacts on build costs.
"Whereas say a year ago he cost to build a 32k poultry shed would be around £1.2 million for example, that is now more like £1.7 million now”.
The other factor is the cost of borrowing, with fixed rates increased from around 2% to 5%.
“The margins are not there," Ian said, "Unfortunately these issues are not unique to the poultry sector either.
"We have seen a lack of expansion in other livestock housing applications too. They have gone down substantially, especially pig housing.
"We have seen a few new planning applications in the broiler sector, but not many."
He added that many farmers are restructuring, repurposing buildings for other non agricultural uses.
"We have just changed the use of a poultry unit built in 2019 to commercial storage."
In the free range sector, there are a number of live but unimplemented planning permissions across the country, where permission has been granted, but not progressed.
They have three years from consent to start construction. "I do not see much confidence in the free-range sector at the moment," Ian added.
"Even if there was a big upturn and more farmers wanted to expand, there are limiting factors and hoops they have to go through which can be a further barrier to entry”.
Natural England legislation
In March 2022, Natural England issued guidance to local planning authorities with new ammonia threshold levels to protected ecological sites such as SSSIs.
The threshold levels are so low that in a large proportion of cases they are virtually impossible to comply with in a large number of cases.
Ian said: “Ammonia production is the inevitable consequence of food production - it comes from all aspects of agriculture.
"The only way to have no atmospheric ammonia is to produce no food. Not a good long term strategy”.
This has further been compounded by the Nutrient Neutrality rules launched in April 2022 in some areas of the country which has seen a number of planning applications essentially get stuck in the system long term.
Despite all this, Ian points out that over 90% of planning applications do go through eventually.
Planning consent harder to obtain
These sentiments were echoed by management at Parker Planning: “On average we’re finding the average turnaround time for such projects can be between 6 months to over a year," the company said.
"So we anticipate the decisions on a handful of these projects in the coming weeks and months."
Securing planning permission for new poultry sheds is an increasing challenge, with objectors becoming more sophisticated and planning committees more hard-nosed.
"Check for things like landscape impacts, whether the Environment Agency and the Highways Agency are likely to be happy and what the effects on neighbours might be," Parker Planning said.
“Most applications for layer or broiler expansions will also need an Environmental Impact Assessment – a statutory requirement for any unit with over 85,000 birds.
"This involves detailed assessments of noise, odour, ammonia, ecology, transport, drainage, flood risk and landscape impact”.
Oliver Grundy at JHG Planning Consultancy Ltd, who principally operate within the East Midlands region, notes that there has been a drop off on applications over the last year.
"Clients who previously saw steady growth and expansion have certainly taken a clobbering from the impact of avian influenza, plus the war in Ukraine, inflation, feed cost increases, building cost increases and the hike in interest rates.
"We are living in turbulent times. Many of our clients have moved into a more defensive strategy just to try and keep their business going.
"We have had no free-range development applications for probably a year now," he said.
Blocks on development
There has been an increase in regulatory requirements year on year, Oliver said, with councils often defaulting to triggering a request for an Environment Impact assessment in circumstances where such is perhaps not strictly necessary or appropriate.
"In some areas development is nigh on impossible," he said, "Wales for example has some very stringent local authorities and is basically a non-starter for livestock unit applications.
"The Welsh government have somewhat hamstrung the rural economy”.
Getting planning can be an onerous task, costing anywhere between £10-£20,000 for a medium sized application, to get it to a stage where permission is granted.
"Local authority planning administration fees for large agricultural buildings are a significant cost," Oliver said, "Some authorities also charge a community infrastructure levy (tax) on agricultural buildings.
"Environmental impact assessments are increasingly requested for smaller scale expansion of existing poultry farms due to concerns over cumulative impact, making it a bureaucratic minefield”.
Tom Simpson, managing director of Potters Poultry, is cautiously optimistic about the future of the secctor.
“As an industry, there have often been ups and downs but we have always got through in the past," he said.
"Times are tough at the moment, with avian influenza, high-interest rates, and inflation, it’s the perfect storm.
"Lots of building development has been put on hold with a drastic decline in enquiries for new builds.
“It’s as flat as it’s ever been, probably even halved year on year. But we have redirected our focus on upgrading existing units to improve productivity.”
Any available funds are being redirected to restocking birds lost to AI or improving existing buildings to try and increase efficiency and reduce input costs.
“With building costs and interest rates so high, the numbers just don’t stack up for new buildings. Those with existing operations are struggling to survive”.
Even if interest rates settle, there is a time lag to getting projects through planning. “We can’t just switch things on overnight," Tom said.
"The lead time on planning applications is anywhere between 4-12 months, with 6 months being the average time frame.
"But that said, we are seeing producers starting to restock and demand for pullets is increasing”.
The market leader in supplying clear span steel framed poultry buildings, Morspan have been in this business for over 25 years.
Morspans’ sales director, Donald Gillespie, is also positive about future developments for the egg sector.
“We design and build units from 6,000 up to 80,000 birds with 32,000 and 64,000 being the most common," he said.
"Certainly 2022 was a quieter year for us but for this year our order book is not too bad, and it is going to keep us relatively busy.
"We are looking at a mix of new units, expansion to existing premises and also some packer’s units, including several in Scotland.
"The north half of the country is a lot busier than the south and obtaining planning seems to get easier the further north you go.”
Donald noted that producers farm for the next generation, not just a ten-year plan. "It will hopefully all come good again," he added.
"Certainly whilst 2022 was quiet, this year is looking more promising, even though the planning situation within Britain can be frustrating.
"Pullet rearing is busy again, and whilst supply is tight, if prices can reflect the true cost of production, things should turn around, so we shall wait and see”.