Losing Banham Poultry would be a 'disaster' for East Anglia, says farmers' agent
Losing Banham Poultry would be a "disaster" for East Anglia's farming industry - and urgent decisions are needed to ensure there is a destination for millions of chickens in its supply chain.
That’s the message from a consultant working with some of the many farmers which supply birds to the poultry factory at Attleborough, whose future was cast into doubt this week.
Charles Whitaker, a managing partner of agri-business consultancy Brown and Co in Norwich, said the news that Banham Poultry was seeking a buyer after running into financial difficulty was “unsettling” – not only for the firm’s 1,000 workers, but for the additional 1,000 people employed in its supply chain.
He said it was “in everybody’s interest” for a buyer to be found quickly who could keep the operation in Norfolk.
“This is a disaster for the region from an employment point of view and a chicken production point of view and we should all do all we can to avoid it shutting down,” he said.
“Chicken production is a big business. It has got value and, in East Anglia, where we can produce it as cost-effectively as anyone because we have the wheat and the feed mills to do it, we don’t want to be losing a significant processor for the region.
“They [Banham Poultry] are doing something like one million birds a week, so there is a pipeline floating around of 7-8 million birds, because it is a 7-8 week cycle. That is an ongoing cycle that we cannot just switch off.
READ MORE: Banham Poultry boss confirms company is up for sale, as doubts hang over 1,000 jobs.
“The industry tends to ‘thin out’ the flocks 10 days before final delivery to ensure they stay within the stocking densities which Defra stipulate so there are not too many birds in a building. So if they have not got anywhere to go, my guess is they would need to be destroyed in a worst-case scenario. No farmer would ever stop feeding them, but the worst thing would be that there is not a home for them.
“In terms of the fallout I suspect we have got 24-48 hours of uncertainty, and hopefully we will get a resolution that keeps the plant running for a period of time.
“It is quite difficult to see how a million birds a week are going to get lifted and taken to other processing capacity. There is not enough spare capacity floating around. So it is in everybody’s interest that it stays.”
Mr Whitaker said the company’s financial troubles will have been exacerbated by a margin squeeze driven by higher feed costs, which rose along with grain prices as the summer heatwave hit wheat yields.
“Feed prices have gone up to £260-£300 per tonne because of the summer drought, and global commodity prices have gone up. Brexit and the weak pound have also sent them higher. That has had a direct effect on feed pricing.
“If you get 4p per kg rise in feed price, that is 6p per chicken so the producer – and that is both our clients and Banham themselves – have got a 6p increase in cost of production and they have not had any movement in the retail price, so it has given them a big margin squeeze because of the retailer refusing to budge [on pricing].”
READ MORE: Analysis: What caused Banham Poultry’s financial troubles?
Mr Whitaker said there had been some positive signs for East Anglia’s flagship poultry industry recently, but the consolidation of the sector into a few giant companies would not be good for competition.
“There have been some positives recently for the industry,” he said. “For example, Cranswick are a big company, and having bought Crown Chicken they are planning to build significant capacity near Diss, which is great for the industry. But in my view we don’t want to lose a competitor if a purchaser can be found who wants to run it.
“The retailers would be angling for that too. There is consolidation in all sorts of sectors of agriculture but if this industry is left in the hands of just a few large processors then to lose the capacity for different retail requirements would be a bad thing.”