egg industry is increasingly considering its own future as producers stop producing eggs. Proposals for new construction or extensions of existing facilities are becoming increasingly scarce.
According to specialist agricultural and rural planning experts Ian Pick Associates, the volume of planning applications submitted has significantly decreased.
“At the beginning of this year, I saw the fewest applications for free-range egg housing. I had ever seen in my 17 years in this industry, “said Ian Pick.
“By contrast, we presently only have 2 live planning applications. One appeal going through, down from what we would refer to as its apex in 2010. When we were running up to 50 applications at any given time.”
Because certain contracts are paying less than the cost of production, Ian attributes this to the fact that egg production simply isn’t producing the necessary margins. “Many farmers have burned their fingers, as we have seen.”
He pointed out that the cost of construction, which has climbed significantly above inflation, is one of the main factors that is severely restricting applications.
Ian said, “Brexit, the war in Ukraine, and inflation have all resulted in tremendous gains.
“Significant rises in the price of steel, wood, machinery, and concrete have a significant impact on construction expenses.
“A 32k poultry shed would have cost about £1.2 million to build a year ago. But today that cost is more like £1.7 million.
The cost of borrowing, which has grown with fixed rates rising from about 2% to 5%, is the other driver.
Ian remarked, “Unfortunately, these problems are not specific to the poultry sector either. The margins are not there”
In other uses for cattle housing, we have also observed a lack of expansion. They have significantly decreased particularly in pig housing.
“The broiler sector has seen a few fresh planning applications, but not many.”
He continued by saying that many farmers are reorganizing and reusing structures for purposes other than agriculture.
“A poultry facility constructed in 2019 is now being used for commercial storage,” the statement reads.
There are several active but unfulfilled planning licenses in the free range sector across the nation. Where permission has been granted but no further action has been taken.
When they receive permission, they have three years to begin building. “I don’t see much confidence right now in the free-range industry,” Ian continued.
“There are restrictions and hoops they must pass that can be an additional barrier to entry, even if there were a significant upturn and more farmers wanted to expand.”
Natural England legislation
Natural England provided local planning authorities with guidelines in March 2022. New ammonia threshold limits for protected biological sites including SSSIs.
The threshold levels are so low that it is frequently practically impossible to comply with them in many situations.
“Ammonia production is the inescapable byproduct of food production; it results from all facets of agriculture,” stated Ian.
“Producing no food is the only way to have no atmospheric ammonia. Not a wise long-term course of action.
This has been made worse by the Nutrient Neutrality laws that went into effect in various regions of the country in April 2022, and caused a number of planning applications to basically become permanently trapped in the system.
Ian notes that over 90% of planning applications are ultimately approved despite all this.
Planning consent is harder to obtain
The management at Parker Planning shared these comments, stating that “on average we’re seeing the average turnaround time for such projects can be from 6 months to over a year.”
Therefore, we expect some of these projects to receive decisions in the upcoming weeks and months.
Obtaining planning approval for new chicken barns is getting more difficult as opponents become savvier and planning committees become more ruthless.
According to Parker Planning, “check for things like potential effects on the landscape, whether the Environment Agency and the Highways Agency are likely to be pleased, and what the implications on neighbors would be.”
An Environmental Impact Assessment is typically required for applications for layer or broiler expansions and is a legal obligation for any operation with more than 85,000 birds.
This entails thorough evaluations of the influence on the landscape as well as noise, odor, ammonia, ecology, transport, drainage, and flood danger.
Turbulent times
Oliver Grundy of JHG Planning Consultancy Ltd, which mostly serves the East Midlands region, observes that the number of applications has decreased in recent months.
The impact of avian influenza, along with the impact of the crisis in Ukraine, inflation, feed cost rises, building cost increases, and the increase in lending rates has undoubtedly taken a toll on clients who had previously experienced stable development and expansion.
We are now experiencing unrest. Many of our clients have adopted a more defensive stance in an effort to maintain their businesses.
We haven’t had any proposals for free-range development in probably a year, he claimed.
Blocks on development
According to Oliver, there has been an annual growth in the number of regulatory obligations, and councils frequently default to requesting an EIA even when it may not be strictly necessary or appropriate.
Development is practically impossible in some places, he claimed, citing Wales as an example. “The Welsh government has somewhat hampered the rural sector,” he added. “Wales for example has some extremely stringent local authorities and is effectively a non-starter for livestock unit applications.”
It can be difficult to obtain planning, which might cost anything from £10 to £20,000 for a medium-sized application before permission is granted.
Environmental impact assessments are increasingly required for smaller-scale expansion of existing poultry farms due to concerns over cumulative impact, creating a bureaucratic minefield, according to Oliver. “Local authority planning administration fees for large agricultural buildings are a significant cost,” he added. “Some authorities also charge a community infrastructure levy (tax) on agricultural buildings.”
Unchartered territory
Potters Poultry’s managing director, Tom Simpson, is cautiously hopeful about the sector’s future.
As a sector, he said there have frequently been ups and downs, but we have always survived.
The perfect mix of avian influenza, rising interest rates, and inflation is making times difficult right now.
Several building projects have been placed on hold as a result of the sharp drop in inquiries for new construction.
It has possibly even decreased in size year over year and is as flat as it has ever been. However, in order to increase production, we are now concentrating on updating current units.
Any money that is still left over is being used to replace birds that AI has killed or to renovate existing structures in an effort to boost productivity and cut costs.
“The numbers for new buildings just don’t add up with such high development costs and loan rates. Those who have run businesses are battling to survive.
There is a delay in getting projects through planning, even if interest rates stabilize. We can’t simply turn everything on overnight, Tom remarked.
The lead time for planning applications ranges from 4 to 12 months, with 6 months being the typical duration.
Having said that, the demand for pullets is rising and growers are beginning to refill.
Staying positive
Morspan has been in the poultry building industry for more than 25 years and is the market leader in the provision of clear-span steel framed poultry houses.
Donald Gillespie, the director of sales at Morspans, is optimistic about the future of the egg industry.
According to him, “We design and install units ranging in size from 6,000 to 80,000 birds, with 32,000 and 64,000 being the most typical.”
While 2022 was undoubtedly a slower year for us, this year’s order book is not too bad and will keep us busy enough.
We are considering a variety of new units, additions to current facilities, and packer’s units, including many in Scotland.
The country’s north is much busier than its south, and the farther north you go, the simpler it seems to be to get planning.
Donald pointed out that farmers don’t simply have a ten-year plan; they farm for the next generation. Hopefully, everything will turn out OK again, he continued.
“While 2022 was quiet, this year seems more hopeful, despite the often difficult planning environment in Britain. The demand for pork is high and the supply is limited, but if pricing can represent the real cost of production, things should improve.
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