The broiler industry in the north and north-east is on the brink of collapse unless producers can persuade a new processor to invest in slaughtering facilities in Scotland.
NFU Scotland’s poultry committee chairman Bob Hay, who farms at Luncarty near Turriff, is one of 16 producers axed by meat processing giant 2 Sisters in the past 12 months.
He was producing around 490,000 birds a year for the firm, but his contract was terminated with less than five days’ notice in August.
2 Sisters ramped up its presence in the Scottish poultry market last year when it bought Dutch firm Vion’s chicken and red meat interests.
Accounts filed with Companies House in April revealed the group had reported a 772% increase in pre-tax losses for the year ended July 27, 2013.
Pre-tax losses at the firm rose to £15.955 million, from a loss of £1.834m the year before. This was against a 9.9% increase in turnover to £855m, from £778m previously.
Mr Hay is joined by the majority of poultry farmers in Scotland in arguing that the company should not have been able to gain a monopoly of the chicken slaughtering market.
NFU Scotland has submitted a request to the Competition and Markets Authority that 2 Sisters be investigated for its actions.
Since November last year broiler production in the north of Scotland has been virtually wiped out, and producers have been left with little option other than to cease production.
Only those in close proximity to the plants at Coupar Angus and Letham have retained their contracts.
Mr Hay and other growers have rallied together under the auspices of the Scottish Chicken Growers’ Association to try to persuade a retailer or processor to invest in new slaughtering facilities in Scotland.
2 Sisters was loathe to admit fault for its actions, claiming they were needed “to create an economically viable poultry industry in the country”.
The company said: “We have repeated numerous times over the past year why we’ve had to take this action.
“We have nothing further to add.”
It said there was “significant overcapacity” in the market in Scotland, and around 500,000 birds a week had to be removed from the country’s supply.
“It’s with regret that we had to confirm a small number of farms in the north and north-east of Scotland would not have their contract renewed,” said a spokesman.
The poultry giant said those “geographically isolated growers” were the most at risk, and Scotland was the least efficient manufacturing location in its business as a result of issues such as a higher cost of live birds, older assets, the climate and longer distribution routes.
Mr Hay said growers, NFU Scotland and Government officials had met with 2 Sisters in June to discuss ways to help save the sector by reducing transport costs for example.
He said growers had been told 2 Sisters would invest in a new cutting plant at Coupar Angus and up its kill at Letham.
However, a cutting plant is yet to be built, and the kill at Letham has returned to its former levels.
According to Mr Hay it is crunch time for the sector, and a new outlet for chickens must be found in the next six months or the current sheds and growing facilities would be lost.
However, he added that the closure of the hatchery in Inverurie would make it difficult for the sector to start up again as it was unclear where producers would get day-old chicks from.
He said there was a market for Scottish chicken provided consumers asked retailers for it UK poultry meat market consumption is predicted to grow by 26% over the next five years.
Rural Affairs Secretary Richard Lochhead said: “Through our poultry plan, the Scottish Government and our agencies are already taking action to support the sector and ensure that, as far as possible, chicken that is consumed in Scotland is produced here.
“I want to see more retailers and wholesalers, as well as the public sector, sourcing Scottish poultry,” he added.