Belfast Telegraph

How Moy Park's chickens came to rule the roost

What propelled the Moygashel-based poultry firm to become a £1.2bn-a-year international business sponsoring the World Cup final? Simple: our all-consuming love of chicken. Paul Gosling reports.

About one billion television viewers around the world will watch tomorrow's World Cup final between Argentina and Germany – and see a well-known Northern Ireland name on the pitch-side hoardings.

Moy Park is not only Northern Ireland's largest private sector business, but also an official sponsor of the World Cup – as is its parent company, the giant Brazilian food producer, Marfrig.

When Marfrig acquired Moy Park in 2008 from the US corporation OSI, the Northern Ireland company's annual turnover was £700m. Today it is £1.2bn – and expansion plans announced a few days ago will see it grow even larger.

And Moy Park is a major employer: it has 2,000 staff at its European headquarters in Craigavon, plus another 2,000 at its Dungannon plant and a further 1,500 at its Ballymena operation.

Moy Park also has 13 production sites located across Europe – in the Irish Republic, Britain, France and the Netherlands, with a total international workforce of 11,500.

This is an astonishing rise for a company that began in 1943 as a small local farming business in the Co Tyrone townland of Moygashel.

Under the latest expansion plans, a further 628 jobs will be created in Moy Park's three Northern Ireland operating sites as part of a £170m investment, of which £9.5m will come from the public purse, via Invest Northern Ireland.

The investment will go into additional processing lines, a new financial shared services centre and the establishment of an innovation centre, to develop new product lines.

According to Enterprise Minister Arlene Foster, the investment will generate an annual £10.5m going into the local economy through wages and salaries.

The minister said: "Poultry production is a highly competitive industry and this investment will position Moy Park to grow its European business from its facilities here in Northern Ireland.

"It is good news for the economy of Northern Ireland as a whole, with local suppliers benefiting, too, as the company will significantly increase its purchasing of additional goods and services as a result of this expansion."

As well as creating direct employment, the new investment will lead to greater demand for chickens from local poultry farmers. Moy Park is seeking up to 400 additional poultry houses within Northern Ireland over the next two years as part of its plans to process an additional half a million birds every week. The Executive's agri-food loan scheme will provide financial assistance to farmers who want to open the new facilities.

Behind the scenes, though, there are concerns that the returns for poultry farmers from the expanding sector are inadequate. Ulster Farmers' Union poultry policy committee chairman Roy Campbell says: "Clearly, the demand is there for poultry meat and Moy Park's announcement is good news for Northern Ireland's agri-food industry and overall economy.

"However, the reality facing poultry farmers must be recognised. It takes a significant financial investment to build or expand a poultry business, but disappointingly many farmers continue to receive diminishing returns.

"The Agri-Food Strategy Board's Going For Growth report has laid out plans to grow the agri-food industry, including the poultry sector. However, these plans will be of little use unless all partners in the supply chain are profitable, including farmers."

The Going For Growth report, published last year, spelled out just how important the poultry sector is for the Northern Ireland economy.

Although not the largest agriculture sector in terms of turnover, poultry farming is responsible for the largest number of jobs.

More than one in four jobs in Northern Ireland's agri-food sector is involved with the production, or processing, of chicken.

The target laid down in the Going For Growth report is for 6,700 people to be employed across the sector by the end of the decade, as part of what is hoped by then will be a £1.25bn Northern Ireland industry.

It is not just in Northern Ireland that the poultry sector is expanding rapidly. Demand has multiplied in recent years. As a white meat, chicken is seen in Western Europe as a more healthy alternative to beef, lamb and other red meats, while being high in protein.

In Asia, demand for chicken has escalated as a growing middle class turns to meat products in general, in place of a largely vegetarian diet. But in the UK and other advanced economies, much of the chicken meat goes into processed foods – for which chicken is the most popular meat.

It is cheaper to produce than alternative meats and chicken use less feed than do other animals to generate comparable quantities of meat.

Chicken also has the enormous advantage (or disadvantage, if you are a chicken) of being acceptable to all the major religions – unlike pork and beef.

Europe is in a strong position to meet much of the demand for chickens. There is disquiet about production in Asia, not least because of a new avian flu outbreak earlier this year.

And the horse meat scandal last year led to more localised sourcing of meat products, backed by stronger guarantees of where and how meat was produced.

Existing production facilities worldwide are unable to meet anticipated demand – hence expansion plans by Moy Park and other chicken processing businesses. The industry is working on the assumption that production in the UK and Ireland needs to rise by 30% to meet just the short-term increase in demand.

Moy Park is expanding off the back of these trends. Last year, it grew revenues by 10% to £1.2bn, while pre-tax profits rose to £34m. Moy Park reported a rise of more than 250% in the volume of Northern Ireland chickens it supplied to Tesco, as a result of the supermarket's switch to using 100% locally sourced meat.

And Moy Park produces chicken products consumed by more than half of Irish households, both north and south.

As far as Moy Park is concerned, Northern Ireland is a very good place for chicken processing. Tony O'Neill, a director of Moy Park, explains: "Northern Ireland is an attractive investment location for Marfrig, because of the skilled workforce, competitive costs and infrastructure. For food producers like Moy Park, Northern Ireland's credentials in food security, agriculture and clean, green environment make it an ideal location."

The UFU's Roy Campbell agrees: "Northern Ireland's poultry industry is world-class and is recognised globally as one of the most efficient for producing poultry meat, table eggs, and breeding eggs.

"With over 600 poultry farmers in Northern Ireland, the poultry sector is an important part of the agri-food industry and a net contributor to the industry's £5bn annual turnover."

The significance of the success of Moy Park goes beyond the benefits to the company itself – it is a success for the Northern Ireland economy and the structure of its agri-food sector.

Agriculture Minister Michelle O'Neill explains: "The Moy Park 'model' is made up of an integrated highly efficient supply chain and with planned growth should create further opportunities for local farmers to increase supply of quality product to the market place."

As well as Moy Park, there are 12 medium-sized Northern Ireland businesses operating in the sector.

The largest sector concentration is across the areas of Armagh, Ballymena, Cookstown, Dungannon and Omagh.

Most of the chicken producers have direct contracts with the processors.

There is, though, one problem the industry has not yet overcome – its own waste. The Going For Growth report stressed that this is now the major challenge facing the sector, not least because of the need to comply with tough environmental legislation.

"Failure to address this issue, specifically the proposals for a long term solution to the problem, threatens the sector's viability," warned last year's report.

This is strange, as the waste is itself a potentially valuable product for conversion into energy. Former Northern Ireland energy regulator Douglas McIldoon is surprised at the industry's slow progress on this.

"I was keen to work with the industry on this a long time ago," says McIldoon, who retired as regulator in 2005.

"People wanted to do this. It makes an enormous amount of sense to reduce waste by converting it into energy. Obviously, it should be done."

It seems that even the biggest problem for Northern Ireland's poultry sector could be turned into a benefit. Other industries must be envious.'Our poultry industry is recognised globally'

10 things you didn't know about chickens

1. Moy Park is one of Europe's largest chicken processing businesses

2. It is Northern Ireland's largest business and largest private sector employer

3. There are three chickens for every person in the world – there are 19 billion of the birds globally

4. Chicken is predicted to become the world's most consumed meat by 2020

5. Global demand for chicken is growing by 2.5% per year

6. Europe's surplus chicken legs and feet are exported to Asian – but Asia's surplus chicken white meat is exported to Europe

7. Chicken farming is mostly concentrated in countries where there is a cheap and large supply of grain

8. Feed prices constitute more than half of total production costs for chicken farmers

9. Chicken is the cheapest mass-market meat produced by farmers

10. Chicken is the world's most internationally traded meat

Belfast Telegraph