CONCERNS over inheritance tax are creating uncertainty and holding back investment in the poultry sector.

These, alongside delays in planning permission and ongoing labour shortages, were highlighted as the key challenges to expansion at last week’s Poultry Network conference at Harper Adams University.

See also: Ep. 12, Wayne Olbison, Lanxess: Foot Dips, Wheel Washes & AI Vigilance

Importantly, money was available for new projects, but investors were hesitating to invest, said Ian Burrow, head of agriculture at NatWest.

“It’s not a case that we haven’t got money to lend, or we don’t want to lend it, we’re just not seeing the demand,” said Mr Burrows.

“A big issue for us all is the three C’s: the confidence, clarity and certainty that we’re not getting. And yes, it’s put a lot of people off. 

Poultry performance

“The asset finance and the lending that I’m seeing from my banking managers is a lot less because they’re just sitting on their hands because of the IHT issue.”

“The poultry sector is probably our best-performing sub-sector within the ag sector today in terms of trends.

“We are certainly open to business to lend, either on a kind of new-build basis, new sheds, new equipment, and then on an asset finance point of view in terms of the equipment and the infrastructure for the sheds and for the building, and for all the kind of operations,” he continued.

“I’ve got over a billion pounds worth of capital to lend to the right business case for the right kind of operation. 

“People are just nervous about jumping in the deep end with projects because of the IHT issue.”

Succession

Iain Chapman of family business Farmlay Eggs agreed: “IHT is a huge problem for our industry.“

“It’s a big threat to our business. Before, my family and my parents were 50-50 in the business, and I felt that was the correct level to be at. And I probably would still feel that is the correct level to be at, had it not been for IHT changes.”

“So we have changed things in our business just to counter that. But yeah, big problems going forward.”

However, Mr Chapman could also see a potential advantage.

“I also feel there’s a possible opportunity there. I think it passes on businesses to the next generation quicker. 

“It gives them the opportunity to start business. I think it’s totally wrong for a 70, 80, 90 year old farmer to be still working and still running a farm, it’s totally wrong for that. I like to give young people opportunities.”

Laboue

He also touched on migrant workers as well.

“Our ability to hire foreigners, that’s a big problem coming in. That’s a huge problem for both the broiler and the egg industries.

Labour, we can’t get it. It’s impossible. We now have 18 guys that came across from the Philippines. We were really struggling for labour three or four years ago, and it’s transformed our business.”

Markets

Mr Chapman also warned against over-expansion in the egg sector. He said that egg prices were at a fair level now.

“Let’s try and keep that margin in there. Let’s not be ashamed that we can make a profit.

“We need to be very careful as an industry not to go oversupplied. Hopefully everyone is being responsible.”

“I’ve pulled back a little bit on recruiting new producers at the moment, just until I see where the market plays out.

“A lot of people still think there’s not going to be enough to go around. So we just need to keep an eye on that.”

Planning

Another key issue was planning permission, said Andrew Dooley from Maelor Foods, which had first-hand experience of the system after undergoing significant expansion in recent years.

“You’re in a battle to convince people that do not make an attempt to understand or appreciate the food industry, and they are people that are voting on a council. It seems because they have such a lack of knowledge, they feel that the only way that they can add value to a planning application process is to come up with some well-grounded, objections.“

Donald Gillespie, of poultry building specialist Morspan, observed that planning applications were becoming more successful in the north of the UK.

“If you look at where we’re currently building in the UK, it’s moving north.

“Scotland, touch wood, still seems to be relatively easy to get planning. And I think it might change, because we’re going to see large units that need to be built and set in Scotland.