Moy Park’s NI growers placed at a disadvantage by RHI cuts

MOY PARK has said cuts to RHI payments in Northern Ireland mean its producers there are at a disadvantage, when compared to their counterparts in Great Britain.

In a submission to the RHI inquiry, the company said it treats growers in both regions “comparably”.

It also demonstrates how many of its producers in Northern Ireland were switching back to LPG gas to fuel sheds.

A letter signed by Moy Park’s Justin Coleman said the company “smooths any cost differentials” for expenses like transport, feed and fuel, which are more expensive in Northern Ireland.

But it could not mitigate the cut in RHI payments to producers in NI, putting producers there at a disadvantage.

Mr Coleman called for parity in the RHI schemes, “Moy Park cannot be reasonably expected to plug the financial gap brought about by changes to the NI RHI Scheme.

“The disparity as between NI and GB Growers can only be corrected by the UK government,” he said.

The company produces about half of its chicken in NI and half in GB, with about 80% of the NI chicken sold in GB.

In April the average payment for biomass boilers dropped from about £13,000 to £2,200 a year to become compliant with EU rules on state aid. In contrast, the average payment in Great Britain is £5,300.

Producers with a 199kw boiler now receive just 1.2p/kw in tier one payments, which run to 260,000KWs. A newly installed boiler in GB will receive 3.05p for the first 400,000KWs.

Mr Coleman also details the extent to which producers are switching back to indirect gas heating.

“The proposed tariff payments are such that we believe Growers will find it an economic imperative to switch to LPG as the source of heating for Indirect Heating systems – based on maintenance costs, fuel cost differentials the low level of RHI income and cash flow,” he said.

The letter says there as of 1 May this year, there were 717 sheds in Northern Ireland using biomass boilers. Of those, Moy Park estimated 65% would be able to convert to heating with indirect gas, as an LPG boiler was fitted as a backup to the biomass system.

Of the remaining “about” 20% had made contact hoping to install an LPG system.

“In total, we might expect to see 609 sheds using LPG rather than wood pellet by the end of the year, with the remainder converting in early 2020.

In a separate submission, the Ulster Farming Union’s David Brown said it was “committed to supporting its members and to the decarbonization of the poultry supply chain”.

“However, this commitment must be balanced by the economic reality of the cost and complexity of generating heat from renewable fuel when compared with the simplicity and economy of liquid petroleum gas and other fossil fuels.”