The Scottish Government has handed out substantial grants to egg producers under the Scottish Rural Development Programme.
And although the grants have drawn a little criticism from some people because of the current oversupply in the egg market, BFREPA chairman John Retson said that a lot of the money awarded under the scheme would help the egg industry meet the requirements of EU regulation.
From January 2012 conventional cages will be banned in the EU. Much of the grant awarded in Scotland would help fund the replacement enriched cages (or colonies), said John, who pointed out that enriched cage conversions would have the effect of reducing stocking density by more than 20 per cent.
"It is unfortunate timing that the grant announcement for Scottish producers was made as packers were announcing major egg price cuts, but we have to remember that it is not only Scotland where grants are available.
"We also have to remember that the people who have received these grants also have to invest a lot of money themselves. In many cases producers are investing more than a million pounds in modern cages. They still have to make a judgement about whether they feel it is right to go ahead with the investment," said John.
One grant recipient is Glenrath Farms in Peebles - the country’s largest egg producer. The company has been awarded £745,000 for upgrading two chicken sheds to the enriched colony system, but John Campbell said the business was spending more than £40 million in total to convert its conventional cages.
Some of the cage production was being converted to enriched cages, some cage production was being converted to free range. However, John said the £40 million investment was having to be made simply to stand still in production terms.
He said that enriched cages would have up to one third fewer bird spaces than conventional cages. "But you either have to spend the money or get out of the business."
John said that Scotland was more advanced in its preparations for the conventional cage ban than anywhere else. His own plans were well advanced and Glenrath would be ready before the EU deadline fell.
Awards made under the Scottish Rural Development Programme amount to £60m in total. The awards were announced in June and one of the larger recipients in the egg sector is former Grampian Country Food founder Fred Duncan, who will receive £1.646m to convert some of his large pig units to enriched colony egg production.
Other recipients include I & J McRae, in Huntly, who have received a grant of £226,000 towards the setting up of a 16,000-bird egg unit and G Watson, Fraserburgh, who receives £129,000 grant to help convert a former dairy unit into a free range egg unit.
In Dumfries and Galloway, Rory Young gets £559,847 to establish two 16,000-bird units. Forth Valley Free Range Eggs receives a £115,000 grant to help expand its poultry enterprise.
The Scottish Government says the £60 million in grants will create 530 jobs in all, with a further 430 sustained. In total, some 4,500 projects have now been approved through the scheme - to the value of £330 million. Rural Secretary Richard Lochhead said that hundreds of projects were now complete, making a real difference to Scotland’s rural communities.
"This is another major investment in rural Scotland that will lead to the creation of new businesses, new community facilities and a range of environmental projects. It is hugely encouraging to see so many applications coming forward that will boost the rural economy through job creation and others that will deliver major environmental benefits.
"These are difficult economic times and the creation of 530 jobs across the country will be a welcome boost to our rural areas," he said.
"We are looking ahead to future rounds to determine how best to keep up the momentum from Rural Priorities and ensure it continues to deliver for future years."
There has been some criticism in Scotland of grants for the egg industry at a time of oversupply in the market. A number of major packers have recently cut producer prices because of the state of oversupply, and a number of people within the UK industry have spoken of the need to ensure that the growth in free range egg production does not outstrip market demand for eggs.
BFREPA chairman John Retson is one of those who has said that the industry needs to take care that expansion is controlled, but he says the grants to Scottish egg producers are largely targeted at meeting the requirement of the new EU regulations coming into force in 2012. "The Scottish Government will have looked at these applications very carefully and we have to respect the judgement they have made in deciding that this investment should be supported."
A Scottish Government spokesman told the Ranger that he expected the current oversupply in the market to be temporary. "The funding was granted under the Scotland Rural Development Programme in the knowledge that the additional supply will shortly be highly sought after by both the industry and consumers. There is a temporary UK oversupply of eggs which will gradually be resolved as producers adapt to account for enhanced welfare improvements in egg production.
"The funding under the SRDP Rural Priority scheme will help the Scottish industry remain competitive and help producers move onto new systems."
He said that in addition to the ban on the use of conventional cages from January 2012, longstanding free range egg producers would also face a reduction in hen numbers from 12 to nine hens per square metre at the same time. These changes would start to take effect from the end of this year, he said. That is because existing flocks will not be allowed to complete their cycle beyond January 1 2012. All hens must comply with the new rules on that date.
