PoultryInternational: What lies behind the success of Dutch poultry and egg production

The Netherlands is home to some of Europe's most successful poultry meat and egg producers. How has a country, with limited agricultural resources, grown to be such a key player?

The Netherlands is 240 percent self-sufficient in broiler meat and 300 percent in eggs. Clearly, poultry and egg production are successful industries in the country. But how has this come about, and what challenges are Dutch producers currently facing?

Poultry International recently spoke to Ben Dellaert, director of Pluimvee & Eiereen, the Product Board for Poultry and Eggs, to find out how the poultry industry is faring in this European country with a population of less than 17 million.

Unique position

There can be no doubt that the strength of Rotterdam—the largest port in Europe— has played a part in the development of the Dutch poultry industry. In a country with limited agricultural land and a high population density, what could not be produced at home could be imported through Rotterdam.

But this is not the end of the story. Dutch poultry production has been favored by its location in terms of proximity to the wealthiest areas of the European Union—the Golden Triangle—taking in areas of France, Germany, the Netherlands and the UK.

“Ever-closer European integration has been of benefit to Dutch poultry and egg producers,” explains Dellaert.

“Proximity to Germany has made the concentration of production easier, and of course we are close to the Ruhr—the traditional industrial area of Germany—which has a high population.”

Yet it is not simply easy feed supplies and proximity to markets that have worked to the benefit of Dutch poultry meat and egg production. Dellaert believes that the structure of the industry itself has played a part.

“The industry is made up of a lot of family-owned farms, and being family-owned, they have a direct interest in taking care of their businesses and making them run as efficiently as possible.

“In some markets, farm owners have no direct contact with their operations; everything is run by employees, who may not have such a direct connection with ensuring that everything runs as well as it possibly can.

“The structure of the industry here has provided an ideal testing ground for new equipment and other inputs, meaning that meat and egg producers have access to the very latest technologies.”

Avian influenza

This may all sound ideal, but poultry meat and egg producers have not been without their problems.

It was only a decade ago that 10 million birds in the country had to be slaughtered because of avian influenza. While there was compensation for direct loss, there was no compensation for loss of production, and so producers were left without an income for three or four months.

Avian influenza had an enormous financial impact on the sector and an emotional impact for farmers, but the outbreak resulted in some longer-term benefits.

“We learnt a lot from the outbreak,” says Dellaert. “In 2003, nobody really knew what avian influenza was. But the outbreak and cull offered us a time to reflect. It brought a new start, and a new concentration of farms and packing stations. And it resulted in the introduction of the most intensive disease surveillance system in Europe. Every farm is now monitored for avian influenza at least annually, and in the case of free-range farms, [they are monitored] every three months.”

Of course, there is a cost attached to such surveillance, and this is paid by farmers directly to the organization carrying out the testing. Producers have no choice in the matter; surveillance tests must be carried out.

Environment

However, disease has not been the only issue to modify production methods in the Netherlands. Government environmental policy has had, and continues to have, a major impact on how the nation produces its poultry meat, eggs and other foods.

Concerns over pollution from animal production resulted in the introduction of phosphorous limits being introduced in the 1980s, which acted as a brake to production. Phosphorous quotas, which could be traded, were also introduced. By 2015, however, this approach is due to come to an end, and a system of production rights will be introduced. Under this new system, poultry and other animal protein producers will be able to produce as much as they want, as long as they can properly dispose of manure.

There is now an electricity plant in Rotterdam that burns poultry litter, so it has a value at making disposal easier, but unless a farmer can prove beforehand that he or she either has enough land to spread the spent litter or a contract to take it away, then expansion will not be permitted. While the possibility of growing production has been welcomed, the change has not been greeted with universal approval, as those producers that bought phosphorous quotas will see them lose any value.

Welfare changes

But pollution is not the only issue the industry is confronting. Broiler producers have been under fire from animal rights groups, who have been funding television advertisements claiming that retailers have been selling “exploding chickens"— birds that have been bred to grow faster than the average.

Clearly, supermarkets do not like to be targeted in this way, but out of the pressure came the first sector-wide agreement between the Dutch retailers’ organization and the poultry industry.

“There were four months of discussions prior to the agreement. We prepared a menu of options, all of which were priced for the retailers, so that everyone would know what was possible and what the costs would be for the final product.

“In 2015, we will start to approach production in a different way. New breeds of birds will be introduced with slower growth rates. There will be more space per bird and other welfare aspects will be taken into consideration. The new rules only apply to those producers producing for the Dutch market, which is about 20 percent of total production.

“We are really pleased with the agreement. This is the first time that we have forged an agreement with all the supermarkets, and they too are happy with it and are prepared to pay, so the extra costs incurred by producers will be covered.”

Despite agreement being reached and changes made, animal welfare groups have to date expressed little appreciation for the move.

Cage ban

While the strength of welfare groups varies from one European country to another, changes to how eggs are produced have had to be applied across all Member States of the European Union since the start of 2012. Some countries, however, including the Netherlands, started down the path to change earlier than others.

In 2005, supermarkets in the Netherlands rejected cage eggs, demanding barn and free range, and supermarkets account for some 80 percent of egg distribution in the country. Consequently, packers encouraged egg producers to look to alternative systems as they needed more barn eggs, and between 2004 and 2006, many farms took the decision to abandon conventional cages. A further stimulus to the change was the belief that German supermarkets would soon make similar demands. Dellaert explains: “The cage ban was nothing new for us. Although a few farms missed the deadline due to government bureaucracy—some local governments took up to 12 years to process the paperwork required to rebuild farms—the last one or two non-compliant farms were compliant by July 2012 .”

Yet, this change was not problem-free as Germany went on to ban enriched cages, making things a little more complicated for Dutch egg producers. As in other compliant countries, there was a degree of irritation with those Member States that had failed to make the necessary investment. “The reaction here and in other countries was, ‘When will somebody act?’ For table eggs in the Netherlands, however, there is a market for only non-cage quality eggs coming for quality control programs, so for us it does not matter too much if non-compliant eggs are in circulation.”

The Netherlands runs the IKB quality scheme, whereby all eggs are stamped with a code identifying country and farm of origin, along with henhouse and type of housing.

In terms of total egg production, output in the Netherlands has fallen slightly, and there has been decline in the number of laying hens over the last year. While some older farmers decided to leave the business, others expanded.

And what of the economic downturn? This really has not been so negative for Dutch producers. Consumers have tended to switch to cheaper products, which include chicken and eggs, and consumption has been rising over the last couple of years. There is even some evidence from supermarkets that consumers are now choosing eggs for some evening meals rather than meat.

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Dutch broiler production

High feed costs and increases in the cost of energy, transport and day-old chicks put Dutch broiler producers in a weaker position in 2012, despite broiler prices rising, and manure disposal costs falling.

Production of all poultry meats reached 810,000 tons (carcass weight) in 2012, up by more than 3 percent, while for broilers alone production rose by 4 percent to reach 738,000 metric tons.

The national broiler flock stood at 47 million head, an increase of 4 percent compared with 2011.

Exports of processed and unprocessed poultry meat rose by 2 percent to 1.1 million metric tons. Exports outside of the EU made significant gains, particularly those to Africa; within Europe, exports to Germany, Belgium and France were higher; to the UK, exports were stable.

Dutch egg production

Egg producers saw some improvement in their position in 2012. Prices achieved for eggs were higher, especially in the first half of the year. Despite the costs of inputs rising, this was to a lesser degree than the increase achieved in selling prices.

The number of laying hens in the country fell by some 3 million birds to 29.6 million in 2012, while the number of layer farms dropped by 130 to 933.

Exports of table and processing eggs fell by almost 5 percent to 9.4 billion, which is the second year of decline after a long period of growth, largely due to Germany becoming more self-sufficient. Imports of eggs and egg products also fell.

Per capita consumption of eggs rose by 4 to stand at 192, while consumption of processed eggs in other products rose by 1 to 44 per capita.

 by Mark Clements