The planned closure of a turkey processing plant in Wales is bad news for the turkey industry
The announcement by Avara Foods that it is planning to shut its Abergavenny factory in autumn 2023, which would result in the loss of all jobs at the site, does not bode well.
The Abergavenny facility was part of the acquisition of turkey processor Cranberry Foods by Faccenda, in 2012. Faccenda then went on to form Avara Foods in 2018 in a joint venture with Cargill. It is a ‘cut and pack’ operation, predominantly preparing a range of fresh turkey products, alongside some chicken lines, for retail customers.
The closure – if it goes ahead – will mean turkey farms in the region will be repurposed – some for chicken, others for pullets. The news is a sign of the times. Apart from the premium, specialist market, selling turkey in Britain is currently a recipe for big losses.
The big players are wrestling with the impact on their finances. Bernard Matthews Foods Limited reported an annual loss after tax of £20.9 million in the year to 2 January 2022, a significantly bigger loss than the previous year when the company reported a £3.95 million loss. Higher costs and a shortage of labour were key factors, the company said. Moy Park made the decision to exit the turkey market altogether in the past few years.
Demand for turkey has fallen significantly at retail in response to rising prices. Sales of turkey by volume in UK supermarkets were down 23.4% year on year in the 12 weeks ending 19 March, according to Kantar data. Average prices were up 16.4%. It seems clear consumers cannot stomach such price rises.
While chicken prices were also up on average 16% during the same period, the price per kilo was £4.60 for chicken, while turkey cost significantly more at £6.56 per kilo for turkey or £9.80 for turkey breast.
Avara Foods said it was facing significant inflationary pressure in fuel, commodities and labour, which has driven up prices and significantly reduced demand for UK-produced turkey in the retail market. This has led to the decision to restructure its turkey business to operate “a more efficient operational footprint focused on fewer, better invested facilities,” it said.
“Over the past six months the company has looked in depth at a range of options to enable its wider business to compete effectively in the market in the future. Regretfully, this process identified that volumes could be processed more efficiently in other operations and with lower capital investment,” said a spokesman. “This has resulted in the proposal to close the Abergavenny site. This difficult decision has not been taken lightly and in no way reflects on the hard-working colleagues.”
The company is currently working through a consultation process with the people affected by this proposal, but said it was important to say no final decisions had been taken. “The nature of this consultation means that no final decisions have been made and there will be no speculation as to how the process will conclude,” the spokesman said.
Turkey has always been a tricker part of the market to make work than chicken, but a series of events over the past few years has pushed the market into crisis, with losses mounting, and according to one source, companies only continuing to grow it out of a sense of duty to the retailers.
“I don’t think any of the big companies want to grow turkeys any more, because of avian influenza,” said one grower. “Basically, as the chicken market has grown, turkeys has gotten smaller.”
“It is an expensive thing to grow, they are awkward to grow, and they are particularly susceptible to AI. They are tying up the factories, and it is difficult to get the labour.”
“Everyone who is doing turkeys doesn’t want to do them any more and they do them as a service to supermarkets because they rely on their business [for chicken]. You are not going to stay in that business forever. It is the same story everywhere. The rewards are not great enough or are non-existent.”
Back in 2020, the future looked rosier for turkey. Avara Foods was optimistic about demand and launched a new range of turkey products under the brand name The Turkey Kitchen. The idea was to help make turkey a year-round option for shoppers and appeal to younger shoppers with products such as Thai Style Cakes, Turkey Katsu and Cajun Turkey Strips and came with specially paired serving sauces.
It spent over £1.5m in improving and developing the Abergavenny site, with new processing equipment, more efficient refrigeration and improved facilities for staff. The optimism about the potential for processed turkey products led to an extra 40 staff being taken on.
But as we all know, a lot can happen in three years, and in the last three years especially, the whole landscape for food producers has been upended.
The spectre of avian influenza has only compounded the situation. The disease has devastated the poultry industry, and turkeys are the most susceptible. Last November, Richard Griffiths appeared before the EFRA select committee and told them half of free-range Christmas turkeys – around a million birds – have been affected by avian influenza. The chief executive of the British Poultry Council (BPC) said the scale of this year’s outbreak was “unlike anything we have seen before. Its intensity poses a risk to UK food producers, and our food supply.”
Paul Kelly of Kelly Turkeys successfully grows premium turkeys predominantly for the seasonal Christmas market. He warned last year that increasingly, retailers were buying in turkey from abroad. Italy and Poland in particular have growing turkey markets and import crowns and butterflies for the UK market.
It seems likely that the future of turkey in the UK will be premium growers supplying the Christmas market, and very little homegrown production to fulfil demand in other times of the year. The story is similar to that of duck.
In 2020, Avara Foods made the decision to close its duck business, but it has been clear in its most recent announcement that there are no plans to exit the turkey market, with two other processing sites in Derbyshire and Lincolnshire that are continuing to operate.
It remains, along with Bernard Matthews (which is owned by 2 Sisters founder Ranjit Boparan) one of the two year round turkey businesses in the UK.
What is clear though is that growing turkey in Britain is more expensive, more risky, and less rewarding that it used to be. The possible closure of Abergavenny is just a symptom of those realities.