Kate Holton, James Davey

DRIFFIELD. England. (Reuters). Nigel Upson examines plucked chicken carcasses hanging off a rotating line at his poultry farm in England. It is clear that money has been hemorhaging from the business as a result of a chain of events.

As with other food producers in Britain, Upson was also hit by the exodus from eastern European workers this year. They were discouraged by Brexit paperwork and fled en masse after COVID restrictions were lifted. This added to Upson’s already high fuel costs.

Because of this, he reduced output by 10% and increased wages by 11%. This increase was quickly matched or even bettered in England by neighboring employers.

There will be an increase in food costs.

Upson said, “We are being hit from all angles,” to Reuters while standing in front of four large sheds housing 33,000 chickens each. It is, to coin a phrase, “a perfect storm.” “Something will have to give.”

As the UK’s fifth-largest economy emerges from COVID, the deepening difficulties at Upson’s Soanes Poultry Plant in East Yorkshire is a microcosm for the growing pressures on companies across the globe. They are now facing the post Brexit trade barriers.

Operators in the food industry have raised wages up to 30% to keep staff. This is likely to end an economic model that allowed supermarkets like Tesco (OTC) to charge some of Europe’s lowest prices.

The departure of European workers, who were often able to do the same jobs as British workers, may force retailers to import more.

According to businesses, despite the fact that all of the world’s major economies are now suffering from supply chain difficulties and labor shortages following the pandemic it is harder for them to rebound.

Already, a shortage of drivers has caused a lack in fuel at stations and gaping on supermarket shelves. Nandos’ chicken restaurant also ran out.

The Bank of England has begun to assess the impact of recent inflation increases on long-term interest rates.

MOUNTING PRESSURE

Upson warns rural companies located near Yorkshire’s flat and open fields that the current situation is very dire.

He says that he only needs 138 people for his plant. However, he had to manage with just 100 workers recently. High staff turnover.

Richard Griffiths of the British Poultry Council says the industry lost over 15% due to Europeans comprising 60% of the sector.

Upson will often request his marketing, finance and sales staff to wear the white long coats or hairnets needed for the processing line when the numbers are very tight.

He said that three weeks ago, the office was empty and everyone had been in the factory. This is a company that provides high-end poultry for restaurants, farms shops, butcher shops, and other businesses. In the lead-up to Christmas, he might look at students.

Soanes cannot deliver chickens in boxes on difficult days. The birds are not trussed for retail, or placed in separate Soanes-labelled packaging which commands a higher price.

Due to a lack of personnel to process the offal, around 3 tonnes is being thrown away each week.

These spikes in fuel, animal feed and energy prices, along with the sudden increase in wages, have also contributed to the decline in productivity.

Upson shook his head and said that he had just to tell customers the price was going up. We’re losing big money. He said that the poorest customers would be most affected.

Businesses have asked the government for temporary relaxation of visa regulations while it carries out staff training and automates processes to close Britain’s 20% gap in productivity with Germany, the United States and France over the next 20 years.

Boris Johnson, Prime Minister of Britain, said that while they are not changing their direction, businesses should cut down on dependence upon cheap labor from overseas, invest in technology, offer good-paying jobs to the 1.5 million British unemployed.

Upson states that there are shortages of rural workers and people have the option to choose from 1.1million job openings. He said, “Working as a poultry factory worker is not everyone’s dream job.”

Although 5,500 overseas poultry workers are allowed to work in Britain prior to Christmas, 800 international butchers will be granted emergency visas by the UK to help avoid an unplanned mass slaughter. The industry believes it is in need of more.

The production of whole birds can already be automated, but it is too expensive for small producers.

In a report, the National Farmers Union and other food organizations stated that certain parts of the UK’s supply chain for food and drinks were “precariously near to market failure”, which limits the country’s ability to invest in automation.

Soanes generates an annual turnover of approximately 25,000,000 pounds ($34 million). The company’s owners spent five million dollars on expansion in the past three years. It is now necessary for the output to match the workers.

TOO CHEAP

Ranjit Singh Boparan founder of 2 Sisters UK, the UK’s largest producer, said food prices are expected to rise.

He said, “Food is too expensive.” In relative terms, chickens today are cheaper than they were 20 years ago. It is absurd that whole chickens cost less than one pint of beer.

Upson claims that he can sell bones for pet food at a much higher price than for chicken legs.

The main obstacle to rising prices for major producers is usually the buying power of large supermarkets. These have struggled since 2008 to maintain low prices on key products such as fruits, vegetables, meat, fish, and poultry.

David Sables (CEO Sentinel Management Consultants) is a coach for suppliers and helps them negotiate with British supermarkets. He said that desperate food producers have already made some price increases, and expects another one to be announced in the early part of next year.

He said that chicken is a “known value” item, and shoppers are able to determine the cost of it. This would lead supermarkets to increase the prices for other products. According to him, the sector of chicken is an “absolute terror show”.

Unnamed senior executives at major supermarket groups said that the pressure was on retailers to hold their prices and to watch out for each other.

“If the major six price moves, you can bet that your darlings will wait about twelve hours to see it,” he stated.

Upson in Yorkshire and other people are praying for them to succeed. He acknowledged Johnson’s wish to be in a high-wage and skilled economy but said that not all jobs are suitable for this.

What skill is required to place chicken into a container? He continues to ask. He asks, “Can we raise wages but the prices will rise?” This is what he’s beginning to worry about. He said, “Normally, you just have to be pragmatic and hope that it all works out.” This one is a bit confusing.

($1 = 0.7277 pounds)