European poultry farmers are going out of business

Soaring energy prices are hitting poultry farmers across the European Union hard, squeezing profitability and sometimes even threatening operations.

The recent sabotage of the Nord Stream gas pipeline from Russia to Europe has caused natural gas prices to explode. Ahead of the event, European natural gas prices had already risen nearly eightfold this year, largely because of Russia’s decision to further cut or even stop gas supplies in retaliation for its military aid to Ukraine.

Russia’s state-owned gas monopoly Gazprom has cut natural gas exports to several European countries including Bulgaria, Finland, Poland, Denmark and the Netherlands in the past few months for non-compliance with its ruble payment obligations.

Russia once accounted for 40% of Europe’s natural gas imports.

Russia’s dependence on gas varies across Europe. Eurostat estimates that Bosnia and Herzegovina, Moldova and North Macedonia will get 100% of their natural gas supplies from Russia. Almost all countries in Eastern Europe depended heavily on imports from Russia. In 2021, Latvia got 92% of her natural gas from Russia, Serbia 89%, Bulgaria 79%, Slovakia 68%, Hungary 61%, Slovenia 60% and Poland 50%.

The difference with Western Europe is obvious.

Eurostat reports that Germany is the most dependent on Russian natural gas imports in the region at around 50%, followed by Italy (38%), France (15%) and Belgium (14%). Russia’s dependence on natural gas is crucial because the current crisis may not be just about rising prices. The availability of natural gas could be threatened. With the Nord Stream 1 and 2 pipelines out of service, the pipelines that relied heavily on energy imports from Russia are the most vulnerable.

In the Czech Republic, average energy prices for poultry farms have increased by 250% since early 2022. Currently, energy suppliers are refraining from long-term contracts with poultry farmers. This adds uncertainty and further reduces the motivation of poultry farmers.

Also in early September, Poland’s National Poultry and Feed Producers Chamber warned that high energy prices were making it impossible for farmers to produce eggs. Chamber of Commerce Chief Poultry and Feed Analyst Marius Simyszyk believes that by the end of 2022 the number of Polish laying hens will be I warned that the population would be greatly reduced. He believes this could ultimately lead to egg shortages on the Polish market.

It’s not just rising energy costs

The energy crisis is not the only challenge facing European poultry farmers. Since the start of the Ukraine crisis, the industry has suffered from rising feed prices, and more recently has seen problems with other raw materials. They point out that bottlenecks in the availability of CO2 to stun animals ready for slaughter and ferric chloride for waste pretreatment must also be addressed.

Alternative energy

The German poultry industry is doing its best to ensure that poultry and eggs are produced in sufficient quantities, including by using several alternative energy production solutions.

Recently, reports of poultry farmers switching to energy-saving options have become commonplace. Pivka Poultry, the second largest chicken producer in Slovenia, recently reported that it has encouraged partner breeders to switch to energy-saving technologies. The company even agreed to co-invest in such ventures. However, the company has admitted that some breeders have already gone out of business.

Poultry farm Ignaczak in Poland’s Warmian-Mazury province has managed to reduce energy consumption by 60% by modernizing lighting. The company switched from fluorescent lights to LEDs. This has reduced the energy consumption of lighting from 11,340 kWh per year to he 3,780 kWh.

Darius Gudačiauskas, director of Lithuanian poultry company Vilnius Poultry and his Kaišiadorių Poultry, said in August that his farm is considering converting to LNG and building a bioplant amid rising gas prices. The energy crisis is expected to boost the demand for solar power from poultry farms and livestock farms in Europe.

Cheaper imports are not making it any easier

At the same time, cheaper imports with lower animal welfare standards from non-European markets flow into Germany, sometimes even with the benefit of suspending EU tariffs and quotas. As a result, consumers are becoming increasingly price sensitive when shopping and relying on cheaper imports.

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