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French Poultry Exporters Face Early Restitutions Withdrawal

19 July 2013

ANALYSIS - The unexpectedly premature withdrawal of export restitutions on third country poultry sales this week has left French poultry groups Doux and Tilly-Sabco with substantial gaps to plug in their accounts, writes Peter Crosskey.

“When our recovery plan was announced in October last year, we were working on the basis of a January 2015 deadline,” a Doux spokesman told ThePoultrySite.

With restitutions worth €108/tonne at the start of the year, the poultry group was already ahead of its target schedule for the subsidy phase-out. “At the moment, they are worth € 20 million over a year, which leaves a big hole.”

Last year, Doux posted sales of € 650m, processing one million birds a day at five production sites around France, with three hatcheries and two feed mills.

Its 2,400 staff work alongside thousands of poultry producers who take in chicks under Doux contracts, feeding them with Doux-supplied feed and delivering finished birds at the end of the production cycle.

It was this embedded business model that caused so much consternation last summer when the group called in administrators.

Privately-owned Tilly-Sabco earns 80 per cent of its turnover from selling whole frozen chickens to Gulf states, like Saudi Arabia. Sales last year were €136m.

The Breton business has capacity for 65,000 tonnes of frozen chicken a year, slaughtering 1.6 million birds a week, employing more than 330 staff.

The fact that thousands of jobs are at stake in these export-driven businesses adds to the urgency of their joint appeal to the French minister for support in the face of overwhelming adversity.

“The Euro exchange rate is at an historical high, while the Brazilian Real has been strongly devalued since the beginning of the year, against a backdrop of low poultry prices around the world," they warned in a joint statement.

The French minister has already been working in the corridors of Brussels, urging European partners and members of the Commission to retain export restitutions until 2015, but without success.

“The compromise adopted at the end of June on the CAP reform allowed for the export restitutions to be retained for the rest of this current year and for the opening year of the 2014-2020 CAP,” the ministry declared.

“This decision weakens the restructuring already in hand for some months with the businesses concerned,” rue de Varenne declared.

National and local government have been working with the sector and looking for ways of increasing its competitiveness in the wake of the original decision to eliminate export restitutions. There is widespread concern that prematurely shutting down restitutions will damage the whole sector.

The export market accounts for more than a third of all French poultry sales, led by Doux and Tilly-Sabco. Last year, the EU exported 1.3 million tonnes of poultry meat, importing 0.8 million tonnes of high value products, such as breast fillets, from Brazil (70 per cent) and Thailand (20 per cent).

According to EU figures, 2012 EU exports were worth an average of € 1.40/kg against imports arriving at € 2.65 kg.

ThePoultrySite News Desk

Top image via Shutterstock

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