Atria Finland’s poultry business is growing

Atria's press release January 4^th promoted its newest brand, Perhetilan broileri, family farm chicken, emphasizing its success. That’s fine, but the release didn’t tell anything really new, but merely repeated statements from the last year.  What’s more, the brand’s properties do not differ much from the properties offered by Atria's competitors, HKScan and Saarioinen.  The key idea of the brand concept is traceability, but both competitors' poultry products are traceable to the farm as well.  Therefore Atria’s new brand does not bring anything new to the consumer.  Atria is excellent in production and logistics, its advertising is always bold, but I’m not that sure about its ability to innovate.

Surprisingly the release appeared to raise enormous interest to the whole Atria Plc.

Let’s now return for a while to the 2011 Annual Report, where Juha Gröhn, CEO Atria Plc listed the key means, by which Atria then planned to improve its profitability in 2012.  One of them was precisely this family farm chicken.  The others were Lönneberga in Sweden, Max&Moorits in The Baltics and Campomos as well as Sibylla in Russia.  The success of Lönneberga has also been reported thoroughly but Atria has not given any info about the success of Campomos’ new products.  One may wonder the reasons for that.

But now, inspired by the release let’s talk a little about Finnish poultry production. With certainty it will be even more important part of Atria Finland's business in the near future.

Poultry business in Finland is growing

One that changed the poultry business is the 2010 EU directive, which prohibits marketing of frozen poultry meat as fresh after defrosting. It has, after the initial hassle, of course improved the position of domestic processors.  However, at the same time, it has forced them in a very precise and controlled production control.

Demand for chicken meat has also increased, so it is no wonder that Atria Finland is actively developing its own poultry production.  In the autumn of 2011, the company decided to expand its hatchery.  More importantly, one year ago, the company, or in fact Itikka co-operative together with poultry farmers, decided to build their own poultry feed plant alongside the existing feed plant, which therefore now expands its product range. Feeding is a major cost item but the construction of the plant is also, according to Atria’s press release, motivated by R&D, animal welfare and growth, as well as by supply chain transparency.  It is also interesting that the desire to preserve the feed production in domestic hands is expressed in the release.

Ethics fight

In a number of recent campaigns Atria has made ​​it clear, what it thinks about the ethics of foreign meat production and food security. It has loud and clear placed itself above the foreign meat production.  It has made it in a credible way, in fact.  There are reasons to believe that Finnish food, compared to most or even all other countries, is more ethical, more natural and cleaner.  The bad thing from Atria Finland's point of view is that it of course has to succeed in Finland.  It would be easy if the rest of the meat processors operated unethically but this is not the case. The ethics competition in Finland is rock-hard.

Poultry production is factory farming, which almost by definition nearly minimizes animal welfare. Then, Atria, just like other companies, tries to minimize animal suffering but only within the limits of efficiency requirements.  It comes at a cost.  Full organic production would be a real and appropriate but even more expensive alternative.

One may easily come into conclusion, that Finnish meat processing companies compete with each other also by trying to achieve, within the strict limits of effectiveness, breeding conditions that are natural at least to some extent, and due to this arms race, the companies themselves get sick.

Views

Now it is the right time to visit the farm.  In this figure is shown a Ross 508 chicken, a breed used also in Finland.  Quite a creature, I must say. Breeding time is very short, 32 to 39 days. Carcass weight is up to near 2 kg.  Animal density at the farm is about 40kg/square meter. You ever thought about a chicken harvester?  Here is one.  Comparable technology is used in Finland although this picture is certainly from elsewhere.  The driver's mask is fine, what else could I say. This picture from a Finnish farm is on the pages of Suomen Broileriyhdistys, a Finnish association, whose members include chicken farmers and meat processing companies.  Is it ammonia vapor or dust or is the picture taken from behind some plexiglass?

Food industry is very eager to criticize all the information that other bodies produce.  That's why it makes perfect sense to find out what Animalia, one of Finland’s best known animal protection organizations says on this matter. Quite a lot, it seems.  They have for instance these arguments:   Large chest muscles and rapid growth cause problems and pain in the feet and in the heart, large flocks prevent formation of the pecking order, no perches where to sleep safe from predators, no room to scratch the ground, some do not learn how to eat and starve to death. 

Looking at the pictures above, one may conclude that the arguments look very plausible.

Atria and its competitors, as well as the association informs on the better sides.  They too are many. Chickens are allowed to move freely on dry litter material, eat and drink freely throughout their lives.  Their feed is balanced and designed primarily with chickens’ health in mind. The rest period (continuous dark), per day is as much as 6-8 hours.  Transport distances are short. Salmonella does not exist at all. The use of antibiotics in Finland is very limited and occasional. However, to prevent intestinal parasitic diseases, the feed contains coccidiostats. This is of course permitted by the EU. 

Evidently, a lot is done to ensure relatively comfortable conditions for the chickens. Nevertheless, mortality is high.  About 4-5% of chickens die during the breeding, which is really short, less than 40 days. During transport dies another 0.5%. Furthermore at the slaughterhouse about 1.5% of the chickens is rejected.

Number of deaths can be reduced through different technologies but one crucial factor is feed. As already mentioned before, building of the poultry feed plant was motivated among other things by animal welfare.  It is not empty talk or some cheap attempt to please consumers. By using a bit of science and experimenting, it is possible to develop better feed, which will prevent the disadvantages resulting from the rapid growth, and at the same time, still achieve large chest muscles without extending the breeding time.  Own poultry feed plant is likely to bring Atria a strong competitive advantage in the Finnish market. And perhaps in the Finnish ethics race too.  The plant will start this year.

We will be back in Atria later but on Friday, February 1^st we try to evaluate HKScan’s Q4-2012.  Each snowflake is unique, they say.  So what?! Each pile of snow is unique, I say!  Summer please come soon.

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