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Watchdog examines complaint over poultry contract

The Competition and Consumer Protection Commission (CCPC) has received a complaint that a contract between a poultry farmers’ co-op and the Manor Farm chicken-processing company breaches competition law.

Last month The Sunday Times revealed that Revenue had concerns that the arrangement between the Sicín co-op in Co Monaghan and Manor Farm might be manipulating the VAT system.

Under the arrangement, the farmers rear chicks sourced from Manor Farm while their co-op buys the feed from the same company. Revenue said the system raised concerns that the price of the feed could be artificially inflated to increase the amount of VAT that could be reclaimed.

This newspaper has seen the contract between the co-op and Manor Farm. The contract says the Sicín co-op, which has more than 60 members and recorded turnover of €75m last year, expects to produce 24m chickens a year.

The document notes that the farmers are engaging in a “very restrictive contract” with Manor Farm, but says this is the “norm” in the poultry sector in Ireland.

The contract stipulates that all chicken produced by the co-op be sold to the Carton brothers, owners of Manor Farm. It also says that all the day-old chicks raised by the farmers must be bought from the Carton brothers and that the feed used to fatten the chicks be purchased from them.

“This is very restrictive but it is the only way that the co-op and processor can ensure traceability of the final product and fulfil their obligations under the food safety regulations and Bord Bia quality-assurance scheme,” the contract states.

The CCPC said it had received a complaint in relation to alleged anticompetitive behaviour in the poultry sector, and that this was receiving preliminary attention.

“By their nature, competition complaints are complex and require in-depth analysis, and so, before a decision is made on whether to open an investigation, each complaint is examined through a rigorous screening process,” the CCPC said. “If a complaint can be found to be substantiated, the CCPC may then open an investigation.”

The Sicín co-op did not respond to requests for comment.

Manor Farm said it was confident that its arrangement with the co-op was not in breach of Irish or European competition law. “This is the model most of the chicken industry worldwide operates to,” it said.

The Sunday Times asked why farmers were not permitted to buy feed from a different Bord Bia-approved supplier.

“Our feed is integral to the quality chicken we sell,” said Manor Farm. “When customers and consumers buy from us, they know that we are responsible for the whole supply chain, including the feed.

“If you think of all the major food scares in meat, the root problem was the feed. Manor Farm’s major selling point is that it produces its feed, so that when a supermarket puts its own-label brand on our chicken, there is confidence that no corners have been cut.

“In the past, when farmers sourced the feed themselves, there were problems.”

Source: - 9 October 2016