James Heaton, Senior Director – Agriculture and Landed Estates at Virgin Money, says strong demand from egg packers and attractive contract opportunities are encouraging more farmers to look closely at the sector.

 

"Free-range poultry is certainly one of the sectors where we are currently seeing the greatest level of investment interest. Strong demand from egg packers has created attractive opportunities for producers, with many contracts now offering guaranteed margins and egg prices linked to feed and other key input costs."

 

While the outlook for the sector is positive, James says establishing a free-range poultry enterprise requires careful planning, realistic budgeting and detailed financial forecasting.

 

"A modern 32,000-bird free-range unit can cost upwards of £2 million, making it a significant capital investment. That's why discussions with lenders should begin as early as possible to ensure the right funding is in place when construction is ready to begin.

 

"We would typically want to see detailed quotations for the key elements of the project, planning consent, building warrants where required, projected cashflows covering the first two or three flocks and evidence that the business has both the technical expertise and management capacity to operate the enterprise successfully."

 

He believes one of the first questions prospective producers should ask themselves is whether they have both the skills and the time needed to run what is considered a highly demanding and specialist business.

 

"Success in free-range poultry relies on consistently achieving high levels of technical performance. Farmers need to be realistic about the time commitment involved and, in some cases, that may mean changing how other parts of the business operate. For example, some businesses choose to use contractors for arable work so they can devote sufficient time to managing the poultry enterprise."

 

Planning permission also remains one of the biggest hurdles when establishing a new poultry unit, with environmental considerations becoming increasingly important.

 

"Planning applications can take time and the associated costs shouldn't be underestimated, so working with experienced advisers who understand the planning process can significantly improve the chances of success.

 

"In Scotland, planners and SEPA are paying increasing attention to ammonia emissions, meaning producers should expect to consider mitigation measures such as improved shed design and ammonia scrubbers as part of the planning process."

 

James has also seen many new poultry developments incorporate renewable energy technologies to improve efficiency and reduce long-term operating costs.

 

"Free-range poultry units lend themselves particularly well to renewable energy solutions such as solar panels and wind generation, with many of our customers also incorporating battery storage to minimise their reliance on electricity from the grid.

 

"These technologies increase the overall cost of a project, so it's important they are included within the funding request from the outset where appropriate. As a lender, I would always rather understand the full funding requirement at the beginning so everything, including the appropriate security arrangements, can be put in place from day one. That can save both time and money and help ensure the build progresses as smoothly as possible."

 

Having supported a number of free-range poultry businesses over the past two decades, James believes the long-term success of the sector depends not only on careful planning but also on strong relationships between farmers and their advisers.

 

"I've been fortunate to support several businesses in establishing free-range hen enterprises over the past two decades and it's been rewarding to see those businesses continue to grow and develop.

 

"Whilst returns are very strong at present, agriculture is cyclical and there will inevitably be periods when returns come under pressure. For farmers considering investing in free-range poultry, the key is to ensure projects are carefully planned, fully costed and financially robust from the outset.

 

"Building strong relationships with customers is a key part of that process. By working together from the earliest stages, we can provide the advice and support needed to help give every investment the best possible chance of long-term success."