A PESTLE Analysis Of The Turkey Industry
Introduction
A PESTLE analysis is important for any business. It can influence marketing and relationships that a company has worked hard to develop. Knowing ahead of time that a change may be occurring will help in making better business decisions. We will be using the PESTLE analysis for analysing the Turkey Industry. We decided to use the turkey industry as one of the members of the team is involved and familiar with the industry.
Political
The turkey industry faces a large quantity of political barriers when entering new countries. Any sector within the turkey industry must ensure that they can overcome and comply with the barriers put before them. Communist countries aren't suitable for companies that wish to establish manufacturing facilities there. Immediately after building their plant, they would lose control of it to the communist party who are in power. Similarly countries that have political unrest or that are run by a dictator are unsuitable for companies within the turkey industry. In 2016 there was a failed military coup in Turkey. This was extremely worrying and a danger to any companies within the country. An unrest like this could have been extremely damaging or even cause bankruptcy to any turkey processing facilities or distributors. This is why they must conduct a thorough analysis of the country before entering. In Ireland there is an annual budget, where the government announce new tax rates and new taxes. This takes place in October and can be an extremely worrying time for any company or industry. Because the turkey industry is so large and it uses resources from across all sectors, government budgets can have a large influence on its profitability and efficiency.
There is increased pressure on the government from lobbying parties who wish to see a larger carbon tax brought into place. This would affect transport, manufacturing and processing costs. Brexit is a political force that has every industry worried, particularly those in ireland who would import and export products to and from the United Kingdom. Tariffs could be put in place if a deal is not reached with the EU and Ireland could even see a hard border put in place between the North and South. This would have massive implications on the turkey industry because of live exports. All livestock would be monitored and documented more strictly.
Economical
The economy has a huge influence on the turkey industry, inflation in particular can cause unrest with employees if wages do not meet the rate of inflation. As the cost of living increases, so does the demand for higher wages. This could cause huge financial strain on a company, especially if profit margins are low. Turkey farmers, processors and distributors can have issues with cash flow. Large companies such as Musgraves and Tescos who purchase processed turkeys for the retail market have been known to be slow to pay for the goods. They wait 60 days before paying the processor, this has implications for the farmer, as their payment is delayed as a direct result. The farmers face high costs due to the need for gas, feed,bedding and labour. The purchasers delay the payment because they can earn interest on the sale of the goods if they hold the money for a period of time. In recent years, disposable income was scarce, this had a direct affect on the turkey industry and in particular organic and free range products as they demanded a higher price. There is a significant change now as more disposable income is available. This means consumers are willing to pay for quality and are turning their backs to commercially grown chicken. Consumers are far more aware of the importance of free range and quality products as before they may have had no choice due to budgeting and managing their money more strictly due to the economic downturn.
Social
There are many social factors associated with the turkey industry. Turkey meat is becoming steadily more popular with sports athletes because it is a low fat meat. People are turning to turkey meat as a source of protein that is seen as better for the consumer compared to chicken or beef. Bord bia promote Irish turkeys encourage consumers to buy Irish reared turkeys through their marketing campaigns. Irish turkeys are seen to be of superior quality because of the quality of feed used to rear them and free range turkeys are seen to be of exceptional quality because they have the freedom to roam around outside. Free range turkeys command a higher price but many people are willing to pay this when they know the birds have access to the outdoors and the meat is more flavoursome. As the economy has improved, People have more disposable income so they are more inclined to buy better quality meats such as free range turkeys. In the past, turkeys have been seen as a seasonal product only eaten around christmas. However, it is commonly available in restaurants and available to buy all year round now. Vegans and vegetarians can be seen as a major threat to the turkey industry. They obviously do not buy the product and they are regularly seen to be attempting to force their beliefs on the general public to get more support. In recent times, they have ramped up their advertising campaign through the use of billboards on the sides of roads. They do not agree with farming animals and are attempting to cause a lot of negatively around the meat and dairy industries. This may reduce demand for turkeys as some will switch to using meat free alternatives. Animal rights activists have made an impact in the turkey industry as they have pushed regulation in the industry. There is regulation on how many birds can be kept per square metre in the sheds and also in the killing process with the aim of making it more humane. Population growth means that there is good potential for the turkey industry to thrive and many new products are being made using turkeys. It is now possible to buy sausages and rashers made using turkey meat. These products would never have been closely associated with turkeys in the past.
Technological
Technology has completely transformed the turkey industry in a lot of ways. Years ago, most turkeys were reared in mixed farms and were seen as an additional source of income over the christmas period. They were kept in sheds that were not purpose built. Nowadays, Turkeys are mostly housed in purpose built houses that have gas heating so the turkeys are constantly kept at the correct temperature for optimum growth. The heating is controlled by timers and most new houses have windows to let in daylight. The feeding and water is controlled accurately and monitored. The process of moving turkeys has changed immensely. A lot of manual work was done long ago to move them and then this was done using a forklift and large crates. There is now an even larger machine than can pick up a large module of turkeys and tip them out into the shed. This reduces the amount of people needed to move in the turkeys and it saves a lot of time. A lot of changes have been made in the factories also. Long ago, turkeys were killed by cracking their necks, the factories then started killing them by electrocution using a bath of water that had a charge in it. The factories have now progressed to using gas to kill the turkeys so as to reduce the amount of bacteria present on the meat after killing. The distribution channel has remained largely unchanged for a number of years. The supermarkets dominate the sale of turkeys and are gradually pushing out the butchers who used to sell turkeys in the past. Some small scale organic producers sell turkeys directly through farm shops. The internet is used to a good degree to promote Irish turkeys through bord bia carrying out many advertising campaigns on social media. However, vegans and vegetarians can also use the internet and social media to voice their opinions on the industry which can potentially be very damaging.
Environmental
Poult turkeys have to be reared in a controlled environment. As day olds, they require a temperature of 35˚C being reduced to 20˚C by the age of 5 weeks. Weather has a big factor in controlling the environment of the poultry house. In warm weather, a lot of ventilation is needed in keeping the air circulated. In cold weather, extra heat has to be supplied via gas brooders. Humidity has to be controlled. High humidity causes the floors to get damp which in turn affects the turkey’s legs. This results in more clean bedding being applied. The above factors add a substantial cost to the company. Both producer and processor have to insure backup generators are in installed in time of electricity outage due to weather. Transportation of birds by the company should not be done in times of extreme weather as stress would be caused to the birds. Litter from the poultry industry should be disposed in a correct manner in accordance with the Department of Agriculture’s guidelines. Dead birds must also be disposed of under the Department’s guidelines.
This means that they must be collect by a designated company that has a licence to collect dead poultry. Also, the processing plant must also get rid of waste offal through a similar company. The producer also has to get water samples tested annually. This is to ensure that the birds are consuming bacterial-free water. The most significant environmental issue resulting from slaughterhouse operations is the discharge of wastewater into the environment. Like any other food-processing activities, the necessity for hygiene and quality control in meat processing results in high water usage and consequently high levels of wastewater, having high biochemical and chemical oxygen demand due to the presence of organic materials such as blood, fat, flesh, etc. This in turn may lead to reduced levels of activity or even death of aquatic life. Residues of chemicals such as chlorine, used for washing and disinfection, as well as various pathogens including Salmonella and Campylobacter may also present in the water. The processor must ensure that this water is treated before being discharged into the environment.
Legal
The Bord Bia Poultry Products Quality Assurance Scheme involves the poultry processor working in partnership with the farmer to ensure best practice in the poultry/turkey industry. Requirements for this include best practice in turkey production at farm level. The farmer must have a mechanism for recording and monitoring the growth and welfare of the turkeys whilst striving to achieve continual improvements in production standards. The health and welfare of a turkey flock depends on the implementation of good management and the provision of suitable housing and environment. It is the obligation and duty of the farmer to ensure that the health and welfare is maintained at all times. Producers are obliged to be aware of the need to carry out humane slaughter on ill or injured birds. Disposal of the birds must be carried out under the Department of Agricultural rules.
Department of Agricultural rules have also to be adhered to when transporting the birds from the farm to the processing plant. The processor has to abide by strict rules in processing the meat and getting it ready for sale. This is to ensure the safety of the consumer. All turkeys leaving the farm after being reared out of heat at 5 weeks of age must be issued with a passport licence by the Department of Agriculture if they are leaving the Republic of Ireland. This is obtained by a veterinary surgeon visiting the site prior to their departure. This is done for the traceability of any diseases that may show up. 2017 records show that there were 4 million turkeys produced in Ireland. It represents a small share of the poultry market as 70 million chickens were produced.
