The firm which supplies 30% of all UK chicken knew early on that Stormont’s RHI scheme was open to abuse because it was ultra-lucrative and entirely uncapped, the public inquiry into the cash for ash scandal has been told.
In an email revealed at the inquiry into the scheme yesterday, David Mark, pictured, a senior manager in Moy Park, privately told colleagues that the scheme was so financially attractive that there was “more money in burning pellets than raising chicken”.
The firm – Northern Ireland’s biggest private sector employer which controls 95% of the local poultry processing market – produced an analysis of the scheme in 2013, just after it had launched, saying that the cost of the boiler could be paid back in three years, but scheme payments of about £10,000 a year would continue for another 17 years.
The company was telling its farmers RHI had a “great payback” and was saying at the time: “Moy Park actively encourage growers to look at this opportunity but do not offer further additional financial assistance as the RHI gives a very positive payback in its own right.”
However, the company in fact came to understand that the taxpayer subsidy was far more generous than even that analysis suggested.
Moy Park had in that time a company strategy to rapidly grow its business from 4 million birds a week to six million birds a week between 2010 and 2018 and RHI helped faciliate that expansion for a firm which supplies chicken on the shelves of Marks & Spencer, Tesco, Sainsburys and Waitrose.
Yesterday it also emerged Arlene Foster’s long-standing special adviser, Andrew Crawford, privately gave Moy Park several weeks advance notice that the scheme was to close, allowing it to get more boilers installed, something which added to the taxpayer burden.
Evidence from one of Moy Park’s award-winning farmers last week suggested that the scheme was in effect an indirect taxpayer subsidy which allowed the £1 billion US-owned company to lower the proportion which it had to pay for heating poultry sheds.
Two senior Moy Park figures yesterday denied that the scheme was a significant financial benefit to the company and said that it was just part of a suite of improvements – from breeding birds which fattened more efficiently to improved feed – which enabled it to rapidly expand after 2010.
Mr Mark said that the company had always stressed the need for “responsible use of heat” and that it was not in the interests of Moy Park for the scheme to be abused. Under questioning, he said that “right from the start” the company was aware that RHI was open to abuse, due to not having tiering of tariffs, a cap on usage or any other constraint.
In an email to a colleague in September 2016, Mr Mark said: “No rules just reasonableness - the pub talk - ‘I leave the doors open heating on when houses empty ramp up my RHI’ doesn’t help and I have heard it from past committee members!”.
Mr Mark told the inquiry: “This was one conversation with a grower [farmer] in his own farm yard in April 2014. I know this grower well and the context in which he told it clearly indicated to me that it was not to be taken literally but was appointing to the inherent weakness of this aspect of the scheme.”
When asked what he did with that information, he said “I took no further action, but I noted his concerns re the unintended consequences of the scheme.”
The inquiry heard that Moy Park at one point – where it was consulting its PR advisers the month before the December 2016 BBC Spotlight programme – calculated that its farmers were in line to receive about half a billion pounds from RHI over its lifetime.
The company, owned by US multinational Pilgrim’s Pride, is linked to 40% of the total boilers on the Northern Ireland non-domestic RHI scheme.
Moy Park had encouraged its farmers to install indirect hot water heating systems – which improved bird welfare and, crucially, performance, allowing the company to make use of more parts of each carcass and reducing the amount of feed required for each bird.
Barrister Donal Lunny put it to Mr Mark that while Moy Park’s official position was that it did not recommend what boiler to use as part of such a system, “the reality was, you were very clearly and strongly emphasising the benefits of a biomass boiler – isn’t that fair?” Mr Mark said: “Yeah. We were very strongly telling them ‘here is a scheme that will work well for you as a grower’.”
Mr Lunny highlighted that in Moy Park presentations to its farmers there were slides driving home the attractiveness of RHI, but none highlighting the benefits of oil or gas boilers.
Mr Mark said: “Yes, we saw this as a very good, bona fide government-backed scheme that they were encouraging us to partake of and we were telling our farmers about it.”
An email from a green energy company to Moy Park in 2011 in the period where Stormont was designing the scheme told the company that at that point it thought RHI would bring in about £40,000 a year for an example farm, something it said “would make biomass heating for poultry a no-brainer”.
Mr Mark said he had never seen the email before the inquiry but that he had heard a lot of people saying “this is a really good scheme”.
The inquiry obtained a Moy Park slide presentation to farmers in which it described the “perfect chicken house”.
The image included a poultry house, several renewable energy sources and a bag with “swag” written on it. When asked what that was meant to convey, Mr Mark – who did not design the presentation but was present when it was given – said: “I can only see it as a cartoon... I suppose it’s talking about renewable energy being available to farmers and farmers benefiting from being able to make the investment.”
In July 2015, he was in contact with Ulster Bank about an application for a loan from a farmer who already had some boilers. The bank told Mr Mark that the farmer was getting “a great return from biomass – much more than the £10k RHI per annum originally assumed. Do we still stick to the £10k or have Moy Park increased in light of what is actually being generated?”
Internal Moy Park emails show that the company knew that banks were happier to lend to poultry farmers for new sheds – crucial to Moy Park’s expansion – if they included an RHI boiler, even though that was a bigger sum, because the risk to the bank was reduced by having the guaranteed security of RHI income for 20 years.
In a July 2014 observation to colleagues about the lucrative nature of RHI, he said: “You can see why banks are now keen to lend the £620k + £60k = £680k over the £620k. It’s a lower risk!!!” Mr Mark told the inquiry the payback period for the shed would be about 10 years, but for the boiler would be two or three years, adding: “We could never match that with our chicken production; that was a fact.”
Mr Mark also said in his email to colleagues that there was “more money in burning pellets than raising chicken!”
He told the inquiry that the context for that remark was that there was a better return on RHI than on poultry farming.