ACFEH Paper 64
For discussion on
6 April 2006
This paper briefs members the Administration��s plan to develop a poultry slaughtering plant in Sheung Shui.
2. At the meeting held on 9 March 2006, members were informed that the Administration was actively exploring the development of a poultry slaughtering plant in Hong Kong to put together poultry slaughtering activities so as to achieve our policy objective of separating live poultry from humans as a means to prevent human infection of avian influenza.
3. Subsequent to the said meeting, we have identified a suitable site and come up with a broad development programme for the slaughtering plant project. The latest developments are set out in the ensuing paragraphs.
4. After conducting a site search, we have identified a site in Sheung Shui (a location plan is at Annex) suitable for development of the slaughtering plant. With an area of about 10,500 m2, the site is currently part of a works site occupied by the Kowloon Canton Railway Corporation for the development of the Spur Line, but is due to be returned to the Government in the latter half of 2007, subject to there being no delay in the commissioning of the Spur Line. The subject location has the advantages of being close to the border and local poultry farms and of being well-served by an established transportation network. It is not in close proximity to major residential areas and is surrounded mostly by industrial buildings. The nearest residential area is over 200m from the plant. Basic infrastructure such as water and electricity supply and sewage network is readily available. In identifying the location for the plant, the Government has taken into account various relevant factors to avoid causing inconvenience or nuisance to the residents.
5. It is the Government��s intention to have the plant developed and operated by the private sector since poultry slaughtering business is essentially a commercial activity. We envisage that the plant will be developed by the private sector selected through open tender under a Build, Own, Operate and Transfer arrangement (BOOT). Under the BOOT model, the private operator selected would be responsible for designing, financing, building and operating the plant for ten years plus five-year optional extension. After that, the plant will be transferred to the Government at no cost and in good condition. The Government will then conduct a fresh tendering exercise for the operation of the plant. We will draw up the details regarding the commercial and operational arrangements for the plant later this year.
6. To cater for consumer needs, we expect that the slaughtering plant will operate throughout the year with a daily slaughtering capacity of 20,000 �V 40,000 live chickens and a maximum of 3,000 pigeons and other small sized poultry except water birds with the capacity for expansion to slaughter 60,000 live chickens. Lorries with crates of live chickens and other poultry will go to the slaughtering plant direct from across the border or local farms. The slaughtering process will start after midnight. Dressed poultry will undergo a chilling process and be individually packed and tagged before distribution to retail outlets by enclosed refrigerated vehicles.
7. We expect that most of the slaughtered chickens will be chilled, but it would be a matter for the operator to assess the technical feasibility and the market situation at that time to decide whether or not to provide freshly slaughtered chickens in addition to chilled chickens. To compete with imported chilled chickens and to enhance the financial viability of the plant, the plant operator will have to establish a market niche and a well-established brand name for the slaughtering plant products.
8. To provide opportunities for others to participate in the future poultry supply chain, the plant operator will be required to reserve sufficient capacity for the slaughter of chickens produced by local poultry farms. The plant operator will also be required to provide on request and at charge poultry slaughtering service for importers of poultry from the Mainland or buyers of local poultry. At the tendering exercise, bidders will be required to set out their proposed slaughtering fee to be charged to the importers and buyers. Favourable consideration will be given to bids with lower slaughtering fee. The importers or buyers may be former wholesalers or retailers who choose to re-engineer their business under the new operating environment. We will include provisions in the tender documentation to require the plant operator to treat all importers and buyers on an equal footing.
9. We note that the plant operator will have to shoulder considerable business risks arising from the disruption of supply of live chickens caused by avian influenza outbreaks. Also, the operator will have to face keen competition from the Mainland in the supply of chilled chickens. To enhance the financial viability of the project, we will charge the plant operator only a nominal rent of $1 per year for use of the identified Sheung Shui site. Besides, the lease offered to the plant operator will be extended by a period of time equivalent to the cessation period of plant operation as a result of outbreak of avian influenza during the lease period.
10. We have no pre-conceived ideas on the number of slaughtering plants that should be provided in the territory and consideration would be given to the development of a second slaughtering plant if there is sufficient market demand.
11. We will conduct an environmental impact assessment study on the project in accordance with the Environmental Impact Assessment Ordinance (Cap. 499). In parallel, we shall initiate a zoning amendment to the Fanling / Sheung Shui Outline Zoning Plan pursuant to the Town Planning Ordinance (Cap. 131). Legislative proposals will also be drawn up to put in place a licensing regime for the operation of the plant and to require poultry traders to deliver both local and imported live poultry to the slaughtering plant direct without passing through the existing wholesale poultry market.
12. After drawing up the broad development parameters, we shall invite expressions of interest (EOI) with a view to ascertaining the market interest in the project and gather views of prospective operators on the operational and commercial arrangements for the project for our reference in drawing up the tender documentation. Our target is to conduct the EOI exercise within 2006. A formal tender exercise will then be conducted to invite bids from the private sector. Given the considerable amount of preparatory work involved, we expect the earliest possible timing for the proposed slaughtering plant to come into operation would be 2009.
13. Upon the operation of the proposed poultry slaughtering plant, the sale of live poultry in retail outlets will be prohibited. This has been and will remain to be the primary purpose for developing poultry slaughtering plant to achieve our policy objective of minimising as far as practicable the contact between humans and live poultry in order to reduce the risk of human infection of avian influenza. Legislative amendments are necessary to effect the implementation of the ban. The timetable for the ban may be advanced in the event of any outbreak of avian influenza in the territory.
Impact on the Poultry Trade
14. While business opportunities will be available for existing traders under the new operating environment, there will inevitably be certain impact on the trade as follows �V
(a) Poultry farmers
Poultry farmers may continue to rear poultry and they may sell their poultry to the slaughtering plant or buyers. However, there is likely to be stiffer competition with Mainland chilled chickens and local farmers may need to make extra efforts to build up Hong Kong brand name.
Live poultry will be brought to the slaughtering plant direct without any need to pass through Cheung Sha Wan Temporary Wholesale Poultry Market. Live poultry wholesalers may switch to operate as buyers for poultry from local farms or importers for sourcing chickens from Mainland farms for retailers/restaurants and co-ordinate transportation arrangements, etc.
Other than transporting live chickens, transporters may opt to change their business to transporting chilled chickens, frozen chickens or other goods.
Live poultry retailers may switch to sell chilled and/or frozen poultry. The Food and Environmental Hygiene Department will consider applications for endorsement to sell chilled and/or frozen poultry.
Some of the poultry trade workers will remain in job should their employers choose to re-structure their business under the new operating environment. For those who become unemployed, the Labour Department will accord priority to assisting them in finding alternative employment.
15. The preparatory work for the proposed poultry slaughtering plant project as outlined in paragraphs 11 and 12 above aside, we shall consult the North District Council and the LegCo Panel on Food Safety and Environmental Hygiene on the project on 6 and 11 April 2006 respectively. We shall also liaise with the live poultry trade and address their concerns as appropriate.
16. Members are invited to express their views on the proposed development of a poultry slaughtering plant at Sheung Shui and the broad development programme for the project.