Free range egg farmers battle rising feed costs after hot, dry summer
PUBLISHED: 14:21 16 August 2018 | UPDATED: 14:22 16 August 2018
Free range egg producers are battling spiralling feed costs after the dry, hot summer – but urgent industry calls for higher egg prices have not been universally supported by farmers in East Anglia.
The heatwave has caused poor wheat yields, forcing up grain prices with a knock-on effect for the cost of chicken feed, with some producers paying as much as £270 per tonne.
Robert Gooch, chief executive of the British Free Range Egg Producers Association (BFREPA), said the situation is “unsustainable” and called for an egg price rise to help farmers ride out the “huge levels of volatility caused by this hot, dry weather”.
But Alaistaire Brice, of Havensfield Happy Hens at Hoxne, near Diss, said high feed prices were affecting the whole of the livestock sector, and it was unrealistic to ask for egg prices to be raised.
Instead, he said BFREPA should focus on addressing the factors which have created a national over-supply of eggs, and challenge the introduction of feed tracker contracts – aimed at insuring producers against volatility by linking the egg prices to the cost of feed – which he said do not work.
He said: “I am not saying we are hard done by, because this is also affecting every other livestock sector. We are all feeding expensive cereals, and the price of our end product is not going up. But we all go into farming knowing that the prices fluctuate and at some point you will be put under pressure.
“The biggest problem is the over-supply of eggs and the unprecedented period of hot weather which has caused a massive loss of egg weight. If a chicken is hot, it does not eat and so the eggs will be smaller, so we have got a massive glut of medium and small eggs which are a real struggle to move.
“At the end of the day when something is in oversupply you cannot expect people to pay more. Rather than asking for more money, I think we need to ascertain what the public wants.
“The over-supply is being caused by the messages we are being given by the supermarkets, which are given to them by consumers. We have reacted to the supermarkets’ commitment not to sell colony caged eggs by 2025 but, if we lose those and barn eggs do not replace them, then free range becomes the normal. Despite the added costs associated with it, the premium will be gone.
“The barn egg has not really found its place in the market because no-one really knows what it is, but everyone knows what free-range means. Farmers have jumped on it and we have increased the number of free-range units – but we have gone too quickly while there are still colony caged eggs being produced, so the number of birds laying eggs is at record numbers.
“There are so many issues. We have got discounting superstores that sell more pre-packed eggs that any other retailer with very little margin, and that has put pressure on other supermarkets, who have put pressure on their packers and producers and eroded their margin at a time when the feed prices are at a record high – and we are an industry where 60-70pc of our costs are related to feed. It is like a perfect storm.”
FEED TRACKER CONTRACTS
BFREPA said retailers could help the situation by offering contracts which link the price of eggs to the cost of feed.
“Some retailers and their packers should be applauded for successfully implementing these contracts but it needs to be offered across the board like it is in the broiler and pig sectors,” said Mr Gooch.
But Mr Brice disagreed. He said: “More and more people are being pushed into feed trackers, which have not worked. If you put everyone on feed trackers you take away the market forces that agriculture relies on.
“A lot of the bigger packers have tied producers in with feed trackers which have sewn them up for five years, but I have not heard of any producer that has had an increase in their price because of their feed tracker.”
Mr Brice said the increased feed prices would cost an extra £3 to £3.50 per bird on average – which would require an increase of 14p per dozen of eggs to cover the cost.
He added: “The problem is not now, but when producers need to replace their flocks next time round after losing they will then be required to finance new birds, which will also cost more due costs in rear going up. On average a 16,000-bird unit costs £67,000 to repopulate – where is this money coming from if the previous flock has made significant losses?”