A supermarket price war on free-range eggs is threatening to “devastate” the sector, with producers now facing unsustainable margin losses, an industry group has warned.
The average retail price of free-range eggs in the mults has fallen by 43% since 2012, according to data from the British Free Range Egg Producers Association, and producers made average margin losses of 9.02% per dozen eggs produced last month - the sector’s worst margin performance since 2011.
In the past year alone, the average price of six medium free-range eggs in the big four and Waitrose has dropped 10p, from £1.55 to £1.45 [BrandView.com]. Meanwhile, packs of 12 large eggs are down 6%, from £2.51 to £2.35, with Asda selling 12 free-range own-label eggs at £1.95, down from £2.25 a year ago, while Sainsbury’s eggs are down from £2.40 to £2.25.
With losses per dozen set to escalate in the coming months despite a general upsurge in egg consumption, the plight of free-range producers could soon rival the recent difficulties experienced by the dairy sector, warned BFREPA CEO Robert Gooch.
“I’m pleased that the milk price war has come to an end, but this war has now moved to free-range eggs,” he said.
Egg producers were being asked to contribute to a raft of promotions, which had contributed to the fall in average retail prices, he added. “This kind of pricing policy is unsustainable, with some retailers marketing free-range eggs at well below the cost of production.
“An increase in production costs and a fall in wholesale prices - with UK shell egg prices down 18.1% year on year in June due to abundant global supplies [Mintec] - had put further pressure on producers, many of whom were now considering their futures, Gooch said. “Some retailers have already taken steps towards offering cost of production-linked contracts and we think this could offer greater security.”
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