The soaring cost of feed and plunging farmgate prices have left many free-range egg producers “desperate” for price increases and on the brink of collapse.
This summer’s drought meant producers were facing feed costs between 30% and 50% higher than last August, said British Free Range Egg Producers Association CEO Robert Gooch. Feed bills for the lifetime of an average flock of 16,000 birds were now up to £40,000 higher than at the start of the year.
The parlous financial position many producers were experiencing had been exacerbated by a dip in demand due to the recent hot weather and an increase in egg production, with total year on year egg throughput up 2.3% during the second quarter [Defra].
However, retail prices had barely shifted in three years, while average farmgate prices were now almost 20% down on 2015 levels at 69.8p per dozen, said Gooch, who called for an immediate price increase and for supermarkets to introduce feed tracker contracts, which link the price of feed with the farmgate price for eggs.
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It comes as Somerset free-range producer and packer Blackdown Hills fell into administration this week, with the loss of 18 jobs.
Gooch warned more businesses could follow Blackdown Hills without action from retailers, adding just 30% of BFREPA’s membership was currently on feed tracker contracts. “Free range egg producers have been exposed to huge levels of volatility caused by this hot, dry weather,” he said.
“Retailers must ensure producers have the option of a contract where the price of feed is reflected in the price they receive. When the feed price drops, so does the price they pay for eggs, and vice-versa.”
Some retailers and their packers should be applauded for successfully implementing these contracts, Gooch suggested, singling out Tesco for stipulating any changes in feed price were reflected in the price paid to producers.
“But it needs to be offered across the board like it is in the broiler and pig sectors,” he warned, with some other retailers either not offering a contract or allowing egg packers to pocket any benefit from a change in farmgate prices.
“Every time the price of feed rises, the small margin producers make is eroded and it doesn’t take much to turn profit into loss.”
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