Egg producers are facing their worst financial crisis for up to 30 years as retailers hold farmgate prices well below the cost of production, farmers and industry experts have warned.
Egg buyers from the 10 largest retailers came in for heavy criticism after they refused to face angry farmers at yesterday's Pig and Poultry Fair. Independent costing data from Adas, an independent agricultural and environmental consultancy, revealed that producers are typically losing 23.8p per dozen eggs before finance and 41.2p per dozen with finance costs included.
In the past year, costs have increased by an average 28.3% as the price of feed, energy, labour and birds has rocketed. Robert Gooch, chief executive of the British Free Range Egg Producers Association (Bfrepa), told an emergency “breaking point” summit that the current average farmgate price was lower than farmers were paid seven years ago.
He said it was shaping up to be the worst crisis producers had faced since Edwina Currie, then a junior health minister, brought the industry to its knees in the 1980s over claims that the national flock was infested with salmonella.
Sainsburys, Asda, Aldi and Marks & Spencer had not responded to Bfrepa correspondence sent since the middle of February, Mr Gooch said, while Lidl and Waitrose had responded to letters but did not engage in “constructive dialogue”.
Tesco and Morrisons called for private meetings, and do offer contracts that track the cost of feed, although one of Tesco’s national packers had used it for their production but chosen not to pass the help on to farmers, behaviour which Mr Gooch described as “criminal”. He said: “There is going to be a shortage. The question is whether it will be at Christmas or halfway through next year.”
More than 70% of respondents to a recent survey by Bfrepa said they would leave egg production within a year if a price rise was not forthcoming. The egg sector has so far failed to replicate the success of the dairy industry in compelling retailers to pass on to the consumer some of the inflation-linked increases in cost of production. This was partly because of egg producers’ “medieval” supply contracts, said Mr Gooch, which compelled farmers to rely too much on the goodwill of packers to pay them a reasonable price.
He called on Defra to conduct a review of the supply chain, similar to those seen in other farm sectors, and for more of the egg industry to switch to a dairy-style aligned contract model which tracked costs.
Egg producer/packer Elwyn Griffiths, of Oaklands Farm Eggs in Shrewsbury, warned that eggs were already becoming scarce on the London wholesale market.
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