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Egg farm profitability reaches new low

graphic for egg market

Another dismal month for egg producers has seen profitability dive to a new low, and an equally dismal quarter has seen UK egg output fall back to where it was four years ago. 

Since the start of the year, the squeeze on producers has intensified, as feed prices have risen sharply, while producer prices have even slipped back. 

Poultry.Network’s Basic Layers Ration has gained almost £100/tonne since December. 

Although free-range producer prices are at a relatively high level when viewed over the last six years, according to Defra, they have declined through two successive quarters at a time when feed costs have risen. 

This has driven down profitability, measured as the ratio of producer price to feed costs, to the lowest level yet recorded in our survey (see chart). It now stands at 0.24, when until this year had never dropped below 0.3.

In response, producers are depleting flocks early and delaying restocking so that output is now shrinking.

Latest quarterly figures from Defra show that output of both colony eggs and free range fell back during the January-March quarter. 

Colony production was down by 11,000 cases a week on the previous quarter, to 186,000, as part of its inevitable long-term decline, and by 44,000 cases/week on the same quarter of last year.

In the case of free range, the figures are more complex because of substantial numbers of free-range being reclassified as barn in the first quarter due to avian influenza marketing regulations. 

Barn output more than trebled in January-March compared with the previous quarter, from 13,400 cases a week to 45,800.

If free-range and barn are combined, output from these sectors was up 4,000 cases/wk on the previous quarter, to 380,000. 

However, compared with the all-time peak in July-Sept last year, these combined sectors are now already down by 17,000 cases a week overall. 

The result, with organic added in, is a drop in total UK egg output of 22,000 cases a week since last summer, to 588,000 a week. 

This decline looks set to continue with the continuing cutbacks in pullet chick placings.

These indicate a steady fall in the laying flock throughout the coming summer, amounting to 1.8m fewer birds between April and August.