EXPANSION of the free-range egg flock will further drive down producer prices, a sector leader has warned.
Robert Gooch, British Free Range Egg Producers Association (Bfrepa) chief executive, made the remarks at the launch of a new report examining retailers cage-free commitments.
The association has also launched a costings portal, allowing producers to benchmark their egg price against other farmers’.
Free-range egg production has increased by 14% in the past three years, with the UK flock now standing at 25 million hens, according to new research.
Consultants at ADAS were asked by Bfrepa to explore how changes to retailers’ sourcing policies might affect the sector.
By 2025 close to 90% of retailers will not be offering eggs from enriched colony cages on their shelves.
Supermarkets such as Sainsbury’s, Waitrose and Morrison’s with a combined market share of 36% have already stopped selling colony eggs.
Other retailers like Tesco, Aldi, Asda and Iceland have said they will stop selling colony egg by 2025. They have a combined market share of 51%, according to the report’s lead author Jason Gittins.
He was updating a previous piece of work commissioned by Bfrepa to examine how cage-free commitments could affect the market.
Based on assessments of the likely uptake of barn, and natural increases in population and potential egg consumption, Mr Gittins predicted that there would be a 300,000-case shortfall for free-range eggs in 2025, based on current production.
That translates to about 400,000 additional birds, or a 2% increase, he said.
Bfrepa chief executive Robert Gooch said the report demonstrated that expansion in recent years had been “unsustainable”.
“There is an incorrect assumption from many in the sector that retailers moving away from colony eggs will lead to a surge in demand for free-range. That is simply not the case, and this report confirms that.
“We have been warning for many years that rapid expansion will create a situation of oversupply, all the while the price paid to farmers has diminished and is now 20% lower than it was five years ago.
“The trend is clear; as production has increased, the price paid to farmers has decreased. This situation is unnecessary and unsustainable.”
Mr Gooch was speaking at a virtual seminar and also launched a costings portal that members can use to benchmark their egg price against others.
“Our data from ADAS shows a break-even price of £1.01 per dozen, but our members are submitting prices through our portal which show that they are being paid significantly less than that – about 88p per dozen on average,” Robert said.
“There is a huge range of producer prices in the market, ranging from below the cost of production to good prices to tempt new entrants into the sector.
“Given this variability, this portal provides the sector with some transparency about what is happening in the supply chain, particularly for retailers who will be able to see if the cost of production price increases given to packers are being passed down to contracted producers.”
The full webinar can be accessed here.