ANDERSONS has said that free-range egg producers could experience “a few golden years”, but that prospects for the poultrymeat sector are not as positive.
The farm business consultant made the predictions in its annual outlook report. The firm’s Lily Hiscock and Ed Calcott compiled the poultry section.
See also: Wholesale free-range egg prices hit 30-month high
For the egg sector, Andersons calculates that there may need to be another four million free-range birds placed to meet demand once retailers stop selling colony egg.
This is more than 250 extra 16,000 bird free-range egg units.
To achieve this by 1 January 2025, would require more than one new unit to come online every single week between now and then, they say.
“With Planning Permission for new sites remaining challenging and Avian Influenza (AI) discouraging single site growth, this target looks nigh-on impossible.
“In the short term, this is likely to result in strong demand for existing producers and prices will reflect this.”
Brexit “will only exacerbate” a tight market, the report suggests, with reduced import opportunities for liquid egg.
“Perhaps a few golden years that free-range producers should look to capitalise on, ready for more difficult times to come.”
As retailers end colony egg sales, Andersons warns that free-range is likely to be devalued. “In our opinion, barn will see some growth, perhaps up to 10% of the market by 2025 but in most cases, free-range may become the ‘commodity’ egg offering.
“The concern is that commodities tend to decline in value over time, and this downward pressure will almost certainly be passed down to producers to erode their margins.”
Top tips for free-range egg producers in 2021
- Obtain contracts with stable pricing across the board (XL to Seconds), rather than going for the highest paying packer today
- Develop a good relationship with your packer and meet their requirements, i.e. work together to develop ‘new’ eggs and timing peak lay to meet demands
- Focus on efficiency and high quality – fast turnaround times, reduced antibiotic usage, clean eggs with minimal seconds.
2020 has been a ‘testing year’ for the broiler sector, according to Andersons.
“Covid-19 has had an impact right through the poultry supply chain; from difficulties in securing wood shavings for bedding; acquiring PPE/dusk masks for farm staff; and the unfortunate closure of some processing factories due to clustered outbreaks of the virus.”
It says that farmers should consider insurance cover in place in the event that a factory is closed and there are no alternatives for birds.
Labour remains an issue across the sector, with seasonal producers particularly affected.
The outlook for poultrymeat touches on chlorinated chicken from the US.
It suggests that, given the commitment by several retailers not to sell chicken produced to a lower standard than in the UK, US producers flooding the market with poultrymeat is unlikely.
The full report can be accessed on Andersons’ website.