EGG producers face bankruptcy, and the supply of British eggs could be jeopardised, if prices paid by retailers to packers and farmers do not improve, the industry has warned.
Inflationary pressure on farm inputs “from all sides” mean that many producers are losing money on every egg they produce.
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Dan Brown, who keeps 44,000 hens in Suffolk, said he was losing about 2p-2.5p on every egg under the current circumstances.
“Our feed costs are up 40%, energy is up 60%, and to bring in the next flock of hens is going to cost 10% more,” he said.
Another producer, Tom Hope, said: “The feed price alone increasing by £100/tonne adds 20p to the cost of producing a dozen eggs on the farm, and every consumer will have heard about the energy price rises that are about to hit.
Energy bill up 200%
“For us, that means our energy bill will increase 200% on the current deal, leaving us with £40,000 to pay.
“My business needs a price rise now, in addition to keeping a tracker condition on the feed price which goes up and down with the market.”
Analysis by the British Egg Industry Council (BEIC) demonstrates how the cost of farm inputs has soared.
- Feed (up about 50%)
The cost of feed for egg-laying birds is now £400/tonne, up around 50% over the past two years, and is expected to rise even further, with Russia and Ukraine being major exporters of key raw materials used in the feed.
- Pullets (up about 15%)
The cost of pullets has risen by 5% over the past month and more than 15% in the past two years.
- Transport (up about 30%)
Fuel costs continue to increase at record levels, impacting the whole supply chain, from delivery of feedstuffs right through to the delivery of a box of eggs ready for sale.
- Labour (national minimum wage increase 7%)
There are significant labour shortages in various industry roles; on farm, in packing stations and egg processing plants. This has led to substantial wage inflation, which will also increase with the rise in the National Minimum Wage
- Energy (up about 40%)
The wholesale cost of gas from suppliers has increased by 250% since the start of 2021, and with Britain generating around a third of its electricity from burning natural gas, electricity costs are also increasing.
- Packaging (up about 15%)
Figures from letsrecycle.com show that the cost of recycled paper, used for packaging, has increased by 50% in the year to August 2021, while energy costs, a vital component of the manufacture of packaging, are also seeing record increases. Prices of egg packs have risen by more than 15% since November 2021.
The British Free Range Egg Producers Association called for an immediate 40p/doz rise in prices on supermarket shelves.
The organisation’s Robert Gooch said: “For months, we have been raising the desperate situation with all the major retailers, and they have all ignored the perilous position their farmer suppliers are in.
“We contacted Asda, Sainsbury’s, Morrisons, Tesco, Waitrose, Lidl, Aldi and Marks and Spencer.
“Not a single reply was received.
“There have been small rises in the price of eggs in shops, but that money has evaporated before it gets to the farmgate.
“It’s the same old story of the farmer at the bottom of the chain being the last to see any price rise.”
Andrew Joret, BEIC chairman, said: “The tidal wave of cost increases will see many family farms, some of which have been producing eggs for generations, going under in a matter of days unless something is done quickly.
“The situation was unsustainable prior to the terrible war, but feed prices have accelerated dramatically in a way never before seen, and farmers cannot absorb these costs and carry on with a viable business.
“Ten years ago, you might typically have paid £1.35 for 6 medium eggs, which today often cost less than £1, which is a third of the price of a barista coffee.”