UPDATED figures from the British Free Range Egg Producers Association (Bfrepa) reveal how input-price inflation has hit farmers over the past 12 months.
The most significant spike in costs is in electricity (excluding renewables) which is up from 49.3 pence per bird (ppb) in October 2021 to 228ppb.
That figure does not take into account the government’s energy price cap for businesses, which will apply from 1 October to 1 March and reduce the 228ppb figure – at least temporarily.
Other inputs have also soared in cost, with feed up by more than £100/tonne, pullets by 18% and vehicle and fuel up 49%. Bfrepa’s figures are independently collated and analysed by farm business consultant Adas.
According to the Bfrepa data, the total cost of running a 32,000-bird free-range hen flock has risen from just over £940k this time last year, to £1.2m today, a rise of some 30%.
The association argues that prices paid to producers have not kept pace with this inflation. It also surveys members on the price paid for their eggs.
Based on those surveys, in October 2021 the sale of eggs from the model 32k flock it uses would have generated £815k in revenue, after catching costs and the sale of spent hens. At the time, that translated to a £128k loss when set against Bfrepa/Adas input costings (the £940k figure referenced above).
In October 2022 egg sales would generate £921k in revenue, reflecting a higher egg cheque paid to survey respondents 12 months later. But given input inflation, losses have widened to £316,804 – or just shy of £10/bird.
The figures are not representative of every free-range egg farm – some have feed-linked contracts, produce and or mill their own feed, or generate a significant amount of energy themselves changing this dynamic. Others may market at least some eggs themselves.
But the numbers do demonstrate how profitability is being squeezed from the egg sector, with some farmers – even those currently making money – now saying they do not intend to re-stock given the current economic climate.
That sentiment is reflected in Defra’s most recent statistics
Packing station output fell by nine million doz in the third quarter compared with the second, to 213m doz. Compared with the same quarter of last year, UK output was down by more than 22m doz.
Bfrepa’s chief executive, Robert Gooch, said: “We know the cost of living went up 10.1% in the 12 months to September, and rising food prices was the key contributor.
“Farmers have seen small rises in the price they are paid for their eggs, but it’s nowhere near enough for their businesses to be sustainable.
“We need the whole industry to collaborate and try and fix this broken market.”