British Egg Industry Council deputy chairman Andrew Joret believes the free range egg market could be back in balance by the middle of 2011. But he is concerned that illegal eggs from other countries could find their way into the United Kingdom when the European Union’s conventional cage ban comes into force in January 2012.
He spoke of his hopes and fears for the UK egg market during a speech to farmers at a National Farmers Union poultry conference in Sleaford, Lincolnshire. Both egg producers and broiler growers attended the meeting, and the egg producers came looking for news of better times ahead after being hit by high feed costs and depressed egg prices. One member of the audience said, "There are a lot of worried producers looking at their returns relative to their investment, and things have got to alter drastically." He said, "I don’t feel that anybody is giving any real encouragement to producers to say that the industry is sustainable in the long term."
Andrew, who is technical director of Noble Foods, admitted that the industry had allowed the free range market to get out of balance, but he was optimistic about the year ahead. "The market as a whole has got out of kilter, for sure. Free range production has outgrown the market growth of free range," he said. "The free range market is growing very strongly but as an industry we have put too much free range down. Now all that free range expansion is on hold and it won’t be long before the free range market has caught up with where we are. I see a scenario where by the middle of next year the market will be a lot more balanced again," he said.
His message of hope for the free range market contrasted with concerns about what would happen following the introduction of the EU’s ban on conventional laying cages in 2012. He said that whilst the UK industry had invested heavily to ensure that it would comply with the new rules, other countries would not meet the deadline. As much as 30 per cent of EU egg production – about 100 million hens – would be illegal when the ban came into force, he said. Whilst the UK, Ireland, Scandinavia, Germany and Holland would be compliant come 2012, others, including France, would not. "When you get to Spain and Italy, they shrug their shoulders. They might get there one day. And when you get to the other big egg countries in the east, Poland in particular, they are just pleading poverty. There is going to be a lot of potential illegal egg around.
"What do we do about it? We have made an enormous investment here in the UK to comply with the law and we don’t want to see our market undercut. If egg does come in undercutting the market it will not just hit the cage sector, it will hit the whole market, so it is in all our interests to keep that egg out."
He said the UK industry was pressing for an intra-EU trade ban on such egg so that it could not be sold outside the country of production, and he said he was pretty sure that such a ban would be agreed in Brussels. The question was how to police such a ban. He said the answer was to get behind the Lion; use the Lion as a police force.
Despite the temporary problems with over-supply in the UK free range market, Andrew said that imports still accounted for 20 per cent of total egg consumption in the UK. Some of those imports were sold as shell egg in small corner shops – particularly in London. Those eggs tended to be from Spain, and he said Spain was one country that did cause him concern. It would not meet the conventional cage ban deadline and its egg industry had been built up to be an exporter. "They may not be able to absorb all the illegal egg in their own country."
Other imports were to be found in egg product, he said, and that was a much more difficult area to police.
"At the moment under Lion rules a packer can only take in Lion egg, but the processing rules at the moment do not say Lion exclusivity. They allow you to have a Lion stream of eggs coming in and a non-Lion stream of eggs coming in. At Nobel from January 1 this year we took a stance on egg products. We are only processing Lion egg in our egg processing operations. We do not import anything. We are just using domestically produced egg. That is not the case for all the other processors yet. We would like to embarrass these other processors to put their money where their mouths are. Are they parasites that live on the industry or are they part of the industry and want to see that industry grow and develop?
There is pressure we can all put on those processors to make sure they are all on board with us as part of a united industry.
"That is where the battleground is going to be, I think. It’s going to be egg either in a tanker coming in to be made into product or in shell to be broken. That’s probably where, if there was illegal egg coming in, it would be. We have to defend that very strongly with the Lion."
Andrew said it was estimated that UK cage producers had invested some £400 million to move to enriched colonies. "I have been in the industry for 35 years and I have never seen a capital investment programme like it. It’s unbelievable what we have had to find.
Pleasingly we are going to do it, but then we have the laggards. When are France going to do it? When are Spain going to do it? In a way I don’t care, as long as it doesn’t come and interfere with our market."
Andrew offered some good news on growth in the egg market. He said the retail market for eggs had grown overall by three per cent over the last year. Free range growth was in double figures, he said, and over the last two years free range had overtaken cage to become the biggest sector of the retail market. It now accounted for 51 per cent of the retail market and he said he also expected free range to win an increasing share of the overall egg market, including processing.
By 2012 he thought its share could have increased to 50 per cent, and one of the things driving that growth would be Sainsbury’s move to all free range in own label products containing egg. "That alone is going to require about half a million free range birds to meet the demand." He said Sainsbury’s was not the first to make the move. Marks & Spencer, Waitrose and the Co-op had already done so, but Sainsbury’s decision would make a difference.
And there was still an opportunity to grow consumption further, he said. In the UK the average consumer ate 189 eggs per year. The European average stood at 215 and the biggest consumers – in Hungary and Spain – ate from 285 to 290 eggs each year. If consumption could be increased to the levels in Hungary and Spain, the market would grow dramatically. That may be a tall order, he said, but there was no reason why the UK could not increase consumption to the European average.
