The British Free Range Egg Producers Association issued their latest costings which bear out the unbelievably difficult circumstances egg producers are facing. Rising pullet, feed and chick prices together with petrol and electricity increases mean that free range producers are losing £5.41 a bird whilst organic egg producers are losing £4.01 per bird. With an average free range flock of 16,000 birds, losses per flock may total £86,560 for free range. This is a massive loss for an industry where capital investment on a 16,000 bird unit can reach £500,000. Organic producers with 3,000 bird flocks could lose as much as £12,030 per flock.
It is expected that egg supplies will tighten as producers either cease production at the end of their flocks or facilities at their banks are withdrawn, forcing many into bankruptcy. Some producers who thought renewing their loans or extending the overdraft was just a formality are seeking new funding as banks become wary of the losses incurred by egg producers. Banks that will lend to free range producers are asking for 50 to 60% deposit but there are few takers.
Producers are now looking to the supermarkets to pass on at least 23p per dozen for free range and 18p on organic and to make sure the rise reaches producers. Organic producers have not had an increase in price since April 2008. Since then they have had four decreases equating to 20p per dozen. Free range producers have seen their price consistently decreasing. The price for eggs in the supermarket has not changed.
One free range producer who thought he was fortunate when his egg count rose by over 400 eggs per day during the cold spell was then plunged into despair when it became apparent the flock had consumed more feed resulting in a further £116.00 loss. He worked out the value of the eggs in his store. He calculated he had four pallets of 540 dozen large eggs per pallet (2,160 dozen). The price he receives from his packer for large eggs is 87 pence per dozen, a total of £1,879.20. Tesco retail price for large eggs is £3.24 (£6,998.40), a difference of £5,119.20.
Producers are paid a rate based on the size of their eggs. The price BFREPA quote for free range is 79.95 per dozen. This figure is achieved from a monthly survey of producers and packers and is an average of the higher price paid for large eggs and the much smaller price for seconds and smalls.
What makes this industry difficult to assess is that every producer is different. Whilst the British Free Range Egg Producers Association bases their calculations on a producer getting 290 eggs per bird some producers get 320 eggs per bird. If we use the BFREPA costings and change the egg count to 320 then losses to the producer reduce to £3.42. Some producers may be lucky to get 320 whilst others may struggle to get 290. If that same producer had fixed his feed costs earlier in 2010 he may again be saving money on feed at today’s prices. But there is no getting around the fact that now, however prolific the flock, however efficient the producer, a loss is inevitable.
The NFU and BFREPA have written to the supermarkets highlighting the plight of both poultry and egg producers. Meanwhile, orders for replacement pullets are being cancelled which will affect egg supplies by July. One pullet rearer we spoke to had received cancellations of 100,000 pullets so far this month, whilst other pullet rearers have also spoken of cancellations. But ironically this tale of an industry in the balance keeps tilting toward excess and shortage. Egg packers are now starting to recruit producers for a shortage they see coming towards the end of the year when the European cage ban comes into effect on the 1st January 2012. But with the massive losses currently crucifying producers the exodus from free range egg production looks set to gather pace.
The latest costings can be downloaded here
