18-05-2007 00:00 AM | Organic, Poultry, News

Prices up but organic gloom grows



Organic price rises have done nothing to lift the gloom that now hangs over the future of the sector.

As reports grow of producers planning to abandon organic status one has told the Ranger that he has already slashed his flock numbers by nearly half.

The latest price rise lifted producer prices by just short of 7p a dozen on a weighted average. But since last autumn organic feed prices have risen by 20 per cent and now stand at a record high of around £300 a tonne. And while producer prices for Very Large and Large eggs went up by 8p a dozen supermarket prices rocketed by 28p.

No long term solution to the organic feed crisis appears to be emerging and against the backdrop of narrowing margins farmers have to weigh the increasing threats from disease, including avian influenza, and the growing burden of regulation.

"The margin for the farmer to produce organic eggs has been eroded year after year," said one producer. "While the risks for the farmer increase the normal market principles—like when there is strong demand for a product then prices might rise—do not seem to work anymore in this sector.

"Over the last 10 months I have reduced our organic flock by 40 per cent and the message I have for anybody out there considering the organic egg sector is... don't bother!"

And another large scale organic producer said: "It is possible that feed prices will ease a little with the new harvest but that's looking less likely as time goes on.

"And my crystal ball says that the packer will try to pull back producer prices prematurely. Looking ahead I see little cause for optimism. The impact of the new salmonella tests next January could be catastrophic and HN51 has not become extinct.

"If farmers are to face these issues individually we need a profit margin which reflects the risks we are taking. Alternatively the industry and or the government should be putting a compensation package in place for those farms caught out.

"Organic production has changed dramatically in the past year and I am very pessimistic about the prospects. At the moment it appears that we are being expected to fund our own demise, on a quietly reducing profit scale."

As producer concerns mount there is evidence that the market for organic eggs is beginning to stall. In the last year retail sales fell by 1.8 per cent. And while increased prices—the average is now £2.87p per dozen—meant an increase in the value of sales by just over three per cent, organic now commands just 3.5 per cent of the total egg market.

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