Sainsbury have been the first supermarket to raise egg prices which may spell the end of months of misery by hundreds of UK egg producers struggling to keep their farms going.
Six Sainsbury free range woodland large eggs have increased from £1.63 to £1.68 an increase of 5 pence, whilst 10 Happy Eggs have increased in price by 24 pence from £2.59 to £2.83. Eighteen Sainsbury’s barn eggs have also increased by 25 pence from £1.74 to £1.99.
Egg producers are now worried that the price rises may not reach the producers in full and that the packers may decide to take a cut of the increase. This would be disastrous for egg producers and the egg industry that is now being targeted by the banks wary of the mounting losses. New producers are now being viewed as high risk by the banks and are struggling to raise funding. Those producers part way through their building projects are having funding withdrawn. Some long standing producers are being called into their banks to have their overdrafts reassessed.
Many producers have already cut their losses and stopped production whilst many caged producers are not renewing their flocks as the cost of converting to the new colony systems is too high. Those free range producers who have a derogation on their internal stocking density have to reduce their flocks from 11.7 birds per square metre to 9 from the 1st January 2012. This together with the European cage ban means there is a possibility of a shortage of egg anytime from the middle of this year.
It can cost £500,000 to start free range production with a 16,000 bird unit. The latest British Free Range Egg Producers Association costings show producers losing £5.83 a bird to the end of the flock. That’s a £93,000 loss in 56 weeks.
This industry’s future may be played out, not by the packers or the supermarkets, but by the already nervous banking sector.
