British egg farmers say while they are facing rising costs due to higher energy and grain prices, they are not being paid enough for their produce, and as a result many may opt to leave the sector.
Inflated prices for chicken feed and energy, made worse by the war in Ukraine, have meant many UK egg farmers can no longer break even.
Victoria Shervington-Jones, owns Country Fresh Eggs in south Wales, a free-range farm where 40,000 of her own chickens and 32,000 belonging to locals, roam around a site spanning several hectares.
"Our feed costs have risen 43 per cent in the last 12 months and our energy costs have increased substantially as well," she said. "There’s also the diesel we use for our delivery vans, which has risen a lot over the last year too, along with the price of the packaging. Everything has gone up.
"To put it simply, at the moment the strains on our business mean we’re not able to produce enough eggs to meet the demand from our customers."
Bird flu outbreak
UK supermarkets, including Tesco and Asda, have rationed the sale of eggs in recent weeks, saying the outbreak of Avian flu this year has decimated flocks and therefore reduced the supply of eggs.
But farmers' unions claim using bird flu as a reason that shoppers are seeing a shortage of eggs on supermarket shelves is not the full story, says the British Free Range Egg Producers' Association (BFREPA)
Much of the reason for the scarcity is because producers are losing money on every carton sold, because the price supermarkets offer has not kept pace with the farmers' rising costs.
Frank Thompstone used to have 36,000 chickens on his farm in Burton-on-Trent, central England. But he reduced that number to 24,000, in an effort to save costs. However, even that was not enough to match soaring feed and fuel prices, so he decided to throw in the towel.
His buyer, who packed and sold the eggs to supermarkets, had offered 15 pence per dozen more, but that still left Mr Thompstone trading at a loss.
"Why would we commit to that?" he told Reuters. "I'm aghast, frankly. It's the retailers that hold the purse strings."
Soaring costs
A BFREPA statement said: "Feeding hens is now at least 50 per cent more expensive than it was, and energy prices have soared in the same way that consumers have seen their domestic bills rise. Spending on fuel has grown 30 per cent, while labour and packaging also costs more."
The National Union of Farmers claims that since 2019, the cost of raw feed materials has risen 90 per cent. Over the same period, egg prices as measured by the UK's Department for Environment, Food & Rural Affairs (Defra), have increased only 35 per cent.
For the most part, when once an egg is laid, the farmer will sell it to a buyer who then packs it ready for sale to a retailer, probably one of the UK's large supermarket chains.
According to BFREPA, it costs a farmer about 138 pence to produce a dozen eggs. But buyers are only paying around 109p, while retailers are selling them for between 219 and 410p. That means that for every dozen eggs, the farmer loses 29p at one end of the supply chain, while at the other end, the supermarket can make nearly 10 times that in profit.
“We have been warning for months that failing to pay farmers a price which allows them to make a profit would result in mass destocking or, worse still, an exodus from the industry,” said Robert Gooch, BFREPA chief executive.
The British Retail Consortium (BRC), which represents the supermarkets, said it recognised the need to pay farmers sustainable prices, but pointed out that supermarkets themselves were also facing higher costs.
Tesco, Aldi and Waitrose last month said they had collectively provided an additional £29 million ($35.3 million) of support to the egg industry.
Government support
The discrepancy in farm gate prices and what shoppers are paying at the supermarkets, as well as the shortage on shelves, spurred the NFU to call on Defra for an official investigation into the UK's egg market.
Such an investigation under section 20 of the Agriculture Act (2020) could lead to government support for egg producers.
NFU president Minette Batters said: “It is critical that Defra acts now to investigate the issues in the egg supply chain so that any declaration under section 20 can be made as soon as possible. Poultry and egg producers must have the confidence they need, working within a fair and transparent supply chain, with fair returns for farmers, so they can do what they do best — meet demand from shoppers for quality British eggs and poultry meat.”
Soaring input costs and bird flu are also affecting companies outside the UK. Global egg production is this year expected to fall for the first time, according to the EU's largest producer, French group CNPO.
In the UK, about 750,000 birds have been culled due to avian flu and there is a worry that some farmers may not replace their flocks, further squeezing the supply chain.
Many producers feel that any boost in the form of higher farm gate prices or government help will now be too little, too late.
"Thinking about what is going to happen if this situation continues absolutely petrifies me," said Ms Shervington-Jones.
"Some of these farms and businesses aren’t going to survive if this continues. I employ 16 staff across the chicken sheds, offices and deliveries and having to ensure they are paid over the last few months when income has dropped has also put significant pressure on our finances."
