Free range egg producers are calling for a price rise to help cover huge increases in the cost of feed, energy, transport, and labour which have been creeping up over the past 12 months and show no sign of abating.
BFREPA chief executive Robert Gooch said data shows the price paid to free range egg producers remains static or declining. Producers have watched on as other livestock sectors have received price rises to reflect the current situation, he said, and the time has come for egg producers to receive the same support.
“Free range egg producers are always at the bottom of the pile,” said Gooch. “Everyone else in the supply chain secures their margin by passing the rising costs down the chain, so they inevitably get left at the farmer’s door.
Gooch told Poultry Business prices were up across the board on everything from labour to raw materials by around 20% over the past year, amounting to an additional 6p per dozen eggs in increased costs.
In addition to this feed costs are at record levels. But some packers are now finding loopholes in their contracts with producers that mean rising costs are not always reflected in the price paid for eggs.
Gooch said this is not in the spirit of contracts for independent producers that were only won after years of effort.
“BFREPA has campaigned for fair, robust contracts to be available which allow for movement in the price paid to farmers as input costs, such as feed, increase and decrease.
“These contracts have been adopted by some retailers and packers but there are numerous examples of these contracts being broken now that inflationary pressures are rising.
“This simply isn’t fair and can’t be allowed to continue.”
In some cases, packers are telling producers the tracker price only applies to feed and because of some other pressures in the supply chain, the base price offered to producers is being reduced. So, the feed price element is being maintained but using small print in the contract they have actually gone out of keeping the price going up in line with costs.
“In other words it is not fair and not right,” said Gooch. “I’m afraid it is something producers have to take on the chin unless they get a lawyer to fight it and unless they want a bad relationship with their packer.”
Gooch said it was not a universal problem and he praised Tesco in particular for its feed tracker contract, and said he had had no complaints from BFREPA members who supplied Tesco’s packers.
But he said many producers were in a difficult situation, with little respite on the horizon. “We are predicting it will carry on for the next nine months given the European harvest has happened and we can’t see any change in the immediate future.”
FREE RANGE PRODUCTION – WHAT DOES IT COST? Prepared by ADAS and supplied by BFREPA
Production costs have been reviewed based on prices in mid-October. Feed price increases have been reported due to a combination of changes in raw material and transport costs. An increase of some 4% has been applied this month, taking the average feed price to £293.53 per tonne, equivalent to a cost of £15.53 per bird, based on an average daily feed intake of 126 grams.
An increase in price has also been reported for pullets and the average is now £4.42 per bird. The cost of electricity has been reviewed this month and increased to 70 pence per bird, excluding the use of on-farm renewables. The average value of end-of-lay hens remains unchanged at five pence per bird but there are suggestions that this may come under pressure in the coming weeks.
Current Free Range Egg Price
The average egg price this month stands at 90.9 pence per dozen. The calculated egg price for ‘high performance’ flocks (in which lower seconds levels are assumed) is now 92.1 pence per dozen.