Producers Finally Reaping Profits with Margins on the Rise

With current average prices of £138.80p per dozen for free range eggs and a feed price down at £322 per tonne, Robert Gooch, chief executive of the British Free Range Egg Producers Association (BFREPA), told The SF, producers are now making a margin of 33.52p per dozen.

This compares to June 2022 when the producers were receiving 96.60p per dozen and losing 23.8p/doz.

“Free range profit margins continue to hit new highs, with a margin of £4.55 per bird with finance, and £9.89 per bird without finance, being reported in July 2023. This represents a increase of £15.24 per bird with finance when compared to July 2022, and a jump of £15.29 per bird without finance over the same 12 month period.”

However, while such prices should be maintained in the short term due to reduced supplies of pullets to meet capacity, the recovery of the egg market in UK, Ukraine and in Europe means producers live with the inevitable boom/bust cycle.

Hitting out at the Scottish and UK Government for not doing more to support producers, Robert Thompson, chairman of the NFUs pig and poultry committee, said the entire retail chain needs to be rebuilt.

“There are 200,000-300,000 egg laying birds that have not been replaced since last year, purely because the risks of going back into production are too high.The public want to support Scottish and British producers, but there is not the confidence in the sector when they lost so much money last year.”

According to a report from Rabobank, which boasts 80+ food and agribusiness research analysts, a rethink of industry value chains, from producers to customers, and how governments interact with the value chain is required on a global scale.

It claims that while consumers face high prices and availability issues, suppliers struggle with disease, cost inflation, new regulations, government intervention, and changing consumer demand.

It points out that while egg values have started to drop in some markets, like the US, global prices are expected to stay relatively high throughout 2023 and into 2024, albeit lower on average than the levels seen in Q1 2023 and with differences between countries.

The main exception is the United States, where prices have started to drop significantly.

Nan-Dirk Mulder, senior analyst at Rabobank said: “The key issue there is that consumers have reduced egg consumption at a time when farms are transitioning toward cage-free production while old capacity is still operational, leading to high production.

“Meanwhile, a sudden drop in the number of avian flu cases in commercial laying hen farms has resulted in more supply than expected.”

He added: “Prices will stay especially high and increasingly volatile in markets heavily impacted by avian influenza, high costs, and regulatory changes.

“In other markets, prices will drop but not to pre-2021 levels, as lingering high input costs will keep prices elevated.”

* BFREPA has welcomed Defra’s recently announced review of fairness in the egg supply chain and is lobbying to reform contracts to spread cost price risk to farmers across the rest of supply chain, reducing the threat of boom and bust.

The Defra review is not devolved and will be enacted in Scotland as well as the rest of the UK.