The free range egg industry has come through one of its most challenging periods with many farmers deciding to leave sheds empty, rather than continue to produce at a loss.

However, there is some positivity as the cut in production looks to have pushed prices up to offset some of the rise in prices. This prompted discussions within the industry on how best to establish fair prices and ensure egg supply in the shops.

To find out more, The Scottish Farmer attended a British Free Range Egg Producers Association (BFREPA) meeting in Aberdeenshire to hear the debate within the industry.

Kicking off the night was Northern Irish poultry farmer, James Baxter, chair of BFREPA who said: “Hens are on a 14-month cycle. It is not like cattle or sheep, we don’t have a long breeding programme to maintain.

"When we get to the end of a cycle and there is no money in it, we will not refill the sheds. It is happening right now and unfortunately it is the only way the retailers will listen.”

Mr Baxter runs a number of large free range units in Northern Ireland which produce around 0.8% of all the free range eggs in the UK. The lack of margin prompted him to leave all his sheds empty for 12 months before his planned restocking in 2024.

He said: “We have a shortage of eggs on the shelves and we saw it coming. When we first told the retailers they laughed at us – it is the best way to describe it.

"We wrote and didn’t get a response. Eventually, we did get through and invite them to our breaking point conference and the retailers didn’t come along. The shelves have now gone empty. They tried to blame AI [avian influenza], but it was all down to cost and the poor egg price being offered.”

The shortage looks to have forced all parts of the free-range egg sector back around the table, though, with Mr Baxter adding: “Packers and retailers are listening to work out a sensible structure.”

One point of debate was how much information to share along the supply chain. Should BFREPA share independent costings with retailers and packers to help negotiate contracts or should the industry retain the figures for themselves?

Currently, BFREPA pays ADAS, a UK independent agricultural and environmental consultancy, to run a monthly independent costing exercise to provide average figures for the industry. These detailed costings are based on a 32,000-hen multi-tier unit with a 76-week cycle where birds average 335 eggs each which weight on average 64g.

The impressive list of figures detailed that hens consumed an average 124g of feed per day, with a typical capital investment of £43/bird. Sixteen-week pullets were costing £5.20 each, which is well above the £4.64 recorded one year ago.

Feed costs still represent one of the biggest costs at 71p per dozen eggs produced, with an average feed price at the moment of £375 per tonne. All-in, the costings for February showed that it was costing 133p to produce a dozen eggs, whilst farmers were getting 122p. Although some at the meeting reported the egg price had jumped in recent weeks.

Robert Gooch, chief executive of BFREPA, told the meeting that the association was also looking for feedback on the type of contracts farmers had with retailers and packers. He explained that the egg shortage put farmers in a strong position to negotiate fair contracts: “If there is any time when packers are going to discuss and sign a new contract, now is that time.”

Currently, farmers are on a range of contracts with packers and retailers. The most risky but potentially rewarding is the variable price contracts which adjust the prices paid for eggs according to market changes.

The least risky, but stable, contract is a bed-and-breakfast arrangement which sees a fixed price paid for producing eggs where the packer, or retailer is more exposed market forces.

Mr Gooch said he thought the industry would increasingly adopt a range of contracts depending on each business’ position, but any chance to establish a co-operative, or national egg board approach had passed.

A number of years ago, very few reduced risk contracts were being discussed but nowadays Mr Gooch estimated that more than 30% of contracts were at least tracking feed costs, with others looking at a basket of inputs to set prices.

Illustrating the state of flux in the sector, Mr Gooch said: “At the moment, I am getting two calls a week from farmers trying to get out of their contracts.”

Meanwhile, NFU Scotland’s poultry chairman, Robert Thompson, issued a warning about continued shortages of eggs. Addressing the room, he said that retailers who were bringing in foreign eggs to plug the supply gap might get used to the imports and reduced the amount of British on the shelves in the long run.

The Angus poultry farmer pointed out that only 40% of the eggs consumers are sold through the whole egg market in shops with the bulk going through food services, or within products like cakes or sandwiches.

He said this was partly because the UK does not focus supply on the 'breaking' industry which needs a constant supply of affordable eggs. As an example, he stated that cake manufacturer Mr Kipling purchased its eggs from the Netherlands. The Scottish Farmer contacted the Mr Kipling brand owners, Premier Foods, who confirmed that it bought all its eggs from the EU.