Grants May Upset Already Fragile Scottish Egg Market

SCOTLAND - Grants announced yesterday to the egg sector are being criticised for unbalancing a market already 'in turmoil'.
calendar icon 10 June 2010
clock icon 4 minute read

The awarding of millions of pounds from the Scottish Rural Development Programme into the poultry sector this week has not been universally welcomed, with industry representatives saying the public cash could further aggravate an already over-supplied market.

The Scotsman newspaper reports that egg prices have plummeted in recent weeks, going down 40p to 50p per dozen. In some grades, the fall in value has halved the income compared with only six months ago when the market was in balance.

Dennis Surgenor, the secretary of the Scottish Egg Producer Retailer Association, reckoned the government has distorted the market by giving some producers grants to help them start or increase their businesses.

At current price levels, he believed many of the newcomers in the industry could lose as much as £3 per bird on their enterprise.

He said: "Some people who have invested in new egg production units may find that the forecast profits over the laying year are not what they budgeted for or expected."

Robert Thomson, who runs his own poultry supply company, TPak, in Forfar, said there were too many new producers coming into the sector without having a secure market. He said he wished that the whole industry had been able to sit down and discuss the best way forward as the sudden expansion of the production end of the business had definitely knocked the price.

He said: "We have had no joined-up thinking on this issue. I have no wish to organise a cartel, but let us have some sense in deciding what is going to be supplied."

As a result of the over-supply position, he believed many current producers with only about 10,000 layers who produced and retailed into local markets had had "their feet kicked from under them".

Even within the whole egg market, there is a fair bit of turmoil still to come, with the old-style battery cages being outlawed within the next 12 months, reports The Scotsman.

Mr Thomson said: "Some people think this will mean all the egg production will come from free-range units but that is not the case. I expect about 40 per cent of all sales will continue to be at the 'value' end of the market."

He also warned that the demise of battery cages from the UK could lead to another problem for egg producers here: that of importing eggs in either liquid or processed form from countries where old-style battery cages would continue to be used.

These imports would not directly affect the fresh market but their sales into the catering sector, where they would be used for anything from cake mixes to pasta, would reduce the sales of UK eggs.

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