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Egg Company Compensates Early-Depleted Flocks

by 5m Editor
7 October 2011, at 9:53am

UK - Noble Foods is to pay compensation to egg producers who depleted flocks early to help ease the oversupply in the egg market.

The Ranger reports that the country's biggest egg packer has written to its contracted producers to outline the terms of a scheme that is thought could cost the company more than one million pounds.

Noble's contract, producers and farms director, Tom Willings, says in the letter that the company has decided to introduce the package "in recognition of the enormously difficult circumstances producers are currently facing at a time when finances are under such pressure."

The latest BFREPA costings indicate that free-range producers are currently losing more than £4 per bird, with organic producers losing more than £6 per bird.

Mr Willings wrote: "I want to emphasise our gratitude for your support over the past year, but in particular, the past seven months. In an oversupplied market place, exacerbated by inherent seasonality, I feel strongly the actions that we have instigated and that you have supported have been both responsible and of benefit to the industry as a whole. Although surpluses stubbornly remain in the supply chain we can assure you that as we begin the march towards the peak demand period we will now redouble our efforts to try to deliver an improved return from the market."

The announcement of a compensation scheme comes as Noble brings to an end its early depletion programme. The company has said that all producers who have been depleting at 68 weeks should have returned to a 72-week cycle by 2 October.

The Ranger reports that Noble says, whilst input costs can vary wildly from one producer to the next because of different flock performance, scale and feed price agreements, the company has attempted to calculate an average margin over direct inputs by using a number of assumptions. The assumptions used for the calculation include a Hy-Line breed standard hen-day average for the four weeks to 72 weeks, average price calculated over average egg grade profile at 68 weeks, average spot feed price between March and September inclusive, and estimated saving in power, water and labour over four weeks.

In the letter to producers, Mr Willings says, "The resultant calculated margin per bird is £0.28 for the full four weeks, or £0.01 per bird per day. So, for an average 12,000-bird unit with standard mortality, the anticipated payment would be: (12,000 hens stocked – 480 mortality) × (28 days early x £0.01) = £3,225.60.

To read the full article, click here.