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Expanding the UK's free range egg industry carries risks, says BFREPA

UK free range egg producers warn that the sector's rapid expansion risks oversupplying the market, driving down profits and reducing producer income.

6 October 2020, at 7:25am

If the free range egg sector continues to expand at the current rate it will create a significant oversupply situation, driving down the price paid to farmers and reducing profitability yet further.

That is according to the British Free Range Egg Producers Association (BFREPA) following the publication of an independent report into the impact of retailer cage-free 2025 commitments.

Free range production has increased by 14 percent since 2017 to nearly 25 million hens.

The report published by agricultural consultancy ADAS forecasts a 2 percent production increase is required over the next five years to meet a predicted growth in free range egg demand of just 300,000 cases.

BFREPA CEO Robert Gooch said: “There is an incorrect assumption from many in the sector that retailers moving away from colony eggs will lead to a surge in demand for free range. That is simply not the case, and this report confirms that.

“We have been warning for many years that rapid expansion will create a situation of oversupply, all the while the price paid to farmers has diminished and is now 20 percent lower than it was five years ago.

“The trend is clear; as production has increased, the price paid to farmers has decreased. This situation is unnecessary and unsustainable.”

As well as existing producers expanding, BFREPA has seen new producers entering the sector, often encouraged by new contract bonuses which disappear over time.

A model contract was made available to all free range egg producers last year to help secure sustainable prices for the long term.

And to help producers understand the market better BFREPA has today launched a new online Costings Portal allowing farmers to enter flock data and egg prices to compare their situation with others across the UK and Northern Ireland.

Alarmingly, data shows that most free range egg producers are not breaking even.

“Our data from ADAS shows a break-even price of £1.01 per dozen, but our members are submitting prices through our portal which show that they are being paid significantly less than that – about 88p per dozen on average,” Robert said.

“There is a huge range of producer prices in the market, ranging from below the cost of production to good prices to tempt new entrants in to the sector.

“Given this variability, this portal provides the sector with some transparency about what is happening in the supply chain, particularly for retailers who will be able to see if the cost of production price increases given to packers are being passed down to contracted producers.”

Click here to read the ADAS report. A webinar giving in-depth analysis on the issue is available here.