The state of the egg market seems difficult to judge at the moment, with conflicting reports of whether or not the sector is suffering from oversupply.
The Ranger egg report for June a large surplus of free range eggs on the market, whilst others in the industry say it is enriched colony that is causing an egg glut. Recently independent Fairburn and Son says it is looking for more free range eggs to satisfy demand from its customers and retail figures indicate that demand for free range eggs has been holding up well.
Statistics compiled for the British Egg Industry Council (BEIC) by Kantar Worldpanel showed free range doing better than cage in the first quarter of the year. Whilst egg sales volume generally was up by 5.5 per cent, the increase for free range eggs was six per cent. And in the pre-Easter period (retail volume sales in the four weeks ending March 17) sales of free range eggs surged by 7.6 per cent - well ahead of the increase in cage egg sales. There were even rumours of at least one major supermarket group running short of free range eggs at Easter.
Despite these figures, a recent market report for the Ranger said that “free range is still in a large surplus position and, unlike colony, shows no sign of abating.” It said, “Egg that cannot find a wholesale requirement is being cascaded into colony or saturating an already over-supplied processing sector. Prices are under considerable pressure at a wholesale level due to the significant differential over colony; this will force prices even lower.”
The company said in the report that there were “signs of early depopulation.” However, the Ranger understands that early depletion is something that has been implemented amongst cage producers rather than free range. Robert Gooch, director of policy with the British Free Range Egg Producers’ Association (BFREPA) said that, as far as he was aware, depopulation had not been instigated in the free range sector. He said he thought that if there was any over-production in free range at the moment it would be a small amount.
“We know that free range was tight before Easter. Everyone has been talking about free range being short rather than overproduction, so if there is any oversupply at the moment I would have thought it would be a small amount, and the market will probably get tighter later in the year. Our latest flock survey showed that bird numbers would remain pretty flat and we have seen good retail demand for free range eggs,” said Robert.
Producer returns for the BFREPA flock survey indicated that there could be a net increase in free range numbers of just 2,840 hens up to October 1. Such a rise would amount to an increase of just 0.05 per cent compared with the 1.8 per cent figure in BFREPA’s last flock survey in October 2012. Government figures also showed layer chick placings falling for the fourth month in a row in April this year – a figure that would tend to point to a tightening market in the months ahead.
Barry Jackson at Eggsell said it was difficult to work out the position of the egg market at the moment because national statistics were poor, but his impression was that cage eggs were more of a problem than free range. “I think free range is slightly in surplus at the moment but colony is the bigger issue. Over the last 18 months we did see free range being cascaded down because it was in surplus. Now that colony is in oversupply that has probably displaced the free range that had been cascaded, but I would love to see some clear market information. It is difficult to know what is really happening.”
Chris Stocks at Sunrise also pointed to the displacement of cascaded free range as one possible reason for a slight surplus in the free range egg market. “If you look at the price at the moment, it would seem to suggest an oversupplied market. One thing about colony is that you depopulate a few large units and it soon turns the market around. It is not so easy with smaller free range flocks.”
John Campbell at Glenrath Farms agreed with others that the colony market was a bigger issue than free range at the moment. He said that free range eggs had had a long run in which demand had outstripped supply and the returns available had made it the most profitable part of the agricultural industry. He said supply had now caught up with demand and probably gone a little bit too far – partly, he said, as a result of grants handed out in Scotland and Wales to encourage new production. But he said that despite the slight oversupply at the moment, he felt that the market was “set fair” for free range producers.
A number of people in the industry have pointed out that the summer months are traditionally more difficult for egg sales and that the market will naturally tighten towards autumn, but Sarah Louise Fairburn said that she had seen no evidence of oversupply despite the onset of summer. “We may be fortunate in that we have good retail contracts, but we don’t have too much free range egg. We don’t have an issue with free range at all,” she said. “We are still looking for more producers.”
It remains to be seen how the market will develop over the coming months, but with BFREPA flock numbers fairly static, chick placings down and retail demand up, logic would point to tighter supply to come. At a conference earlier this year, John Bowler, founder of the Bowler Group, even suggested that there may be a shortage of free range eggs by Christmas.
