Egg producers feed costs rising again after series of monthly falls

Jason Gittins, who produces the figures for ADAS, told the Ranger that the increase in the feed price appeared to have been driven mostly by an increase in the price of soya
Jason Gittins, who produces the figures for ADAS, told the Ranger that the increase in the feed price appeared to have been driven mostly by an increase in the price of soya

An unexpected jump in the price of feed has hit egg producers’ finances after a series of falls in feed costs had taken some of the pressure off farm incomes.

ADAS reported a sudden increase in the cost of animal feed in its returns for the November edition of the Ranger. These returns are used by the British Free Range Egg Producers’ Association (BFREPA) to calculate its monthly costings, which indicate how well producers are doing. BFREPA’s costings in November’s Ranger showed that free range producers were losing as much as 53 pence on average on every bird in their units. The figure for the previous month showed producers making a profit of 28 pence per bird on average.

Robert Gooch, BFREPA’s director of policy, said it was important that both packers and retailers were aware of what was happening. “The danger is that packers and retailers assume that feed prices are still dropping. We need to make sure that packers know about this increase and that they make the retailers aware of what is happening,” said Robert.

Jason Gittins, who produces the figures for ADAS, told the Ranger that the increase in the feed price appeared to have been driven mostly by an increase in the price of soya. “The price of soya has gone up and it has dragged up other prices up with it, including wheat,” he said. “That is the basic cause, from what I have been told.

In the magazine costings in November Jason calculated the cost of feed to be £226.50 per tonne compared with £209.70 the previous month. The jump in the feed price came after a series of monthly falls. From £222.70 per tonne in the August magazine, the price fell to £216.20 per tonne in September and then £209.70 per tonne in October. Martin Humphrey of Humphrey Feeds said that the cause of the increase in feed costs was a rise in ingredient costs during October.

“During October the price of wheat for November jumped from £108 delivered to £123,” he said. “An increase of £15 at 60 per cent inclusion equates to £9,” said Martin. “Soya jumped from £308 to £357. An increase of £49 at 15 per cent inclusion equates to £7.35. So we have £16.35 rise, and that is before we add sunflower and wheatfeed rises, or deal with the fact that there is some stuff like methionine which has quadrupled in price. So yes, the replacement price has risen sharply.”

Martin insisted that the market should be lower. “But it is gripped by the funds returning to the market and messing it up, and the fact that the US has a logistical problems largely caused by: A, large soya and maize harvests in the US, already stretching logistics; and B, freight being overtaken by the requirements of fracking.”

In October Bloomberg reported the price of soya bean meal hitting a four-month high. “Futures rose as much as 6.1 per cent to $399.80 per 2,000 pounds on the Chicago Board of Trade, the highest since June 23, before trading at $388.70 at 6:30 a.m. local time. Prices jumped 7.6 percent yesterday, the most since 2007,” it reported on October 28.

European feed and cereal representatives have also warned that soya supplies could be disrupted again if the European Union is slow to approve new varieties of GM grains. In the past shipments from North America have been turned away because of cross-contamination from small amounts of GM varieties still awaiting formal approval by the EU. FEFAC, the European Feed Manufacturers’ Federation, has warned of further disruption if new approvals are delayed.

Eight new varieties of GM grain are awaiting approval and FEFAC secretary general Alexander Doring said delays “could cause uncertainty about feed supplies in the EU. Livestock farmers are already suffering from trade bans, particularly the Russian embargo. We cannot jeopardise their livelihoods by adding uncertainty about the market stability for feedstuff.”

He said, “Supplies are critical to the EU livestock industry and there are real dangers that the livestock industry will be drastically damaged due to a lack of raw material supplies. Overall, the EU is 78 per cent dependent on imported vegetable proteins necessary also for the animal welfare. The EU livestock industry could consequently face a massive loss of competitiveness, unless the process for import approvals for new GM varieties continues.”

He told the Ranger, “There is the possibility of cross-contamination. At the moment there are no problems. But for how long? And it is very difficult to put a value on that.”

FEFAC, together with other organisations Copa-Cogeca, Coceral, Fediol, Fefac, Uecbv and A.v.e.c., has told the European Union that further delays by the Commission would result in a “suicidal situation for European growth” and said it would “leave the EU food and feed business operators exposed to a possible risk of disruptions in the vital supply of soybeans, maize and various protein-rich products derived thereof.”

FEFAC and the other bodies say that, regardless of whether they are genetically modified or not, consignments of grain imported to the EU could be halted at the borders if the authorisation process was postponed. “This will trigger further uncertainty about market balance, supply chain disruptions and price hikes for basic food products and major feed ingredients, as well as undermine the competitiveness of the EU food, feed and livestock sectors,” they said in an appeal to the Commission.

Alexander Doring said, “Hesitations about new GM products may really bite economically, which is particular[ly] serious in the current economic crisis, and markets will be destabilised.”

FEFAC said the eight varieties awaiting approval had been scientifically proved to be safe. It said delay could pose a threat to the EU food and feed supply and market balance. It warned that the approvals were especially essential for the livestock industry.