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24/05/2004
Show visitors flock to free range (but egg market takes a tumble)
Hundreds of visitors to this year's Pig & Poultry Fair were there for only one reason… to find out more about getting started in free range egg production.
And after a recruiting campaign that included adverts in the national farming press, it was little wonder that many of the potential new entrants headed for the Deans stand, pictured above, which was making a comeback to the show after an absence of 25 years. But even Deans were taken aback by a level of interest they described as "overwhelming".
Ironically, this huge interest in producing eggs coincides with a worrying downturn in the market, with retail sales of all egg types having declined noticeably over the last four to six weeks.
Sales director for Deans, Geoff Cooper, estimates that retail uptake has fallen by around 3 to 4%, but packers, and the supermarkets, are at a loss to know why.
"It could be that the Atkins diet is now losing some of its popularity," said Mr Cooper, "coupled with the fact that we are entering a time of year when egg sales can be sluggish with the onset of the warmer weather."
And while last month's headline-grabbing stories of drug residues in eggs are not being discounted as a contributory factor, the packers point out that sales had already started to slide before this story broke.
"We can only hope that it is a blip and sales quickly get back on target," added Mr Cooper. "It certainly hasn't changed our long term view of the market and free range figures very prominently in our future plans."
The effect on the wholesale market has been very pronounced and at its lowest point ungraded cage eggs were reported to be trading at a mere 21 pence a dozen. While the major packers are not regular suppliers into this market, with sudden surpluses they may have had little choice, and large volumes of eggs have certainly been exported over the last few weeks. Not that the situation in Europe is any better where prices have also tumbled. According to Agra Europe the weekly average price for large and standard grade eggs has nearly halved, from €7.94 to €3.83 per 100 eggs, since the beginning of this year. The crash in price is being blamed on the rapid expansion in bird numbers, which has been described as a "production frenzy", that followed the high prices of last autumn and winter. Although production potential in Holland remains significantly below pre-avian flu levels, other countries, particularly France, have increased numbers dramatically.
In conjunction with a rise in feed prices estimated to be in the order of 22% since spring last year, the outlook for European egg producers is decidedly gloomy.
A penny rise for organic and free range
Against a background such as this many will have been surprised to see the major packers increase prices to their free range and organic suppliers. Deans moved one pence on all first quality eggs and are now paying 90.5p for Very Large; 84.5p for Large; 63p for Medium; and 23p for small. Seconds remain unchanged at 24 pence. And Stonegate upped their prices to also give around a one penny increase in the weighted average, according to commercial director Nick Rogers.
David Tromans, managing director of Deans Foods, said while conditions in the general egg market did not justify the increase, the move was aimed at maintaining producer confidence in free range.
"Free range is a growing market and producers need to have the confidence to invest for the future, said Mr Tromans. "The profitability of primary producers is crucial to securing supplies over the longer term."
BFREPA executives met with the packers at Stoneleigh where the current egg market was high on the agenda. Speaking afterwards chairman Tom Vesey said he was naturally disappointed to hear the market had taken a turn for the worse.
"We were looking for a two pence increase which would have ensured that producer prices at least kept pace with the extra cost of feed and pullets incurred by our members," said Tom. "However, we realise we cannot buck the market and let's just hope the fall off in sales is short-lived."
Tom was also cautious about the prospect of expansion in the free range sector and warned that if every enquiry BFREPA had received at the Poultry Fair came to fruition, serious over-supply would result.
"The reality is that many of these would-be free rangers never get past the major hurdles of finance or planning permission," he said. "But, nevertheless, the situation will require careful handling if we want to avoid the sort of surpluses that the intensive market is now suffering from."
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And after a recruiting campaign that included adverts in the national farming press, it was little wonder that many of the potential new entrants headed for the Deans stand, pictured above, which was making a comeback to the show after an absence of 25 years. But even Deans were taken aback by a level of interest they described as "overwhelming".
Ironically, this huge interest in producing eggs coincides with a worrying downturn in the market, with retail sales of all egg types having declined noticeably over the last four to six weeks.
Sales director for Deans, Geoff Cooper, estimates that retail uptake has fallen by around 3 to 4%, but packers, and the supermarkets, are at a loss to know why.
"It could be that the Atkins diet is now losing some of its popularity," said Mr Cooper, "coupled with the fact that we are entering a time of year when egg sales can be sluggish with the onset of the warmer weather."
And while last month's headline-grabbing stories of drug residues in eggs are not being discounted as a contributory factor, the packers point out that sales had already started to slide before this story broke.
"We can only hope that it is a blip and sales quickly get back on target," added Mr Cooper. "It certainly hasn't changed our long term view of the market and free range figures very prominently in our future plans."
The effect on the wholesale market has been very pronounced and at its lowest point ungraded cage eggs were reported to be trading at a mere 21 pence a dozen. While the major packers are not regular suppliers into this market, with sudden surpluses they may have had little choice, and large volumes of eggs have certainly been exported over the last few weeks. Not that the situation in Europe is any better where prices have also tumbled. According to Agra Europe the weekly average price for large and standard grade eggs has nearly halved, from €7.94 to €3.83 per 100 eggs, since the beginning of this year. The crash in price is being blamed on the rapid expansion in bird numbers, which has been described as a "production frenzy", that followed the high prices of last autumn and winter. Although production potential in Holland remains significantly below pre-avian flu levels, other countries, particularly France, have increased numbers dramatically.
In conjunction with a rise in feed prices estimated to be in the order of 22% since spring last year, the outlook for European egg producers is decidedly gloomy.
A penny rise for organic and free range
Against a background such as this many will have been surprised to see the major packers increase prices to their free range and organic suppliers. Deans moved one pence on all first quality eggs and are now paying 90.5p for Very Large; 84.5p for Large; 63p for Medium; and 23p for small. Seconds remain unchanged at 24 pence. And Stonegate upped their prices to also give around a one penny increase in the weighted average, according to commercial director Nick Rogers.
David Tromans, managing director of Deans Foods, said while conditions in the general egg market did not justify the increase, the move was aimed at maintaining producer confidence in free range.
"Free range is a growing market and producers need to have the confidence to invest for the future, said Mr Tromans. "The profitability of primary producers is crucial to securing supplies over the longer term."
BFREPA executives met with the packers at Stoneleigh where the current egg market was high on the agenda. Speaking afterwards chairman Tom Vesey said he was naturally disappointed to hear the market had taken a turn for the worse.
"We were looking for a two pence increase which would have ensured that producer prices at least kept pace with the extra cost of feed and pullets incurred by our members," said Tom. "However, we realise we cannot buck the market and let's just hope the fall off in sales is short-lived."
Tom was also cautious about the prospect of expansion in the free range sector and warned that if every enquiry BFREPA had received at the Poultry Fair came to fruition, serious over-supply would result.
"The reality is that many of these would-be free rangers never get past the major hurdles of finance or planning permission," he said. "But, nevertheless, the situation will require careful handling if we want to avoid the sort of surpluses that the intensive market is now suffering from."
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