A surplus of free range eggs on the UK market could affect supermarket contracts up for renewal in September, producers have been warned.
In last month's Ranger Andy Crossland, trading manager at Central Egg Agency, warned that he was "swamped" with egg and struggling to find a home for some grades. "The market is not in a good place at the moment," he said.
Other packers have also confirmed to the Ranger that market conditions are grim at the moment. With some contracts up for renegotiation in September, the oversupply in the market could impact on tenders.
The price for seconds has been decimated. This time last year the market price had been about 55 pence per kilo; this year the price was down to 20 pence per kilo. Last year the demand from Europe for British eggs had been strong as a result of the fipronil scandal on the continent. Millions of birds were culled when the chemical was found to have been used illegally in a treatment for red mite. Seconds prices had been as high as one pound per kilo in the wake of the fipronil crisis.
Barry Jackson, managing director of Bumblehole Foods, agreed that egg prices had ballooned as a result of fipronil. "In the latter quarter of last year post-fipronil there were some phenomenal prices," he said. However, he said the current structure of the egg market meant that most egg companies had not been able to take advantage of the high prices. The vast majority of egg was now sold under long-term contracts, egg suppliers were locked into prices, he said.
It was a similar story with current low prices on the wholesale market. Most egg sales were supplied under long-term contract. However, he said he expected that producer prices may well come under pressure in the weeks ahead. His customers and other customers knew only too well what was happening in the market. If there was too much egg around, then buyers would know that, said Barry.
One trend highlighted by Andy Crossland at Central Egg Agency was the demand for large eggs. He said retailers seemed to almost have an obsession with large eggs, and this was one issue that the egg industry needed to address. "Retailers are looking far too much for large eggs," he said. "We are producing far more medium than large eggs, but selling more large than medium. The industry needs to be putting pressure on retailers because it is an issue."
Daniel Fairburn, managing director of L J Fairburn and Son, agreed that medium eggs were a particular problem at the moment, with consumers seeming to want large eggs. "The consumer seems to think large eggs are better value - possibly because the differential between large and medium eggs is not that big.
"In fact, we use nothing but medium eggs at home because we know how good they are for cooking. We are gong to be producing some short videos to explain to consumers the advantages of medium eggs. We need to try to educate consumers a little bit more. The industry needs to take a lead.
"It is a bit difficult at the moment but we need to see how we can get more medium eggs into retail."
Andy Crossland told the Ranger that, whilst very large eggs were fetching £1.35 at the moment, medium eggs were fetching as little as 50 pence - the same as colony; smalls were going for 45 pence - again, the same as colony.
