Free range egg sector 'very challenging', Oaklands says

The company's 2020 accounts show that turnover was down from £63.5m in 2019 to £62.9m in 2020
The company's 2020 accounts show that turnover was down from £63.5m in 2019 to £62.9m in 2020

Oaklands Farm Eggs described the free range egg sector as “very challenging” as it revealed it had made a significant loss for the second year running.

The company, which has been investing heavily in new barn production, posted a loss of £1.7 million before tax in the 12 months to the end of March 2020.

The previous year Oaklands lost £2.6 million compared with a pre-tax profit of just under £2 million in the 2018 tax year.

Director Elwyn Griffiths said in his report that the free range cost of production and sales value is still seen as a challenge for the business to provide a sustainable supply chain for the future.

"The sector continues to be very challenging and the decision has been made by the directors to only enter sustainable long term deals with regards to free range. This is a fundamental change from the company’s previous strategy," he said.

“We have, at a cost to ourselves, supported free range producers while sales prices have been under cost of production in light of the ongoing Brexit uncertainty and currency supply issue."

The 2020 accounts show that turnover was down from £63.5 million in 2019 to £62.9 million in 2020.

The company said that this was because of continued market pressure on the price of eggs, and that the directors were closely monitoring this.

This year’s operating loss was down by 41 percent – largely due to the one-off sale of land, explained the company.

Net assets of £20.5 million were down by 8%, but Oaklands said the company continued to be strong due to investment in the latest technology.

In his 2019 report, Elwyn Griffiths said the company had invested £8 million in plant and machinery over the last few years.

“The exceptional development costs, loss of sales and human resources to achieve this gave us one off costs of £2,970,000 to the business.

"This has obviously impacted on financial performance,” he said.

The previous year he had said the company aimed to become the UK market leader in barn egg production. In his 2019 report, Elwyn said the company had achieved its target.

"Our ambitious targets of rearing a unit every 20 weeks to become first and largest to market with cage-free egg production we achieved with over 500,00 birds being reared and in lay.

"The company led in the conversion to colony cage from battery cage and are ahead of the market in the new cage-free side of the business.

"This has led to the biggest challenge the family business has ever faced in adapting and developing systems fit for purpose."

Now, Oaklands is investing still more: “We will be well placed to face the ongoing challenges of Brexit and Covid-19,” he said in his 2020 report.

“Phase two of the conversion project will take the company to one million cage-free birds, which will place the company well ahead of any retailer expectation.

Historically, the company has led in colony conversion and the directors are confident the company will be well placed and in a good position to do this again.

“Whilst the directors recognise the challenges to short term profit in respect of this, it places the company ahead of the market for the future long term strategy over the next 10 to 15 years,” he said.