Egg supply agreements could be eligible for regulation to ensure fairness in the supply chain, Defra Secretary George Eustice has said.
Speaking in response to a question at a media briefing during the NFU Conference about regulation being considered in the pig sector, Eustice said: “Of course, yes we're open to considering the use of this power in other areas too.”
Held at the ICC in Birmingham on 22 February, the NFU Conference focused on supply chain fairness relating not only to domestic contracts but also to international trade.
The Defra Secretary said: "We took powers in the Agricultural Act for a reason to be able to bring fairness and transparency to supply chains.
"We’ve already acted to bring forward regulations in the dairy sector. We are about to commence a review of the pig market sector with a view to using those powers in the Act to ensure that there is fairness in the supply chain in the future.”
Asked if he would also look at contracts and fairness in the supply chain for eggs, he said: “It's a broad power that enables us to introduce regulations for the first purchaser of agricultural produce; so it can apply to any processor in the system or retailers that buy direct from farmers.
"It's a very broad power with bespoke regulations specific to particular sectors; we have a set of regulations for instance already for dairy and we are looking at the pig sector.
"Previously there's been a voluntary code in the beef sector because there have been issues there and we are going to put that onto a statutory footing as well, but of course yes we're open to considering the use of this power in other areas.
“The purpose of this is not to fix prices or rig markets in anyway; the purpose is to ensure you have a properly functioning market response that respects terms of trade and that is transparent, if we want a successful and profitable farming industry they have got to know where they stand.
"They can't just be price takers at the end of the line where all the risk ends up being delivered,” Eustice said.
NFU President Minette Batters tackled him on the issue of producers being price takers: “We have a unique monopoly power in the rise of the discounter which has led to the most extraordinary environment in such a dense population of over 60 million people.
"When the discounters discount Tesco, it has to follow the discounter; and this has most recently played out with the undervaluation of Morrisons.”
She added: “We have created a trading environment that is exceptionally challenging … with this enormous exponential rise in inflation of energy and labour.
"I think that's a new environment we're heading into which going to become the norm, so we probably got to accept we are price takers and think about what a fair return for everybody looks like in that marketplace with producers taking less than 8% out value chain.
"It doesn't stack up so they'll be put out of business just by the impact of operating in that marketplace.”
Jake Pickering, agriculture manager for Waitrose, agreed that it was important that retailers provide long term security of their supply chains given the current marketplace.
Speaking at the poultry breakout session of the conference, he said: “A lot of what we can do is really simple stuff- it is about providing that long term security for supply chains.
"We recently had an annual conference for suppliers and one of the polling questions was - how long have you supplied Waitrose?
"The vast majority answered over 20 years, so we've been working with those supply chains for a long time and we have lots of models in place with feed trackers and long term contracts.
"LTA’s are long term agreements in place to try and give those supply chains reassurance that we're going to be here for a long term.
"I look at what's happening in pork sector at the moment and its truly dire in their industry and we have stuck by our contracts. I would encourage all the elements of the supply chain generally to put their long term commitments out there.
"Embedding those long term relationships is really key now; I think that that is a huge weight off farmers’ minds’ when they have got that sort of security”.
NFU’s chief poultry advisor, Aimee Mahony, chairing the session, asked Pickering about the future for white eggs, noting that Waitrose stocked a six pack of white eggs in their Essentials range.
Jake’s response was: “We have been 100% free range across our egg offering over many years and we see white eggs as more of a value offering.
"But the fact of the matter is from our consumer research is that consumers see the brown egg as being more artisanal and when it comes to the flavour profile, they think shell colour comes in the top three elements as well as the size of the egg.
"They assume the larger the better but we all know in this room that's its conversely true when you look at the white:yellow ratio; and then they look at the yolk colour and the shell colour and believe these decide the quality of that egg.
"The egg research we see indicates that consumers perceive that white eggs have been bleached or have been heavily processed.”
Aimee then asked Jake about the kind of environmental credentials that Waitrose customers look for. He replied: “That is the big question so for the last few years all retailers are communicating the credentials of their supply chains, and animal welfare is key.
"I think all of us probably struggle to grasp the environmental nettle and that is because it's so broad reaching, is not just biodiversity, it’s not just net zero, not just water use, air quality, soil quality etc.
"Rightly or wrongly, soy and palm oil going to increasingly get demonised by certain parts of the market and we're going to have to be on a clear communication journey in terms of reassuring customers that, by buying half a dozen eggs, that they're not causing deforestation.
"It’s not an easy process but something that all retailers are sort of on the journey with.”
