Noble Foods has taken swift action to offset the impact of a sudden surge in feed prices and has increased its free range producer price by three pence a dozen on Large and five pence on Medium.
According to the packer, the increase is being funded entirely by Noble ahead of any money that may come out of retailers’ pockets, with pricing discussions with retailers currently underway but not concluded.
"Noble have moved to increase producer prices in a timely manner as we recognise that the producer base requires this extra payment to quickly offset the impact of feed price rises," wrote Contract Producer & Poultry Director Martin Troop in a letter to producers.
"We hope that the price increase announced in this letter will start to help provide the necessary confidence to our producers to expand production facilities where appropriate, whilst also demonstrating our commitment to returning a fair price to producers for their eggs."
The move has been welcomed by BFREPA chairman Tom Vesey, who commented: "I think many of us had been expecting feed prices to continue to ease so this sudden reversal has taken us totally by surprise and all credit to Noble Foods for recognising the pressure this had placed on producers and for taking the appropriate action."
But despite this move Tom still does not believe producer returns have reached a point where they can be considered fully sustainable. "Our Association costings still show producers in a situation of negative margin," says Tom. "I believe it is vital that packers and retailers work together to find a solution to this problem or our sector will have little chance of meeting the challenge of increasing demand for free range eggs."
Feed prices have increased by an average of £15 per tonne due mainly to weak sterling making UK wheat an attractive proposition for overseas buyers which in turn has pushed up the price on the home market. The weakened pound has also led to imported ingredients, such as soya, being more expensive to source.
Using the Ranger average egg price profile (64gm egg weight at 5% seconds) the Noble egg price has increased by 3.5 p/doz, which means it has fully compensated for feed price increases of up to £17.50 per tonne.
South-east based packer Fridays has also implemented an increase in producer price, mirroring the Noble increase of three pence and five pence per dozen on Large and Medium eggs. This has enabled it to maintain a gap over Noble’s pricing of 6.45 p/doz before the deduction of a collection charge.
