Egg sector come together to agree average costings
A formula for calculating the cost of free range egg production has now been agreed by the British Free Range Egg Producers' Association (BFREPA), packing companies and other representatives of the United Kingdom egg sector.
The agreed formula has been developed with the help of ADAS, and it is hoped that the agreement will help to limit any potential future disputes between producers, packers and retailers about the true cost of producing free range eggs. Achieving an agreed set of costings is seen as a significant breakthrough by Robert Gooch, BFREPA's director of policy, and one that he believes will help in any future discussions about egg prices.
"No longer will anyone be able to argue any more that the costings are not accurate," he said. "We now have an industry-wide standard for cost that the packers, the NFU and BFREPA are all agreed on. That is a major step forward," said Robert, who said that in the past regular costings published in the Ranger had been disputed by packing companies. That would not happen in the future.
The work on producing an agreed costing formula has been carried out by ADAS. John Newton, senior consultant with the sustainable livestock group at ADAS, said that from now on he would be producing regular updates on the cost of production in the free range egg sector, taking into account changes in the cost of feed, pullets and other essential inputs. The same costings would be supplied to everyone who had signed up to the process, including representatives of both producers and packers.
"Costs have been an area of argument in the past, but, hopefully, this will eliminate that," said John, who said that ADAS had used information provided by more than 50 free range egg producers to arrive at the formula. "We got data in from a wide range of units - from producers with 3,000 or 4,000 birds up to 36,000-bird units, so we had a good spread of sizes. The majority were 16,000-bird units, which is typical for the industry at the moment. We also got information from poor performing flocks as well as from good ones, so I think we have been able to arrive at a good average.
"All parties involved have signed up to it and from now on we will be providing a monthly figure for input costs," said John, who said that the main point of disagreement in assessing the financial plight of those in the industry had now been overcome as a result of the agreement.
Asked how he had managed to arrive at an agreed formula, he said that the key had probably been the independent status of ADAS. "Just the fact that that we are doing it rather than BFREPA or the NFU makes a difference," he said. "We are an independent organisation. Whilst I am sure that BFREPA did the work properly and diligently, there is always going to be the suspicion from the other side that the figures may have been adjusted in some way to make them more beneficial to producers of eggs in any price negotiations. We are completely independent. No-one can accuse us of manipulating the figures," he said. "Figures have been collected anonymously from more than 50 producers, both large and small, and I think they provide a very fair reflection of average cost. We now have industry
agreement on them."
Whilst the cost of production will be calculated by ADAS, the prices that free range producers receive for their eggs will continue to be collated for BFREPA by Keith Wild. Keith will monitor both the egg price and the price of spent hens from month to month and put them together with the ADAS costings to arrive at a monthly profit and loss calculation for free range egg production. Keith currently obtains prices from both packers and producers, but he is keen to encourage more producers to volunteer prices in order to obtain an estimate that is as accurate as possible. "The more information we receive from producers, then the better the estimate will be. I am looking for producers to text me the prices they receive for their eggs. I will put them all together and arrive at an average for the industry. Obviously it is in the interests of all BFREPA members to have the most accurate picture possible of the profitability of the industry."
Producers who are willing to submit price details are asked to text them to 07855 400666. Keith would like producers to detail the price received for each egg grade, including any bonus paid under the producer's agreement with their packer. All information will be handled with complete confidentiality. It will simply be used to calculate average egg prices for the free range sector.
Former BFREPA chairman John Retson has repeatedly stressed the importance of BFREPA members being prepared to share information on prices and costs to benefit the membership as a whole. John, who set in motion plans for an agreed costing formula whilst chairman, repeated this appeal after hearing that a formula had now been agreed. "It is very good news that the costings going into the producers' magazine will now have been ratified by everyone, but it is vital that BFREPA members continue to provide both ADAS and Keith Wild with the information they need." He said that the initiative would only succeed with the support of egg producers,
themselves. n
