Demand forces up producer price

Competition for supplies of free range eggs has led some packers to offer prices at a level not seen for over 10 years.

In December Deans Foods increased its producer price by around four pence a dozen, a move that was quickly followed by most packers. But Kent-based Fridays, which is actively recruiting extra free range production on the back of newly-acquired supermarket business, pushed up its price even further this month when it handed producers an extra four pence for Very Large eggs and five pence for Large and Medium.

This means that Fridays are now paying a weighted average of nearly 78 pence per dozen, although as reported in last month's Ranger, the company does levy a collection charge of £100 a week. The move has left Deans lagging behind by over eight pence a dozen.

Alluding to the free range fraud scandal exposed last year, in a letter to its suppliers Friday's operations manager Martin Flegg said: "The false supply situation made it impossible to improve producer prices prior to the past couple of months when the true market situation emerged.

"Naturally during this period of poor returns there has been little expansion in UK free range egg production and we hope that we can stimulate growth because we are still seeing strong demand for both free range and organic eggs."

Glenrath Farms has also pushed up its free range price and is offering a deal which will see producers paid 76 pence a dozen for all eggs—including seconds up to a level of six per cent— supplied over the life of the flock. Despite being based in the Scottish Borders, the company is prepared to travel to the south of England to collect eggs provided that volumes are sufficient.

"We need decent-sized loads," Glenrath boss John Campbell told the Ranger. "But this doesn't necessarily mean we are only interested in big farms, it could be achieved by producers coming together on a regional basis."

Glenrath Farms has major accounts with Tesco and Asda and currently delivers eggs into England.

Geoff Cooper, who has recently taken over responsibility for Deans' contract production, told the Ranger that the company had not ruled out a further increase in producer price but was "waiting for the dust to settle" following a turbulent time in the market.

"Producers have had two increases since October, both needed and fully warranted," said Mr Cooper. "We've now come through a frantic period of trading over Christmas leading to some very high prices being offered for free range eggs.

"I believe what producers now want to see is long-term sustainable pricing leading to a consistent and fair return."

He called on competitors to focus on developing the much needed extra production rather than fuelling a boom and bust scenario for existing production.

"In the long term this sort of activity does not strengthen the market."

Mr Cooper went on to say that Deans was committed to adding value to the free range category and the company encouraged its producers to get involved with the production of speciality and branded eggs.

"It is important to look beyond the base price for we operate several schemes where producers can receive extra payment.

"Woodland Eggs is a good example. We are currently in the process of converting a lot more farms to Woodland and producers are receiving a premium of two pence a dozen."