Noble Foods has started to recruit new production again in anticipation of the egg market returning to balance by the end of the year.
Free range egg producers are currently making substantial losses through a combination of soaring costs and low prices paid for their eggs – the result, they were told, of too many eggs on the UK market. Just a few months ago the packers’ organisation, NEMAL, warned that it could be the middle of 2012 before the egg market returned to balance, but Britain’s biggest packer, Noble Foods, now says that balance could return earlier and it is making plans for extra production for next year.
Noble’s contract, producers and farms director, Tom Willings, told the Ranger, "There are some indications that free range supply and demand may return to balance toward the end of the year. Wholesale market prices have firmed and whilst there are still some surpluses present, the volumes being traded have reduced from those present only a few months ago. Chick placement data shows a significant reduction in future flock base, though it is unclear as to what extent this is influenced by the legislative change in the intensive market," he said.
Ironically the latest monthly statistics from Defra show that the commercial layer chick placings for May were up slightly on the same month last year – 2.74 million in May this year compared with 2.64 million last May, although there were substantial year-on-year falls in the previous months this year.
The chick placement figure for April this year was 2.9 million. This was nearly a million down on the 3.8 million chicks placed in same month for 2010, although last year’s figure was slightly inflated because April was a five-week month for the statisticians. The number of layer chicks placed in March this year was 2.2 million - down by more than a quarter on the total for the same month last year. A total of three million layer chicks were placed in the UK in March 2010.
Tom Willings said that demand for free range eggs amongst consumers was also holding up very well. "Free range performance in the supermarkets continues to be strong, with the latest data showing a 10 per cent year-on-year increase in volume, although free range retail prices, contrary to recent reports, have seen little or no inflation over the last 10 months. Average retail prices after promotional discounts, when comparing August 2010 to June 2011 remain unchanged at £2.73 per dozen."
He indicated that there could be better times ahead for the UK’s struggling free range egg producers. "With these factors taken into account, together with some reduction in feed costs, the outlook for improved producer returns must be positive.
"Into the medium term, the continued growth in free range demand will necessitate careful expansion in supply base if the demand is to be met over the next year. To this end, Noble Foods have first and foremost looked to source free range volume from within the pool of existing packer surpluses, ready for use in 2012. Having exhausted the opportunities to responsibly acquire these existing surpluses, and considering the length of time the planning and building process can take, we have looked to selectively recruit a controlled number of birds due to come into production well into the next year." Tom would not say just how many extra layers the company was looking to add to its books.
Another company looking for new producers is Glenrath Farms, although John Campbell said the market remained very difficult at the moment. He said that, like Noble, the company was looking ahead. It was looking for new producers for its own Kitty Campbell’s brand, which it launched onto the market recently.
The Kitty Campbell’s eggs, which take their name from John’s granddaughter, are currently exclusive to Tesco and are being trialled in a number of stores initially. The brand is being marketed as high welfare, high quality eggs. All the birds are reared on the farm from one day old.
John said Glenrath had launched the new brand in response to other companies. Glenrath says the venture is proving successful and because of this the company is looking for new producers to provide the eggs needed for its development. Glenrath advertised in the Ranger, offering producers 85 pence per dozen for their eggs, and John says that the response has been huge.
"We are amazed at the number of responses we have had. Most are existing free range producers, although there have been one or two new people as well," said John. "We are not wanting too many at the moment, but we are looking towards next year."
On the market generally, John said there were still too many eggs around at the moment. Added to the problem of surplus commercial eggs, there was also the problem of backyard hens, he said. There had been huge growth in the number of backyard hens and this would inevitably have an impact on the market.
Despite his concerns, John is looking ahead by seeking new recruits and Noble is doing the same. Existing producers will take some heart from Tom Willings’ expectation that the egg market will return to balance earlier than previously suggested.