A leading figure in the UK egg industry has warned that egg producers have been hit by 'hyper deflation' over recent years.
Veli Moluluo, managing director of the consumer foods division at Noble Foods said that, whilst the industry was doing well overall, with demand and egg consumption increasing, the detail behind the headline statistics were less encouraging for egg producers.
"What is really interesting is digging behind those numbers," said Moluluo during an address to a poultry commodity session at the NFU annual conference in Birmingham.
"Yes, volume is growing and that is what is driving value growth, but what is really being hidden within those numbers is that there really is significant deflation.
"I would almost term it hyper deflation. As we stand here today, six medium free range eggs are almost half the price they were 10 years ago. In certain retailers they are half the price they were 10 years ago," said the Noble chief.
Latest full-year figures released by Defra show that average farm gate prices for free range eggs were down again in 2019.
The average for a dozen free range eggs in 2019 was 80.3 pence in 2018 compared with 81.8 pence the previous year. In 2017 the average farm gate price was 82.6 pence and in 2016 it was 84.3 pence.
Robert Gooch, chief executive of the British Free Range Egg Producers' Association (BFREPA) said that many free range producers were struggling financially.
"This real terms deflation in free range eggs has been happening for quite a while," he said. "While value has been going up, it has not been going up as much as volume.
"Producers have for some time been producing more eggs for less money. That is, I am afraid, a symptom of the increasing growth of free range over the last few years.
"Producers are struggling," he said, "A lot of producers are leaving packers at the moment."
On a more optimistic note, he added: "I think it is likely we will see packers respond positively on price over the next nine months."
Veli Moluluo told those attending the poultry session that there were positive signs for the egg industry.
"We are a nation of egg lovers - almost a billion pound category from a retail perspective, which is 55 per cent of the eggs used within the UK. The rest are food manufacturing, food service and retail," he said.
"There is significant growth - it's a great industry to be in - when you look at the numbers, from a volume perspective 3.5 per cent growth on an annualised basis, two per cent growth annualised from a value perspective. They are positive numbers," he said, although he added they did disguise the issue of deflation.
Another positive sign was the growth in egg consumption in the UK: "It is fantastic. Since 2013 we have consistently grown egg consumption within the UK.
"We currently stand at 199 eggs per capita. There is still significant room for growth. Continental Europe are in the mid-200s, 220s, so there is a significant opportunity for us to grow consumption and really supercharge our industry and grow."
One issue that has plagued the industry over the last couple of years has been booming consumer and retailer demand for large eggs over other egg grades.
Industry leaders have been calling on retailers to try to temper this unbalanced demand and, during the poultry session, Thomas Wornham, chairman of the NFU national poultry board reported that the union had had some small success with one retailer.
He said that Aldi representatives had agreed to change all its recipes involving eggs to stipulating medium eggs rather than large ones.
The question of white hens was raised during a question and answer session at the poultry break-out. Phil Crawley asked whether there was any prospect of persuading consumers to accept eggs from white birds.
Veli Moluluo said he was a fan of white birds - they had many benefits. He said it was always possible to communicate with and educate consumers.
"The crux of it is how long does it take and how much money are we going to invest in doing that? Fundamentally, the bigger question is who is going to invest?"
He said that in the Netherlands over a period of time the industry had created a market that was now split 50-50 between brown and white eggs in what had historically been a brown egg market.
"How much time and money and resource are we willing to invest as a nation?"
He said: "We, as a business, have tried it and I know retailers in this room have tried it in their own label, own brand products. Where consumers are given the choice, where brown eggs have been converted to white at the same cost, we have seen same store sales drop anywhere between 18 and 40 per cent.
"It is unsustainable at that level, and what you have always to go back to is the consumer will decide.
"The worst thing we could do as an industry is flood the market with white egg that nobody wants and create an issue whereby there aren't enough brown eggs to fulfil consumer demand and we end up importing brown eggs. That would be a huge, huge disaster," he said.
Jake Pickering from Waitrose said his company offered a white egg but it was not something that sold particularly well: "The job of a retailer is always to provide choice," he said, "and make sure consumers have that product availability."
John Kirkpatrick said his company, Tesco, had spent a lot of time with Noble and Glenrath Farms looking at white birds: "The virtues of the birds are unarguable," he said.
"The challenge keeps coming back to the customer. The customer will look at the product and assume that product has been adulterated in some shape, form or fashion. There is a huge piece of education with customers to get this over the line."
He said the white bird's virtues as a bird with less aggression were an advantage with the threat of beak trimming ahead. And he said he saw potential for a white egg as an entry tier offering.
"If I was a betting man, in 10 or 15 years' time I could see white birds in some of our barns producing, potentially, an entry tier egg.
"That is where this bird fits the market really well and, if we look at out European counterparts, that is where they have got that bird producing really, really well."
