Feed price crisis set to hit producers hard if packers and retailers do not respond

Free range egg producers throughout the UK have been forced to accept increases in feed prices throughout the year and things are not looking better.

In January 2007 a typical layer diet stood at around £140/tonne. September quotes for the same diet have hit the

£190+ mark with the prospect of rising to over £230/tonne by January 2008.

Similarly rearing diets of also been subject to massive price hikes from around the £130 mark in January to

£190 in September with the prospect of a further increase of £30-£35/tonne by January.

Reason for the increases has been the dramatic rise in wheat prices as can be seen from the following table:

Jan £90/tonne

May £100+

June £115+

July £120+

August £145- £150

September £185-£190

Further increases are expected which could take wheat well past the £200/tonne mark.

The situation on soya is less dramatic rising from around £160/tonne in January to £205+/tonne in September.

To be fair not all producers will have suffered such increase in costs, as many will have contracted their feed supplies forward. However, at least one compounder has told the Ranger that it is unlikely that they will offer fixed price contracts in the new year due to the volatility and uncertainty in the raw materials market.

In terms of production costs these prices rises hit across the board resulting in increased day old chick and

point of lay pullet prices to say nothing Feed price crisis set to hit producers hard if packers and retailers do not respond on the effect on the cost per dozen of

producing eggs.

If the increases in feed costs are to be recouped then producers would need to nsee a significant increase in egg prices.

From January to September the cost of feeding a chick to point of lay has risen by between 40p and 45p. By January

2008 the increase will be closer to 60- 65p a bird.

For a typical free range unit producing 24 doz eggs a bird the increase in pullet feed costs, if passed on, represent

between 1.5 – 3.0p/doz on the cost of producing eggs. Add onto this the increase in layer feed prices and some

producers will be faced with cost increases of between 15- 20p/dozen in production costs! This may well seem in

some eyes to be a worst case scenario but for producers placing flocks over the next few months is likely to be a reality.

Although most producers have seen egg price increases of around 5p/doz this is clearly grossly below what is needed if they are to breakeven let alone make a

profit. Packers and retailers must now work together in offering a realistic price for eggs which inevitably be reflected in a substantial increase in retail prices.

BFREPA officials have already met with the packers where the case for a double-figure increase was spelt out.