Crunch in egg market sees prices on the rise

TURMOIL in the eggs market looks like bad news for shoppers but good news for farming.

Retailers say some reports on egg prices have been over-dramatic but it is clear a significant adjustment of the market has begun, following the introduction of new standards for caged layers.

The last stragglers in UK egg farming had caught up with the new rules by the end of February, said Defra, but a lot of their European rivals have been caught out by governments and big buyers suddenly insisting on compliance.

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“The crunch has come quicker than anyone expected,” said the British Eggs Industry Council.

Last week, French bakers were reported calling for help because of shortages caused by farms closing. Last weekend, a Sunday paper quoted anonymous food industry sources predicting: “Supermarket shelves could be empty of key products in a month.”

On Monday, an ice-cream maker told Farming Today he was suddenly paying 70 per cent more for frozen yolks. On Tuesday, a Bulgarian news agency reported uproar over eggs doubling to more than three euros a dozen in Sofia.

UK supplies remain steady. But Nicola Wood, speaking for Bako, of Preston, one of the biggest dealers in liquid egg for the baking industry, told the Yorkshire Post hot competition for compliant eggs from the rest of Europe had pushed up prices dramatically and there would not be a quick return to normal.

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She said: “Following the changes in the legislation, the industry has failed to deliver, with a high number of European countries unable to meet the requirements. This has caused an unprecedented shortfall of legal egg within the market. We have seen an increase of 60 percent in our buying cost of liquid egg.”

Ian Bowles, head of sustainability for Premier Foods, producer of brands including Mr Kipling cakes, said there were significant problems to overcome. They had anticipated a shortage of legal eggs from cages and had moved to more expensive free-range-only dried egg – but now that was short, too, “so we have been hit by a double whammy”.

An online bulletin from the British Free Range Egg Producers at the end of last week was reporting average farm-gate prices doubled on a year ago but Charles Bourns, chairman of the NFU poultry board, said they needed more and was later quoted saying prices in the shops would probably need to rise 12p-20p a dozen to allow a proper response to the “seismic shift” in the rest of the market.

George Fuller, who supplies eight shops in Yorkshire and Lincolnshire from a bakery in Goole, said his shell-egg supplier had put up prices 25 per cent between last Friday and this Tuesday and his liquid egg costs had doubled in a week. He reckoned £12 worth of quiche would suddenly cost another £1.60 in raw materials.

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He said: “There is no doubt it is serious. We are not going to run out of staple foods but some big manufacturers might well have supply problems.”

The Yorkshire Post spoke to local egg producers who said they were still locked into contracts and it was too early to say where prices were going – but they had pent-up cost rises to take into account as soon as the market let them ask more.

Chris Kirkwood of K Fresh at Withernsea – one of the first investors in the laying ‘colonies’ which are now the new budget end of the market – said prices still varied according to who was buying and in what circumstances, but he confirmed they were “firmer”.

He said: “They need to be, because the industry has spent a huge amount of money conforming. It should be the start of a move in the right direction and it just has to happen.”

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Another big egg farmer, who is not locked into any contract, said he was averaging 20p a dozen better since Christmas.

Warning over costs

FOOD industry spokesman Terry Jones, director of communications at the Food and Drink Federation, said: “Manufacturers will do all they can to mitigate the increased costs of compliant eggs to avoid passing them on to consumers. However, there will come a time when it will be unsustainable to absorb all of these costs and prices may rise.”

Referring to the threat of brands disappearing, he said: “It is simply too early to know how long this tight supply situation might last and whether it could cause manufacturers to produce smaller quantities of product.”