UK's Egg Producers May Just Quit As Feed Costs Soar

In Britain, the damage wrought by rampant inflation can be seen in the fate of the humble egg.

Photo Insert: With the war in Ukraine driving energy and chicken feed costs higher by 90%, farmers say what they get paid is no longer enough, upending the economics of a key food staple.

With the war in Ukraine driving energy and chicken feed costs higher by 90%, farmers say what they get paid is no longer enough, upending the economics of a key food staple, James Davey reported for Reuters.

Many of the country's supermarkets, including market leader Tesco and No. 3 Asda, have rationed sales, blaming the bout of bird flu that has ravaged flocks across Europe and the United States and, they say, led to a British shortage.

But British farmers argue that while the outbreak is a factor, there are not enough eggs because they lose money on every box sold, forcing many to cut production or quit altogether.

"The stupidity of the whole thing is that we warned retailers, we've given them plenty of notice this was going to happen," Robert Gooch, chief executive of the British Free Range Egg Producers Association (BFREPA) told Reuters.

BFREPA estimates the total UK laying flock has fallen 6% to 36.4 million over the past 12 months. Frank Thompstone says that last year he cut the number of free-range hens at his farm in Burton-on-Trent, central England, to 24,000 from 36,000 to limit his losses. By October, he had had enough, giving the required 12-month notice on his contract with his buyer.

Driven by demand, British egg producers have for years focused on free range, which now represents 70% of the market.

But with only 13% of eggs in the European Union free range, the option to fill the gaps on UK supermarket shelves with imports is limited.

Britain's National Farmers Union (NFU) says the eggs shortage could be just the beginning, as the new era of costly energy and grains combined with labor shortages could bring more empty shelves unless food producers and retailers agree fairer terms for the future.

Intense competition among British food retailers has kept prices below European averages and their profit margins among the lowest around. That, combined with a cost-of-living crisis fueled by soaring food and energy costs, limits their room for maneuver, retailers say.

Yet egg producers say that while the supermarkets have raised retail prices and paid farmers more, that increase is not enough to cover exploding costs. NFU says that while British producers are being paid 35% more for their eggs than in 2019, the cost of chicken feed raw materials has surged 90%.

Official UK data shows retail prices for eggs have increased 27% over the last year alone. BFREPA says it costs a farmer about 138 pence to produce a dozen eggs. But buyers are only paying around 109 pence while retailers are selling them for between 219 and 410 pence.

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