There is no let up on the margin squeeze, prompting increasing numbers of producers to consider cancelling replacement flocks until margins improve and claim that retailers have failed to grasp the full extent of the problems.
New figures published by the NFU show that by January 2008, the average free-range egg producer will be losing over £27,000 a year while broiler units face a loss of more than £118,000.
NFU poultry adviser Sam Hawkes said the financial pressure was largely down to increases in feed costs, as they accounted for a high percentage of the total cost of production. So the increase in feed costs had directly pushed businesses into the red.
To return the average broiler business into profitability seen before to the recent feed cost increases, a price rise of 24% is required on the August price. This equates to a price paid of 66.6p/kg.
The equivalent amount for free-range farmers is an increase of 30%, equal to 98p/doz.
Chairman of the Free Range Egg producers Association, Tom Vesey, recently highlighted that since August, “the price of my feed has risen by £50/t and yet, to date, I have received no increase in the price of my eggs”.
He has calculated that it will cost him £50,000 to restock his 16,000-bird house. “I just have time to cancel them and I am very tempted.
“Already other producers are cancelling their birds, and I don’t blame them. If the chairman of BFREPA is talking about cancelling his next flock, it really is time for retailers to face up to what the consequences might be unless something is done quickly to restore profitability.”
He urges other producers in the same plight to write to their packer stressing the problems they are facing and the real threat of being unable to continue.
At the time of writing, there was some indication that there would be a price rise by Sunday 28 October, but nothing had been confirmed.
Mr Vesey added: “I’m very concerned that some retailers have already done a deal which is too low, at 10p/doz. We need 15p just to stand still. It’s very worrying and the egg sector is in big danger.”