A major organic feed componder has called upon supermarkets to open a dialogue with producers before the organic egg supply chain collapses.
In an open letter sent to The Grocer, Humphrey Feed’s director of feed sales Martin Humphreys highlighted the precarious nature of the organic egg supply chain.
“I am concerned that the organic egg supply chain is on the verge of collapse. Am I being over dramatic? No, the chain is under enormous pressure due to a lack of organic raw materials and the resultant high price caused by the shortage. While producers are having to pay escalating prices, the rest of the supply chain is not covering these higher costs.
“Is there anything that can be done about it? Of course, but it will take the major UK retailers to recognise the problem and help put in place a long-term solution that will build a robust supply chain capable of developing and prospering,” said Mr Humphreys.
He warned that if retailers do not take the lead and pass on these price rises to their customers, the trickle of organic farmers who have already converted back to conventional production will become a full flow.
Mr Humphreys backed his claim by highlighting that since harvest last year, organic raw materials have increased in price by between £100-200/t or 24-48p/dozen eggs (see table)
“When we contacted a number of major suppliers of organic grains and proteins, none of them had materials to sell. This is happening against a backdrop of the requirement on 1 January for a higher % of organic materials in animal feeds.
“However, this shortage of the materials has encouraged our French and Belgian competitors to relax their organic % inclusion, thus giving them a competative advantage.
He believes The high prices will ultimately paralyse the organic sector unless the costs can be passed on to the consumer who wants to buy organic foods. It is difficult for feed compounders to contract to buy forward (and that is the only way of securing supplies) if they are concerned that the level of these raw material prices will result in uneconomic feed prices for customers.
Feed companies are currently discounting prices to keep their customers in business, but this is a short term expedient in which financial risks are huge.
Since harvest last year
•Organic wheat has gone up from £220 to £330/t
•Organic full fat soya was £350 and is now £568/t
•Organic sunflower was £210 and is now £360/t
•Organic soya expeller was £340 and is now £530 to £620/t