Andrew Opie of the British Retail Consortium put up a robust defense of the supermarkets' actions in relation to the collapse in egg prices on today's Farming Today on Radio 4. According to Mr Opie, the retailers have been paying a sustainable price to packers and producers, have helped promote the free-range sector and are funding special offers on eggs themselves, "with no impact at all on farmers". If anyone was to blame for the losses being endured by producers, it was wholesalers and caterers who had capitalised on the egg surplus, he said. Really?

ha ha, they would say that , wouldnt they.

what they pay, and what they charge is a scandal.

I can't claim to have inside knowledge of the dealings between retail buyers and packers or wholesalers, but the consistent message throughout the second half of last year was that retailers had squeezed prices in the wake of the egg surplus. Their reluctance to increase prices to the poultrymeat sector, despite the massive increase in production costs, also raises questions about their claims to be supporting the supply chain.

Retailers will pay the least they can within the market and sell for the mos they can.

Currently the market is supplying eggs/ poultry at the low price you mention -therefore that is the value of the eggs/poultry.

Are you suggesting supermarkets should pay above the market price to support farmers?

THE BEAST

I really don't know the answer to the question of who/what caused the current collapse in egg prices. In theory a market eflects demand and supply, so when supply is higher than demand, the price paid by the retailer will be lower than if supply is lower than demand.

This model is easy to understand but reality is never quite so simple. Seasonality, marketing and imports/exports can also affect price/cost.

What suppliers must never forget, (but they often do) is that the core purpose of the retailer is to maximise variety offered to the customer whilst minimising the cost of purchased product. On the other hand the core purpose of the producer is to minimise variation (and variety) whilst also minimising input costs.

In the case of the egg producer his opportunities to minimise input costs are a lot less than those of the supermarket, at the same time the egg producer has less opportunities to expand his market (he has fewer customers and products) than has the supermarket. Nor is it as easy for the producer to find alternative supply sources as it is for the supermarket. (The supermarket can buy eggs/anything in from the global market) whereas the single producer has limited alternative sources of supply.

In other words. The whole system is stacked in favour of the supermarket.  

In my view. Every producer of every type of food stuff should have the long term aim of doing their level best to encourage systems of retailing that can compete the the supermarkets in the locality of that producer.

I am not anti supermarket. But I am in favour of localism (not parochialism) in the food market.

Peter Wells:

(The supermarket can buy eggs/anything in from the global market)

One only hopes they have not bought eggs from Germany which are contaminated. (See an earlier posting.) 

 According to a contributor (who obviously worked for a supermarket and in a fairly high position too) on the Daily Telegraph comments section recently with whom I had a lively debate regarding supermarkets and their treatment of farmers, if we can't supply chicken or eggs at the price the supermarket is willing to pay it is because we are all inefficient at what we do, and if we can't be efficient (how he measured this he wouldn't say not surprisingly) then we should quit farming and let supermarkets import all their food (or fud if its the Co-op) from producers abroad who are cheaper and therefore in his view 'efficient'.

Supermarkets are to blame for most things in Britain keeping prices low. they buy chickens from Thailand,Taiwan Phillipines for 10p each,they buy eggs from same countrys at a penny each so they wont buy British poultry etc, same with milk they pay a pittance for milk and sell it 4 times more,these places dont make billions monthly by buying British, I stay in North East Fife in Scotland there is numerous Farm produce companies,, I asked management at local Tescos why dont they buy fresh rom Kingskettle Farm produce they stated they cant as they have contracts from abroad and its cheaper to buy.they are just interested in profits, quality doesnt count any longer most chickens in supermarkets are year old before customers buy them.they sell the asian bought birds at £2.50 to £3.50 each and £10 for a scottish chicken.they wont sell many of the latter, they now have started to sell pullets as chickens.

The  Produce companies dont survive from local supermarkets, Producers have to sell in Europe. and  Saturday markets many farmers have to sell from farm with advrts in newspapers , many prefer to buy a 56pound  of potatoes for a fiver  than a supermarket taking a fiver for  6kg.

will be same in rest of Britain.

i dont think it is massively the supermarkets fault in the case, i know of a few farmers locally who converted from pigs to free range eggs because of the exceptional prices being offered for them a couple of years ago when how chuckies were treated became for want of a better word 'fashinable' with the public. with the demand increasing for free range eggs so rapidly they were scared making prices go up quickly, within 2 or 3 years alot of farmers were jumping ont he band wagon because of the good prices now theres too many have jumped on, too many eggs meaning supermarkets can manipulate the price because of oversupply. Im sure i read somewhere of thousands of eggs having to be disposed of and used as cheap protein in some feeds as there was no other use for them as there were so many free range eggs that the sueprmakrets didnt want them?

JockStewart,

Define quality because your definition will probably be diferent to the supermarkets.

To claim supermarkets sell lower quality imported produce than the domestic altenatives is doubtful. What is the difrerence to the consumer in an egg sold in the value range of Tesco's that has come from Thailand or Hereford? to Tesco and to the average consumer of value eggs none at all, they both have to meet identical specifications.

freeranger:

if we can't be efficient (how he measured this he wouldn't say not surprisingly) then we should quit farming and let supermarkets import all their food

This is an excellent point. Unfortunately the supermarkets measure producers efficiency in a very limited way. Their main criteria is 'Cost/Price.' Secondary criteria are related to whether the product has features which enable them to obtain a premium price from their customer.

In acting this way Supermarkets are reacting like Supermarkets. The problem many farmers, and I fear journalists have, is in having a mistaken belief that somehow Supermarkets can work in such a way as to promote the producers interests. They cannot.

This is not to say that a form of cooperation is not possible. But in my view, that should take the form of contract and not drift into areas such as 'partnerships.'

 Discuss.

Peter Wells:

freeranger:

if we can't be efficient (how he measured this he wouldn't say not surprisingly) then we should quit farming and let supermarkets import all their food

This is an excellent point. Unfortunately the supermarkets measure producers efficiency in a very limited way. Their main criteria is 'Cost/Price.' Secondary criteria are related to whether the product has features which enable them to obtain a premium price from their customer.

In acting this way Supermarkets are reacting like Supermarkets. The problem many farmers, and I fear journalists have, is in having a mistaken belief that somehow Supermarkets can work in such a way as to promote the producers interests. They cannot.

This is not to say that a form of cooperation is not possible. But in my view, that should take the form of contract and not drift into areas such as 'partnerships.'

 Discuss.

I recall one example this defender of supermarkets used when I accused supermarkets of bullying their suppliers into accepting their terms of agreement. He said that one supplier had refused to help fund a promotion, and was immediately de-listed. Eventually both parties met and hammered out an agreement which was mutually beneficial to them both. Is it me, or can others see something intrinsically wrong with those last two  sentences? This guy was saying that farmers don't get the deal we want because we are weak negotiators and if we are weak then we get what we deserve. He went on to say that we don't deserve to benefit if we can't be 'efficient' and we shouldn't be looking to make money at others expense, and assurance schemes shouldn't be used as an excuse to demand more money simply because we comply with them.I did put a link on another page but the comments section with his postings in has probably gone now.

This is the same problem all Primary producers and most Manufacturers have but Super Markets have taken the real Biscuit over this issue.I used to know a Chap that worked for a large company that sold Eggs to Super Markets and he said that there were about four main Companies who sold Eggs to them and all of them would be treated in the same way by these Monsters.He said that they would order so many Eggs at an agreed Price for Delivery say two Days hence ,just before the Delivery time the Barrow Boy with the Cockney accent would ring and say we have been offered Eggs at a lower price if you want to Deliver you wll have to accept a lower price. Dirty Business,well of course,that is their way of conducting Business but what is good for the Goose is good for the Gander and a Bit of Rough Treatment would perhaps show these Jack the Lads that your Word should be your Bond. Until Farmers and Packers get pro active with their Customers the situation will stay the same.