10 May 2002

Egg investment offers an immediate return

By Shelley Wright Scotland correspondent

CONTRACT organic egg production has proved to be an enjoyable and financially sound diversification for Giles Henry.

Until earlier this year, Mr Henry spent his time tending 450 breeding ewes and 50 Luing cows, with followers and finishers, on the 219ha (540 acres), including 114ha (280 acres) of heather moorland, he rents near Selkirk in the Scottish borders.

"Most of the time I finished work with the livestock before breakfast. So, over the past five years, I have had various part-time jobs off farm. The income was very welcome, but when you are away from the farm – even for just a few hours at a time – the worry is that something is getting missed.

"I really wanted a monthly income without having to be away from the farm."

Last June, Mr Henry saw an advertisement in the farming Press looking for producers of free-range eggs.

"I had no experience of egg production, but it sounded like an interesting opportunity," he says. With consumer demand for organic free-range eggs soaring, he was offered a contract for all the eggs he could produce with the price guaranteed for a year.

After looking at various free-range egg production systems in Scotland, Mr Henry opted for a mobile house, from APS in Devon, complete with solar panel and wind turbine to provide all light and power requirements.

The capital cost of the venture is £38,000. But half is coming from the Scottish Executive after Mr Henry applied for help from the Farm Business Development Scheme, which offers grants to help farmers diversify.

"The building was ordered last November and arrived in mid-January," says Mr Henry. And 2000 Hyline variety brown 17-week-old birds arrived on Feb 4, sourced at £2.50 each from the company to which eggs are sold.

"With a total floor area in the house of 344sq m, stocking at 5.81 birds/sq m is within the limit of 6/sq m laid down in the organic standards."

Hens are given 14 hours/day of light which, combined with feeding and the opening and closing of access to nest boxes, is controlled by automatic time clocks.

By 28 weeks, hens were laying at about 90%, with Mr Henry having to deliver eggs twice a week to the grading and packing station in Peebles.

An all-in, all-out system is used, with hens kept for a 56-week laying period. Once they are removed, the house will be thoroughly cleaned and moved to a clean area of field. "Organic requirements state the second batch of hens cant be on the same land as the first," he says.

Payment for eggs varies according to size, but at week 28 Mr Henry was delivering 1100 dozen eggs/week, averaging £1.10/dozen.

The organic premium is significant, with the current contract price for non-organic free-range eggs 50p/dozen lower.

"But we need a healthy premium because I am paying £292/t for organic poultry feed and the hens are eating 1.75t/week," says Mr Henry.

In his original cash flow, Mr Henry forecast a 19% return on capital for the venture. "Yes, we have a fairly high feed cost. But there was also income straight away. I cant see any other livestock enterprise that can compete with that return on capital.

"There is a good market for organic free-range eggs and it really is satisfying to tray-up 150 dozen eggs/day. "There is no definite plan in place yet, but I think we could well expand." &#42

Giles Henry prefers his new egg enterprise to previous off-farm, part-time jobs he took to improve income.

&#8226 Good diversification enterprise.

&#8226 Grant for building.

&#8226 Weekly income received.