The poultry sector has had a difficult year, squeezed by low output prices and high costs, and the outlook shows little improvement, says Andersons consultant Andrew Suddes.
“The egg sector in particular has had a disastrous 12 months and prospects for 2012 are not much better, with feed prices locked in at historically high levels and little sign of a meaningful price rise for eggs to take them above the cost of production,” he adds.
Figures relating to chick placings and hen populations do give some cause for optimism. DEFRA statistics confirm that the first two quarters of 2011 showed a rise in egg production from free-range systems compared to 2010.
However, evidence suggests production has peaked as margins have been squeezed. Data from the British Free Range Egg Producers Association suggest chick placings to July 2011 are down by 7% compared to the same period in 2010. The pullet population is projected to fall by about 1m birds in the second half of 2011 compared to the first, which will affect egg supply into 2012.
Anecdotally at least, there is plenty to suggest that a proportion of producers will cease production, either temporarily or permanently, says Mr Suddes.
“The big issue on the horizon is the proposed ban on eggs produced in cage systems at the start of 2012. This will inevitably have an impact on supply and demand and the price of eggs in the free-range market. The wildcard is the wider European market and what will happen to illegal eggs that come from banned production systems after January 2012.”
In the poultry meat sector, high feed prices will inevitably continue to put pressure on margins. However, demand for chicken meat seems more robust than that in the egg sector and production has continued to rise as consumers view chicken as a cost-effective and convenient purchase, says Mr Suddes.
• Cost/price squeeze expected to continue
• Production falling and more producers set to quit
• Impact of cage system ban on egg prices unpredictable
* Commentary for this article is based on Andersons’ Outlook 2012. Copies can be obtained free of charge by calling 01664 503200 or it can be downloaded from the Andersons website – see ‘Publications’.
* The Andersons Centre will be running its popular series of spring seminars on the prospects for UK agriculture in more depth at locations around the UK in spring 2012. These briefings are aimed at farm business managers as well as professionals working with companies in the agricultural sector. Detailed overviews of each of the main sectors of UK agriculture will be covered as well as comprehensive discussion of the latest agricultural policy developments. For details go to the Andersons Centre.