Get numbers right before setting up free range egg business

The first step in setting up a new free-range egg enterprise should be to talk to a packer or marketeer, according to Richard Kempsey, production director at Stonegate.

Speaking at the first of the workshops at the Pig and Poultry Fair, Mr Kempsey said that potential new entrants should establish there was a market for their eggs before they did anything else.

“Once you’ve done that, get up-to-date figures from someone like ourselves, and check and double-check your figures.”

Not even standing room was left as would-be producers packed themselves into the room to hear Mr Kempsey run through the key steps to starting up in free range eggs.

“Please treat every one of these points with a lot of reverence,” he said.

“Work on the figures for a gross margin sheet, then generate a projected cash flow based on your own circumstances. After that, talk to your bank manager as to what loans you can get in place.

“Then go back to your gross margin sheet and put in the interest on your loan, and again recalculate your cash flow.

“Go round and round those three documents until you know where you’ve got to. Then sign off your bank documents and start the planning permission process.”

Producers should only sign contracts for buildings, pullets or egg supply once they had the planning permission in place. The planning process could be short, or it could be “really hard work”.

“In the time between signing contracts and getting going, project-manage the build and get any necessary training in place.”

Turning to his own company’s scheme with Waitrose, he said that what they’d set out to do was to re-establish true family run British farming again.

“Waitrose have recognised that livestock sectors in the UK are on a gentle decline, and where is the meat, poultry and eggs going to arrive on to the shelves from in the future?”

The Waitrose Colombian Blacktail scheme was one of a number of premium free range brands that would become more widespread.

“The egg market is going to split within free range, and we’ll have premium lines and we will have a standard free range offer.”

It was already happening with a lot of the retailers, Tesco and Morrisons in particular, he said.

Such schemes allowed Stonegate to pay roughly 10 or 11p over a standard free range price, for just 3 or 4 p of extra production cost.

Mr Kempsey also issued a warning about the state of the market: “Just remember the whole poultry sector is cyclic and can go up and down.

“In terms of pullet numbers, and the new enquiries we are getting, there are real cautionary signs, so do be careful at how you approach looking at any new enterprise. The amount of investment going on right now is huge.”

All the news from Pig and Poultry