European egg markets are into “uncharted territory” with the shortage that has developed in recent weeks, according to one of the UK’s leading packers.
Elwyn Griffiths of Oaklands Farm Eggs told the latest meeting of the Midlands Free Range Discussion group that culling of hens had started in Europe on such a scale that it had “shocked and surprised everybody”.
“What has happened is beyond anyone’s expectation,” said Mr Griffiths. “When traders want British eggs to go into Europe, you know something is changing.
“Spain was 120% self-sufficient in eggs and 20% were exported to UK. But Spain has killed more chickens in the last 10 days than we’ve actually culled in the UK, and Spain is now a net importer.
“European egg prices have gone up 300%. When you come to look at any market, you only want a tight market, but when the market goes too tight, everything gets a bit out of hand. Every single account we are packing for this week we have been ‘shorting’.”
Normally, he said, Oaklands would be worried about someone else taking the account off them. Now they were simply telling customers how much egg they would be getting.
“For the first time we don’t need to be frightened of how we deal with our customers. We need to treat them with respect, but we need to get a strong message out there.”
The reason for the rapid cull in Europe, he said, was that the commission had made it clear to member states that it was going to enact the cage ban legislation, and intended to fine them heavily for not complying.
“We would have assumed that Europe would take five years to look at the rules and do something, but what has shocked everybody in the industry is how quickly Europe has moved.”
There was a big question about where the money was going to come from to create new colony cage units. Even bone fide, sound businesses in Spain could not borrow money. “If we think our banks are paranoid, the European situation is worse. In Europe I just can’t see where the money is going to come from to invest.
Mr Griffiths said there was still is a lot of free-range egg going into intensive egg sales in the UK, because there were about 3-4m colony places still under construction.
When that colony egg came on stream, there could be a free-range surplus again.
“I personally think the sector has had to mature,” he added. “In the last five years everybody producing free-range eggs made a profit. But now, in a market where it’s not premium, it’s not niche, the bottom 10% or 15% should be going out the industry all the time, because any industry needs to be dynamic and competitive.”
“I still think there is a strong future for the egg industry, but managing change in the next three to six months is going to very challenging.”