Outlook 2017: Can rising demand sustain poultry prices?

Many farmers have entered the egg production sector over the past few years because of strong demand.

However, egg prices will need to remain robust in 2017 or margins will come under some pressure, says Andersons consultant Blaise TerHarr.

“Over the past six to seven years the UK industry has grown, with output in 2015 at 835m dozen and likely to be higher again for 2016. This has been driven by consumer demand, with egg consumption up 9% in the past year.

See also: Avian influenza – the signs and symptoms

Business pointers 

  • Significant productivity gains have helped margins
  • Prices need to be maintained for this to continue
  • UK production systems could benefit from retailer commitments

“As with broiler production, this sector has seen significant productivity gains. Egg production has increased by three eggs a bird a year over the past 20 years, with the average bird now producing 330 eggs/laying cycle.”

The past two decades have seen significant growth in free-range production systems. “With the commitment of many retailers to phase out colony eggs by 2025, this trend only seems set to continue,” says Mr TerHarr.

There has already been significant investment across the EU into enriched cage and colony systems to comply with the ban on traditional battery cages in 2012 and this will now have to be written down by 2025, he says.

“The UK retailers’ moves seem to cast doubts over the future market for eggs from these systems. Most UK egg producers now practice under the Lion Code. This could be significant over the medium term in respect of Brexit, as it could create a [non-tariff] trade barrier to imports.

“With the UK being a net importer of eggs [85% self-sufficient], any restriction on imports has the potential to see domestic values rise.”

Cost of feed is crucial

In the shorter term, the cost of feed will be of key importance to both egg and broiler producers.

The fall in feed prices predicted only a few months ago has been halted and in some cases reversed by the rise in cereal and especially protein prices, says Mr TerHarr.

Farmers Weekly says:

Jake Davies, Editor, Poultry World 

  • The commitment by the final retailers to end the sale of eggs from caged hens will continue to vex poultry farmers as they consider which system of production will replace it. Few will invest in barn without a ready market on supermarket shelves. 
  • For broiler producers many will have an eye on continued sector expansion and depressed dark meat prices – nothing new there. The price of feed is trending upwards.
  • Both sectors face pressure to keep reducing the use of medicines in 2017 – the lobby against intensive farming is only becoming more adept at influencing policy. Avian influenza remains the greatest single threat to poultry farming in the UK. 

Andersons Outlook

The Farmers Weekly outlook articles are based on Andersons Outlook 2017. Copies of the full publication can be downloaded from the Andersons website by clicking on ‘Publications & Events’. Alternatively, request a printed copy by telephoning 01664 503 200.

Andersons is running a series of seminars in the spring looking at the prospects for UK agriculture in greater detail.

3 March – RAF Club, Piccadilly, London

7 March – Harper Adams University, Newport, Shropshire

8 March – Westmorland, J36 Auction Centre, Kendal

9 March – Carfraemill Lodge Hotel, Lauder, Berwickshire

10 March – York Racecourse, York, North Yorkshire

14 March – Yew Lodge Hotel, Kegworth Leicestershire

15 March – Perth Racecourse, Perth

17 March – Newmarket Racecourse, Newmarket, Suffolk

21 March – East of England Showground, Peterborough, Cambridgeshire

22 March – Salisbury Racecourse, Salisbury, Wiltshire

23 March – Exeter Racecourse, Exeter, Devon

24 March – Royal Agricultural University, Cirencester, Gloucestershire

More information please on the Andersons website