17 February 2023

4 minute read

By: Global Ag Media

Europe

In a frank discussion, Matthew Green, managing director of Wot a Pullet expects the egg supply shortage to continue for some time. 

“In common with many colleagues, across the UK laying sector, we have sought to warn the retailers of the impending shortages, pointing out that the length of the cycle means that production increases cannot be switched back on quickly,' Green said. "Houses taken out of commission require the whole cycle from parent breeders, egg set to hatching, pullet rearing, and transfer to laying farm before the egg supply kicks in. At Wot a Pullet we are now seeing growth in orders for pullets, but this will not translate into eggs on supermarket shelves until Autumn."

“We have been trying, along with our representative bodies, to communicate this message to the retailers for over a year," he continued. "It seems the message has been unheeded, and now it’s going to take a long time to recover."

In the meantime, Green said it seems highly likely that at some point there will be a crisis in the retail sector where consumers pressure them to maintain more reliable stocks of eggs. 

"If retailers are forced to import eggs, and it becomes the new norm, it will have dire consequences for the sector," he said. "The value of the Lion Code and consumer loyalty to home produced eggs could be permanently undermined. The longer the shortage persists, the greater the likelihood of imports. It is therefore incumbent on all parties to have an open discussion on the impact of egg imports growing."

Without major changes to the way the egg sector operates, the issues are likely to occur every few years, Green said. 

"One of the perennial problems the sector faces is that swings in the size of the UK laying flock cause fluctuations in returns," he said. "This makes medium term planning and long-term investment projections incredibly difficult. As we have seen by the withdrawals from the market, due to unprecedented cost pressures, the ability of a producer to weather this crisis is dependent on where they happen to be in the investment cycle, the scale and timing of borrowing, and when their energy and feed contract renewals fall. This is a level of uncertainty that would not be acceptable in many sectors. Over the last few years, with the now seemingly permanent issue of AI, poultry farmers have seen their risks multiplied and their rewards divided."

“Failure to acknowledge that mere survival is not a realistic business objective also puts the viability of the sector in doubt. Negotiations need to start from a perspective where margin and profit are not uncomfortable subjects. Recognition that significant investment is required to improve productivity, safeguard welfare standards, and to attract and retain staff by providing a good working environment, should be openly discussed.

“Ultimately the big question is around food security in the UK. If the UK genuinely wants to be as self-sufficient as possible in food, based on the best quality products, with investment in high welfare, environmentally friendly systems, and fair wages, then a full reset across every agricultural commodity is required," Green added. "This will come at a cost to the consumer, and even though no one wants to add to food poverty, or fuel inflation, this fact must be faced by retailers. Ultimately, food security will benefit the whole country in time."

“The one-sided power struggle between retailers and producers has led us directly to shortages, despite warnings from the farming community and its representative bodies. This cannot be in anyone’s interest," he continued. "The sector has made vast improvements in genetics, breeding, nutrition and management and is now incredibly efficient. This is remarkable story and modern commercial flocks produce an amazing number of eggs. Just a few years ago peaks of 90% were almost unheard of, and they were short lived. Now these peaks are the norm, and they persist much longer. But operating lean businesses at the limit of the potential for improvement means there is little margin left for manoeuvre. Under these conditions a small change in one cost factor, such as energy, feed or wages leads quickly to losses. As a sector we know our numbers and we should be able to present them to retailers, without fearing negative consequences from such transparency."

“Across the sector we need a serious communications programme which leaves neither the media or the consumer, in any doubt about the cause of the shortages, and the impact of the cost increases on livelihoods," Green said. "Punitive contracts, that force producers to supply at a loss, must be contested and replaced by fairer and more flexible agreements, that take account of seismic shifts in economic conditions."

“Harnessing the power of branding to build the image of eggs should be taken much more seriously," he continued. "Marketing eggs as a super food, an amazing source of protein and so much more than an ingredient, as opposed to a mere commodity used as a convenient price check, is one way to protect margins and increase prices for the benefit of the whole sector."

“It is rare for warnings given by suppliers to retailers to be so fully vindicated, or for predictions to manifest themselves in widescale empty shelves," Green concluded. "This presents us with a one-off opportunity to stand firm together, for our representatives to engage constructively with the retailers from a position of credibility, and to press the case for fair margins, which protect our shared interests."