21 Aug 2018
Free-range only approach could hit egg margins
The British Free Range Egg Producers Association celebrated its 25th conference by welcoming a new chairman. Emily Scaife reports.
The new chairman of the British Free Range Egg Producers Association (BFREPA) has called on more farmers to become involved in the organisation as the industry braces itself for a period of uncertainty.
James Baxter, a free range producer from south-west Scotland, believes all free range farmers need to ‘sing off the same hymn sheet’ as the industry prepares to cope with Brexit, new legislation and a shift to sourcing cage-free eggs from major retailers.
Cage-free demand
The latter, a decision made by supermarkets, could have widespread repercussions, Mr Baxter believes.
He said: “On the face of it, the supermarkets’ move to favouring free range is a fantastic opportunity for farmers. However, there is concern the small premium paid for free range eggs, which is required to pay for production, could quickly disappear.
“Anything which has a destabilising effect or is out of the ordinary and makes the market go one way or another is not good news, because it could possibly lead to farmers making the wrong decisions.”
He said consumers have already made it abundantly clear they are willing to pay extra for free range eggs – a necessary price hike which covers the higher cost of production.
Indeed, a recent OnePoll survey showed 78 per cent of shoppers were more than happy to pay a premium.
Mr Baxter said: “But despite the customer being willing to pay extra for free range, we still find ourselves in the position where supermarkets are discounting eggs. They are using price to drive sales up, which is a very blunt and dangerous tool.
“Once you take the value out of a product, it is difficult to get it back in.”
Mr Baxter’s main fear is a period of rapid, uncontrolled expansion in the sector to cover the anticipated shortfall of 4.35 billion eggs a year could cause considerable damage.
He said: “We need a gradual process of moving to cage-free. We need packers to keep control over the expansion – we do not want people putting up sheds hoping they are going to be able to get someone to take them.
“Chicken sheds are a huge capital investment which take years to pay off.
“The free range sector has done well, but we are now in a period where margins are disappearing quickly. It would be easy to find ourselves in a position where all the value is gone.”
Perching standards
Mr Baxter advised caution regarding RSPCA Assured’s review of the standards surrounding perching availability for free range hens.
The proposed regulations, which were originally set to come into effect on October 7, would have required producers to provide at least 150mm (6in) of raised perching per bird – a decision which would require a great deal of investment and cause inconvenience to farmers with flat deck production systems.
He said: “We are waiting on RSPCA Assured to provide the science behind it. This was one of the concerns listed when BFREPA highlighted the proposal as a key concern for its membership, leading to implementation being postponed.
“We are willing to listen. If they came to us and said ‘if you do this your hen will be healthier, it will lay more eggs and you will be a happy farmer’, they would not have to sell it to us, we would be queuing up to do it.
“RSPCA Assured believed it had consulted widely, but we felt there was a bit more work to do. It is a two-way street – we are listening to them and they are listening to us, so watch this space.”
Brexit
Another issue requiring a degree of ‘waiting and seeing’ is the impact of Brexit.
Mr Baxter said: “What we know is Brexit will be a slow process. There will be winners and losers and the big loser right now is the exchange rate.”
What the new chairman said he did not want were any sudden reactions or decisions in the sector.
He said: “I am hopeful the fantastic health stories and good press around eggs will continue to allow consumption growth to stay in balance with production. I do not want any sudden changes – cage-free by 2025 is enough. We need time for the production to come to the market rather than trying to force it.”
James Baxter.
Julian Sparrey
Now is the time to lock the doors
The current situation with regards to avian influenza was described as ‘worrying’ by experts at BFREPA’s 25th annual conference.
Julian Sparrey from Livetec Systems, an organisation which carries out the slaughter of livestock in incidents of disease outbreak, said cases of the H5N8 strain in European countries has led to the threat level in the UK being raised from ‘low’ to ‘medium’.
He said: “I have talked to the Animal and Plant Health Agency in the past few days and it expects the outbreak to go up to ‘high’ before Christmas.”
Although he explained the official risk of the virus coming onto farms had not increased, it had heightened and therefore poultry farmers needed to be more vigilant.
He said: “It is very likely there are wild birds in the UK carrying the H5N8 virus. We have just not found them yet.
“The risk is there. At the moment, your gates should be shut and you should not be letting people wander into your farm. Try to reduce non-essential visits. Now is the time to lock the doors.”
BFREPA approached Livetec Systems to write a contingency planning notebook, which has been sent to every member.
Producers have been encouraged to complete the workbook so it suits their business and contains a wealth of advice on topics including who should be contacted in the event of a suspected outbreak.
Mr Sparrey said: “It is important to draw up a plan for what will happen if you are put under restrictions or suspected of having the virus on your site.
“Cleanup costs a fortune and is partially because people have been unsure of what to do. There will be people standing around doing nothing when they could be cleaning, but instead they are asking questions about what they can and cannot do. If you go through this process earlier, it will cut your costs.
“This will also reduce the stress on you and your family. Up until this point, you have been striving to produce brilliant products and one day someone comes along and says ‘sorry, your entire business is shut down now and we are going to take it away from you’.
“You cannot underestimate the stress it puts on people, but if you have a plan it will make it a little bit easier.”
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