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‘Resilient’ egg supply chains must see price increase for producers amid shortages

The British Free Range Egg Producers’ Association (BFREPA) has urged retailers and processors to create ‘better aligned’ contracts with egg producers, in order to tackle supply chain turbulence amid the coronavirus pandemic.

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‘Resilient’ egg supply chains must see price increase for producers amid shortages

The call follows moves by Sainsbury’s, which issued a statement claiming it may be ‘forced’ to consider importing foreign shell eggs, after a spokeswoman highlighted demand had increased by around 2 million eggs per week.

 

BFREPA acknowledged the spike in demand had created ‘logistical’ problems for the processing market, which had slowed the supply of eggs into major supermarkets, but chief executive Robert Gooch highlighted egg shortages were largely due to the fact producers had been paid below the cost of production for the last three years.

 

In a letter to the firm, he said: “In a properly functioning supply chain, a shortage would lead to a significant increase in price to producers. While there has recently been some uplift, most producers have still not seen a price increase.


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“The current shortage of supply into stores is not just a function of avian influenza or Covid-19, but of a lack of resilience in egg supply chains.

 

"For the last three years egg producers have been paid a price below the cost of production (including depreciation and finance costs).”

 

Clearer contract

 

Mr Gooch therefore reinforced clearer contracts between retailers, suppliers and producers would now be fundamental to ensuring long-term stability and resilience in egg supply chains.

 

He said: "Some of [Sainsbury’s] producers do not even have a written contract with their packer, and most do not benefit from any feed or cost related tracker contracts, which they offer to their suppliers.

 

"Sainsbury’s must insist that these tracker contracts are also passed down by their packers to those producers who would like them."

 

Production cost

 

Referring to costings independently prepared by ADAS, Mr Gooch added the average producer price last month was 83.p/dozen, while the average cost of production was 101.74p/dozen, claiming the move to sell imported eggs would therefore be a further ’kick in the teeth’ for UK producers.

 

He said: "For this reason many producers have gone out of business or have empty sheds and are no longer producing free range eggs."

 

Packaging

 

NFU Scotland (NFUS) urged supermarkets to take a ‘fresh look’ at their supply chains post Covid-19 but also reinforced egg producers must also prioritise appropriate haulage and packaging for fresh eggs, to avoid supply chain disruption from packers to retailers.

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