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Producers have called for ‘price restructuring’ in the supply chain

Egg producers have described feeling “trapped” by the sector, with crippling input cost increases pushing many into a growing financial crisis.

Amid growing concerns of egg shortages across the mults – primarily due to the low returns faced by producers – some are now facing “the worst” conditions in more than two decades, and are calling for urgent “price restructuring” across the supply chain as they continue to make losses despite retail price increases.

Rutland-based egg producer Lucy Hinch said the business her parents had built over the past 20 years was now being “destroyed by the supermarkets” who had “no idea about what producers actually do”, she claimed.

“I genuinely think the supermarkets couldn’t care less about farmers,” she said, explaining her family felt “trapped” by market conditions, but could not halt production as the business employed 15 people to which they felt they have a “duty to keep employed”.

Her comments were echoed by mid-Wales-based producer Ioan Humphreys, who told The Grocer he hasn’t “got a choice but to continue producing eggs”, despite soaring costs making production uneconomical.

“I can’t keep them in the shed, I can’t stop the hens laying, and my shed is fairly new and I have still got to pay the bank back the money, so I have to have some sort of money coming in,” explained Humphreys, who has been campaigning for a fairer deal for egg producers on social media platforms such as TikTok and Instagram under the moniker that_welsh_farmer.

Humphreys said his production costs had risen across the board, with feed prices up by 60%, from £250 to £400 per tonne, while his electricity costs had tripled.

It was therefore costing him £1.25 to produce a box of a dozen eggs but he was only receiving £1.07 in return.

“I am losing a lot of money,” he said, but would lose “a hell of a lot more” if he were to stop production.

Sainsbury’s stocks imported eggs in response to shortage

Both producers laid the blame of their current situation at the door of the major supermarkets.

While the mults had increased retail prices by around 45p on average since the start of the year, Humphreys said, “we haven’t seen that” and “there is a big gap there somewhere”.

Hinch added she had spoken to supermarkets a few months back to ask why they would not increase prices further, but had been told this would not be forthcoming as they had enough supply, “so what’s the point in them increasing the price?” she suggested.

“It doesn’t seem like [the supermarkets] have any interest in British producers at all,” she added.

“They have been warned about [egg shortages] for months and they have just done nothing about it.”

As reported in The Grocer last week, Sainsbury’s has been forced to import eggs to make up for the shortages.

Hinch explained the move was “really, really frustrating” as Italian producers do not need to prove they have the assurances that British producers do, and the time she spent on paperwork to prove this assurance now felt “pointless”. 

However, Sainsbury’s this week published a defence of its actions and outlined its ongoing support for producers.

“We understand that farmers who supply our own-brand egg packers are also facing significant challenges and it is clear this is impacting the number of eggs they are able to produce,” said Richard Crampton, director of fresh food at Sainsbury’s.

“To support them we have increased the amount we pay our packers for eggs over the past 12 months, while at the same time remaining focused on keeping prices low for customers. In response to high levels of inflation in June we accelerated our support, making a meaningful 20% increase in the amount we pay for eggs, and last week we further doubled this investment, paying an additional 20%. This brings the total we have increased pay by over the past 12 months to around 40%.”

Egg prices up 50% but shortages loom due to tight supply

But despite these actions, Hinch called for more transparency within the supply chain.

“Packers will tell you it’s not their fault, but being the producer you will never really know this because the supermarkets seem to say they are giving more money, but it doesn’t seem like any money is coming down to the producer. So, I don’t know where the money is going,” she said.

“There needs to be some restructured pricing because the producer is the one putting in all the effort and is seeing nothing from it,” she added.

It comes as the NFU this week called for an urgent investigation by Defra into whether an “exceptional market conditions” declaration should be made under the Agriculture Act 2020, given the egg supply situation and the financial crisis gripping producers.

This declaration, described as “critical” by NFU president Minette Batters, would enable Defra to use its statutory powers to provide support to egg producers.

“Poultry and egg producers must have the confidence they need, working within a fair and transparent supply chain, with fair returns for farmers, so they can do what they do best: meet demand from shoppers for quality British eggs and poultry meat,” said Batters.

She added that the farming union had raised concerns about “the functionality of the supply chain with Defra a number of months ago in the hope of avoiding the situation we have now”.

Morrisons and M&S are the latest supermarkets to ration eggs to a two-pack cap following increased demand. Tesco also introduced rationing earlier this week with a three-pack limit.

Looking ahead, Humphreys said “there will be shortages, there is no doubt about it” and “it is going to take a few months to come back” as producers are emptying their sheds.

According to Hinch, “it all depends on the consumer. If the consumer is going to back British agriculture, then the supermarkets are going to have to pay the price, otherwise there is not going to be the producers as people can only survive for so long.”