Tesco has announced nearly £14m in support for egg suppliers and producers, amid mounting egg shortages across the retail sector.
It is directly investing £13.9m in its egg supply chain until March 2023, which comes in addition to £13.6m of extra funding already provided by Tesco since March this year. The support package will be paid to suppliers to cover the cost of handling, processing and egg production, including any increases in feed for farmers.
Tesco said it would continue to work with its suppliers to ensure the additional investment got passed on to producers as quickly as possible.
“We know the British egg sector continues to face acute market conditions with input costs continuing to increase, and avian flu causing disruption and adding complexities to farming conditions and the supply chain,” said Dominic Morrey, Tesco commercial director for fresh.
“We’re pleased to continue our support for UK suppliers and producers, as well as provide reassurance to our customers that we will remain 100% British on all our shell eggs.”
The move comes amid growing concerns over egg shortages in the mults due to a slump in production caused by soaring input costs, with a number of retailers now rationing egg sales.
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Earlier this year, Tesco announced five-year contracts with its five main British shell egg suppliers: Anglia Free Range Eggs, Glenrath Farms, Griffiths Family Farms, Noble Foods and Skea Eggs.
The long-term contracts, which began in October, have enabled Tesco to continue to stock 100% British shell eggs in its stores, while helping to provide UK egg farmers with the confidence to invest and plan for the future, it said.
The retailer has also confirmed the continuation of its poultry feed model which adjusts to price changes in the market. Poultry feed represents 70% of the cost of production on egg and poultry farms.
“With five-year contracts with our suppliers now underway and our well-established feed model in place, we hope the support we’re providing alleviates some of the pressure being felt and provides the industry with confidence and protection during these uncertain times,” added Morrey.
Tesco’s announcement follows pledges of financial support by both Waitrose and Noble Foods this week to producers.
Elsewhere, Sainsbury’s − which has been forced to source eggs from Italy due to shortages in its supply chain – stressed on Monday it has “always believed in close collaboration with our farmers and in paying them fairly and, as inflationary pressures rise, we continue to do everything we can to help all our suppliers and communities”.
The retailer’s director of fresh food Richard Crampton said Sainsbury’s had “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%”, he added. This brought the total it had increased pay by over the past 12 months to around 40%, Crampton pointed out, adding “prioritising financial support to our farmers is the right thing to do”.
Waitrose’s support package consists of a £2.6m cash injection that will go directly to its UK egg producers. “Without our farmers, we can’t function as a business,” said James Bailey, executive director at Waitrose. “We’ve cultivated long-standing relationships with our suppliers, and paying our farmers fairly and offering our customers free-range British eggs are commitments that we simply won’t sacrifice, even when the going gets tough.”
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Meanwhile, Noble Foods, owner of Happy Egg Co, has announced its second price increase for egg producers in the space of eight weeks. Free-range egg producers across all grades will nnow receive an increase of 9p per dozen from 1 December.
“The concerns around cost pressure and risk management require the entire supply chain to work together, find the solutions to these underlying problems, and ultimately ensure availability returns to normal,” said Graham Atkinson, agriculture director at Noble Foods.
CEO of the British Egg Industry Council Mark Williams said the organisation was “delighted that Tesco is investing in its supply chain to support British egg producers. We know consumers want and expect the eggs on retailers’ shelves to be British and it is great to see Tesco publicly reinforcing its commitment to stock British Lion eggs.”
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