News of the government lifting mandatory bird housing measures linked to the UK’s “worst ever” avian flu outbreak next week should offer some succour to an egg sector that has been warning of reaching “breaking point” over the soaring cost of production. 

The adjective ‘beleaguered’ is one that’s been used regularly in The Grocer to define the myriad problems faced by the fresh foods supply chain over the past year – and the egg sector has been a case in point.

Producers were hardly rolling in cash when Defra followed a spate of local lockdowns by introducing a national housing order for all captive birds and poultry on 25 November, in a bid to stop the spread of the avian flu outbreak.

Indeed, the likes of the British Free Range Egg Producers Association has been vocal on more than one occasion over the past five years about the declining returns faced by producers, warning in October 2020 that the price paid to farmers had slumped by 20% compared with 2015.

So, last December, egg and poultry suppliers were bracing themselves for a long period of disruption, caused by what the British Poultry Council described as this country’s most serious outbreak of the disease, and what chief vet Christine Middlemiss said was a “phenomenal level” of the virus.

In the following four months, egg suppliers suffered the blow of several million animals being culled. And as BFREPA reported their “dire” financial situation, suppliers were then told on 21 March that their long-housed free-range birds would now need to marketed as barn instead.

But while free-range eggs will make a “welcome” return to shelves from next week, BFREPA warns the tentative end to the disruption caused by latest bird flu outbreak pales in significance to the financial difficulties faced by producers.

As The Grocer reported last week, a poll of producers by the trade body found 51% of free-range and organic egg farmers were considering exiting the industry due to the “devastating consequences” of the soaring cost of production on farmers.

Soaring is only stating it mildly, when you consider fertiliser prices have risen by 107.7% over the past six months, according to feed supplier AF’s latest Aginflation Index.

Animal feed and fuel costs (up 27% and 29.4% respectively) have seen the next two biggest increases over the past six months, contributing to a total cost of production increase for the farming sector of 46% over the past 18 months, AF says.

BFREPA is calling for an immediate retail price increase of at least 40p per dozen to be implemented on free-range eggs – rising to 80p per dozen for organic eggs – in a bid to alleviate the impact of such rampant input inflation.

It has written to the eight major food retailers in the UK urging them to act before businesses go bust. However, so far it has reported receiving little support. These retailers are “culpable” for creating the “desperate situation” producers are in, it argues – and failing to take action could lead to a collapse in the UK’s egg sector.

A look at Assosia data shows there were actually 82 price increases on egg SKUs in the past month across the big four and Waitrose, compared with just 87 for the whole of 2021.

It’s clear these increases don’t yet cut the mustard with egg producers, and we’ve seen a similar tale (and calls for big price increases) across meat, poultry and dairy over the past six months. The NFU last week said the same challenges over the soaring cost of production could plunge a fifth of the UK’s horticulture growers out of business as well.

We’re also seeing increases in the price of some other fresh products, most notably milk and dairy over the past few weeks, with most of the major supermarkets now selling the bellwether four-pinter at £1.25 (compared with £1.15).

But at the same time, we are also in the midst of a fast-developing cost of living crisis, accelerated by the conflict in Ukraine and ongoing post-Brexit labour and supply chain issues, which have contributed to soaring levels of food price inflation, up 5.9% year-on-year in March, according to ONS – the largest rise since 2011.

With that in mind, both Morrisons and Asda escalated a developing big four supermarket price war yesterday, with a raft of price cuts on hundreds of staple products… including some egg lines.

This all proves just how delicate a line the sector has to tread in such a crisis. Supermarkets are having to balance the need to continue offering hard-up families value versus the need to offer hard-up suppliers enough cash to carry on producing.

What’s the solution? Who knows, but at this rate, it’s going to be a problem that will plague the food sector for a long time yet.