Egg producers have warned that the UK faces a shortage of domestic free-range eggs because returns from the marketplace are not justifying the expansion required to meet growing demand.

British Free Range Egg Producers Association vice chairman John Widdowson said he was concerned by a spate of price cutting sparked by Asda last week (see below) and said British free-range egg shortages were "a certainty".

"The market is expanding by 10% a year and there is no reason to suggest that the same won't happen again this year.

"Producers have to expand to meet that extra demand and that's not happening for the simple reason that they aren't getting enough money.

"We calculate that to install a new free-range unit costs in excess of £250,000, and for this level of investment there has to be a worthwhile return. Egg producers aren't being forced out of business, but there is no enthusiasm for expansion.

"Free-range eggs are selling well. Their volumes are increasing without this discounting, so why do it and risk future supply volumes? They ought to be talking to the packers about how to get more money back to the producers rather than cutting prices."

National Farmers' Union poultry chairman Charles Bourns described the situation as "very worrying".

"If the present pricing level stays, then obviously the producer price will have to drop, and they are already saying they need another 4-5p a dozen to deal with rising costs.

"If farmers don't get paid enough for their eggs then that is bound to reflect on supply eventually, though it may happen next year or the year after rather than this year."