The UK egg industry is facing a shortage due to a range of issues including the culling of hens due to avian influenza and Brexit-related issues. Producers and processors have been warning supermarkets of impending shortages for over a year, but the length of the cycle means that production increases cannot be switched on quickly.
The problem is further compounded by the fact that houses taken out of commission require the whole cycle from parent breeders, egg set to hatching, pullet rearing, and transfer to laying farm before the egg supply kicks in.
Matthew Green, Wot A Pullet MD, conveyed that the company was seeing growth in orders for pullets, but this will not translate into eggs on supermarket shelves until autumn. Green expressed concern that retailers hadn’t listened to the message and that it was going to take some time to recover. In the meantime, it seems highly likely that at some point, there will be a crisis in the retail sector, with consumers putting pressure on retailers to maintain more reliable stocks of eggs.
There is also a risk that if retailers are forced to import eggs, and it becomes the new norm, it will have dire consequences for the sector. The value of the Lion Code and consumer loyalty to home-produced eggs could be permanently undermined. The longer the shortage persists, the greater the likelihood of imports. Therefore, it is incumbent on all parties to have an open discussion on the impact of egg imports growing.
Green added that major changes in the way the sector operates mean that swings of over-supply and paucity will continue. One of the perennial problems the sector faces is that swings in the size of the UK laying flock cause fluctuations in returns, making medium-term planning and long-term investment projections incredibly difficult. With the now seemingly permanent issue of avian influenza, poultry farmers have seen their risks multiplied and their rewards divided.
As a result of the myriad of issues facing the sector, there has been a drastic decline in the number of planning applications for free-range egg housing. Specialist agricultural and rural planning consultants, Ian Pick Associates, said they had seen the lowest number of applications in 17 years of being in the business. The decline is due to poor margins as supermarkets are paying less than the cost of production, and many farmers have gotten their fingers burned.
The doubling of the cost of building is also putting off potential producers. Brexit, the war in Ukraine, and inflation have led to phenomenal increases in the cost of steel, wood, equipment, and concrete, which has huge impacts on build costs. A year ago, the cost to build a 32,000-bird poultry shed would be around £1.2 million. Today that cost is more like £1.8 million. The other factor is the cost of borrowing, which has increased from around 2% to 5%, and the margins are not there.
Commenting on the state of the broiler sector, Pick said there had been a few applications, but many farmers were restructuring and repurposing buildings for grain storage or housing. The UK egg industry's challenges show how the global food supply chain is vulnerable to a range of issues, from animal disease to political and economic instability.
