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Even at Noble Foods, which has taken three of its own organic farms out of production and reduced producer prices by 9p per dozen and 4p per dozen for nine and six bird-per-square-metre flocks respectively, there is an upbeat message.

"I think we are looking at a market readjustment more than anything," said Noble sales and contract supplies director Geoff Cooper. "My personal view is that organic is going through a difficult time, but there is a strong core of people who want to buy organic produce."

Noble says TNS figures show a 13 per cent fall in organic egg sales on last year. As well as switching three of its own organic farms over to free range production, the company has also asked contracted producers stocked at nine birds per square metre to consider their future based on the forthcoming changes to the organic legislation in 2010. The company said it understood it would be a challenging period for producers but it had little alternative but to reduce prices at the moment. It believed there was a long term future for organic eggs and felt that action now would secure the long term future.

Geoff Cooper said the company had been planning for growth on the back of the strong upward trends of previous years, so the fall in sales had come as a blow. But he said some headlines had made more of the current economic climate than was justified.

"I think the credit crunch is being over-hyped. You can make people feel guilty about spending money if you overdo it. Things are cyclical and the market will improve."

Fridays also reduced producer price by 9p for nine-birds-per-square-metre flocks but, like Noble, the company still believes there is an important future for organic eggs. "Given the extra costs and difficulties linked with production, organic eggs need to demand an extra premium. As a result, these eggs are likely to remain a small part of the market," the company said in a statement. "Over the past year organic egg sales volume is down around four per cent. This trend is likely linked to the credit crunch.

"As a major packer marketing organic eggs from our producers and our own production, Fridays has invested heavily in the organic sector. Organic eggs are key to the UK egg category, often representing the 'best' part of a 'good, better and best' retail strategy. This makes them an important element of consumer choice. Fridays certainly see organic eggs being an important and long term offering of the egg category."

This optimism is echoed by retailers. A spokesman for the British Retail Consortium said that customers were very price conscious at the moment. They were not rejecting organic food products, but needed to see the extra value they were getting for those organic products. "On basics like potatoes the difference between organic and non-organic is not necessarily obvious, but customers do believe they are getting value from an organic egg. They see more reason to opt for an organic egg."

Supermarket chain ASDA said it was not planning to reduce stocks of organic eggs, even though sales had slowed slightly at the moment. "The wider organic food category is performing well," it said. "ASDA has seen an increase of 25 per cent in organic sales in the last quarter, while the rest of the market has grown at just under three per cent."

Stonegate, which sends 90 per cent of its eggs to Waitrose, has so far avoided reducing its producer prices. "We are comfortable where we are at the moment. It is difficult to predict the future, but we will obviously continue to review things," said divisional director Richard Kempsey.

Producer James Maclean, who farms at Berwick upon Tweed, still believes the future is pretty bright for organic eggs, even though the price cut has cost him money. "It cost me £10,000 overnight, but so be it. I can't do anything about that. In the year and a half I have been in organic eggs I think we have had three price rises. This is the first time there has been a reduction. Hopefully there will not be any more. I will carry on with organic," he said.

James has 9,000 birds. Some 90 per cent of his eggs go to Noble. The rest are sold privately under the the name Border Eggs. "I have no problem with Noble at all. If demand has fallen they have to do something about it. I am just grateful that they keep picking up the eggs."

George van den Berg is a little less upbeat about the current state of the market. He has 12,000 birds in North Devon and he says that the return on his organic eggs has been gradually falling.

"Since 2001 every year the margin has declined," said George. "If the feed price goes up then a few months later there is some kind of compensation in the price. If the feed price goes down, then within 12 hours the price we get goes down. Whatever happens, we always end up with the margin getting smaller."
George says that the margin for free range and organic is now pretty similar, although he believes he is still slightly better off with an organic flock. "We have quite low production costs compared to others. We will stick with it at the moment. Once you have started into an organic cycle you have to finish it because of the investment," said George, who said that decision time would come around again in November or December. At that point, he would look at how the market was doing and make a decision about ordering pullets. "We will consider everything - feed prices, egg prices and so on before making a decision. We are feeling the squeeze at the moment. We will have to see what happens over the next few months."

Dennis Ball, who farms in Monmouthshire, is one producer who has switched out of organic, although he was already planning to do so when the price cut was announced. He said he had initially taken the decision because of EU regulations which would eventually force him to reduce stocking to 3,000 birds. By switching to free range, Dennis will be able to house 6,000 birds in his shed rather than 3,000 for organic. He currently has 5,600 organic birds in the shed prior to enforcement of the new regulations.

"It has worked out well with the price going down. Organic feed prices have climbed alarmingly. Non-organic feed is cheaper, and although the price I get for non-organic eggs will be lower I will still be better off, although I would not knock organic. The reason I switched was because of these EU rules."

Inevitably, the Soil Association wants producers to hold firm and wait for the market to recover rather than abandoning organic operations.
"I don't expect life to be fantastic for the next few months, but I don't expect it to be a long term problem," said Helen Browning, the Soil Association's food and farming director. "Overall in difficult economic times we see the market plateau for a bit. That has happened a number of times over the years. We saw it in the early eighties for a while, but we haven't seen the market fall away for our products," she said.

"Fundamentally, we don't think the ethical consumer has gone away. People have been thinking more and more about these issues when buying food. I don't think those feelings have gone away in the face of the credit crunch. Consumers are increasingly looking at ethical issues, and eggs are a product where the quality shines through from the eating point of view. We have seen a big shift away from battery to free range and I think there is a big future for free range and organic eggs."

BFREPA chairman Tom Vesey said that there was currently a glut of organic eggs on the market. "This has probably come about for a variety of reasons and it is obviously very expensive for the packers. They have to respond to that. Some producers will switch to free range, but for those who remain in organic there will always be a market for producers who do their job well."

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