Headlines

Noble compensate early depletion producers

Noble Foods is to pay compensation to egg producers who depleted flocks early to help ease the oversupply in the egg market.

The country’s biggest egg packer has written to its contracted producers to outline the terms of a scheme that is thought could cost the company more than one million pounds. Noble’s contract, producers and farms director, Tom Willings, says in the letter that the company has decided to introduce the package "in recognition of the enormously difficult circumstances producers are currently facing at a time when finances are under such pressure." Latest BFREPA costings indicate that free range producers are currently losing more than £4 per bird, with organic producers losing more than £6 per bird.

"I want to emphasise our gratitude for your support over the past year, but in particular, the past seven months," Tom says in the letter. "In an oversupplied market place, exacerbated by inherent seasonality, I feel strongly the actions that we have instigated and that you have supported have been both responsible and of benefit to the industry as a whole. Although surpluses stubbornly remain in the supply chain we can assure you that as we begin the march towards the peak demand period we will now redouble our efforts to try to deliver an improved return from the market."

The announcement of a compensation scheme comes as Noble brings to an end its early depletion programme. The company has said that all producers who have been depleting at 68 weeks should have returned to a 72-week cycle by October 2.
Noble says that whilst input costs can vary wildly from one producer to the next because of different flock performance, scale and feed price agreements, the company has attempted to calculate an average margin over direct inputs by using a number of assumptions. The assumptions used for the calculation include a Hy-Line breed standard hen day average for the four weeks to 72 weeks, average price calculated over average egg grade profile at 68 weeks, average spot feed price between March and September inclusive, and estimated saving in power, water and labour over four weeks.

In the letter to producers, Tom Willings says, "The resultant calculated margin per bird is £0.28 for the full 4 weeks, or £0.01 per bird per day. So, for an average 12,000 bird unit with standard mortality, the anticipated payment would be: (12,000 hens stocked – 480 mortality) x (28 days early x £0.01) = £3225.60

"This compensation will only apply to the number of hens removed from the shed at end of lay and pro-rata’d to a maximum of 28 days."
He said, "Given the importance of accurately predicting future supply volumes and as we conclude a fixed 68 week depopulation policy, I would like to make clear our expectation that all flocks revert to a strict 72 week cycle. Unless express permission has been granted for flock extensions, eggs from birds older than 72 weeks will be accepted as Class B material and paid for at seconds price."

Producers wishing to apply for compensation are invited to complete an application form and return it to Nicola Swindells at the company’s Bilshthorpe office by November 4. Noble say that payment values will be confirmed by December and single sum payments made for all approved applications by January 6 2012.