18 August 2018 | Online since 2003

1 July 2014

Stonegate - last of the big packers to cut

Stonegate has finally followed Noble and some other leading packers in cutting the price paid to producers for eggs.

When Noble cut its prices earlier in the year, citing falls in the cost of feed, Chris Ramsey, Stonegate's supply base director, ruled out an immediate cut but said the company would continue to review and monitor markets and make adjustments as and when necessary. The company

has now written to producers to say that it can no longer ignore market trends. Blacktail producers have been informed of a four pence per dozen cut.

In its letter to Blacktail producers, Stonegate pointed to the price war that has broken out amongst leading supermarkets who have lost market share to continental discounters Aldi and Lidl. It said, "You will be aware of the significant change taking place in the market and the impact on key staples, as the biggest four supermarkets come under pressure from negative market share growth.”

The letter sent to Blacktail producers, whose eggs go to Waitrose, read, "In conjunction with Waitrose, we have kept this under review - wanting to provide as much opportunity as possible to recover on farm margin by taking advantage of the benefit of lower feed costs in the period from summer to date."

Statistics published by Defra in January showed that in the three months from July to September last year poultry feed prices fell for the first time in 18 months. The latest fig-ures showed that prices fell again in the following quarter - from October to December 2013. The price recorded by Defra was also lower than that for the final quarter of 2012, although it was higher than the published figure for October to December 2011 and the recent political unrest in Ukraine has threatened to prices up again. At the end of Febru-ary the UK May wheat futures stood at £156 per tonne. By the middle of March, after Russian troops were sent into Crimea, they had hit £170.75 per tonne.

Stonegate said in its letter to producers, "Together with Waitrose we have held this posi-tion whilst continuing to invest in our consumers, driving volumes and consistently re-warding customers by providing keen promotional prices in a planned was, for example highlighting British Blacktail Eggs for pancake day and vegetarian week, along with fea-turing in our customer magazines, Waitrose Kitchen and Waitrose weekend publication.

During certain activities we have also been able to increase shelf space and sales through British Blacktail inclusion on gondola ends (end of aisle promotion space)."

Stonegate said it had rewarded customer loyalty with savings offered to 'My Waitrose' loyalty card holders and the company had continued to invest in recipe card ideas and online activity. "In return, customers have continued to buy British Blacktail eggs, helping to increase the volume of eggs we sell and increasing Waitrose market share," it said.

"Together we have done this successfully but unfortunately, as we all know, Waitrose cannot ignore the market and the drastic measures that some of the big four have engaged in to increase customer footfall. It is vital that Waitrose maintains its strong position in the market for eggs and must remain competitive in the face of this activity, which has an impact on customer staples.

"We have worked together to delay this decision as long as possible but, with regret, I have to advise you that from Sunday 1 June 2014 your egg price will be reduced," said the letter. "We have sought to minimise this price change and the 4p/doz is less than the general market reduction of 5p/doz experienced by other producers at the start of Febru-ary 2014. I know you will be disappointed by this news, and if you would like any further clarification on this change please do not hesitate to contact me." The letter said, "I would like to close by expressing our thanks for your continued support and loyalty in the face of especially tough market conditions."

Noble Foods led the latest round of price cuts earlier in the year when it reduced prices across its whole range by five pence. The company's producer and farms director, Tom Willings, told producers, "With raw material futures continuing to fall and delivered ration prices already over £40/t below their peak over a year ago, there has been a steady decline in selling prices across the retail trade."

Fridays followed Noble's five pence cut. Martin Flegg said the company had increased producer prices when feed costs increased, even though the company's margins had not followed. And he said that, even after the reduction, Fridays was still offering a better price to egg producers than some other packing companies.

Glenrath Farms and Yorkshire Farmhouse Eggs also cut prices by five pence. John Campbell at Glenrath said, "Feed has come back and the supermarkets want some money back." James Potter at Yorkshire Farmhouse Eggs said the company needed to remain competitive. "Producers should still be better off than they originally were because of the falls in feed prices," he said.


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