1 November 2016
Bill Broody November 2016
To kill the Goose That Laid the Golden Eggs' is an idiom used of an unprofitable action motivated by greed taken from the Aesopica from ancient Greece between 620 and 564 BCE. Which I believe provides a useful warning for the future of free range eggs.
I was fortunate enough to be visited by the You and Yours Radio 4 consumer affairs programme. Their visit was partly motivated by emails from their listeners with concerns regarding the welfare standards of ‘mass produced’ free range eggs. I was able to show the presenter and producer around our range and shed of our single flock, single site, 12,500 bird flat deck system. They asked many detailed and searching questions but they broadcast a positive report. They also broadcast a positive report about the NFU Poultry Board Chairman’s Colony Cage system in August. This latter report was followed up by Countryfile where Professor Christine Nicol provided a fair and balanced assessment of all the different egg production systems stating that they all have different welfare advantages. The variety of production systems currently provides consumers a range of options when purchasing eggs, and as Martin Ford(check) pointed out on the Countryfile programme, the colony eggs provide the value egg. Consumers currently understand the clear differences between colony systems and free range and vote with their wallet.
Millions of consumers are buying in to their belief of free range as a brand, a sector and a category. This places us, as producers, in a uniquely privileged position within British Agriculture - no other food is eaten in as many homes based purely on a perception of higher welfare. If those consumers did not have the belief in the values of free range they would still eat eggs but they would choose cheaper eggs from a different production system. But at the moment, over half of the population is willing to pay more money for our product in the belief that our hens have more room to move, to range, to dust bathe, to perch, to wander in trees and do all of the positive things that are promoted about free range hens.
Encouragingly an increasing number of the population are willing to spend more of their money to buy into these values and beliefs. Data from Kantar on the retail shell egg market shows that sales of free range eggs are up by 8.8% in terms of volume sold year on year. The total number of eggs consumed in the UK has increased by six eggs in the last 12 months to 189 eggs per annum – that’s nearly one egg every other day for every man, woman and child in the Country. These are incredible growth figures; so why then has the total value of free range shell egg declined by a dramatic 6.4%? The simple fact is that the large retailers are engaged in a price war on eggs and driving down the cost of free range eggs. These price cuts are being passed along the supply chain and stopping at producers. As the Agricultural director of Morrison’s once said to me ‘we are a PLC – we can’t afford a profits warning’. I can see his point of view, as I can’t afford them for very long either. Based on current egg and feed prices, our eggs sold on contract for this flock will make a loss.
The continual and increasing squeeze on margins leaves me with three options; sell more direct, increase capacity or stop farming free range hens. Nobody has a God given right to stay in business or to make money but where does the ‘getting bigger’ option take us?
I can borrow more money, take on more sheds and work harder and longer to try and maintain reasonable profit levels. I can prepare spreadsheets, stress test the financial model, convince the bank to make the investment and go from 12,000 to 32,000 hens and everything will be fine for…. five years, two years? And then there will be another round of price cuts and I will have three options…. and the cycle continues.Five years ago, entry level in free range eggs was 12,000 birds, now it is 32,000. Where will it be in five years’ time and the five years after that?
Why should we as producers take on more debt and more work to produce cheaper eggs simply to fund a price war?
I truly believe that Free Range production is at a crossroads. Do we choose to take the same path as our contemporaries in the colony cage and broiler sectors, where the average size of farms is in the region of 215,000 birds with just 70 colony farmers? Or do we recognise our strengths and provide a vision for the future of the free range sector?
The BFREPA conference provides the perfect opportunity for all members of the association of all sizes to make representation to Council about their vision of future Free Range Egg production. The vision of what we produce, how we produce it and how we protect our values and standards.
Anything that is done to harm the brand of Free Range hurts all of us regardless of size or system. Consumers understand the difference between colony and free range, they don’t understand the differences between multitier and flat deck, or big and small – all free range has got to live up to the standards consumers expect.
There are potentially huge opportunities in BREXIT and in cage free 2025 but there are also huge threats from price pressure, equivalence and imports; and if the association of British Free Range Egg Producers does not represent all of our interests then who will?
The Council need to know producer’s thoughts and I call on all members to express their views on how BFREPA should represent our interests to the media, consumers, packers and retailers:
• Should BFREPA make a stand on price cuts,
• should BFREPA ensure that we continue to endorse the values of Freedom Food,
• should BFREPA campaign for a maximum size on free range egg farms,
• should BFREPA seek to market free range eggs,
• should BFREPA seek to prevent the industrialisation of our sector,
Our single most important strength is the belief of so many consumers in the values of our product. We are the people responsible for implementing and protecting those values. If we allow those values and standards to decline and we lose the trust and belief of consumers we will slowly strangle the golden goose.