How spiralling cost of chicken feed is driving UK egg crisis: Boss of poultry feed firm says wheat shortage caused by Ukraine war and Europe’s dry weather is pushing up prices to ‘record’ levels leaving egg farmers unable to meet production costs
- Record prices for key ingredient in chicken feed is pushing up farmers costs
- Russia and Ukraine are biggest producers and exporters of wheat, used in feed
- War and a bad year for crops due to weather is pushing up the cost of wheat
- Egg producers would like to see help from supermarkets to ease their costs
A boss of a poultry feed firm says a wheat shortage caused by the Ukraine war and Europe’s dry weather is pushing up their prices to ‘record’ levels leaving egg farmers unable to meet production costs.
Kynan Massey, managing director of Massey Feeds, who sells livestock food to over 4,000 farms in the UK, said prices of wheat have gone up by up to 60% in a year.
He said prices for their product has now reached record levels of an additional £100 a ton – almost doubling in recent months.
The high prices of feed – which constitutes an estimated 60 to 70% of egg production costs – has left struggling egg farmers unable to make ends meet, and many are pulling out of the industry, or halting production.
Mr Massey added that farmers cannot recoup the costs of raising animals so they are choosing to not have as much chickens on their farms.
It has triggered a shortage of eggs in the supermarket, hitting customers who are already struggling with out of control prices for food, rent, mortgages and energy.
Kynan Massey, pictured, managing director of Massey Feeds, who sells livestock food to over 4,000 farms in the UK, said prices of wheat have gone up by 60% in a year
This is believed to have caused the price of chicken feed to more than double until it now costs £100 a ton
Pret, Tesco, Sainsbury’s, Aldi, Leon, M&S and Waitrose have stopped selling some some or all cooked poultry products because of the outbreak at the gigantic Cranswick food processing plant in Hull.
Cranswick, which bills itself as a producer of gourmet cooked chicken for sandwiches and meals, says the salmonella was detected during a ‘routine internal inspection’. The products feared to be contaminated appear to have use by dates of May 11, 12 and 13, and tonnes of food have now been seized and binned.
It is not yet clear if anyone has been made ill by the bug, which kicks in between six hours to six days after infection. It causes diarrhoea, fever, and stomach cramps and in severe cases can cause hospitalisation. Around 50 people die each year in the UK.
A spokesman for Cranswick, which makes the majority of supermarket own brand sausages but fairly recently moved into sausages said: ‘As a precautionary measure, we have asked our customers to remove any of their products containing our ready to eat chicken produced during the affected period. We are working closely with the Foods Standards Agency and will collaborate with their experts to resolve the matter’, adding that its factory ‘will remain closed until the investigations are complete’.
The mass pulling of chicken products shows how exposed the UK food chain is to a handful of huge suppliers.
MailOnline has visited several supermarkets and food stores today where shelves usually piled high with chicken salads and sandwiches were bare or closed off. One Pret store in Kensington had removed all labels for its poultry products, with staff saying they were ‘all gone’.
A nearby M&S is continuing to sell chicken and sweetcorn and chicken and avocado sandwiches, but its chicken and bacon and chicken and salad ones have been pulled, leaving an empty shelf. Yesterday it emerged that one Sainsbury’s customer tried to buy some of the chicken but had it snatched from them by a woman at the till.
Mr Massey told the Today Programme on Radio 4 that prices for the ‘raw materials’ used in feed have been on a ‘steady increase’ over the last two years but this is starting to get out of control.
He said today: ‘As we got into last Autumn and into February, we saw a 20% increase in the wheat price from the Autumn through to February and then very soon after, within weeks of the conflict, starting in the Ukraine we saw another 40% increase in the price of wheat in a very short space of time.
‘We are seeing on our feed prices going up £100 a ton. It’s a massive amount. Try bearing in mind the prices at February were already near record prices. We’ve never seen prices this high prior to the Ukraine conflict starting.
‘It’s important to remember all our raw materials are driven by world prices.
‘We are driven by world trade so in these situations we try to look at the world market and see what drives prices higher and what might drive prices lower.
‘The reason we have gone up so significantly in this period is Russia and Ukraine are between the biggest producers of wheat in the world but not only that they are responsible for a quarter of all exports around the world and throughout this period if the conflict continues we could continue to see the wheat prices increase.
‘We are also seeing the actual crops are under stress in Europe from the weather. We need more rain so the dry weather is actually pushing prices up.
‘So what could bring the prices down? The end to the conflict, good weather in Europe or a drop in demand for wheat. A lot of wheat goes into Ethanol, higher fuels. If that were to drop that would be another area which might see some pressure come off.’
He added that farmers are now looking to not ‘rear’ as many chickens as it does not make financial sense.
He added: ‘Food security is a concern and it would be great if the retailers could offer more support to the farmers.’
Farmers also made the same call last month and called on all major supermarkets to hike the price of a dozen eggs by 40p for free range and as much as 80p for organic, meaning some customers would have to shell out some £4.40 for a box of 12 organic eggs.
But despite warnings and pleas for help from the British Free Range Egg Producers Association (BFREPA), the UK’s biggest supermarkets have yet to increase the price of free range and organic eggs to a level where many farms can break even.
Robert Gooch, CEO of BFREPA, said: ‘There are clear and obvious cost increases being heaped upon farmers, and retailers simply aren’t sufficiently adjusting the retail price.
‘Any increases being made are too little and too slow. They are suffocating businesses.
‘This is nothing more than supermarkets putting cheap food marketing tactics above the needs of the primary producer.’
Industry chiefs called a Crisis Summit at the Pig and Poultry Fair on 10 May and invited representatives from each retailer to attend to discuss how to resolve the issue.
The high prices of feed – which constitutes an estimated 60 to 70% of egg production costs – is making it not worth farmers while to stay in the industry
But the 10 largest egg buyers reported refused to attend and Mr Gooch told a press event attended by Farmers Weekly that there will be an egg shortage.
‘There is going to be a shortage,’ Mr Gooch. ‘The question is whether it will be at Christmas or halfway through next year.’
Egg producer David Sharples, who owns Clyttir Farm in Llanbedr DC, Ruthin, also told the BBC there will be a ‘shortage’.
‘We’re really struggling, and we really do need a price increase of nigh on 40p per dozen eggs,’ he said. ‘Our feed has really gone up in price nearly 50%, and feed constitutes about 60-70% of the egg production costs.
‘The only thing that [UK supermarkets] understand is food shortage, that’s the only thing they act upon, and we’re trying to pre-empt that.’
‘The feed price has gone up, around 18 months ago it was around the £250 a tonne mark, but over the last six months or so it’s gone up to around £400 a tonne,’ said Mr Curtis, who keeps 64,000 free range chickens at Pembrokeshire Farm Eggs, near Tenby.
‘The cost of feed is virtually what the eggs are being sold for, so there’s virtually no margin in it whatsoever, some are almost at a loss.’
Despite millions of people struggling with the rising cost of living, Tesco, Asda, Sainsbury’s, Morrisons and Aldi all hiked the price of more than 100 value range items.
The big three supermarkets in the UK have all raised the prices of value range products by significant amounts in the past month
Price rises were recorded for 102 items including tinned vegetables, jam, pasta, coffee, fresh meat and cheese – whilst only 34 items were lowered in price.
Some of the products’ prices had been increased again, having already seen hikes earlier in the year.
The secret shopper comparisons, conducted by reporters for Nationalworld, found three times as many price rises compared to price decreases (34 items).
Energy prices are also going to climb higher putting a further burden on consumers as Ukraine cut off a pipeline into Europe.
Gazprom, Russia’s energy supplier, confirmed that the rate of gas flowing into Europe had fallen by around a quarter after supplies through the pipeline that Ukraine had threatened to cut fell to zero.
Dr Adi Imsirovic of the Oxford Institute for Energy Studies, who has worked for Gazprom also told the Today programme that there will be ‘price spikes’ in the UK which though it does not get its oil from Russia is affected by the global market.
‘Most of the volatility in the gas price is [because] there is a war in one of the major [pipelines] into Europe,’ he said today.
The news come as the National Institute of Economic and Social Research (Niesr) said soaring inflation will will lead to around 1.5 million UK households struggling to pay food and energy bills
The leading think tank has called on the government to put in place measures so the poorest can combat the cost-of-living and not face a choice between heating their homes and eating.
It comes after the Bank of England predicted that Consumer Prices Index (CPI) inflation will rise from 7 per cent currently to more than 10 per cent in October – its highest level in 40 years – due to soaring energy prices.
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