Tesco and Aldi provide millions in additional support for British egg industry
The retailers are responding to the highly publicized problems egg producers are facing, caused by increased production costs including energy and feed, as well as the challenges posed by the avian flu outbreak.
Aldi outlined how it will increase by £12.5m (US$14.9m) the amount it pays to its egg suppliers - the move will bring the total of additional support it has provided for the sector to £38m, with it having already invested £25.5m since April 2022. It has also pledged to continue stocking only 100% British eggs in all its 980 stores nationwide.
Julie Ashfield, managing director of buying at that chain, said it would work with suppliers to make sure that investment gets passed to those who need it most and as quickly as possible.
Tesco said it will provide £13.9m in additional support for its British egg suppliers and producers. Its package includes £13.6m of aid already provided to its suppliers and producers since March this year, as well as a commitment to provide a further £13.9m of additional support until March 2023.
Earlier this year, Tesco announced five-year contracts with its five main British shell egg suppliers - Anglia Free Range Eggs, Glenrath Farms, Griffiths Family Farms, Noble Foods and Skea Eggs. The retailer said those long-term agreements, which began in October, mean it will continue to stock 100% British shell eggs in its stores, while helping to provide UK egg farmers with the confidence to invest and plan for the future.
Poultry feed model
Tesco also confirmed the continuation of its poultry feed model. Poultry feed represents up to 70% of the cost of production on egg and poultry farms. The model adjusts to price changes in the market, providing producers with the cost protection and security they need when buying feed, said the organization.
The support package will be paid to suppliers to cover the cost of handling, processing, and egg production, including any increases in feed for farmers.
Dominic Morrey, Tesco commercial director for fresh, said: “We know the British egg sector continues to face acute market conditions with input costs continuing to increase, and avian flu causing disruption and adding complexities to farming conditions and the supply chain. We’re pleased to continue our support for UK suppliers and producers, as well as provide reassurance to our customers that we will remain 100% British on all our shell eggs."
“With five-year contracts with our suppliers now underway, and our well-established feed model in place, we hope the support we’re providing alleviates some of the pressure being felt and provides the industry with confidence and protection during these uncertain times.”
Laying hen flock shrinking
With some egg farmers quitting the industry, the total UK flock of laying hens, which peaked at 44mn last year, has shrunk to about 38mn, according to the Financial Times, citing the British Free Range Egg Producers Association.
The National Farmers' Union (NFU), the representative body for agriculture and horticulture in England and Wales, is calling for an urgent investigation by the UK's department for environment, food and rural affairs (Defra) into whether an 'exceptional market conditions' declaration should be made under the Agriculture Act 2020, given the severe disruption which egg producers and UK consumers are experiencing.
A declaration under section 20 of the Act would enable Defra to use its statutory powers to provide much needed support to egg producers whose livelihoods are under threat.
NFU president, Minette Batters, said: “There are a huge range of issues facing the poultry sector, in particular within the egg supply chain, which have built up over months and which we have been warning of for some time. Energy price inflation and supply chain disruption have added to the worst outbreak in Avian Influenza yet. However, these pressures alone cannot explain empty shelves.
“The NFU raised concerns about the functionality of the supply chain with Defra a number of months ago in the hope of avoiding the situation we have now, with some retailers having to limit UK consumers’ access to eggs. This is surely a prima facie case of severe disturbance to an agricultural market.
“It is critical that Defra acts now to investigate the issues in the egg supply chain so that any declaration under section 20 can be made as soon as possible. Poultry and egg producers must have the confidence they need, working within a fair and transparent supply chain, with fair returns for farmers, so they can do what they do best; meet demand from shoppers for quality British eggs and poultry meat.”