Noble Foods and Fridays, both UK food packers, have cut rates on the back of falling feed prices. At the end of August, UK feed wheat was down to £84/metric ton, a drop of £13/metric ton on the month, and of £34/metric ton year-on-year. Wheat prices have declined due to the UK Department for Environment, Food and Rural Affairs' announcement of a 150% rise in on-farm wheat stocks, as well as continued reports of better-than-expected EU harvests.
In response, the chairman of the British Free Range Egg Producers Association, Tom Vesey, expressed his disappointment in the price cuts, but was able to understand why it had happened.
Noble has reduced payments by 3 pence/dozen on very large eggs, 3 p/dozen on large eggs and 1 p/dozen on medium eggs, which equate to a weighted average cut of 2 p/dozen. The same cuts were announced by Fridays.
Vesey, though, pointed out that price cuts would deter the establishment of new producers, or prohibit the expansion of existing producers.
He emphasized a need for expansion within the free-range egg sector to help fill the gap created by the ban on conventional cages to be established in January 2012, and stressed it was one issue packers should consider before cutting producer payments.