Italian egg producers benefit from reduced number of UK producers

British media have reported the appearance of Italian eggs on UK retail shelves amid accusations by British manufacturers that Italian eggs are being produced by caged hens even though the cage doors have been removed.

Sirio Lionello, president of Eurovo, Italy's largest egg producer, denied the accusations: “It's a complete lie - we don't do it. We keep 9 chickens per square meter in accordance with European Union regulations.”

Robert Gooch, chief executive of the British Free-Range Egg Producers Association, said many UK producers have stopped production to avoid selling at a loss. “Last year it cost us £1.40 to produce a dozen eggs, but the supermarkets insisted on continuing to pay just £1.” He added that similar UK legislation could have been used, but the UK government chose not to: "Our government is more interested in cheap food than food security," he said.

Towards the end of last year, supermarkets began to offer more money to British producers, but by that time there were fewer chickens.

Restocking is underway, but there is little interest in the UK for new poultry projects or expansions due to high borrowing rates and construction costs due to inflation. That has changed quite a bit in the past 6 weeks, according to Ian Pick of planning consultants Ian Pick Associates. But there is still a long way to go.

“We certainly have not been inundated with requests for any free-range poultry farm building applications, be it new projects or expansions. With borrowing rates still above 6% and construction cost inflation at 40%, we have a long way to go before the recovery starts to kick in,” he told trade media.

JHG Planning's Oliver Grundy agreed, saying the sector hasn't seen much improvement: "We continue to see high material and energy costs discouraging large investment in new projects, although the situation is slightly better than last year."

Martin Humphrey of Humphreys Feed and Pullets said that while there were several new construction projects under development, the company was operating at full capacity raising pullets through the end of the year.

“So many producers have gone out of the natural cycle, either by stopping restocking until prices improve, or forced out of production due to avian flu or salmonella . However, as young stock producers, we cannot simply turn on production to meet unplanned new demand. It's just not possible to suddenly increase it when demand returns."

As a result, the industry expects store shelves to empty and retailers to struggle to supply UK eggs for at least another 18 months.