Producers question their future in 'volatile' egg industry

Brendan Soden (centre), vice chairman of the Irish Farmers’ Association's poultry committee during protests in 2022 targeting retailers over the price paid for eggs. Picture: Lorraine Teevan

The poultry industry has been “too volatile” in the last couple of years with producers questioning their futures, as they are just about “keeping the bills paid on a very small margin”. 

Farmers have been extremely exposed to high input costs, poor returns, and the threat of disease to their flocks.

Egg producers had entered 2023 in a "very bad situation", according to Brendan Soden, vice chairman of the Irish Farmers’ Association's poultry committee.

This followed after events in 2022 where farmers targeted retailers as part of protests, blocking the entrance for deliveries, leading to shop shelves in Co Cavan being empty of fresh produce for several days. 

Mr Soden said at the time that farmers were looking for 2c more per egg to be paid back to producers – otherwise, the supply of eggs would be in jeopardy.

According to the IFA, major players have met producers' demands in the past year, however, one packer continues to be “lagging behind others when it comes to price” and producers are urging for this increase that equates to 3c per dozen to be passed back.

“At a time when retail, processing, and wholesale markets are flourishing, returning an additional 3c per dozen (€0.0025 per egg) to producers should be a simple task, especially since it has already been secured from retailers,” IFA poultry chairman Nigel Sweetnam has said this week.

Stabilisation

Brendan Soden told the Irish Examiner that overall, there has been a recognition by most packers and retailers that there is a “need for some sort of stabilisation of the price paid to producers”.

What producers have been seeking for the past two years is “not a big ask, we’re getting into very small money at this stage - I don’t think it would matter a lot to them but it makes a big difference to the farmer”, according to Mr Soden.

“Margins will still be tight, we’re surviving – keeping the bills paid. That’s a big improvement from two years ago when the bills couldn’t be paid,” he said.

“If we had to take the UK’s attitude and close the doors, maybe we’d have been better off today when you see what the UK prices are running at - but we decided we’ll keep going.

“That’s the Irish attitude to not give up and we kept at it and slowly [the increase] came in dribs and drabs to a point where we just have a very small margin - but enough to keep things going.” 

Supplies tight

It is estimated that producers get less than €1.50 per dozen of eggs.

Mr Soden said that egg supplies are “tight at the minute”, and producers have exited the sector.

The age profile of farmers is a big factor, Mr Soden said. Existing farmers are finding it too expensive to put money into improving their infrastructure, and the sector is “too volatile for the last couple of years” to expect young people to be attracted to it. Producers are also struggling to source labour.

Securing the future of the sector depends largely “on the attitude of the retailers and the packers, whether they want to see us continue or not”, Mr Soden said.

“You have to make a certain income to survive,” he continued.

“Everything has got so expensive and it takes so much money to run a house and to keep things going. Everybody has so much coming in their front door that has to be paid for now, so you have to pick what’s going to leave you with a sustainable living and what’s going to give a quality of life.” 

Small margin

When it comes to inputs, “nothing really has come back yet”.

The haulage costs of manure disposal and labour costs have increased, along with parts and maintenance having “gone through the roof” too.

The majority of eggs produced here are for the domestic market.

Exporting eggs “is something we had looked into”, so that producers could sell their eggs where higher returns are being paid, according to Mr Soden.

“The UK market is a lot better at the minute, but we just haven’t gone to that extent, we’re hoping we wouldn’t have to go to them lengths to keep it going,” Mr Soden said.

Producers are “keeping the bills paid on a very small margin”, the vice chairman said, but overall, while challenges remain and producers will continue to seek higher prices, the outlook for the sector is “more positive than two years ago”.

The IFA remains adamant that farmers will not tolerate any reduction in the margin they receive if retail price wars intensify.

Mr Soden said that he does not “mind the retailer taking down the price for customers as long as they don’t take down the price for the farmer”.

“They’re quite entitled to take it out of their margin if they want, but not to take it out of mine,” he said.

Mr Soden went as far as to thank consumers for their support for Irish eggs in recent years despite them costing more on the shelves.

“They’re buying as much Irish as they ever were. It’s great to see that there’s such support for farmers,” he added.

'Prison'

Garret Bannon in Bawnboy, Co Cavan, keeps cattle alongside poultry, with 20,000 free range laying hens.

He has been in poultry since 2010 when he built his first shed for it.

He was part-time farming at the time, and in 2013 he expanded and went into it full-time, and built a second shed in 2020.

Prior to supplying his current packer, Mr Bannon said that from 2020, it had been “downhill ever since unfortunately”.

“It’s been horrendous to the point I felt like I built my own prison,” he said.

I was supplying a company who just phoned me up in the middle of 2020 and said we don’t want your eggs anymore. It was the middle of covid and I had no home for eggs, I had to destock.

“Unfortunately we had no protection out there, so hopefully the food regulator can help in future.” 

Producers feel they are in a very precarious situation with a lack of “security” around contracts and prices, according to Mr Bannon. 

He is finding that inputs are “still going up unfortunately”, and if farmers are in a position of making money, they “reinvest it”. 

The poultry industry in Ireland is “in a state of limbo” according to Mr Bannon.

“There is expansion needed, caged egg is being phased out, I don’t know where the reinvestment is going to come from,” he said.

“I don’t see a long-term future in poultry for a lot of people.” 

Sustainability

As environmental regulation continues to come from Europe, Mr Bannon said that “we’d all love to be sustainable, but sustainability starts with a fair price”.

“If I could afford it I’d have solar PV panels on my roof, I’ll plant loads of trees, but if you can’t financially sustain that then you can’t do that.” He believes his own business “will survive – but with no money to reinvest” going forward.

“I have a shed 12 years of age, it needs reinvestment. I am not going to take a loan out to reinvest without some security,” he said.

The costs of reinvestment in a shed would be dearer than what it took to build the shed in the beginning nearly.

“I have been down that road before, I want it that if things go south again, I can just shut up the sheds if needs be.

“I have no confidence in industry.” 

With milk for example, “no matter how bad” the price gets, there is intervention Mr Bannon said, “there’s always some sort of mechanism” and support to ensure supply continues.

However, in the poultry sector, the same “willingness” doesn’t exist. He is urging for that to change, and for industry and Government to support producers when they need it. 

“We’re not like any other product - the product only has to be collected and graded, run through a machine and put into a packet," Mr Bannon continued.

“It’s a stable, high-quality protein with not a huge amount of manufacturing required - there’s no reason why there’s no more in the margin for everybody.” 

The recent increases passed on to the producers have helped and "allowed us to pay our bills", but “we were looking for that two years ago - two years ago that would have made a huge difference, we, unfortunately, need more to cover costs now”.