Egg prices will rise if drought continues

Australian consumers could soon pay as much for locally produced eggs as they would for imported ones, owing to the extra costs associated with the ongoing drought conditions throughout much of the country.

The Australian Egg Corporation says sudden hikes in grain prices have left farmers absorbing high production costs - with grain being the single biggest variable cost to egg farmers.

The corporation's managing director, James Kellaway, said unless there was a change in weather conditions soon, egg farmers were likely to see further increases in the price of all grains.

â€œIn recent months, forward wheat contracts have risen from around $180 to $310 per tonne,â€ Mr Kellaway said in a statement.

This current price increase translates to 20-30 cents extra per dozen eggs, with prices now reaching import parity.

The Australian Bureau of Agricultural and Resource Economics is forecasting the wheat crop could be down by up to 44 percent in some parts of Australia in 2006-07 because of unfavourable weather earlier this year.

This will leave egg producers unable to compete with flour millers and other grain buyers if egg prices remain static.

â€œFarmers have been struggling for some time to absorb these increasing production costs and keep prices as low as possible for consumers,â€ Mr Kellaway said.

â€œBut with margins virtually non-existent, egg farmers are now at breaking point and will have little choice but to pass on these costs.â€

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Editor WorldPoultry