A commitment by the UK government to introduce a fair contract review in the UK egg supply chain 5 months ago at a Downing Street Summit has been realised.
The review, made by prime minister Rishi Sunak, follows similar moves to improve transparency in the pork and dairy supply chains and will protect consumers’ access to high welfare British eggs. The review will seek input from industry stakeholders on issues around transparency, clarity of contractual terms and conditions and data from the supply chain.
It was raised by the egg industry at the Farm to Fork Summit earlier this year at a time when the sector was facing increased energy and feed costs due to the Ukraine conflict and avian influenza.
Retailers were being blamed for not paying enough for eggs, forcing producers to cut back on birds numbers, which in turn led to shortages on supermarket shelves. To meet demand, supermarkets began sourcing imports from Italy and Poland. Since then, prices have risen by as much as 50% and many producers are now making a profit.
Robert Gooch, British Free Range Egg Producers Association chief executive, said contracts between farmers, packers and retailers needed to be fairer: “Contracts tend to be very one-sided because they are produced by the farmer’s customer – the packer – the intermediary between the retailer and producer,” he said.
“So, those tend to be one-sided enough to say, for example, you are going into a 5-year contract and we have the right to vary the price at any time according to market conditions. These are the contracts that we think need to give more flexibility so the producer has a say in the wording of the contract,” he told BBC Farming Today.
Gooch said the issue was relevant as the egg sector tended to go through boom and bust cycles.
Gary Ford, British Egg Industry Council deputy chief executive, welcomed the supply chain fairness review and said it would be promoted to all stakeholders in the supply chain.
“The review will focus on understanding how the contractual arrangements within the sector currently function and whether there is the need for further legislation to oversee the relationship between producers and buyers where necessary and facilitate a fairer and more transparent supply chain.”
James Mottershead, NFU Poultry Board chair, said reform was long overdue, adding that almost one billion fewer eggs were packed in the UK last year compared to 2019.
“For decades now there has been a serious lack of transparency, clarity around contracts and data availability for market monitoring, all of which leaves primary producers shouldering most of the risk for what, at times, feels like very little reward.”
Mottershead said the message from producers was clear: risk and reward needed to be spread evenly across the supply chain.
There needed, he added, to be a concerted effort to improve the choice of contracts that are available to producers: “Whether that’s price linked, cost of production modelling or bed and breakfast type agreements, producers need options so they can choose the best contract to suit their business, and transparency to benchmark contract terms against the market,” he added.
Therese Coffey, Food and Farming Secretary, said: “Producers should be paid a fair price for their high-quality produce, which is why we are committed to ensure there is fairness across food supply chains.”
The review runs until 22 December.