Leading egg packer Noble Foods has announced an average 5p/doz increase in the price it pays its free-range egg producers, having extracted more money from its reluctant supermarket customers.
Farms director Tom Willings said the increase had come about following “protracted negotiations”. “The negotiations with many of our customers have been the most difficult any of our experienced senior team have ever witnessed, reflective of the fiercely competitive and pressurised conditions in the retail market,” he said in a letter to producers. “Though we have yet to satisfactorily conclude all of the conversations, we recognise that the pressure brought about by seemingly interminable inflation in costs associated with feed raw materials has reached a point at which we must respond.”
Mr Willings explained that different groups of free-range producers supplying Noble Foods would receive different rates of increase. “As you know, we operate a number of egg ‘pools’, with several value-added pools existing for various own-label and brand lines. For example, farms with trees planted as range enrichment to a retailer specification are considered ‘value-added’.”
Producers supplying these premium pools – accounting for over half of Noble’s bird base – would be receiving an additional 5.6p/doz on very large, large and medium eggs from 24 November, said Mr Willings.
The remainder, supplying the generic, non-aligned pool, would see prices increase by 4.5p/doz. “We are quick to recognise that these values go only some of the way to offset continued inflation in feed,” he admitted.
Mr Willings also issued a warning to any producers tempted to sell eggs outside of their contracts, when faced with “the inevitable and unwelcome reappearance of the ‘white van trader’ in the coming months”.
“Our customers place tremendous value on our ability to provide an exceptional level of service, and failure on our part to deliver against their expectations over the forthcoming seasonal peak in demand may cost all of our businesses dear in the longer run.” The latest price rise follows an earlier increase of 2p/doz for Noble’s top 20 producers in October, and a series of other rises from some of the smaller packers.