Tight margins for layers, ongoing issues with avian influenza and the aftermath of Covid-19 have led to a decrease in poultry production this season.
Poultry feed production, including integrated poultry units (IPU), accounts for 45% of the total amount of animal feed that is produced in Great Britain, making it by far the largest sector compared to cattle (29%), pigs (14%), sheep (6%) and other (6%).
With animal feed demand making up over 50% of total domestic consumption of UK cereals, its importance is clear, according to the Agriculture and Horticulture Development Board (AHDB). While diets vary, poultry diets are made up of around 65% cereals, with wheat as the majority of that. Some barley is used and in Northern Ireland, more maize tends to be used due to its price.
AHDB said margins for laying producers have become increasingly tight, with rising feed, energy and labour costs, and little to no increase in the purchase price from retailers to compensate despite pressure being levied by the British Free Range Egg Producers Association. The organisation said that more than 70% would leave egg production within a year if a price rise from retailers didn’t happen.
Data from the Department for Food and Rural Affairs (Defra) shows that, since December, placings of commercial layer chicks have fallen considerably on year-earlier levels – 8.3 million compared to 9.9 million in 2021, which means there will be a further contraction in the domestic laying flock.
Feed for layers (including IPU) makes up around 20% of poultry feed production and around 10% of total animal feed production (including IPU) in Great Britain. AHDB says that if there is a further contraction in domestic egg-laying flock, this will have an impact on feed production and, in turn, a reduction in cereal usage.
Free-range egg producers at the British Pig and Poultry Fair spoke of some of their concerns to Poultry World. Philip Ashton of Lincolnshire-based David Ashton said he had been fortunate in signing a 15-month egg contract, which would run until September 2023, ahead of the war in Ukraine. Others whose contracts were coming up now were in a much more parlous situation.
Patrick Lynn of Nottinghamshire-based Hockerwood Egg, which supplies Tesco via Noble Foods, agreed, saying some who have signed tracker feed contracts were in a better position than others who were facing 50% cost increases, which included rises of as much £1 a pullet. This is eroding margins further.
They both argued that many consumers were prepared to pay an additional 10-20p (12-24 cents) per dozen but that free-range eggs were now seen as a commodity product and as packers were prepared to undercut, discounters were content to take the cheapest product.
Tim Bradley, who farms in Lincolnshire, said if the current situation continued over the next 6-12 months, farmers would get out of production, which would eventually lead to a price rise due to supply and demand. Some producers are already deciding to miss a cycle so they don’t add to loses being incurred.
However, commercial broiler chick placings in the UK have risen by 6.6% on year-earlier levels to 323.7 million head. Poultry meat accounted for 36% of volume sales of meat, fish and poultry over the past year and despite a move back to eating out the poultry performance is better than the total market.
From a feed perspective, broilers make up nearly 60% of total poultry feed production (including IPU) in Great Britain and account for over 25% of total animal feed production. In volume, broiler feed production alone is higher than total domestic feed production.
With demand, looking likely to remain strong in the short term, feed demand is likely to remain robust, too. However, with soaring input costs for producers and processors there may be more uncertainty in the mid to long term around the strength of growth by the broiler sector, said AHDB.