Farmlay Eggs counts cost of challenges in the market

Egg producer Farmlay Eggs has blamed rising costs and a competitive retail market for a drop in turnover and pre-tax profits.

The company, which supplies Morrisons, Aldi and Lidl in Scotland, is run by Robert and Ethel Chapman and their son Iain.

The firm sorts and packs around four million eggs a week at its state-of-the-art grading plant, which now includes five robotsfollowinga£3.5millioninvestment.

Just under half of the eggs are produced on the family’s 2,000-acre farm at Strichen, with the remainder sourced from 23 contract producers in Aberdeenshire, Moray and Kincardine.

According to accounts filed with Companies House the company, under its registered name of Aberdeen and Northern Eggs Ltd, recorded a turnover of £15.351m for the year ended May 31, 2016. This is down from £16.120m the year before. Pre-tax profits were down to £2.38m, from £2.43m previously.

Robert Chapman blamed the drop in turnover and profits on increasing costs and margins being squeezed.

“The next year is going to be worse,” Mr Chapman said.

“The price of feed is up and all the costs are up.

“It’s also difficult in the retail market at the moment to get prices up. Margins are being squeezed.

“The year before the price of grain was low so egg prices were dropped.

“We are starting to turn a corner but it is very tough.”

He said despite the challenges, the egg sector was performing really well with UK sales increasing by an estimated 4% every year.

“The egg job is a huge success story,” added Mr Chapman.

“They (eggs) are a super food and they are good for you.”

He said the company was in talks with new producers wishing to supply it with eggs and some existing producers were also looking to expand.

On future plans, Mr Chapman said the company would continue to expand both its producer and customer base.

A key challenge, however, would be the move by retailers to phase out all eggs from colony hens by 2025 – around 60% of the farm’s own production base is from colony hens.