Why Britain’s egg industry is starting to crack

Already stretched farmers are being told to keep poultry inside as cases of bird flu rise across the country, finds

‘Farmers are having to clean everything down. It builds in additional costs’

‘The worst case scenario is that we’ll be importing from the very cages that were banned here, many, many years ago’

In the heart of London’s theatre district, Daniel Karlsson’s Swedish bakery, Bageriet, is doing a roaring trade. Sugar-flecked buns piled high in the window are parcelled up one after the other, as shoppers seek to satisfy their sweet cravings. Neat tartlets and freshly baked bread prove popular with the passing trade.

It may seem busy now, but owner and baker Karlsson insists it is nothing compared to the festive rush. “Sales will probably triple,” he says.

After years of Covid restrictions, it is a well-needed boost for the business. Yet, Karlsson says there is one thing on his mind: eggs. Across Britain, there are signs that the egg industry is starting to crack and shortages are beginning to materialise.

“Our supplier asked us to go for pasteurised eggs from Europe, rather than free-range ones from Britain if we need to order a lot,” Karlsson says. As a bakery that uses around 100 eggs a day, it is a threshold Bageriet is likely to breach. Karlsson says it is not what he would choose.

“I prefer fresh eggs because they’re much more stable in mixes and it’s nicer to buy local.” Still, he says, there is little he can do. “If I don’t have a choice, then I don’t have a choice.”

By the end of last week, around one in 10 egg boxes at Tesco, Sainsbury’s, Asda and Morrisons was unavailable, according to figures from data company Assosia. “We’re at the brink now in terms of there being shortages,” says Robert Gooch, chief executive of the British Free Range Egg Producers Association (BFREPA). Some estimates suggest Britain’s egg production could plunge by eight million next year. Others say the UK could run out of eggs by Christmas.

Gooch says it is still unclear what the fallout will be. But farmers are already going out of business. The industry group has been warning retailers in letters and meetings that this would happen since March, Gooch says. “We told them producers couldn’t carry on making losses forever, and they ignored us. Now look at what’s happened.”

Pressure has been building on farmers for some time. The cost of feeding chickens has surged by at least 50pc, while energy prices have hit record highs and fuel costs are up 30pc. Estimates from the BFREPA suggest that a third of farmers have cut back on the size of their brood of hens after not being able to cover their costs. A quarter have stopped production either temporarily or permanently.

Yet there are concerns that things could get even tougher. As of Monday last week farmers in England are required to keep their birds indoors to help stem the spread of bird flu – a threat that piles extra costs on producers. A previous housing order for birds was only lifted in May after being introduced in November last year.

Chris Bull, chairman of the UK’s largest egg company Noble Foods at the time, told The Sunday Telegraph it was proving the most challenging period in the company’s history.

“Farmers are having to clean everything down,” he said. “They’re all very capable of handling this, they’ve experienced it in the past – but it builds in additional costs.”

The requirement to change packaging – to show that eggs were technically barn eggs after a lengthy period of birds being indoors – is another cost that farmers could face.

Yet, this time around, the challenges are likely to feel more acute, as cost of living pressures push supermarkets to take a more aggressive approach to price increases and force producers to swallow some of the steeper costs themselves.

Andrew Opie, director of food at the British Retail Consortium, has said all parts of the supply chain and retailers are going to face “massive” challenges in the next year as they attempt to keep grocery inflation down in order to make prices competitive for customers.

“There are some very challenging conversations going on because it’s just unrealistic to put products on the shelf at the wrong price at the moment,” he said.

One insider at a “big four” supermarket says eggs are a major flash point because retailers do not want to increase prices on everyday items during a cost of living crisis.

“The reality is that farmers, packers, retailers and customers are all going to have to take some of the pain. The argument is just who takes which proportion,” he says.

Still, figures from the BFREPA suggest prices have gone up by 45p for a dozen since March, yet farmers have only been earning an extra 5p to 10p.

Some have claimed it is the packers – who sit between farmers and supermarkets – that have been taking more of this increase. However, the BFREPA’s Gooch says: “The retailers have the power to insist that so much of a price increase they give a packer goes down to their producers.” Still, with the cost of living crunch front and centre of many retailers’ minds, there may be another

option open to supermarkets to keep prices down. As early as May, retailers were threatening farmers that they were looking to turn to Poland for more of their eggs instead of paying extra for British supply, with one producer, Oakland Farm Eggs, warning the country risked becoming “a dumping ground for cheap food” without more post-Brexit controls.

It is something some farmers are increasingly concerned over. Ioan Humphreys, a fourth-generation farmer from Wales, has been among the most vocal on social media over the pressures weighing down on his business. “The thing is, I don’t want oodles of money,” he says.

“I don’t want the cost to fly up. All I want to do is cover the cost of producing the eggs, and at the moment I’m making a loss. I just don’t want to have to go into more debt.”

He says he has to jump through hoops to make sure the welfare of his birds is up to the highest standard. “We do a lot to ensure that the public have the best quality eggs from high welfare farms and I’d say the British public would rather eat British eggs,” insists Humphreys. But still, he says, some retailers seem to be considering buying more from abroad.

Farming leaders warn this is something customers should be wary of. For years, the drive has been for more supermarkets to sell free-range eggs, which now account for 74pc of all eggs sold today. The rest are barn eggs. “The worst case scenario is that we’ll be importing from the very cages that were banned here, many, many years ago,” says Minette Batters, president of the National Farmers’ Union.

“We’ve really got to find a way through. Because we want to make sure these eggs are affordable, but I think it’s more the case that consumers want to know that they can buy eggs.” Across Britain, there are already some who are feeling the squeeze. On an online forum for body builders – a community known for using eggs as a key source of protein – commenters asked, “what the f--- is going on with eggs?”.

One poster said: “Hardly any eggs around. There goes my breakfast and last meal.”

At Bageriet in the West End, a supply squeeze is not imminent. But Karlsson says buying more from abroad might be his only option. After all,

with Christmas fast approaching, Bageriet’s pastries are likely to fly off

the shelves. “And let’s just say, if suppliers say they don’t have any eggs, we’d be in trouble.”