Price Of Eggs Set To Rise As Demand Exceeds Supply
20th March 2012
Egg prices across the EU have increased by 40 per cent so far this year. To date the average price in Ireland has only gone up by five per cent but this is set to change very shortly as the impact of the EU wide shortage of eggs hits Ireland.
The shortage is a result of increased demand, reduced flock size due to a lack of profitability in the sector, failure to recover feed cost increases and the impact of the EU Welfare of Laying Hens Directive. The new directive was effective from 1st January 2012. It banned production using traditional cages and introduced the new colony system with significant improvements for the welfare of laying hens. As a result the production of eggs has reduced by an estimated average of 10-15% in the European Union since January, as some EU producers exited the market due to lack of profitability. This is set to continue for the rest of 2012 as major producers are forecasting continuing production declines. Spain, the EU’s largest producer is forecasting an eight per cent decline, the UK over five per cent and Holland, the EU’s largest exporter, expecting declines in production.
Many Irish producers invested heavily in the new colony system, aided by a government grant partly funded by the EU. Production in Ireland is expected to increase slightly. However, as a result of pressure from other markets the price of eggs here is rising and this will continue over the coming weeks as the Irish market catches up with the rest of Europe. In particular the shortage of eggs in the UK will have an impact as they rely on imports to satisfy their market demand. Empty egg shelves are expected in the UK as the shortage is becoming severe. Eggs from Northern Ireland that were traditionally a source of supply for the Irish market are now going to Britain and there is strong demand from British importers for Irish eggs.
Sharp price increases have already been experienced already throughout the EU, particularly in the hospitality and food processing sectors including bakers, confectioners, pasta makers, ice cream producers and mayonnaise producers. The price of processed egg products has almost trebled and processors are now matching their prices with table egg prices adding to the pressure on the market. This is now being experienced by these sectors in Ireland. Easter is a peak demand period for eggs and it is expected that the supply will be an issue over the coming weeks.
It is estimated that it may take up to a year to increase production in the EU to meet demand. As a result of market forces the retail price of eggs will increase over the coming weeks. However it should be noted that Irish retail price of eggs has remained steady over the past number of years and there is a need to recover some of the increased feed and energy costs along with the very significant costs of upgrading to the new colony system of production.
Eggs are a very economic and nutritious food and this will continue to be the case. The price rises are required to maintain a viable and competitive Irish egg sector.