November 25, 2010

UK pullets set to rise on increasing feed prices

UK egg producers will be stung with higher prices for chicks and pullets from January 2011 as the massive increase in feed prices begins to filter down the supply chain to breeders and hatchers, industry experts have warned.

Pullets are expected to rise towards the psychological barrier of GBP4 (US$6.30) a bird, mainly due to the cost of feed, but also on the back of other pressures such as vaccine costs and more expensive energy inputs.

"The feed price has gone up GBP50 (US$78.80) per tonne over the last year and that correlates to GBP0.30 (US$0.50) a pullet," according to a senior executive with Country Fresh Pullets.

"Chick companies are looking for a GBP0.03-GBP0.05 (US$0.05-US$0.08) increase from 1 January, and vaccine costs are going up considerably," the executive said.

Peter Cumbers, sales manager at chick hatchery Joice & Hill Poultry, says they are currently absorbing most of the impact of the increase in the feed price, but they will eventually need to pass on those costs.

"We've just put our chicks up by GBP0.03 (US$0.05), but that is nowhere near enough to cover the feed price," Cumbers said. "A chick is over GBP0.60 (US$0.95) now. When we had the last massive spike in feed the egg market was strong and they were able to pass on the cost much easier."

Cumbers said the persistent low price for eggs and the fact many producers weren't in profit was making them hostile to price increases, but eventually prices will need to go up again.