[NYTr] Chickenfeed: Brits Can't Afford It, and Chickens Coming Home to Roost

[All the News That Doesn't Fit]

The Times of London Sep 14, 2007 via GATA - Sep 20, 2007
http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article2448881.ece


British chickens may have to start laying smaller eggs

Market Ingredients Put in Place for a More Costly full English
Breakfast

By Carl Mortished

The cost of a cooked British breakfast is about to surge as price
inflation grips the animal feed industry and threatens to create
shortages of food staples, such as eggs, as well as soaring bacon,
dairy and bread prices.

The inflationary spiral in wheat, which last month forced up the
price of a British loaf, is creating havoc in the farmyard.

A leading UK egg producer, Noble Foods, gave warning yesterday that
farmers were quitting the egg business, unable to afford the cost
of feeding hens.

Noble, which supplies about 40 percent of the UK market, said that
a number of its producers were cancelling orders for chicks to be
raised ahead of the Christmas laying season, raising the prospect
of egg shortages for the first time since the Second World War.

"Farmers are deciding not to buy pullets. There could be shortages
in the market in the weeks leading up to Christmas," Finn Cottle,
the marketing director, said.

Egg consumption rises by 50 percent in the run-up to Christmas, as
families have more cooked breakfasts in winter and bake cakes.

The cost of animal feed, mainly wheat and soya, represents half the
cost of keeping hens and those ingredients have doubled in price
over the past year.

Pig farmers are also feeling the effect of soaring commodity prices
and are demanding stiff price increases for pork.

According to the British Pig Executive, farmers are getting L1.10
a kilo for pigs that cost L1.44 to produce, a loss about L23 per
pig.

To make up the deficit, the organisation representing British pig
farmers reckons that a typical packet of bacon needs to increase
by 13p in supermarkets.

Climate convulsions, politics, and changing diets around the world
are raising the cost of the staples of a British shopping basket.

The price of a bushel of wheat has more than doubled on world markets
in a year, rising at an alarming speed over the past month.

The grain price is setting records every week just as egg farmers
enter contracts for animal feed, typically renewed in September.

If the business of producing eggs is to get back on an even keel,
farm gate prices must rise by 25 percent, says Noble. That translates
into an extra 20p on six free-range eggs on a supermarket shelf.

Without the prospect of price increases, egg farmers may choose to
put their money elsewhere, such as in arable farming, where profits
are soaring.

Tom Vesey, chairman of the British Free Range Egg Producers
Association, said: "They are hesitating about committing to their
next flock, which means that further down the line we will have a
shortage of free range eggs."

Expensive wheat is affecting livestock farmers worldwide and last
month forced mass-market bakers in the UK to raise the price of a
standard loaf by 8p.

Associated British Foods, which owns Allied Bakeries, gave warning
last week that the increase was insufficient and analysts are
expecting further increases to take the cheapest loaf well above
L1.

Dairy farmers are also feeling the impact of feed costs.

The price of skimmed milk powder has doubled on world markets and
in the UK dairies are extracting higher prices from supermarkets
as they suffer milk shortages because of the early summer flooding.

Supermarkets are trying to absorb the price increases and, according
to the Milk Development Council, the stores are selling butter to
shoppers at less than cost.

First Milk, a leading farm cooperative, declared force majeure at
the end of last month, warning customers that milk supplies would
be falling 5 percent short in its second such warning this summer.

* * *

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