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3.5. Organic eggs
According to the British Egg Information Service ( BEIS), approximately 66% of eggs produced in the UK come from hens reared in the laying-cage system. A further 24% are from free-range systems, and just 3% of the total eggs produced are organic, with a retail value of £17 million (See table 3.4.). However, sales figures as high as £19 million have been reported 21.
Table 3.4. UK Egg market (2004)
Egg production system | 2004 market share (percentage) | 2004 retail value (£) |
|---|
Laying cage | 66 | £374,880,000 |
|---|
Free range | 24 | £136,320,000 |
|---|
Barn | 7 | £39,760,000 |
|---|
Organic | 3 | £17,040,000 |
|---|
3.5.1. Traceability
New European legislation was introduced on 1 st January 2004 requiring all Class A eggs to be stamped with a producer code that will identify the production method to the consumer and the farm of origin to competent authorities. The code will help to inform the consumer of how their eggs have been produced. In Scotland, with support from Scottish egg producers, eggs will have the mandatory suffix ' SCO' included in the egg producer code. However, egg producers that sell their produce from the farm gate or locally door-to-door are exempt from stamping eggs as it is assumed that the origin is already known 18.
This change to EU legislation will enable consumers to choose Scottish eggs. However, the Scottish Egg Producers Retailers Association ( SEPRA) estimate that indigenous egg production caters for 60% of their total daily egg requirements. The remaining 40% are imported, mainly from Northern Ireland and England followed by EU producers, such as Holland, France, Belgium and Spain. It is apparent that the organic sector has similar levels of imports.
3.5.2. Survey results - volumes and market outlets
The survey elicited 17 responses from producers engaged in the production of organic eggs. They accounted for a total of 1,060,000 organic eggs produced by approximately 3,700 laying hens between July 2004 and June 2005. However, the processor survey suggests that this is a gross under estimation of organic egg production in Scotland.
Results from the processor survey suggest that over the same 12 month period, the number of organic laying hens in Scotland increased to 44,000 producing 13 million eggs per year equating to a farm gate value of £1.3 million.
The survey suggests that the majority of the organic eggs produced in Scotland are sold through the multiples (84%), with a further 7.5% going through wholesalers to independent retailers, 8% through direct sales and the remainder to the food service.
Figure 3.6. Scottish ogranic egg outlets (by value)
More than 80% of Scotland's organic eggs are sold to a central distributor who in turn supplies the multiple retailers. The distributor had existing contacts with multiple retailers for non-organic eggs and therefore, is now able to supply them with the full range of egg varieties required.
The 'distributor' is the hub of the organic egg supply network providing producers with access to a growing market. This relationship forms a buffer between the producers and the market, reducing the amount of time the producers need to spend on marketing their produce thus enabling them to focus solely on production.
In this case, the distributor/processor is also a primary producer and so has in-depth knowledge of the costs of production under organic standards and a vested interest in ensuring a profitable relationship with the multiple retailers. The network also suits multiple retailers who have a preference of dealing with as few suppliers as possible.
In order to keep costs down and increase profits, some organic egg producers have successfully sold to independent retailers by using transport and delivery services already in place. For example, eggs from the Black Isle are collected by a delivery van in Inverness and distributed to outlets in Edinburgh for retail. This type of co-operation between producers is essential if small-scale rural businesses are to reach their customers.
The development of co-operative relationships allows producers to pool resources enabling them to expand and refine their farm business. Producers are able to penetrate markets that they otherwise would not be able to access and subsequently increase production improving their overall profitability. Without this sort of co-operation and relationship between producers, it would be far more difficult for producers to find sufficient markets for their produce thus limiting their ability to impact on the overall levels of market penetration.
Farmers markets and farm shops account for the vast majority of the eggs sold direct to consumers. Producers are able to significantly increase their returns by marketing their eggs in this way with some producers reporting prices as high as £2.80 per dozen at farmers markets. This is more than double the price received by producers selling to a wholesaler (prices received by producers selling to a wholesaler cannot be released due to issues of confidentiality). Several box schemes have also begun to sell organic eggs which has increased the overall attractiveness of organic boxes.
3.5.3. Penetration
The market for organic eggs in Scotland continues to grow. The survey suggests that as much as 40% of the organic eggs sold in Scotland are imported from England and Ireland, closely mirroring what is happening in the non-organic sector. However, it is apparent that by value, Scottish organic egg producers provide between 6.8% and 7.6% of the UK's organic eggs and therefore could meet consumer demand. Consumer demand is stimulating interest and producers are continuing to increase production. It is estimated that production in Scotland will have increased by a further 30% by spring 2006. However, due to the rapidity with which the market is growing, and the apparently unnecessary importation of organic eggs, it is difficult to predict if this will improve the overall levels of market penetration.
3.5.4. Summary
- 84% of organic eggs in Scotland are sold through multiple retailers;
- The Scottish organic egg sector was worth approximately £1.3 million in 2004/05;
- 80% of the organic egg sector is operated under contractual agreement through one wholesaler;
- Penetration levels are approximately 60%.
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