Shortage of eggs leads to price increase

 
Dr Charlotte Nkuna, Senior Executive of SA Poultry Association, writes:

The past year was a very challenging year for egg producers. The farmers saw
feed price increases with a minimum of R1 000 per tonne between January and
August 2016 due to the drought. At the same time, between January and April
2016, the egg prices dropped substantially as a result of excess eggs on the
market. It was very difficult for the farmers to cope with the high feed prices
and the low market prices for eggs. The farmers were unable to recover any of
the losses suffered as a result of the increases in the price of feed. This
hardship resulted in the exit of many of the small scale farmers, those with
between 5 000 and 40 000 hen capacity. Some of the farmers depleted their flocks
early, moving the average depletion age from 74.8 weeks in 2015 to 71.8 weeks in
2016. The above factors have resulted in a shortage of eggs. The consumers can
expect an increase in egg prices due to the shortage of eggs on the market. The
indications are that prices are likely to increase on average by about 7-8%.
This scenario is likely to persist while farmers attempt to increase their
production to meet the market demand.

In summary, reasons for the current trend include:

• Commercial egg producers have not been immune to the input cost pressures
endured by the broiler industry.

• As a result of extremely low profit margins, a number of producers have not
been able to replenish laying hens at the end of their productive cycle or have
had to cull early to raise funds so as to be able to meet commitments to
creditors.

• This is manifested in an acute shortage of eggs following an almost year long
decline in the size of the productive laying flock and associated numbers of
eggs produced.

Eggs remain the cheapest and most complete form of animal protein available and
as competing protein sources have increased in price, there has been a migration
to the consumption of eggs, exacerbating the increase in demand. The current
trend is not viewed as short term or seasonal but rather more medium term in
nature and should endure through to the latter part of 2017 at least.