Public AdministrationWritten evidence submitted by the Food and Drink Federation (FDF) (Eggs follow up 2)

I am writing in advance of Wednesday’s session of the EFRA Committee’s inquiry on the implications of the Welfare of Laying Hens Directive for the egg industry.

The UK food and drink manufacturing industry—the UK’s largest manufacturing sector—is a committed customer of UK farmers, purchasing around two-thirds of the country’s agricultural production. FDF has supported UK egg producers’ efforts to anticipate and comply with the new European requirements from day one, sharing their concerns regarding lack of enforcement in other Member States. Food manufacturers worked with government, the domestic egg industry, processors, the food service sector and retailers and reached a voluntary commitment to ensure use of compliant eggs and egg products in their manufacturing.

Unfortunately the failure of other Member States to comply with the Directive has resulted in serious supply shortages and surging prices and considerable uncertainty remains around how long this situation will last. UK manufacturers face continuing difficulty obtaining eggs from foreign suppliers, while UK egg suppliers struggle to fulfil contracted deliveries and cannot offer additional non-contract supplies. Manufacturers have subsequently been forced to cancel shifts and close production lines due to the lack of sufficient volumes for their manufacturing needs.

FDF has a shared vision with Government to deliver 20% growth in food and drink manufacturing by 2020. Removing barriers which hamper the competitiveness of the sector and securing a consistent and reliable supply of key agricultural raw materials will be vitally important if we are to deliver accelerated rates of sustainable growth.

While Defra has been alive to the problems that manufacturers are facing in obtaining eggs, the Commission have taken a rather different line, doubting that there is a problem with the supply of eggs and egg products and claiming that the rapid price increases were merely evidence of the legislation working.

With reduced demand post-Easter the situation for some has improved slightly, however prices remain exceptionally high. Some suppliers even report that the supply situation is getting worse and prices are likely to increase. Looking further ahead it is likely that food manufacturers will continue to face considerable uncertainty in relation to egg supply and the end of the year will see manufacturers’ contract prices for processed egg increasing substantially. We continue to monitor the situation closely and are in constant contact with members to establish how the shortage is impacting on their businesses.

Evidently this is a big problem for food manufacturers especially SMEs and those who manufacture products with high rates of egg inclusion and I look forward to meeting with the Committee this week to discuss how the introduction of the legislation has impacted on the supply of eggs and egg products.

April 2012