The Irish poultry industry has always faced turmoil surrounding disease challenges each year, however, 2021 saw producers face the worst highly pathogenic avian influenza (HPAI) outbreak, with six cases in commercial units.
The outbreak was on top of rising input costs, grain prices, energy costs and higher replacement pullet costs.
The Irish poultry industry comprises of two main sectors – eggs and meat.
Within the meat sector, this is further divided into the broiler (chicken), turkey and duck industries. This article will concentrate on the egg sector, due to the most up to date figures being available. The data presented in this piece is a financial sample from free-range and organic egg producers.
Like the pig industry, poultry production systems rely solely on grain and finished rations to feed the food-producing birds. Feed costs are approximately 60% of total costs in an egg-producing system.
Since April 2021, free-range feed prices have increased by 20%, and will continue to increase in the coming weeks and months. On average, it costs €0.80 on feed alone to produce one dozen eggs at today’s feed prices. While the graph shows a recent increase in egg price, there had been significant losses prior to this. This recent egg price increase, while welcome, will not be sufficient to cover previous losses.
Organic egg producers have also been faced with excessive feed cost increases. Organic layer feed has increased by 74% in the last 12 months, while egg prices have only increased by 15%. Feed costs account for almost two-thirds (€1.959 per dozen) of all feed costs in an organic system.
Egg producers receive a price for each egg size, with the large and extra-large eggs achieving the highest price. The average price per dozen is calculated using the average gradings achieved.
The structure of the egg industry is such that the producer handles the cost of feed and the replacement pullet and while egg packing centres (EPC) do aid producers in covering feed increases, the non-feed costs associated with egg production, namely the pullet and energy, are paid by the producer.
The egg producer will purchase the point of lay (POL) pullet at 16 weeks of age. The price of the pullet has increased by almost 90c. This results in an additional cost of 3c per dozen eggs, which the producer must pay.
Feed price will remain high, with further increases expected in the coming weeks and months. While the EPC has covered some feed cost to date, a higher retail price is required to cover the non-feed increases which have been seen to date. These non-feed costs will not remain static, as the pullet price will increase along with the feed cost.
At current prices, free-range egg producers are at breakeven point. When these producers are ready to restock they will face higher pullet prices. They are facing into a loss-making situation if there is not an increase in retail prices. The current outlook for feed and non-feed costs is leaving producers with the decision on whether to restock or not once the birds have completed their cycle.
The organic egg sector is currently facing a loss-making situation, with producers facing losses of approximately 60c per dozen. If these losses are not recovered from the market, there is a possibility producers will be left with no option but to leave production houses empty.
Disease and rising costs are additional challenges to the removal of enriched cage systems from the Irish production system. This system change will also lead to an increase in production costs.
In summary, the last six months have been very difficult for producers. The outlook for the next six to nine months is that feed will remain high, therefore any improvement in profitability will have to come on the retail price side.