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Disruption in European Egg Markets

12/13/2022

Given the effects of HPAI and narrow margins in the U.K., an apparent shortage of eggs has emerged at retail in that Nation. A number of supermarkets have responded by restricting volume of purchases by consumers.  Some chains are now facing the results of their collective inappropriate policies of holding down wholesale prices over many years. Restricting margins generated by producers has resulted in shortages that were predicted by industry groups including the British Free-Range Egg Producers Association, documenting soaring prices of feed, fuel and labor forcing cessation of production.  In an attempt to stimulate production, the Tesco chain is providing cash supplements to producers. This represents a desperation tactic rather than generosity.  The volumes of egg sold by the chain and their consumer goodwill, would have been better served by providing producers with a fair and equitable price months ago.

 

Hungary, generally recognized as an autocracy, has taken the position of imposing price caps on eggs and other basic foods in an attempt to reduce grocery bills.  Invariably, a low-price policy devolves into a non-availability response.  Simply capping the price of a product in the face of increasing production costs results in a decline in production.  Perhaps Prime Minister Victor Orban will be able to induce his well-fed ministers to lay eggs to tamp down consumer disaffection with his administration.

 

The war in Ukraine has exacerbated the availability of eggs in Europe, since that nation was a major supplier of egg liquids.  Based on demand by the food industry, shell eggs are now diverted to breaking, reducing availability to consumers of packaged shell eggs.