2120 final report.pdf - Agra CEAS Consulting

APPENDIX 1: MEMBER STATE REPORTSA1.15.3. Egg processingThe UK egg processing sector is concentrated with ten producers (some of whom operate jointly),dominated by Deans Food Group Ltd.. The main processed products are liquid; there are no eggdrying facilities in the UK, although one company was drying egg a year ago. According to thiscompany, drying eggs is no longer cost effective under the Directive. The UK processing sector hasa domestic focus and services around 70% of the UK’s processed egg demand. There is a net importrequirement of 46.9 tonnes of egg products (2003) and imports are drawn mainly from theNetherlands, France and Belgium.The size of the UK processing sector is equivalent to just over 2 billion shell eggs. This absorbs allUK second quality eggs (which make up around 10% of total egg production, i.e. 1 billion eggs in2003) and an equivalent number of first quality eggs. There is some differentiation by productionsystem, with most processors producing some free range and a small amount of organic processedproducts. These are sold to a range of food service organisations including Hilton Hotels,McDonalds, Brakes Brothers and 3663) at a premium. Whilst some second quality eggs fromalternative systems therefore attract a premium, the majority are not utilised in this way and arebought at the same price as eggs from traditional caged production and are used in undifferentiatedproduction.Given production of around 1.87 billion free range eggs per year, between 187 and 224 million freerange eggs are available as second quality 146 . When Marks and Spencer demanded free range eggproducts, the existing demand was already absorbing this supply, albeit with only a modest premium.The entry of Marks and Spencer doubled this demand, resulted in a significant increase in thepremium and, as a result, some existing users left the market, some first quality free range eggs werediverted into processing with a premium and a greater proportion of second quality free range eggswere utilised 147 . The expected entry of Waitrose to the free range product market will increasedemand, and premiums, still further.The largest producer of liquid egg products from alternative production systems is Stonegate whosupply, inter alia Marks and Spencer. This differentiated production accounts for between a quarterand a third of Stonegate’s processed egg output.A1.15.3.1. Main egg processorsThe UK egg processing sector is dominated by Deans Food Group with Stonegate Food Ingredients,Manton Group and Framptons Ltd in second, third and fourth place 148 . The market for processed eggproducts in the UK is around 2.9 billion in shell egg equivalents, of which, 30% is imported. DeansFood Group account for just under half of domestic supply of processed products (equivalent toaround 0.9 billion shell eggs). Stonegate Food Ingredients account for approximately a fifth of UK146 On the basis that second quality eggs account for between 10% and 12% of egg production.147 Prior to the entry of Marks and Spencer the premium for second quality free range eggs was insufficient to make it worth collection formany producers. These eggs were simply discarded.148 Whilst Stonegate use more eggs than Framptons, production of products is roughly equivalent.324