2120 final report.pdf - Agra CEAS Consulting

APPENDIX 1: MEMBER STATE REPORTS4,5004,000Demand for eggs by production system (millions)3,5003,0002,5002,0001,5001,000500-Retail Food service ProcessingCage Free range BarnFigure A1.87: Estimated demand for eggs by sector and production system 2003Source: Deans Foods and Agra CEAS Consulting calculations.Within the processing sector, 70% of products are destined for the baking industry (Northern Foods,RHM, Hazelwoods, United Biscuits), 20% to general food manufacturers (companies such as Nestlé,Geest, Mars, Cadbury’s, Terry’s) and the remaining 10% to the food service industry. As can be seenin Figure A1.87, approximately 12% of the processed market is free range (Marks and Spencer andMcDonalds both demand exclusively free range eggs). However, second quality free range eggs arein short supply and the market also draws on first quality free range eggs, some of which are sourcedfrom dedicated producers set up specifically to service this market. Whilst the demand for freerange eggs in the food service industry may grow, it is not thought likely that a similar trend will beseen in the baking industry where eggs are a major, but often unnoticed ingredient. The use oforganic eggs in processing as differentiated product is negligible at around a tenth of a percent.A1.15.4.2. PricesFigure A1.88 shows the evolution of egg prices in the UK between 1991 and 2003 and compares thisto weighted average EU prices. The UK price series tracked the EU weighted average closely upuntil 2000, albeit with less volatility, but after this point the series diverge with UK prices increasingand the EU average price decreasing. Finally, between 2002 and 2003 the series move in oppositedirections with the UK average price declining whilst the EU average price increases.The percentage difference between average prices in the UK and the EU is shown in Figure A1.89.The relatively close relationship between the two series can be seen with the UK price fluctuatingbelow and above the EU average.327