Egg farmers passing along savings from lower feed input costs

MISSISSAUGA, ON, Nov. 5, 2013 /CNW/ - Egg Farmers of Ontario (EFO) has established the price Ontario egg farmers are paid for each dozen large eggs produced will drop six cents to $1.90 from $1.96 effective November 11, 2013.

Lower feed input costs currently measured by Ontario's farm pricing model are triggering the reduction of the price paid to egg farmers across the province.

The six cent price reduction will not necessarily trigger an equivalent decline in retail prices since the price of eggs in supermarkets is not set by farmers. Egg farmers sell their eggs to grading stations, who in turn sell them to wholesalers or retailers.

Retailers set consumer prices. This is a complex process that has retailers using features such as "loss leader" pricing, below cost, on staples such as eggs, milk and bread as retailers compete for market share. The total pricing mix across the typical consumer food basket purchase is used to achieve retailer profitability. Just as retailers cannot stay in business if they "lose" money, farmers also need a fair price for eggs to sustainably supply a safe local food.

"The fair farm price reduction of six cents means there is six cents in cost removed from the marketing chain," said Harry Pelissero, EFO General Manager. "This will result in some combination of lower prices or higher margins equal to six cents depending on decisions taken by the other players in the marketing chain."

The fair farm pricing model tracks all costs of producing eggs. The cost of feed inputs for laying hens represents about 35 per cent of the calculated cost of producing a dozen eggs. A drop in feed input costs means this six cent per dozen cost reduction can be passed through to the marketing chain and consumers while maintaining fair income levels for Ontario egg farmers.

Egg Farmers of Ontario represents approximately 440 egg farmers and pullet growers in Ontario. It is an independent, self-governing organization funded entirely by egg and pullet farmers.

SOURCE: Egg Farmers of Ontario

Contact:
Bill Mitchell
Director of Public Affairs
Eggs Farmers of Ontario
905-858-9790