Eggs and poultry meat destined for foodservice is struggling to find a market. What can be done to clear the obstacles?
The events of the past few weeks have shown the inflexibility of some supply chains. While retail demand for eggs and poultry is significantly up, the product usually destined for hotels, restaurants and pubs has struggled to find a market.
One medium sized integrated poultry meat business, which did not want to be identified, said its usual route to market in the north of England had simply collapsed in the past few weeks. Its core customer base of pubs, cafes, wholesalers and catering butchers had almost all closed. “The supermarkets are crying out for poultry meat at the moment,” said the source, but despite this, offers to redirect the product to supermarkets had so far been unsuccessful.
Demand for both poultry meat and eggs has increased significantly at retail level with reports that demand for eggs is up by as much as 100% in some supermarkets compared to usual levels. Some individual businesses supplying the retail sector, such as Country Fresh Eggs, have seen volume increases in excess of 300%.
Kantar data shows record meat sales during March; 9% growth in fresh meat and poultry over the past 12 weeks was surpassed by a 27% increase in the last four weeks.
The NFU has been leading talks with government and industry on how businesses can divert supply destined for food service into retail. There are several obstacles in the way of simply moving product from one market to another including packaging, logistics and contractual agreements.
Independent processors and hatcheries hit
Cutting up operations in this sector have closed partly as a result of staff shortages and partly due to a lack of demand following the closure of restaurants and butchers’ shops. This has impacted on the independent processors, some of which have reported sales down significantly on pre-COVID-19 levels. The NFU said it was concerned ahout the impact on farm unless the processors in this sector take birds from farm as per their agreement.
In response, the number of chicks being ordered is being cut back due to a lack of confidence in the sector. Defra data shows the number of eggs set in UK hatcheries during March 2020 was reduced.
The number of commercial broiler eggs set was down by 1.53% to 98.40 million compared to March 2019 and down 1.64% on February 2020. The number of broiler breeder eggs set was down by 10.65% to 4.61 million compared to March 2019 and down 17.53% on February 2020.
Removing the obstacles
It has been easier for businesses that already supply both retail and foodservice to respond. Noble Foods has redirected its foodservice liquid egg products into the grocery retail channel to help meet the exceptional demand for eggs and ensure these products still have a route to market while pubs, restaurants and takeaways are closed.
There are two liquid egg products, free-range and colony, with the branding Great British Egg Co, and are being promoted to consumers as a convenient and easy to use alternative to shell eggs.
“With households on lockdown, more meals are being consumed within the home than ever before,” said Veli Moluluo, managing director of the consumer division at Noble Foods.
“Our industry is unique in that our hens can only lay a finite number of eggs and it takes a considerable amount of time to increase our flock sizes to meet increased demand.
“However, we have a number of products available under our recently launched foodservice brand, The Great British Egg Co. and by switching the liquid egg products into retail solutions, we can minimise waste and help relieve the pressure on shell egg supply.”
The Lakes Free Range Egg Company has been supplying McDonald’s with eggs for 15 years, and usually supplies over one million eggs a week to the fast food chain. David Brass, chief operating officer, told the BBC Farming Today programme it had been able to redirect its eggs that would usually go to McDonald’s to its national supermarket customers including Sainsbury’s and Tesco.
However, while these examples show how some individual businesses are able to repond, there is clearly a structural problem and many businesses are in a risky position.
Norman Bagley is policy director of the Association of Independent Meat Suppliers, (AIMS) representing abattoirs and processors; cutting plants; meat wholesalers; retail butchers and catering butchers.
Some processing plants are cutting production by up to a third, he says. He welcomes the government’s Job Retention Scheme, which went live on 20 March, and allows businesses to furlough staff, with 80% of their wages paid by government.
But Bagley says there is a need for a flexible furlough scheme for the meat industry. “As it stands this is very much a one size fits all scheme and simply doesn’t taken into account the differences that exist from industry to industry.
“What we are hearing is that many have seen a downturn in their businesses but do not have the need to fully close. We would like to see the option for flexible furlough whereby staff would receive their full earnings from their employers on the days they work and the 80% furlough payment on the days they don’t.
“Many of our members supply much of what they produce to the hospitality industry who through Government instruction are not currently operating. They have some additional retail business, and many have moved into home delivery. However, those sales in no way will replace the business lost.”
AIMS believes that if businesses can operate flexible furlough then there would be a saving to the country’s finances and businesses would be more likely to survive the impact of coronavirus.
In the meantimes the prognosis is worrying. According to NFU analysis, the collapse of wholesale poultry meat supply chains means birds are backing up through the supply chain.
There are tentative signs some parts of the foodservice sector are coming back to life. KFC has reopened 15 of its 900 UK branches, offering a delivery only service through couriers including Deliveroo and Uber Eats. Burger King has reopened four of its 500 branches, again on a delivery only model, and Pret a Manger has reopened at 10 sites. In addition, there is likely to be Ramadan-related demand (the month-long Muslim festival began on 23 April) on as demand for poultry from the Asian community is strong in the UK, and an increasing number of retail butchers and takeaways are helping to ease the situation. However, the wholesale poultry meat sector is experiencing a very challenging time; this will likely remain the case while the UK is still in lockdown.