Egg prices may rise further still on spring's increase
Egg producers in Estonia are seeing their situation being complicated by both rising energy prices and inflation in the cost of poultry feed, meaning the price of eggs in the stores may get even more expensive in the fall than its current, high level.
At the same time, store chains argue that the market makes its choice based on price.
In April of this year, the price of eggs rose sharply, with the main reason being given for this was the increase in the price of chicken feed.
The price of organic chickens' eggs rose by ten percent in the spring, for instance.
Lauri Bobrovski, board member of egg producer Äntu Mõis OÜ, told ERR that this inflation did not, at that stage, reflect effects of the war in Ukraine and what has transpired with energy prices, whereas a new price hike now awaits, as a result also of these factors.
Bobrovski said: "I have to concede that every day for the past month-and-a-half, I have been thinking about how to proceed. We have dragged things out a lot, but now there is a crossroads coming up."
Since Äntu Mõis consumes electricity at an energy market tracking package, its price has increased several times compared with last year. In addition, the farm uses pellet heating, which is also almost one hundred percent more expensive than it was a year ago.
Bobrovski added that: "My team and I are simply doing calculations to determine to what extent we will be forced to increase the price. At the moment, in light of the prices we have to buy raw materials and energy at today, this increase seems so drastic as it appears in the Excel table, that we are fearful, since as a premium product , will the consumer be able to buy the product at the new prices or not."
The company plans to set its latest price level increase by the end of this week, but, depending on agreements with partners, the new prices will reach the consumer from October onwards.
The great summer led to a shortage of fodder
The situation with animal fodder is also a concern for businesses in the sector. Vladimir Sapožnin, a board member at Dava Foods, the largest egg producer in Estonia, said that whereas the company usually buys feed-quality fruit, i.e. fruit that has been exposed to a little rain or has grown poorly, this summer's weather was so good that there is no feed-quality fruit available in Estonia - everything is higher grade than that, meaning it is much costlier
Dava Foods also considers a price increase in the fall quite likely.
Sapožnin said: "We have bought some feed] stocks in advance, but we cannot buy grain in advance for the whole year. We may have to raise the price of eggs in October-November, but time will tell," said.
According to Sapožnin, it is difficult to calculate the average price of eggs at this point, since there is such a proliferation of producers, countries of origin, and egg sizes and grades.
While the price of eggs may still drop in stores as a result of of price promotions, according to Sapožnin, prices of from producers as a whole have not decreased since spring.
He said: "Stores play with their pricing all the time. Eggs has been seen as a product that was extremely cheap, senselessly so."
Sapožnin considered the rise in energy prices to be less of a concern than the increase in the price of feed, since the latter accounts for 70 percent of the cost of eggs, at least at his company.
"However, of course, the price of energy and fuel also have their effect. Input-related prices drip from here and there, and even if everything becomes just a few percent costlier, this all adds up to several tens of percent [to the consumer]," he went on.
Agriculture has hardened to the difficult times, he added, but the current situation is still a feeling of hopelessness.
The state has started from the wrong end with its planned energy subsidies, he added, because by supporting producers (the current package under debate at the Riigikogu is aimed at domestic households – ed.), the price growth of produce could also have been slowed down.
Shoppers looking for cheapest prices
The experience of store chains demonstrates that a large number of customers buy their eggs based on price, while public price sensitivity is much higher than before.
Rimi's purchasing manager Talis Raak said: "Promotional prices are sought in every product group, and chicken eggs are no exception."
"Since the rise in the price of eggs has been substantial this year, the share of sales of the cheapest produce has risen, that is, a large number of customers make their choices based on price, choosing the cheapest on offer."
Tiia Schapel, head of Maxima Estonia's marketing and public relations department, concurred, that their customers also saw price as key.
Schapel said: "During discount campaigns, L-sized white eggs tend to do particularly well. Regarding our permanent selection, the demand for brown M-sized chicken eggs has grown the most over the past three months," he said.
At the same time, Schapel noted that compared with the first months of the year, their demand for M-sized organic chicken eggs from Poland, which certainly do not belong to the cheapest price category, had also risen, by a third.
Demand for substitute products such as egg whites sold separately in 500g packages had risen by 8 percent since the start of the year, she added.
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Editor: Andrew Whyte