Egg farmer warns rising production costs will force another price hike in supermarkets

Egg farmer warns rising production costs will force another price hike in supermarkets

When Darren Letton looks at his chickens, he knows how much the cost of farming them has increased over the last few years, and what that means for consumers under financial pressure.

Key points:

  • Darren Letton says his overheads have increased due to rising feed prices and input costs
  • Supermarket manager Grenfell Koch says nearly all grocery items are more expensive
  • A researcher says food prices do not need to be as high when farmers are being paid so little

Nestled in Pike River in South Australia’s Riverland, Glenview Poultry Farm is home to about 35,000 birds that lay about 24,000 eggs every day.

Mr Letton said the price of producing his chickens and eggs had jumped about 40 per cent in recent years.

An Australian Bureau of Statistics November 2023 report showed egg prices had increased 10.4 per cent in the last 12 months.

Mr Letton said the price of food and even the cost of chicken sheds had increased. 

Darren Letton has about 35,000 chickens, with about 60 per cent free-range.(ABC Riverland: Sophie Holder)

“Eventually we have to put the price up. We can’t wear it forever,” he said. 

“We’re probably only getting a third of the price of what you see [on the shelf]. There’s a middleman and then there’s a retailer.”

Mr Letton bumped up prices twice in 2023 to meet costs but was considering more increases.

“I would probably say we could go up again, but you can’t [so soon],” he said.

Australian growers were also facing costs to transition from caged eggs to free-range in line with a national phase-out of conventional cages by 2036

Mr Letton said about 60 per cent of his chickens were free-range, and he had spent about $700,000 on a new shed for 5,000 free-range chickens. 

“We know that [change] will happen and it will cost a lot of money,” he said. 

“To transition from what I’m doing would cost me around $3 million.”

Mr Letton said the cost to transition could also see some older farmers drop out of the industry, resulting in less chickens and less eggs, and pushing up prices again.

All grocery prices up

Renmark and Loxton Foodland owner Grenfell Koch said the prices of nearly all products, not just eggs, had increased — particularly in the past 18 months.

Grenfell Koch says prices will level out soon as inflation settles. (ABC Riverland: Timu King)

He was confident prices would plateau. 

“Certainly, there are lots of other factors that go into it as well, like wages and the cost of transport, power and those sorts of things,” Mr Koch said.

“I think if inflation comes back and settles down, I do believe pricing should stay a lot more stable.”

Prices don’t add up

Curtin University Associate Professor Elizabeth Jackson was hopeful a federal government review into grocery store profits would help determine some of the supply chain issues that were putting pressure on farmers like Mr Letton.

A review is underway into how supermarket pricing verses production and supply costs.(ABC Riverland: Timu King)

The review follows profits of over $1 billion for Woolworths and Coles in 2023, which sparked calls from the federal Opposition and farmers for an Australia Competition and Consumer Competition inquiry

Dr Jackson said expensive prices at supermarkets was a new phenomenon that was causing confusion along the whole supply chain.

“We just don’t need our food prices to be as high as they are when farmers are getting such low prices,” she said.

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