Has the egg industry killed the golden goose?
Food & Agriculture
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Once again Australia is suffering from a glut.
An egg glut.
Things have got so bad, again, that Farm Pride Foods (ASX:FRM) is warning shareholders of a massive drop in half-year earnings due to drought and “continuing national over-supply of eggs”.
The company is forecasting half year EBITDA (earnings before interest, tax, depreciation and amortisation) to be around $500,000-$600,000.
That’s a fall of 85-88 per cent compared to the first half of fiscal 2018.
Things haven’t been eggcellent for a long time
The egg surfeit is not due to too many backyard urban hipster farmers.
It may have arisen in 2016 from a shortage due to new free-range rules and has been growing worse since 2017.
“With greater industry certainty about free range definitions and following a hiatus in shed construction, egg producers like ourselves have invested in additional capacity in excess of the immediate national requirement,” Farm Pride said in February 2017.
That could be coming back to bite.
“We currently do not see any relief in the over-supply of eggs,” they said today.
It’s not even the first time.
In 2006, South Australia farmers were slaughtering hens by the thousands as WA became the last state to deregulate its egg industry the year before.
Farm Pride has been contacted for comment.
The company’s stock fell 1.3 per cent to 76c.