Preparing the UK egg sector for retailers' 2025 cage-free commitments
Background
In 2016, major UK retailers announced that by 2025 they would transition entirely to non cage shell eggs, signaling a profound shift in the supply landscape. BFREPA commissioned ADAS to conduct a comprehensive analysis of how these commitments would affect UK egg production, particularly the free-range sector. Building on earlier work from 2017, ADAS updated cost models and assessed expected production capacities.
Objectives
BFREPA asked ADAS to provide clarity on three central questions:
- What will it cost to produce free range and barn (non cage) eggs in 2025?
- How will retailer policies shape demand for different production systems?
- Will the UK need to expand free range capacity to meet 2025 requirements?
Actions
To deliver accurate, future focused insights, ADAS combined:
- forecasted flock performance for 2025
- current input costs for feed, pullets, and housing
- updated retailer policy data
- national capacity analysis (free range bird places and production volumes).
Because of the uncertainty surrounding future feed prices, ADAS used current feed costs combined with forecasted 2025 performance, creating a robust and credible cost model.
Results
ADAS compared cost structures for free‑range, Lion Code barn, and non‑Lion Code barn egg production systems.
- Free‑range forecast cost per dozen was 88.8p. Free range is the highest cost, with feed accounting for up to 50%.
- Barn (Lion Code) forecast cost per dozen was 75.5p (15% cheaper than free‑range).
- Barn (Non–Lion Code) was 71.3p (20% cheaper than free-range with a higher stocking density).
Under all realistic scenarios, barn egg production will remain significantly cheaper than free‑range. Even when assumptions were made less favourable (higher labour, higher feed intake, higher housing costs), barn systems still maintained a cost advantage of approximately 9%.
Most major retailers have committed to non cage shell eggs by 2025. For retailers wishing to maintain an entry level, low cost egg, barn production is the likely replacement for enriched cages—not free range. Free range demand is expected to grow only if driven voluntarily by consumers or if retailers adopt free range and organic-only policies (as Morrisons has already done).
- 2020 UK annual requirement: 36.3 million cases
- Forecast 2025 requirement (with 3% population growth): 37.3 million cases
Using sector‑specific sales proportions (retail, food service, processing), ADAS identified a combined need for:
- 9 million cases of free‑range and organic eggs
- 5 million cases of free‑range alone.
Analysis of the UK’s current free range bird places and productivity indicates:
- forecast free range production in 2025: 21.2 million cases
- forecast requirement: 21.5 million cases
- shortfall: only 0.3 million cases, equivalent to ~400,000 bird places
- total required expansion: just 2%.
Considering the sector has already expanded 14% since 2017, the additional capacity required is modest.
Conclusions
ADAS concluded that:
- free range eggs will continue to carry higher production costs than barn eggs, making barn systems the most viable “value tier” option for retailers fulfilling non cage commitments
- major expansion of the free range sector is not required under current retailer policies and population projections
- any significant growth in free range demand will depend on consumer preference shifts or retailer decisions to exceed non cage requirements
- external uncertainties (Brexit transition, post Covid economic impacts) could influence long term outcomes and should be monitored.
Impact
This analysis provided BFREPA and the wider egg industry with:
- clarity on realistic future production costs
- a grounded forecast of sector capacity and demand alignment evidence based guidance to support producer investment decisions
- strategic insight into retailer behaviour and consumer trends.
