Cairo, Egypt (CNN) - Table egg prices in Egypt witnessed a noticeable shift during September, after months of decline that “put pressure on producers and led to selling eggs at less than their production cost,” according to them, before prices returned to rising with the change in the supply and demand equation and the rise in production input costs.
The recent increase came in conjunction with the return of school and the increase in demand for eggs, at a time when the supply was relatively declining, which pushed prices to levels higher than those recorded during the period of decline.
The recent price movement raises questions about the reasons for the rapid transition from the stage of surplus and low prices to the current rising wave, and whether the market is facing a temporary price correction or the beginning of new price levels, especially with the continued pressures associated with the cost of feed, transportation, and raw materials.
"correct mode"
Head of the Table Eggs Division of the General Union of Poultry Producers, Ahmed Nabil, said that what the market is currently witnessing cannot be described as an exceptional increase in prices, but rather represents a correction of the situation, after a long period during which producers were selling at less than the cost of production.
He explained that the cost of producing a plate of eggs was about 115 pounds ($2.22), while the selling price from the farm was about 60 pounds ($1.16), which means that the producers suffered continuous losses for a period of approximately 6 months, adding that the market witnessed during the period of declining prices a surplus in production compared to local consumption, ranging between 30 and 40%, at a time when Egypt’s egg production reaches about 17 billion eggs annually.
Part of the price movement is related to the cost of production inputs, according to Nabil, who pointed out that the prices of feed and raw materials rose by rates ranging between 30 and 40%, coinciding with the increase in transportation and insurance costs as a result of the unrest in the Middle East region and the movement of commodity prices in global markets, in addition to the movement of the price of the dollar against the pound.
Nabil said, in exclusive statements to CNN Arabic, that the continued sale of eggs at less than the cost of production for a long period made producers unable to continue bearing losses, which led to a decline in supply in the market, coinciding with the increase in demand for eggs at the beginning of the school year, as egg consumption in this period increases by about 30 to 40% compared to other periods of the year, which coincided with a relative decline in supply, so that the market equation changed after months of a surplus.
Regarding what is being raised about the impact of what is known as the controversial “Al-Taybat System” on egg consumption, Nabil explained that he “does not see a real impact of this system on market demand,” and that his observations on the market “do not indicate a fundamental and continuous decline in egg consumption due to this system.”
The “Al-Tayyibat System” relies on specifying a list of foods that are allowed to be eaten and others that the system’s followers avoid. Among the discussions related to it are restrictions on some foods, including eggs and poultry, in accordance with the rules followed by the owners of this system, which Egyptian health authorities have warned against because it does not rely on medical rules.
He said that table eggs are fresh commodities that cannot be stored for long periods, so an increase in supply leads to a decline in prices, while a lack of supply leads to them moving in the opposite direction. According to his estimate, the most influential factor in the current period was “the increase in consumption with the beginning of the study, in addition to the relative decline in supply.”
According to Nabil, the price of a plate of eggs from the farm in August and the beginning of September was around 60 pounds ($1.16), and it remained near this level for about 15 days, before moving to levels ranging between 100 and 110 pounds ($1.93 and $2.12).
As for the consumer, he explains that the dish that was sold for 90 to 100 pounds ($1.74 to $1.93) saw an increase of about 30 pounds ($0.58), stressing that talk of a 100% increase relates to the farm price and not the final price paid by the consumer.
"Back to normal"
For his part, Sameh Al-Sayed, head of the poultry division at the Giza Chamber of Commerce and a member of the Board of Directors of the General Union of Poultry Producers, said that the current prices represent “a return to the normal rate of the market after a long period of losses to which the producers were exposed, and not an abnormal increase in prices,” explaining that the cost of a plate of eggs was about 95 pounds ($1.83), while its selling price from the farm ranged between 55 and 65 pounds ($1.06 and $1.25), which is Which led to continued losses for a period ranging between 6 and 8 months.
He pointed out that weak demand during the previous period contributed to the formation of a surplus in production, pointing out that some of the rumors that were raised about what is known as the “Al-Tayyibat System” had an “impact on demand,” from his point of view, before the market movement changed with the beginning of the study and the return of demand for poultry and eggs.
Al-Sayed said, in exclusive statements to CNN Arabic, that the prices of a plate of eggs from the farm currently range between 80 and 90 pounds ($1.54 and 1.74), while its price to the consumer reaches about 130 and 140 pounds ($2.51 and 2.70), compared to levels that ranged during the period of low prices between 90 and 100 pounds ($1.74 and 1.93) for the consumer, according to his estimates.
He stressed that the rate of increase, which is described as 100%, is related to the farm price, and not to the final price for the consumer, considering that the current levels return the market to “a more balanced price for the producer and consumer after a period of long losses.”
Al-Sayed said that the market was suffering from a surplus in production estimated at about 25%, before the increase in demand for poultry and eggs, along with the talk about adding poultry to ration cards and outlets, led to the absorption of a large part of this surplus, bringing the market closer to a state of balance between production and consumption, explaining that the production of table eggs did not decline, but rather the surplus declined as a result of increased demand, which contributed to the change in price levels during the recent period.
