Falling grain prices have cut feed costs and so egg farmers will get a nickel less — but none of the big grocery chains will say if the savings will be passed on
Following a year of bumper grain crops, feed costs have declined — resulting in a five-cent reduction in the producer price of eggs in Manitoba.
“The cost of production is updated as input costs change, it could be monthly, or quarterly or yearly… but in my recent memory, I don’t think we’ve had a reduction,” said Cory Rybuck, general manager of Manitoba Egg Farmers.
But while Manitoba producers will be paid a nickel less — the new price is an even $2 per dozen — it’s difficult to predict if the retail price of eggs will follow suit.
The Manitoba Co-operator contacted Safeway, Sobeys and Loblaws to ask if that nickel will be passed on to consumers, only Loblaws responded — and it directed the reporter to the Retail Council of Canada.
“In our experience, retailers always try to pass along savings to consumers,” said Sharon Armstrong, the council’s senior vice-president of marketing and communications. “Retailers operate in a very competitive environment and want to be as attractive as possible to potential customers.”
However, Armstrong adds that it’s important to note that the cost of goods is only one element of pricing. Other variations, including transportation costs, business expenses and handling costs can also impact pricing, she said.
It’s the same situation in neighbouring Ontario, where prices are falling by six cents.
“The six-cent price reduction will not necessarily trigger an equivalent decline in retail prices since the price of eggs in supermarkets is not set by farmers,” reads a press release from the Egg Farmers of Ontario.
However, the association’s general manager notes grocery chains frequently use eggs as “loss leaders” to compete with other retailers.
“The fair farm price reduction of six cents means there is six cents in cost removed from the marketing chain,” said Harry Pelissero. “This will result in some combination of lower prices or higher margins equal to six cents depending on decisions taken by the other players in the marketing chain.”
Rybuck said what’s important from the producer perspective, is ensuring that the price of production remains in line with the producer price as inputs fluctuate.
“As the cost to produce a dozen eggs goes up or down, we adjust the producer price accordingly,” he said.