Feed, dish and tucking costs mean eggs are expensive in the market

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Egg flats are displayed in a discount store in Seoul. [YONHAP]

Egg prices are skyrocketing due to soaring feed and fuel costs.

An egg dish, which contains 30 eggs, sold for 8,480 won ($6.7) at a discount store on Tuesday and hit 9,000 won at a traditional market in central Seoul’s Jongno district in May. . That’s about 2,000 to 3,000 won more than at the end of last year, and similar to that of the first half of 2021, when the bird flu outbreak drove up the price of eggs.

“The cost of animal feed has gone up since the beginning of this year to the point where I can’t afford it anymore,” a farmer who runs an egg farm in the North Gyeonggi region said during a briefing. phone call Tuesday with the JoongAng Ilbo.

The egg farm, which has 400,000 hens, consumes about 35 to 40 tons of feed per day. The feed costs 600 won per kilogram (2.2 pounds), up from 400 won last year, according to the farmer. The cost increase translates to an 8 million won increase in daily production costs.

“The cost of feed accounts for a significant portion of production costs in egg farming, up to 70 percent,” the farmer said.

Food costs are indexed to international grain prices, especially maize. Corn is the main ingredient in livestock feed and therefore drives up feed prices.

The price of maize has been rising sharply since the beginning of this year.

Corn futures were trading at $315 a ton on the Chicago Board of Trade on Tuesday, up 1.9% year on year. The price of corn was $200 in January 2021 and jumped 50% in the past 16 months to cross $300 in March.

Russia’s invasion of Ukraine is the main factor behind the rise in corn prices, with Ukraine being the world’s third largest corn exporter. Rising global freight rates also exacerbated the trend.

The uptrend could continue for much of the second half of the year.

“The price of feed has gone up once every two or three months,” the egg farmer said, “and it’s devastating to hear that there could be additional price increases in the second semester of the year.”

Another issue is soaring fuel prices.

The Gyeonggi Egg Farmer delivers eggs to processing facilities daily through a contractor. The money paid to the driver, who uses a five-tonne truck, includes both fuel costs and labor costs. Monthly fuel costs rose 3 million won from a year ago to 10 million won, the farmer said.

Dubai crude, which traded at $76 per barrel in January 2022, reached $90 in February and broke above the $100 per barrel level in March. The price was $110.88 a barrel on Tuesday. Diesel is more expensive than gasoline for the first time in 14 years.

Packaging has also become more expensive.

A pulped egg peeler for 30 eggs now costs 110 won, a jump of 20 won from last year, according to the farmer. The package for 25 eggs has become 7.4% more expensive at 360 won since last year.

“We can’t reduce the production cost by ourselves, since all the additional costs come from off the farm,” the farmer said.

Industry intermediaries, who process eggs supplied by farms and deliver the products to retailers, are coming under increasing pressure.

“It costs about 50 won per egg to sort and pack the products and supply them to retailers,” said an unnamed business owner who runs an egg farmers’ cooperative in the southern Gyeonggi region.

The business owner said the business was losing because “the cost of fuel jumped 25% from last year.”

The price of 30 eggs recently rose 18% to 5,300 won in local markets near egg farms.

Discount stores were also affected.

“Consumers are sensitive to fluctuations in the price of eggs, so we can’t easily raise the price even when the cost goes up,” said a discount store insider. “Shipping or storing the eggs isn’t that easy either, so there’s hardly any profit left.”

Increases in international grain prices have weighed not only on the egg trade, but also on the livestock industry. The retail price of U.S. beef was 4,400 won per 100 grams in May, up 77% year on year, according to the Korea Institute for Animal Product Quality Assessment. Imported pork prices rose 10.6% to 1,414 won per 100 grams over the same period.

“The surge in global inflation is the result of expansionary fiscal and monetary policies, the recovery of demand, supply bottlenecks, the Russian-Ukrainian war and the subsequent rise in the cost of energy and commodities,” said Her Yun-ji, a researcher at the Korea Energy Economics Institute.

Experts predict that the situation could worsen when the harvest season begins in July in Ukraine.

“The war in Ukraine will further affect international grain prices in the second half of the year, further pushing up domestic food prices,” said Kim Jong-jin, a researcher at the Korea Rural Economic Institute.

BY KANG KI-HEON, KIM MIN-SANG, KIM YOUNG-OK [[email protected]]


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