Baked products hike looms as egg prices rise
Goldie cakes produced by Honey Bun bakery

Consumers are being warned to brace for an increase in the cost of baked products with the price of eggs set to go higher at the end of next month.

Following Sunday's announcement of an impending increase in the price of eggs, baking companies already challenged by egg shortages are now reviewing their input costs to see how it will impact the prices of final products.

Bakery manager at MegaMart Dave Walters says even if bakeries are willing to pay higher costs for the eggs, orders are still not being fulfilled, an issue he says has been ongoing since December.

"I don't know if birds [are] short or what, but we are not getting the full orders that we really need," Walters said in a telephone interview with the Jamaica Observer.

Cupcakes produced by MegaMart bakery

The baking manager explained that he is unable to tell right now by how much baking products will increase.

"We would have to look at the other ingredients to see," he said, noting that eggs are not the only input that has seen a price increase.

"You have to look at cake mix and so on...but once the egg increases, definitely the product will have to increase."

Honey Bun, a wholesale bakery, said it is also looking to increase prices due to higher input costs.

"Apart from bread, a lot of the baked product prices will increase due to the egg increase," Daniel Chong, chief operating officer of Honey Bun, explained to the Business Observer.

Chong, however, said he was not yet sure by how much costs will increase, but predicts it will be by a small amount. He also cited the increase in labour costs as another contributing factor for the increase in its baked goods.

Already, some supermarkets have started limiting customers to one tray of egg per person, but according to Mark Campbell, president of the Jamaica Egg Farmers' Association (JEFA), the country is not critically short of eggs.

"We are currently placing new birds in the market...we project that by August there will be enough in the market to fill the demand," Campbell told the Business Observer.

He said with egg farmers facing higher costs of production, chiefly from feed prices which have almost doubled since the pandemic, egg prices could rise between 15 per cent and 25 per cent.

"It is the highest cost in our calculation of production costs, the feed accounts for up to 70 per cent in the total costs to produce a dozen eggs," Campbell highlights. The cost of the layers and packaging are the next biggest input costs.

Campbell added that the 15 per cent General Consumption Tax (GCT) paid by consumers for eggs is also a factor driving up the cost. Egg farmers have been appealing to the Government from its introduction to have it removed.

"We have considered it to be an unfair tax because it is the only agricultural item that has the GCT on it, so we know that when the 15 per cent is added to the price that the consumer has to pay, we have the empirical evidence that it depresses consumption."

He said despite the issues affecting Jamaican egg producers, they have still managed to keep the price significantly below what obtains in other countries, including within the region.

In the United States, eggs are being sold for as much as US$8 ($1,200) per dozen while locally, farmers sell eggs for around J$400 per dozen currently to which retailers add their margins along with the 15 per cent GCT.

Campbell said Jamaica's egg industry has achieve self-sufficiency over the years but is in danger of losing that if there can not be a balance in the market between the cost of production and the price that the farmers receive.

"It is not anything about greed or pricing or anything like that they just want their business to be viable," Campbell noted.

BY CODIE-ANN BARRETT Senior business reporter

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