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E11 Graham Atkinson: Building Fairer, Smarter Egg Supply Agreements image

E11 Graham Atkinson: Building Fairer, Smarter Egg Supply Agreements

S1 E11 · The Poultry Network Podcast
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61 Plays14 days ago

In this episode of the Poultry Network Podcast, hosts Tom Willings and Tom Woolman welcome Graham Atkinson, an experienced poultry professional who recently founded Grange Consultancy after nearly three decades in the sector, including 14 years at Noble Foods.

The conversation begins with talk of Yorkshire weather before turning to Graham’s transition from corporate employment to independent consultancy.

He reflects on the nerves of setting up on his own but explains how a “varied diet” of work – spanning data, technology, health and welfare, pharmaceuticals, writing, and increasingly direct work with producers – has kept him busy and engaged.

The core focus of the discussion is on egg supply contracts – a subject Graham has been exploring through his work and in a recent article in The Ranger magazine.

The hosts and guest dig into what makes a good contract, why producers should pay closer attention to detail, and how contracts can balance fairness for both producers and packers.

Graham notes that today’s strong producer margins are historically unusual and unlikely to last indefinitely.

Many farmers, he says, underestimate or misunderstand the small print of contracts.

Some have traditionally relied on trust-based relationships without formal agreements, while others sign documents without fully grasping their obligations.

Both situations can leave producers exposed when market conditions change.

The podcast explores specific contract components:

  • Egg supply agreements vs. pricing terms – often handled in separate documents, which can create confusion.
  • Force majeure clauses – usually vaguely drafted; Graham argues for clearer definitions, including explicit reference to avian influenza.
  • Price adjustment mechanisms – highlighted as the most contentious element of any deal. The team stress the importance of transparency over when and how prices move.

One major development has been the use of the ADAS cost of production model, pioneered by BFREPA.

This independent reference point has been increasingly incorporated into contracts, giving producers and packers a clear, mutually agreed basis for pricing.

Graham welcomes this as a step forward, though he cautions that adoption remains patchy.

The discussion also touches on wider market dynamics. The hosts argue that while cost-of-production models provide fairness, there must still be space for diversity: different farms with different business models will inevitably need different contractual terms.

Spot markets will continue to play a role, as not every producer will opt for (or be offered) a long-term cost-linked agreement.

Looking ahead, the panel link these debates to the DEFRA Fairness in the Supply Chain Review, which outlines a potential code of practice for farm-gate contracts.

Government is pushing for greater transparency from buyers, particularly around price changes – a demand that could be very difficult for packers to meet given the complexity of their operations and customer mix.

As the episode closes, Graham offers his advice to farmers:

  1. Read your contract in detail – don’t assume you know what it says.
  2. Seek advice on unclear clauses.
  3. Look beyond today’s price – focus on how price is structured and adjusted.
  4. Clarify protections around force majeure and other critical risks.
  5. Work with packers as partners to create agreements both sides can sustain.

The conversation underscores that contracts are not just paperwork but the foundation of long-term, resilient relationships across the egg supply chain. 

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Transcript

Intro

Introduction and Guest Welcome

00:00:18
Tom Willings
WElcome to the poultry network podcast my name is tom willings it's an exciting day for me we're welcoming a new guest and and and a man that i've worked with for for several years in my in my early poultry days graham atkinson how the devil are you sir
00:00:20
Tom Woolman
And I'm Tom Woolman.
00:00:34
Graham
um Very well, Tom, thank you very much. Good to good to see you. um Yeah, yeah out very well. ive mean
00:00:41
Tom Woolman
what's What's the weather like in Yorkshire at the moment, Graeme?
00:00:44
Graham
It is at standard Yorkshire weather around a tropical 30 degrees or so, which which obviously we week benefit from 365 days of the year.
00:00:54
Tom Woolman
yeah
00:00:54
Tom Willings
You're looking well on it, cracking tan.
00:00:58
Graham
Cameras can do some wonderful, wonderful things.
00:00:58
Tom Willings
Yeah.
00:01:01
Tom Willings
that's your That's a window directly behind you, I see.
00:01:04
Graham
It is, it is, yeah, absolutely.
00:01:05
Tom Willings
Yeah, cost Costa del Yorkshire.
00:01:06
Graham
Just a view out view out onto the coast, yeah.
00:01:09
Tom Willings
Fantastic, and fantastic. ah Graham, we're we're thrilled to have you here. Welcome. and thank you for Thank you for joining
00:01:12
Graham
Thank you.

Transition to Consultancy

00:01:14
Tom Willings
us.
00:01:15
Tom Willings
um You've set up your own consultancy. You've you you' joined the dark side. You're out out in the wild. How's it going?
00:01:22
Graham
Indeed, yeah, took the big leap. Crikey time flies. May of last year, we started Grange Consultancy and and and thankfully desperately looking forward, touch wood, it's going on quite nicely.
00:01:34
Graham
Yeah, it's been, ah as as you guys know, when you when you step out of the world of employment and into ah into your own world, there's a period of nervousness, shall we say, that you're just going to be able to um keep yourself busy and pay the bills.
00:01:39
Tom Woolman
Thank you.
00:01:48
Graham
But that seems to be seems to be going well. It's ah it's a varied diet, which I enjoy. So all things from and

Focus Areas in Consultancy and Producer Work

00:01:54
Graham
kind of... um data and tech through to through to health and welfare, pharmaceutical, a bit of writing here and there, um and then And then latterly probably wasn't where we, where we set off with, which may, some people may say is ah is a crazy thought having spent, well, almost 30 years in working with producers or or being one.
00:02:16
Graham
Um, and, and 14 years at, uh, at Noble Foods, certainly definitely working with producers. Um, we didn't really set off with, with that as an aim, but, um, as time has gone on and in the last few months, the the producer magnet has pulled ah pulled strongly. so um So yeah, started to venture back into the world of producers, which which is enjoyable.

Egg Supply Contracts and Producer Challenges

00:02:38
Tom Willings
Fantastic.
00:02:38
Tom Woolman
and and that's And that's sort of the subject that we were particularly interested in talking about today because, um, been reading reading the Ranger, which is Befrepper's monthly magazine that comes out. And there's there's an excellent article in there this month about egg supply contracts and what makes a good contract.
00:02:57
Tom Woolman
um Really aimed at the producer, but I suppose, but also the the packer as well as to yeah what makes for ah for ah for a good contract for both sides, giving giving fairness and openness.
00:03:09
Tom Woolman
yeah, so yeah i Don't know potentially whether ah you could give us some thoughts, Graham, in terms of what you think makes ah makes a good contract and and and what producers should be looking out for.
00:03:22
Graham
Yeah, certainly. ah it Interestingly, that's been some of the conversations and some of the work with with producers. um And i guess I guess perhaps because they're feeling a sense of, look, we we all know that egg producers are in a good place in terms of in terms of margin in ah in ah ah a place of margin they have never been before realistically let's be let's be truthful about it but I think among those producers they do realize that so this will not last forever um and they're looking out there perhaps they're looking because they're looking over the fence and thinking is there some more to be had in the current climate or concerned around ah the longevity of their of their current margin so
00:04:06
Graham
What have I learned through through those exercises is that um producers don't necessarily understand the devil of the detail of the of the contract.
00:04:17
Graham
So there are there are numerous numerous points in there and I've read the article as well. um So let's let's just pick one out.
00:04:23
Tom Woolman
And it's it's funny because I think if even if I take it back to my poultry meat experience, I've known producers and working with it um contract breeder producers. There's people that actually for years and years really prided themselves on not having a contract.
00:04:35
Tom Woolman
They prided themselves on the fact that they were doing business with people that they trusted um and that they'd worked with for years and years and years.
00:04:36
Graham
Mm-hmm.
00:04:43
Tom Woolman
And um yeah, and and there have been times, I think in my past, when i've tried we've been trying to introduce contracts to producers and and they've taken it as a bit of an insult. you know how what what so What does this mean about our you know our relationship? It's like trying to introduce a prenup on um on a marriage. you know oh do do What's going to happen?
00:05:01
Tom Woolman
Um,
00:05:02
Tom Willings
Exactly. You've got, yeah i remember very well, you've got you've got a school that have never signed the document because, as you say, they're they're their bond is their word and their word is stronger than oak. yeah like change um And then youve got you've got a load of guys who are scared witless to sign it because they don't actually know what it

Supply-Demand Balance and Market Shifts

00:05:23
Tom Willings
says.
00:05:24
Tom Willings
And they're more concerned about their obligations to their customer than they are their customers' obligations to them. And yeah, you think, gosh, goodness me. And then where do you go from there?
00:05:32
Tom Woolman
Mm-hmm.
00:05:34
Tom Willings
I think, you know, it's why are we talking about this now? It's pertinent now because it feels you haven't got to have an especially gifted crystal ball. to feel that you know the supply and demand balance are starting to shift.
00:05:51
Tom Willings
And if those margins that you've mentioned already, Graham, are as good as they're gonna get, then kind of the the the next step is down. um And you know the huge bit bit about um any contentiousness within a contract is price adjustment and price price movement.
00:06:09
Graham
Yeah.
00:06:09
Tom Willings
you know and And this article's a ah ah ah great explanation of all of the different mechanisms that can be used to to to make that um ah adjustment. But you know just from your point of view, you see an awful lot of contracts out there.
00:06:23
Tom Willings
um yeah what's What's normal? What should people be looking for in their egg supply agreements?
00:06:29
Graham
Well, I think you've too, a point to make here as well, when we when we kind of use the word contract, it sounds as though that's an all-encompassing document that that covers absolutely everything that both producer and packer need to take from that relationship.
00:06:43
Graham
And and let's be clear, this is a relationship, it's a partnership. though There needs to be something in this arrangement for everyone.
00:06:47
Tom Willings
Mm-hmm.
00:06:49
Graham
It isn't ah and shouldn't be a one-sided affair. But I think What I'm seeing is you are you're actually talking about two separate pieces of work when you're talking contracts. So there'll be an egg supply agreement, which will cover things such as force, which we we may come on to, or quality standards and access to farm and and all of the other bits and pieces that come within that.
00:07:16
Graham
But actually pricing and and contract term, if you like, the length of that of that arrangement are held within ah separate document or email perhaps or maybe not even that so they're two very different things in some in some ways so point number one how does one connect to the other if if you are a recipient of those two separate documents or indeed if it's all sat within the one document, I think i think that's a step forward.

Contract Practices in Egg vs. Meat Sectors

00:07:49
Graham
But then you come down to the devil of the detail of what's in there. So again, and I think for you guys, you'll have seen enough of these contracts over the years as well to to understand or ah to understand that force majeure as one will will be in there.
00:08:03
Graham
So, okay, that's that's great. The contracts I've seen, i it's it's it's maybe a paragraph, a scant paragraph. what's What's actually included in that?
00:08:16
Tom Woolman
and And the other thing I was thinking of is what's different in the egg sector to to the meat sector is is in the egg sector, um you've got this, um certainly this work, which you can credit Bfrepa with, that have worked with ADAS to to produce a sort of cost of production model, which is not something that we have in in the meat sector. Certainly, people when people are producing contracts and producing ah pricing, it will be it will be based on on cost of production, but there's there's not necessarily a ah sort of an agreed industry-wide cost of production.
00:08:48
Tom Woolman
And that's been something that is actually quite useful now, isn't it, for ah for for egg producers that are looking at contracts about... There's a lot of contracts which reference the ADAS cost of production production model.
00:08:59
Graham
ah Absolutely, Tom. And I think that's that's come on such a long way from from where it was when it was first introduced. There were some points within that and some numbers within that, if you like, that were that were contentious. But a cross section of industry came together along, clearly driven by Bfrepa and with ADAS to to develop that you know in in more detail.
00:09:23
Graham
Now, that's always there for improvement. It's always there for forensic interrogation and and if things need to be adapted and so on. Well, that's absolutely fine, isn't it that's how things should That's how things should be done.
00:09:34
Graham
um But I think that it is a huge step forward for the industry. We are seeing more contracts that include the ADAS cost of production model tracking.
00:09:46
Graham
And it's my own personal view. I think that's a great thing. It's a very clear set of numbers, provided your rules and your metrics around that are ah clear within the agreement. Then I think that's beneficial for for both parties in terms of being very clear as to how your price is is made up.
00:10:04
Tom Willings
would Would you say, Graham, that's a, um you make a really interesting point about the adoption of that cost of production reference and the independent nature of it is why it's so valuable. Would you say it is becoming the norm or used in the majority of cases or just you know from a low base starting to become more frequently used you'll you'll see a lot more farm contracts than than than i would in my in my world but
00:10:29
Graham
three
00:10:31
Graham
I think it's probably the latter, Tom, in it's ah you know it's it's come from a it's come from a low base and it's and it's growing and it's growing well and it's growing at pace. So ah again, from my perspective, I think i think that's a good thing.
00:10:45
Graham
However, we are still in a world where we see producers and ah look, I'm not saying that there's anything wrong with it. Individual producers will will make their own business decisions based on their on their feelings of it.
00:10:58
Graham
And if you are on a... and I'll use that market to price currently, then arguably your price is strong.

Market Price Fluctuations and Transparency

00:11:07
Graham
But if that is your only arrangement, to to refer back to your earlier point, and I'm in that camp as well,
00:11:13
Graham
the winds have changed, feel as though they're they're starting to blow. And from where we are, price is probably only going down.
00:11:17
Tom Willings
Yeah, what goes up goes down.
00:11:21
Graham
Well, if all you're on is a market price, then for that producer, as we well know, if that market's going down, there's very rarely going to be somebody who's standing out above that market paying top dollar you can you can port your business across to.
00:11:21
Tom Willings
Yeah.
00:11:37
Graham
So that for me is a huge worry. I think that's exposure in in the extreme, personally.
00:11:40
Tom Willings
Yeah.
00:11:43
Tom Willings
Yeah. Yeah. Even from a low base, it's great news that more farms are, um you know, signing up to agreements that have got that independent reference point.
00:11:53
Graham
Yeah.
00:11:54
Tom Willings
I think i think if I were in that business, what I'd really want to understand is um the next link in the chain. And, you know, there are reports that there are some retailers or or food businesses that buying eggs from packers or products from packers that themselves use that cost of production reference as um you know their their own ah method of adjudicating change.
00:12:14
Graham
and
00:12:20
Tom Willings
And that that is a sustainable chain. if If all of the parties in it line up and and sign up to the same um measurement of ah value, that is good for everybody.
00:12:23
Graham
It is. It is.
00:12:32
Tom Woolman
ah I suppose one one thought that I've got, and maybe this is just me playing devil's advocate, but if if we say that cost of production ah contracts are good and and say, whatever, 95% of the industry are dotting, that's great.
00:12:32
Graham
Well, it feels.
00:12:46
Tom Woolman
But potentially, is it is it also a little bit of ah ah almost a danger it becomes a license to print money? And is that just a recipe if everyone gets on that bandwagon for oversupply? Don't you need a little bit of market tightening?
00:12:58
Tom Woolman
Yeah. I don't know. it's It's difficult to see how producers can be entirely protected, um but also, i guess, still benefit from ah from from good prices which come from having a market that that requires growth and requires more more supply.
00:13:15
Graham
Absolutely. And I guess and again what what I'm about to say, i can I can potentially hear the national producer base or a good percentage of it now screaming for screaming for blood. But it's back to that ah that earlier point. Margins are in a place. Margins have not been.
00:13:31
Graham
So from there, we we are going to head down. There is no no doubt about that. I don't think I'm Jedi Knight enough around the egg market to predict what forces it may be that actually push push the price down. um Now, if you're on that cost of production, nay, margin tracker, then you follow you follow that movement. That's fine. So here's the contentious bit.
00:13:56
Graham
is the margin too high for sustainable long-term contracts? I arguably would say, yes, it is. um Producers will very clearly and quite rightly say, well, hang on a minute.
00:14:07
Tom Woolman
But... yeah
00:14:11
Graham
It's not that many years ago. And Tom tom will remember this when we were when we were working together where where you know egg egg price per dozen didn't start with a pound sign.
00:14:22
Graham
um You know, we were in the 90, 95 pence kind of bracket. We're way, way beyond that now. So just deserts that margins have got into the place that they are. But if you want to take that longer term and back to the point around retailers starting to perhaps use that model as well, that's transparency through through the supply chain.
00:14:42
Graham
That should be a good thing. But somehow, Parties need to come together to agree. This is the kind of margin that we can hold throughout this supply chain, regardless of the movements around it. And that, I think, is, if you'll s excuse the pun, the golden egg that should be searched for.
00:15:01
Tom Willings
I farm is the same, not every farmer, and I think, Tom, you've already made made this point to it to a degree, but you know different different producers with different ambitions for their for their product who want to work with different sorts of of businesses,

Diverse Contract Needs and Force Majeure

00:15:15
Tom Willings
um you know they're going to be under different terms and conditions of the sale of their of their product. If, if to to your exact point, Tom, if everybody had a cost of production plus model at the sort of margins that Graham is alluding to, yeah, our industry would be in all sorts of difficulty very, very quickly, particularly if planning were a great deal easier to go and go and get as well, because you know the the rate of return is is enormous.
00:15:36
Graham
hmm
00:15:39
Tom Willings
But it shouldn't be available to everybody. There should be a great deal of selection around who's on these sorts of contracts and it will be based on you know the the age of that farm and the and the type of production the alignment to the customer right the way through the through the chain etc and and the commitment to that farm under those contractual terms should be based on that kind of long-term need of of of packer retailer and farmer all being aligned It can't just be, well, I produce eggs and therefore i'm um I've got to have exactly that same contract because we're all b we'll all be oversupplied in five seconds flat.
00:16:16
Tom Woolman
Yeah. and i And I think there's space enough in the market, both in the egg sector and in the meat sector. for for As you say, there are different businesses. There are different businesses models. some some Some people have got a lot of borrowing.
00:16:27
Tom Woolman
Other people have have got no borrowing. um Some people will be buying their feed. Some people will be making their feed and and trying to play the market a little bit that way. And so and I think there's probably enough flex in the market for different people to have different contracts.
00:16:41
Tom Woolman
And and actually, the the sort of the wholesale market, the spot market doesn't need to be that big, really, to have to have an impact. I'm sure there will always be enough producers that will want to to to play the field and and see how they get on.
00:16:49
Graham
Yeah.
00:16:53
Tom Willings
Mm-hmm.
00:16:54
Tom Woolman
um
00:16:55
Tom Willings
I wanted to ask Graham about force majeure. We touched on it a moment ago, but um one one thing that goes around in my head is is around bird flu, because for for force majeure, and again, this article touches on it quite nicely, but there's a whole litany of uncontrollables and and unforeseen circumstances that are shown as ah an example of what force majeure actually is.
00:16:59
Graham
yeah
00:17:04
Graham
and
00:17:13
Graham
yeah
00:17:18
Tom Willings
But the first one would be yeah disease. And
00:17:23
Graham
yeah
00:17:23
Tom Willings
It is or is not avian flu a force majeure issue because surely it's foreseeable. um It's in sometimes depending on the on the on the books of the insurers, it's it's an insurable risk in its own right. So ought it be included in force majeure or not? what's What's your what's your view?
00:17:43
Graham
My... It's a great question. um Is there a right or wrong answer? I don't know. My view is it it should be included. i i
00:17:53
Tom Willings
yeah
00:17:54
Graham
That's where I would stand on it. I and do take a point. i mean, think...
00:17:59
Graham
depending on on the level of threat, if you like, um the availability of insurance changes season to season if we have such a thing in in in that world now. But nonetheless, ah for me, that should be that should be included. and that's just one singular point.
00:18:18
Graham
within ah clause within an awful lot of contracts that that to go all Yorkshire on you tells you nowt because it just kind of briefly describes that well do you know what there could be some things that are out of everybody's control and this clause is is to cover that
00:18:22
Tom Willings
Mm-hmm. Mm-hmm.
00:18:35
Graham
What does that mean? So what are the things? And I think that article touches up, what are the things? let's Let's have those listed off clearly. And what are the ramifications should, unfortunately, any one of those things occur within within our agreement? So um think there's more work to be done in general on that side of it. It's a big subject and it's a very important piece within the within the contract. And for me, AI included, yeah, yeah absolutely.
00:19:02
Tom Willings
Yeah.

Understanding and Reviewing Contracts

00:19:03
Tom Willings
Well, what's our, if we look to wrap up guys, you know, what's our advice to, to, to any farmers listening or or for that matter, anyone in the, in the chain listening, what's the kind of take home, the the call to arms or action?
00:19:17
Graham
but ill I'll give you number one would be even if you think you know what it says, go get your contract, and sit down and and read it and and highlight the questions you have within it um and seek advice.
00:19:34
Graham
Seek advice on the bits that you're not clear on would be would be number one for me.
00:19:41
Tom Woolman
i think there's I think there's a ah tendency at the moment, while prices are good, that that everyone focuses on price and price is the most important thing that people look at with contracts.
00:19:41
Tom Willings
uh,
00:19:49
Tom Woolman
But actually it's it's clear that there's all sorts of other things, a with how how is that price going to be structured going forward? What other mechanisms have you for adjusting that price, either up up or down?
00:20:02
Tom Woolman
um But as you say, coming to the force majeure point, if you haven't got proper protections there, you could you could wipe out you know wipe out any gains that you're making through good pricing in in an instant with the wrong contract.
00:20:12
Graham
Yeah.
00:20:15
Tom Willings
I think for me, you've touched on there the most important thing, which is um understanding the the process, the justification for adjustment of price.
00:20:28
Tom Willings
When it moves, why does it move um and in what circumstances and to what extent and and um knowing that process.
00:20:38
Graham
yeah
00:20:38
Tom Willings
And I think there's ah there's a, you know, in the background, of course, you've got this DEFRA, Fairness in the Supply Chain Review, that sort of listed out the um the blueprint for what so um good looks like as a code of practice for contractual arrangements between buyers and sellers of farm farm products. And I'm sure within that, there was some incredibly onerous obligation on the buyer, on the, let's say the packer in this instance, um to be completely transparent with why prices were changing, which I think from a packer's point of view is actually really, really difficult to do because you you know you buy a basket of goods from a whole concoction of different people, but that's also true on the selling side of things.
00:21:19
Tom Willings
You've got all sorts of different customers with all sorts of different arrangements for all sorts of different specifications and standards of product.
00:21:20
Graham
yep
00:21:26
Tom Willings
And although a lot of farmers will you know, get on the old keyboard warrior group chat and say, you know, wholesale market this or my egg price that or retailers are are actually retailing to the consumer at this sort of price level and I should not be paid this.
00:21:42
Tom Willings
They have very, very little ah generally understanding of of how an egg packer balances the books because it's a very very very complicated thing that even if I think I wanted to understand as a independent kind of um ah auditor looking to
00:21:51
Graham
and
00:21:53
Graham
Absolutely.
00:22:00
Tom Willings
arbitrate over that price movement, I'd find it very difficult. it so That's a big old ask. But that's that kind of degree of transparency is what government are calling for. And that's what they're asking. And I think the least what that we should be saying to people is make sure you understand the status quo in your contract, because as sure as eggs is eggs, changes are coming at some point.
00:22:21
Tom Willings
And and you need to understand what's right, what's not, um and and what to do about it if if if you're not happy about it.
00:22:22
Graham
Yep.
00:22:28
Graham
Well, absolutely. And when you reference that kind of change, which could be huge in terms of how these contracts and and and agreements look, you know I personally don't like surprises. So so you know don't don't don't tee yourself up for even bigger surprises as that kind of thing flushes through. Understand what you've got already and try and get that in a place that that it should be. And you're comfortable, you know to get to your point, Tom, earlier, each individual business.
00:22:55
Graham
different needs and wants and ways of of ways of looking at it. get that Get that put it Work hard to try and work with your packer partner to get that in a place that you're you're both comfortable because, yeah to your point Tom, change is coming without a doubt.

Conclusion and Invitation for Consultancy

00:23:11
Tom Woolman
Great.
00:23:11
Tom Willings
I guess we should say to people, if they want to get in touch with with you, Graham, um and Grange Consultancy, then, you know, you're ah you're available for this sort of work.
00:23:21
Graham
Yeah, absolutely. Yes, yes. I'm never going to turn that opportunity down. Thank you very much, sir, for that bit of advertising.
00:23:25
Tom Willings
There we go.
00:23:27
Graham
Lovely.
00:23:28
Tom Willings
Yeah, perfect, perfect.
00:23:29
Tom Woolman
Brilliant. All right. Well, thank you ever so much for for joining us today, Graham. and um yeah and And yeah, best of luck with with your consulting going forward.
00:23:39
Graham
Thank you very much for having me on.

Outro