MILD summer temperatures have combined with rising production efficiency on Australian poultry farms to suddenly trigger an egg oversupply.
The nation's top 25 egg producers met yesterday in a bid to avert an extended supply blow out in the wake of a 10 per cent rise in production last year.
Despite record egg consumption in Australia - up 5pc in the past 12 months - egg production has dramatically exceeded demand this summer, partly because chooks are enjoying a more comfortable season without too many temperature spikes.
Cooler than average weather on the east coast has encouraged more consistent laying habits from the national flock, which has also expanded considerably in recent years.
Egg inventory volumes awaiting retail sale have jumped in the past four months from less than two days' stock on hand to almost five days - about five million eggs instead of the usual 1.5m.
Producers fear the surplus will be used by big retailers as leverage to further cut prices, which have been flat or falling for several years.
"Egg consumption has actually gone through the roof in the past decade, but the industry may have overcooked its production response to the strong demand," said Australian Egg Corporation executive director James Kellaway.
He said the popularity of backyard chickens could also have helped drive the production flush.
Backyard and small-scale producers contribute up to 12pc of Australia's total egg production at peak times such as spring and normally about 7pc of the annual egg harvest.
With a high dollar making it hard to export the surplus as pulp, powder or fresh eggs producers are looking at doubling the number of eggs given to charitable bodies such as Foodbank to help ease the supply bulge and stop it becoming a glut with fire sale price consequences.
Last year about 52,000 dozen eggs were donated to charities.
Australia produced about 392m dozen eggs last year (13m a day) - up 51pc in the past 10 years.
Egg consumption rose to a record 213 per person, peaking at 221/person in October.
Mr Kellaway said an industry-wide new technology drive on layer farms and greater consolidation and co-operation among producers had boosted supplies to match the rising popularity of eggs in the Australian diet in the past decade.
Since 2000 layer numbers had grown by 4.5 to 7pc as farmers upgraded sheds and feeding systems and adopted better chicken genetics.
But while producers had made big efficiency investments Mr Kellaway said the industry could slip into an unprofitable cycle, particularly if flock numbers did not plateau soon.
"The behaviour of some retailers is already reducing price points for eggs and squeezing industry margins, eroding the industry's ability to maintain its current capital reinvestment levels and productivity," he said.
"We're trying to maintain current price points but supermarkets have been in an egg price war since November 2010.
"While consumption is rising, margins got a lot leaner last year."
He said average retail price on free-range eggs dropped 40 cents a dozen (7pc) back to 2006 values.
Victoria's Kinross Farm managing director Phil Szepe said there was a real risk supermarkets would use the current supply situation to push for cheaper supply contracts, setting the scene for a another "very lean 12 months ahead".
His business has its own label and also supplies supermarket house brand eggs from its eight free-range and cage farms between Kinglake, Bendigo and Euroa.
"We need the supermarket's big volume sales, but we've got concerns about how much longer these markets can remain viable," he said.
"We've put any further free range expansion on hold after growing it for five years."
Mr Szepe said while the affordable protein source which eggs offered (about $4 a kilogram, compared to around $6 for chicken and $10 for beef) made them increasingly popular, he worried too many producers had overly ambitious expectations of sales absorbing the supply bulge.
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