Glenrath Farms of Peeblesshire, the UK’s largest supplier of free-range eggs, served up a strong set of results in its latest financial year despite a variety of cost and supply headwinds facing the agricultural sector.

The family-owned business established in 1959 by Sir John and Lady Catherine Campbell posted a pre-tax profit of £5.1 million for the year to May 2021, up 41 per cent on the previous 12 months. Sales rose by 9.1% to £44m.

Gross profit margins edged higher to 23.7% during the period under review, which covered the opening months of the Covid pandemic. Social distancing restrictions resulted in a scarcity of eggs which was compounded by Brexit, with imports greatly reduced into the wholesale market.

The company supplies free range, organic, barn and “enriched colony” eggs – those laid by hens kept in enlarged indoor enclosures, rather than battery cages – to major supermarkets throughout the UK. It was recently one of five producers to secure a new five-year contract with Tesco, which has committed to using only British eggs throughout its network.

Glenrath’s accounts were signed off at the end of January, before surges in food and energy prices took firm hold earlier this year. Even so, the company said inflation had already caused a “steep increase” in input costs, about 70% of which are accounted for by poultry feed.

HeraldScotland: Sir John Campbell, chairman of Glenrath FarmsSir John Campbell, chairman of Glenrath Farms

Noting that his “long-predicted downturn for the industry is now firmly with us”, Sir John said the market remains extremely competitive. Against that backdrop, he was pleased with the “very solid performance”.

“The UK egg industry is facing challenges at the present time and we at Glenrath are adapting as quickly as possible,” he wrote in his chairman’s report.

“Despite the large investment continuing to be made by the group in meeting our customer demands, we have remained profitable throughout. The results for the year have been achieved by adopting a prudent management approach and cost savings achieved throughout the group.”

Commenting on trading since the end of the fiscal year, Sir John said the business did well during the eight months to the end of January when compared to the same period a year earlier. Demand from key customers remains strong “as a consequence of general consumer trends”.

The sale of colony eggs continues to decline across the UK and now represents less than 10% of sales by Glenrath's customers. All major retailers have committed to giving up caged eggs by 2025 following successful animal welfare campaigns, though Sir John has predicted this could happen sooner than the impending deadline.

READ MORE: Cracking year for Scots egg producer

With UK demand for free range eggs continuing to rise, Glenrath is expanding production in this area. It has also accelerated the conversion of former colony production facilities into barn production even though some retailers have discontinued selling barn eggs.

“We are of the view that our principal customers will continue to operate within this sector of the market and whilst the conversion costs are considerable, we believe our sound judgement will help us to manage this delicate and challenging situation,” Sir John said.

Glenrath plans to be a net-zero operation by 2045 and is currently pursuing alternative energy sources and planting agricultural forests to improve biodiversity across its farms. It has also reverted from plastic to pulp packs “where possible” for its eggs.

The group, which employs about 200 people, is not paying any dividends. The highest-paid director, assumed to be Sir John, received total remuneration of £167,000 for the year, the same as in the previous 12 months.

Originally farming sheep and cattle in the Scottish Borders, Glenrath diversified into egg production about 30 years ago when Lady Catherine began rearing hens and delivering eggs door-to-door. It now produces more than a million eggs a day.