The transition to non-caged eggs in the United States of America

The transition to non-caged eggs in the United States of America

Jason Lusk*

The pretty redheads at Mrs. Lucie Gantier (Source)

Here is an economic study, certainly relating to the United States of America, which is timely, while theEuropean Food Safety Authority (EFSA) just made far-reaching recommendations to improve the welfare of laying hens and broilers ».

It’s the title of a new research report which I co-authored with Vincenzina Caputo and Aaron Staples of Michigan State University and Glynn Tonsor of Kansas State University. This research was funded by both egg producers, represented by the United Egg Producers (EUP) and the United Egg Associationand by food retailers, represented by the Food Industry Association Foundation (FMI Foundation).

Here are the reasons for the study:

« National regulations, retailer commitments and end-consumer demand have contributed to the increase in the proportion of laying hens kept in non-cage systems over the past decade. However, the conversion from conventional farming to non-cage farming is costly, both for egg producers and for end consumers. As such, it remains unclear to what extent egg producers will be willing and able to continue the transition to cage-free farming at a pace consistent with the commitments made by retailers in this regard. To explore this question, this study examines the challenges and opportunities associated with the transition to cage-free farming, including interviews with and a survey of egg producers, a survey of egg consumers, and a economic modeling of the sector. »

There are many things in this report of almost 100 pagesbut a two-page summary document is ici. Highlights are given below.

Consumer Perspectives

• Although the general public is very supportive of retailers committing to cage-free eggs, more than half of consumers (56%) don’t know if their grocery store has made such a commitment, and only 19% think their store has taken one. Consumers do not expect a full conversion to cageless egg systems by 2026, and on average expect a 10 percentage point increase in cageless laying hens by January 2026.

• Consumers prefer government policies to subsidize the transition to cage-free farming or mandatory tags policies that force producers to adopt certain husbandry practices. Among policies aimed at restricting farming practices, consumers prefer minimum cage size requirements to an outright ban on conventional production.

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  There are consumer segments willing to pay significant premiums for eggs from hens raised without cages, but the largest segment (representing 55% of consumers) is primarily price driven and does not distinguish between eggs from hens raised without cages and those raised in cages.

Views from producers

• Egg Farmer Interviews Reveal Prevalence of Long-Term Contractual Relationships with Retailers, Importance of Retailer Demand for Market Evolution to Cage-Free, and Opportunities for Reigniting the Conversation with Organizations animal rights. However, these interviews also reveal several obstacles and unintended consequences to continuing the transition to cage-free, including:

• Higher costs and labor requirements associated with cageless production;

• Difficulties in securing financing to convert or build cage-free facilities without longer-term commitments from retailers, especially in a rising interest rate environment and when existing facilities can no longer serve as collateral ;

• Differing interests of the retail and foodservice/egg products sectors with respect to hen housing;

• Skepticism about the possibility of meeting retailers’ commitments by January 2026 without significant financial incentives, particularly given the high cost of construction materials and the long construction times associated with obtaining permits and disruptions to the supply chain.

• A majority of egg producers consider conventional housing to be superior to cage-free production in terms of food accessibility, production efficiency and environmental impact.

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  Producers predict that revenues from non-cage systems will be on average 8% higher than those from conventional systems. But costs are estimated to be at least 8-19% higheron average, by expense category, with incremental labor and capital costs being the categories expected to see the largest increases.

Economic modeling focused on the shell egg market indicates the following:

• For every 1% reduction in the equilibrium quantity of conventional eggs produced and sold, there needs to be an increase of approximately 1.9% in the equilibrium quantity of cageless eggs produced and sold and an increase of at least $21.6 million per year of total wholesale egg spending so that egg producer profits are not affected.

• If the share of cage-free shell eggs sold increases by 20 percentage points, the cost of producing cage-free eggs is 20% higher than conventional eggs, and consumer demand does not change, producer profits of eggs would fall by a total of $572.5 million per year, not including the additional fixed costs that producers would incur to facilitate the transition.