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Cage Free Eggs Becoming Standard Across Nation

Chicken Little Is Wrong…
Sky Not Falling But Egg Prices Are

April 19,2016-

Michael Sheats, USDA’s Director of Ag Analytics, has seen egg prices rise and fall – but nothing like this past year.

Humane Soc pic 2016-04-16 at 7.18.24 AMWhen a virus swept the Midwest poultry belt last year where the bulk if the nation’s egg farms are – some 42 million egg-laying hens were lost over a short time. Iowa, the largest single egg producing state, lost 30 million birds.

“They were just gone” remembers Sheats. That pushed companies in the food service business like McDonalds who buy by the truckload into the shell egg market where you and I purchase eggs – a dozen at a time.

Sheats says the result was that the available supply was gobbled up and of course,prices soared. European producers flooded the market to make up the difference. But US producers were not about to lose all that business and Sheats says “ they recovered much more quickly than anyone thought they would.” After falling to 270 million hens we are at back to over 310 million according to USDA.

Meanwhile California had its own drama compounded by that same bird flu, a declining in-state hen population and a new law pushed by animal welfare groups.

Back in 2008 California’s voters approved Prop 2 by a surprising two thirds – requiring eggs sold in the state to be from hens able to at least flap their wings and stretch their limbs. The law went into effect in January 2015 after an unsuccessful attempt to block the law by midwest and southern egg farmers who did not want to be told how to raise their chickens.

Miscalculation

When the law went into effect in California ”the industry still thought the law was going to be reversed” argues Sheats. But they miscalculated. From the first of the year there was a shortage of “California compliant” eggs that just got worse by April 2015 when Midwest eggs farmers saw a huge hen die-off.

As the avian flue got worse  -prices did too – both nationwide and in California according to USDA. In California the wholesale “California Index” price hit the roof on July 20,2015 at a painful $3.61 a dozen – meaning the retail price was somewhere around $5 or more. Critics of Prop 2 wasted no time telling California voters how they made a mistake and the result was to be more expensive food.

California has been reducing the size of their egg industry in the face of higher costs and urbanization for years.In 2005 California had some 19.3 million hens. By 2015 the numbers fell to 11.4 million.

It seemed that Chicken Little was right. Critics of Prop 2 pointed to the high cost of eggs in the state and how this was hitting the poor hardest of all. And others did not like regulation, especially from those Hollywood types. Here is one press account.

“Should California tell farmers throughout the country how to run their farms? Rep. Steve King, R-Iowa, says no.

“After a while, you end up with a patchwork quilt of 50 states with different regulations and it’s impossible to comply with them,” King said. If his measure doesn’t pass, he worries that more states could try to dictate farm policy to the rest of the country.”

But there were egg shortages not just in the Golden State but nationwide as for months consumers continued to read headlines like” US egg prices are at their highest in more than 30 years.”

But Sheats says the bird flue and high eggs prices nationwide finally peaked in August 2015. After the debacle the nation’s egg farmers worked feverishly to rebuild their flocks At the same time a growing chorus of food companies, food service firms and and grocers announced they wanted more eggs from “cage free” hens turning a steady push for egg producers to change their ways into a good shove.

Natl Index PMPrices Fall
Meanwhile egg shortages turned into egg surpluses nationwide after the Christmas buying season last year. In August 2015 the nationwide wholesale (National Index) average hit $2.66 a dozen. Today that index price is way down – an amazing 43 cents according to USDA (see charts).

Cal Index 2016-04-18 at 12.23.12 PMIn California the trend has been the same with the wholesale “California Index” price at its high in July 2015 at $3.61 a dozen but falling to $1.15 a dozen today for cage free eggs. Retail price is around $2.60 a dozen. Meanwhile the state’s layers are on the rebound – up from 11.41 million in 2015 to 12.27 million in 2016.Many cage free eggs operators set up shop in nearby states including Nevada and Arizona to be near the nation’s largest egg market.

Nationwide midwest egg farmers are quickly switching to cage free  convinced it may be a good money maker after all.

”Grocers like cage free because they have higher margins and at least some consumers seem to want it” notes Sheats.”We are in the year of cage free” declares Sheats.

“It’s A Revolution”

”It’s a revolution that started in California but is sweeping the 48 states.”

Case in point is news this past week that one of the largest midwest egg producers will do more cage free eggs. “One of the nation’s largest egg producers says it plans to build a new cage-free farm in eastern South Dakota that will house 3 million egg-laying hens.

Spirit Lake, Iowa-based Rembrandt Foods supplies egg products to food manufacturers, food service providers, restaurant chains and retail grocers. It announced plans to increase the number of hens housed in cage-free barns last year.Rembrandt president Dave Rettig says growing consumer demand for cage-free eggs has pushed more than 100 food companies, including Wal-Mart and McDonalds, to switch to cage-free eggs in the next ten years.

The way Mr Sheats figures “some two-thirds of the chickens will be cage free“ in the near future.
Walmart, the nation’s top grocer, announced a few weeks back that it plans to get 100 percent of the eggs it sells in the U.S. from cage-free suppliers by 2025. Walmart will require all their egg suppliers to be certified by United Egg Producers which certifies each hen should be allotted between 1 and 1.5 square feet of space and 6 inches of elevated perch space, and 15 percent of the usable floor of the hen house must be a scratch area. But it does not mean that the birds get to go outdoors.

With more producers adopting cage free practices, the premium on cage free should come down argue some advocates.“Studies show only a slight difference in the cost to produce cage-free eggs, but no difference between cage-free and conventionally produced eggs themselves, says Josh Balk, senior food policy director for The Humane Society of the United States.”The cost is going to come down,” Balk says. “These production practices are going to gain in efficiency because producers are going to understand even better how to do it.”

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