US egg industry faces hard choices amid cage-free rush

While the U.S. egg industry surges toward a cage-free future, the United Egg Producers and its members find themselves at a crossroads. Should the organization of the country’s largest egg farmers go all in for cage-free production, or back against the trend by defending battery or enriched cages?

Future Of Cage Free Eggs In Us

While the U.S. egg industry surges toward what looks like a cage-free future, individual egg producers and the organization that represents more than 90 percent of them, the United Egg Producers (UEP), find themselves at a crossroads. Should the organization of the country’s largest egg farmers go all in for cage-free production, or push back against the trend and defend enriched cage housing as an alternative to cage free?

The UEP held a series of six regional meetings across the country in August and the staff of Egg Industry attended meetings held in Atlanta and Des Moines, Iowa, on August 15 and 23, respectively. At those meetings, several egg producers expressed frustration with the disconnect between the marketplace and the cage-free egg purchase pledges made by major retail, food-service and food processing purchasers.

Cage-free egg supply exceeds demand

Many of the cage-free egg purchase pledges have implementation dates around 2025, which was thought to be the minimum amount of time required for the industry to convert from more than 90 percent cage-housed hens to being predominantly cage free. Unfortunately, many of the retail store purchase pledges don’t contain intermediate benchmarks, and they have provisions for availability and affordability of eggs. Couple this with many consumers’ reluctance to pay the premium for cage-free eggs, and we have the current confusion in the marketplace where surplus cage-free eggs are being sold to breakers at substantial losses for egg producers.

Conversion to cage free presents a huge challenge for egg producers and, as demonstrated this year, timing will be everything. The UEP estimates about two-thirds of the country’s layer flock will need to be cage free by 2026 to meet the cage-free purchase pledges.

The cost of this housing conversion for the entire industry has been estimated at $6 billion. But, the potential conversion of the industry isn’t being made as a group decision, rather it is a series of individual decisions that are being made by farm owners to either add a new cage-free house or to remodel an existing house. Industry representatives at the meetings said the current lack of demand for cage-free eggs from consumers – and difficulty of financing the transition – is magnifying the financial strain placed on farmers.

Stand up for cage free or defend cages?

Chad Gregory, president and CEO, UEP, said the cooperative shouldn’t stand by and watch the issue play out, but it can’t act without direction from its membership and its board of directors. The group fought hard against Proposition 2 in California and put in years of work into the so-called Egg Bill – a failed bid to set up a national transition plan to enriched colony cages – but it doesn’t have a defined stance on cage free.

Members at both meetings asked why the UEP isn’t doing more to point out the flaws in cage-free production. The science, chiefly from the Coalition for Sustainable Egg Supply, demonstrates the drawbacks cage free generates for producers, the environment and consumers.

“When are we going to come to the point that we try to protect the 90 percent of the eggs that we produce that are in cages? When is the industry going to address (it)?” Cal-Maine Foods Inc. CEO Adolphus Baker asked in Atlanta. Other producers made comments similar to Baker’s.

The challenge for egg producers would be to defend cage-housed egg production without going negative on cage free. Any attacks on negatives of cage-free housing such as higher hen mortality, possible food safety issues with floor eggs, or greater environmental impact could backfire when activists shift the goal posts and start pushing for free-range or pasture-raised egg production.

Another troubling aspect of trying to defend cage housing at this point would be, what type of cages would producers defend? The Egg Bill puts UEP members on record as supporting a transition to enriched cages. Less than 1 million birds’ worth of fully enriched cage housing has been installed in the U.S. Should egg producers really take the risk of advocating for enriched cages? How comfortable would egg producers feel making the investment in an enriched house now? Would a lender even make the loan?

Gregory said UEP has fought for cages for years and that it’s a lost cause. Consumers think a cage is bad –  they don’t have time or interest enough to understand the difference between battery and enriched colony cages – so executives at food companies and grocers say their hands are forced.

Going toward one extreme or another, Gregory said, would alienate a portion of the egg industry and divide the organization. Perhaps a better solution would be to prepare to support cage-free and conventional practices and allow the UEP’s directors and members to say which way they want the organization to go. 

Protecting freedom of choice in grocery stores

Egg producers, as well as retailers, are struggling with the general public’s unwillingness to pay the premium to purchase cage-free eggs. Food industry research shows consumers say they are willing to pay a premium price for humane products, but then they consistently choose the cheapest product. Cage-free eggs are not increasing market share at the rate that producers are adding cage-free production.

The problem is compounded by the looming threat that one day eggs produced in cages will be removed from grocery stores altogether. Gregory said producers are unwilling to tell their customers their purchase pledge will be impossible to meet because they don’t want to harm their business relationship. It’s time, he said, for the producers to speak up for themselves and start telling their customers those pledges cannot be met in time.

Producers also framed the issue as protecting freedom for consumers to choose a product they can feed their families at a price they can afford.

“People need to see it, the choice is being taken away from them. This is the land of the free, but they’re not going to have a choice in how much they spend or what kind of eggs they get,” one producer said. “And it’s not (us) who’s taking it away from them.”

Another producer said that if consumers, particularly lower-income groups, have to start buying less – or not shopping at a store that’s gone entirely cage free – maybe it will convince grocers to keep carrying conventional eggs. Americans want choices, he said, and they will fight to keep them.

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