Market driving growth in cage-free production
I have been asked whether I am against cage-free production of eggs, because, I suppose, I have championed the U.S. egg industry taking steps to preserve the option of housing hens in cages. My reply is always the same: I have nothing against cage-free egg production. If consumers decide that they want cage-free, free-range or some other specialty egg, I think it is great. As long as they are willing to pay enough to make it worth someone's while to produce eggs in that manner, then the market will be served.
Whether we are talking about eggs or automobiles, there is a small percentage of the population that is willing to pay for what they perceive to be the best. I have seen the premium market segment classified at different percentages of the total depending on the product class, but, by definition, it is always less than 100 percent, and it is usually 15 percent or less. Cage-free eggs are now available in most supermarkets, so consumers have access; now the market will let producers know how big this segment can become.
Cage-free egg production should get more efficient as egg packers have more cage-free eggs to sort, grade and pack. With more cage-free eggs to pack, the options for undersize and oversize eggs should improve. The logistics for getting cracked eggs to a breaker who markets cage-free egg products will be improved with increased volume as well. In short, more of the eggs laid by cage-free hens should make it to a market where a premium is returned, and this will ultimately lead to a somewhat lower premium needed for the carton of large cage-free eggs the consumer sees in their local market.
As long as egg producers can keep hens in some kind of cage in the U.S., then I don't think that cage-free egg sales in the U.S. will ever get over 20 percent of the total. If done well, that less than 20 percent of the market can be highly profitable.