After a difficult period during part of 2012 and 2013, this year has been a much better year for egg producers in Argentina.

"The status is generally very good; we're doing a major conversion, automating all of the poultry houses and modernizing facilities, with substantial investments in the sector," said  Jorge E. Nazar, honorary president, Argentina Association of Poultry Producers (Capia), and president, Avícola Telos, SA, a leading egg producer.

Dr. Javier César Prida, president of Capia added: "Today we have about 40 percent of production automated." He said that with further automation that is planned, the industry should be 80 percent automated by 2018.

Domestic consumption and exports

Contrary to what happens with the Argentinian broiler meat industry, very few shell eggs are exported. There are significant exports of powdered eggs. There is one company that is 100 percent dedicated breaking, pasteurizing and exporting powdered eggs.

But the vision for shell egg exports is changing: "Our goal is that part of the investments we've made this year are to prepare ourselves to export more shell eggs, as much as 20 percent of our production (could be exported) to Africa and Middle East, markets which we have access to and with which we have successfully worked with," said Nazar.

Exports of processed eggs from Argentina have declined significantly. "We went from exporting about US$40 million a year to about $18 million dollars," said Prida. But it is expected that for 2014, the situation will improve with the exchange rate variations and some adjustments that have been made internally to regain some of that lost ground.

The improving economic conditions for egg producers are demonstrated by the increase in the number of hens. In January 2013, Argentina had a hen population of 35.9 million, which by 2014 had increased to 38.4 million, an increase of 2.5 million birds. It is still not close to the 2011 record high, which was of 44.3 million hens, "but we believe that, step by step, we will get there," added Prida.

Impact of globalization

The economic crisis for Argentina's egg producers was the result of overproduction, due to lower exports of egg products to Europe caused by the problems they are facing. This created an oversupply of eggs in the domestic market.

Since 2003, Capia has been planning 10-year goals in conjunction with the government. "By bringing proposals to the government, we have had very good answers, good funding, good aid in the chancellery (equivalent of the State Department), in international negotiations, which have allowed us to work with a future vision that did not exist before and which is now part of everyday," said Nazar.

Battling for greater market share for eggs

In a country like Argentina, with high consumption of animal protein from different meats, increasing egg consumption is a great challenge.

That is why Capia conducts a consumer survey every five years to learn about consumer attitudes. "We had a challenge in the 2010 survey, which yielded an interesting amount of data," said  Prida. These data revealed that the Argentine consumer was not incorporating eggs as a food for dinner or lunch. Eggs are battling snack items such as instant soups, cereal bars, yogurt and fruit for inclusion in Argentine diets outside of breakfast.

"Beyond the fall in exports, we've had consumption staying the same or increasing slightly in some years," said Prida. "That is really our main objective. Today, 96 percent of the production goes to domestic consumption and 4 percent goes to exports."

Prior to reaching this plateau in egg consumption, Argentina saw a rapid growth in egg consumption in the past decade, from 135 to 244 eggs per capita.

Nazar adds two more aspects to his analysis. One has been the government policy of blocking exports of beef, which depressed the inventory of cattle. Thus, the price of beef is more expensive, while the egg has remained at very reasonable prices (the same happened to chicken meat), which has enabled the egg to be the cheapest protein. The other aspect is the advertising campaign to consumers and physicians, about the benefits of egg consumption.

Furthermore, "all the modernization of production has also allowed us to be more efficient in our costs and we can produce at cheaper prices," said Nazar.

Major grain producer

Argentina is fortunate to have land and production of grains and oilseeds. Is this a blessing? "It can be a blessing or a sentence," said Nazar. "Our corn and soybean markets follow that of Chicago, the international market, that is, when it goes up overseas, our grains go up at the same time."

Argentine egg producers benefit from the existence of export taxes on grain, but this is also offset somewhat with aspects such as the enormous bureaucracy and costs that other countries do not have. For example, Prida said, "for us, freight from the western city of Mendoza to Buenos Aires is more expensive than freight from Buenos Aires to China." In addition to the enormous costs of energy, logistics and labor in shipping grain internally in Argentina, there is also a the value-added tax of 21 percent.

Argentina's government has flip-flopped on an export incentives and now imposes a tariff on exports. Until 2008, exports earned the exporter a tax credit worth 5 percent of the value of the export. Now a 5 percent tax or tariff is imposed on exports.

"We've lost 10 percent of competitiveness overnight," Prida said. "And this is without any foundation, because we never stop providing the Argentine table with the amount of eggs needed."

The future

Nazar is convinced that, in Latin America, we have to preserve the image of the egg production sector and must be very attentive to what happens in Europe and the U.S., particularly, in relation to issues such as animal welfare.

"They have suffered and have failed to deal with it (animal welfare) as it should have been. Easy to say now, once the battle is lost. It is a problem that is not science-based, but is political and emotional," Nazar said. This has been grasped by certain groups that have influenced legislation, but politicians have failed to see that the removal of cages leads to higher production costs.

"We must be very close to each other, because they pretend that we have the same costs as them. They do everything possible to have tariffs or our products may not enter under the same conditions," Nazar said.

"Particularly Mexico, Colombia, Brazil and Argentina have to be united," said Prida, "because they are the engines of the Latin American poultry industry and the ones that must somehow respond to international demands."

Both leaders think they do not have problems in producing what Europe asks for, but Europeans need to grant quotas, eliminate import tariffs, and end subsidies to European producers. For example, in order to bring eggs to the EU, Argentina pays tariffs that in some cases reach 106 percent of the FOB value. "If they eliminate that 106 percent, I guarantee the Europeans that they are going to have free-range or organic eggs, in the amount they want," Prida said.

We need a level playing field to compete. The world is hungry, then the question is: What should we feed the people? Or, should we feed them?

"I think that the first thing is to feed them" especially if we talk about cheap and good-quality protein such as eggs. "After breast milk, it is the best animal protein."