U.S. egg producers made a major push in 2013 to gain passage of the Egg Bill as an amendment to the Farm Bill in 2013. The final fate of the Egg Bill and the so-called King amendment, which would hinder the state of California's efforts to ensure that eggs brought into the state met Proposition 2 standards, were not certain at time of press. Most observers have commented that they wouldn't be surprised if there winds up being a brief shortage of eggs in California sometime in 2015.
The best news for egg producers in 2013 had to be the results of the U.S. grain harvest, which finally ended the 3-year run of record high feed costs. The rapid drop in grain prices coupled with relatively high egg prices left many egg producers with outstanding profit margins at year's end.
Company rankings
With 32 million hens in lay on December 31, 2013, Cal-Maine Foods ranks No. 1 in Egg Industry's annual Egg Industry Survey. The company reports having 1.5 million less hens housed this year than on December 31, 2012. Rose Acre Farms remains in the second spot in the survey this year with 24.6 million hens housed, which is up slightly from the prior year.
Moark LLC holds down the third spot in this year's survey with 16.084 million hens, up just over 1 million hens from the prior year. At time of press, industry sources report that Moark's parent company, Land O'Lakes Inc., was exploring options for the sale of Moark's assets.
Rembrandt Enterprises, with 13.56 million layers, is in the fourth spot in the survey, up from the fifth spot last year. Daybreak Foods is now in the fifth spot with 13.0 million hens, down 0.5 million hens from last year.
Michael Foods, which is owned by GS Capital Partners, is sixth in the rankings with 11.3 million hens. GS Capital Partners, a private equity affiliate of the Goldman Sachs Group, acquired Michael Foods in 2013 from Thomas H. Lee Partners for $1.7 billion. Michael Foods has asked Goldman Sachs' banking unit and Bank of America Merrill Lynch to help prepare for an auction of Michael Foods. According to published reports, the asking price is at least $2.0 billion.
Trillium Farm Holdings, which operates at former Buckeye Egg Farm facilities in Ohio, moves into the seventh spot in this year's rankings with 9.39 million hens. Midwest Poultry Services moves up to the eighth spot with 8.5 million hens. Centrum Valley Farms, Hillandale Farms, and Weaver Brothers each had 7.5 million hens in lay on December 31, 2013, and round out the top 11 egg companies. The ownership groups for the Center Fresh Group, Trillium Farm Holdings and Centrum Valley Farms have many members in common, and these three entities together had 20.5 million hens in lay on December 31, 2012.
The 60 egg companies listed in this year's survey had a total of 263.9 million hens housed on December 31, 2013. According to the December 2013 United States Department of Agriculture National Agricultural Statistics Service (USDA NASS) Chicken and Eggs report, there were 296.4 million layers producing table or market type eggs housed on December 1, 2013. This year's survey captured approximately 91 percent of the USDA figure for hens housed on December 1. Results for the survey come primarily from the egg producers themselves, but various industry sources are consulted in the formulation of estimates of hen numbers for non-responding producers.
Hen numbers continue to rise
The number of hens housed on the first of the each month of 2013 crept up higher throughout the year than the amount housed in the corresponding month of 2012, according to USDA data (Graph 1). The average number of hens housed on the first of the month in 2013 was nearly 6 million head greater than in 2012. Increased exports of shell eggs and egg products in 2013, particularly to Mexico, helped keep egg producers profitable for all but three months in 2013, according to Egg Industry Center estimates. For 2013, the average returns over cost were estimated at $0.15 per dozen eggs.
What will 2025 look like?
In 2013, over 90 percent of layers in the U.S. were housed in conventional cages; less than 1 percent were in enriched cages, and an estimated 4 to 6 percent were cage-free. The Egg Bill mandates a transition period during which the U.S. egg industry would be required to replace conventional cages with either enriched cages or cage-free housing. The Egg Bill has not passed, and the efforts to secure its passage seem to have lost momentum.
Based on the current situation, where there is no national legislation in place regarding hen housing, egg producers were asked to predict how hens in the U.S. would be housed in the year 2025. The 25 egg companies who answered this question have faith in the future of cages in the U.S. The average of these predictions was that half of the layers in the U.S. would be in conventional cages in 2025, with approximately 40 percent in enriched cages and 11 percent cage-free (Graph 2).
There was a wide range in the responses to this question. Predictions for the percentage of hens housed in conventional cages ranged from 0 to 89 percent, with the median at 60 percent. Predictions for the percentage of hens housed in enriched cages ranged from 1 to 90 percent with the median at 35 percent. The range for the cage-free prediction was from 6 to 25 percent with the median at 10 percent.
2013 construction
Nine egg producers reported new housing construction or re-caging activities in 2013. Seven producers report that they added new buildings to house a total of 1.66 million hens in 2013. Two producers report recaging activities which replaced cages for a total of 464,000 hens.
Anticipated 2014 activities
Nine egg producers report that they expect to build new houses with enriched/enrichable cages for 4.3 million hens in 2014. Housing for 720,000 cage-free layers is reported to be under construction by nine egg producers in 2014. In total, 12 egg producers report that they will add 4.4 million head of hens to their layer flocks this year.
