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News and analysis on the global poultry
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eggs_export
on September 14, 2007

Export picture keeps getting better

Exports of eggs and egg products continue to have a strong year in 2007, which is one more reason why the year is such a strong one for producer bottom lines.

For the first six months of the year, exports of table eggs were up 139 percent by value and 100 percent by volume compared to the same period in 2006, with egg product sales also strong, up 32 percent by value and 12 percent by volume.

"I've never seen such phenomenal growth in shell egg exports and sustained growth of processed eggs as well," says James Sumner, President of the USA Poultry & Egg Export Council (USAPEEC), Stone Mountain, Ga. Looking at the second half of 2007, he adds: "I don't see any reason why things will change."

Another USEM Sale

On the table egg side, exports are due in large part to sales by United States Egg Marketers (USEM), and the group approved an additional sale last month of 132 container loads of eggs for export starting with delivery the week of August 20, according to the United Egg Producers (UEP). UEP says that never in the past seven years since UEP assumed management of USEM has an export order ever been made at such a high price.

The sale, made at 60 cents per dozen, is 10 cents higher than any previous export.

UEP says that Urner Barry's quote for breaking stock in Europe was 27 cents per dozen higher than a year ago in mid-August, which indicates that there may be a limited supply of eggs for breaking in Europe.

Indeed, it's no exaggeration to say that exports to Europe have skyrocketed, with January-June 2007 volume of table egg exports from the United States up an astounding 6,101 percent compared to previous-year levels, with egg product exports to Europe also strong, up 183 percent.

Why such strong sales to Europe? In the view of Dean Hughson, director of marketing for Rembrandt Enterprises, in Rembrandt, Iowa, it's largely the change in Europe to cage-free production, "which has effected the egg industry world-wide." Not only has it boosted sales of eggs and egg products to Europe, but former markets served by Europe are now possible

Reasons for Growth

Overall, though, the reasons U.S. egg sales are improving are three-fold: the quality of U.S. eggs, the fact that the United States is the world's low-cost producer, and that United States is viewed as a dependable supplier, Hughson says. And the production cost with Europe is widening as that region's producers are shifting to cage-free production, which is more costly, thus effecting both quantity and price. Hughson adds that he's been in the business for 30 years, and he's seen exports ebb and flow, "and now it's our chance to shine again."

One additional reason for expanded U.S. exports is that when U.S. food and restaurant companies expand overseas, in many cases they look to U.S. production if local production cannot supply their needs on quantity and quality, says Leonard Ballas, president of Ballas Egg Products Corp., Zanesville, Ohio. He adds that the sales are not necessarily staying in Europe, that is, shell eggs could be sold in Europe and resold to other nations. Hughson says that ironically, it is cheaper for a customer to import eggs from the United States than to import eggs from some locations within Europe, due to favorable ocean freight costs.

Other major increases in volume of table egg exports the first half of this year are the Middle East, up 974 percent; South Asia, up 75 percent; East Asia, up 70 percent; and Caribbean exports, up 25 percent.

On the egg products side, in addition to Europe's strong growth, North America exports were up 10 percent, while East Asia exports were down 32 percent. Exports of egg products to Mexico jumped 129 percent the first half of 2007, bringing the nation nearly even with Canada and within $1 million of Japan.

South of the Border

Mexico is also showing interest in importing U.S. table eggs. More refrigerated table eggs are entering Mexico through the retail trade in cities along the border with the United States. Although there are no significant tariff barriers to shipping fresh eggs to Mexico, the reality is that U.S. eggs are refrigerated from farm to store. Mexican regulations do not require domestic eggs to be refrigerated, but do require products (like U.S. eggs) that are transported under refrigeration when they arrive in Mexico, to be kept under refrigeration. This little catch 22 has successfully kept significant quantities of U.S. table eggs out of Mexico for years, says USAPEEC's Toby Moore.

Egg products to Mexico are surging, with the country now one of the leading importers of U.S. processed egg products. For years, Japan was the leading U.S. export market, followed by Canada as a distant second, followed by everyone else. The European Union (EU) would occasionally rise as the market of note, but would fall back. Mexico was not even on the radar. That's now changed, Sumner says, in part to USAPEEC promotions supported by the American Egg Board. Not only is Mexico "now nip and tuck with Canada, it could even challenge Japan as the top market for U.S, egg products," he says. The Mexican food and baking industry has been very receptive to hearing about the benefits of eggs and egg products, Sumner states.

Egg Bans Aid U.S.

In other positive developments for U.S. producers: the United Arab Emirates' ban on eggs from Saudi Arabia, and the re-opening of some doors in India. The Saudi ban and the market's mistrust of Indian eggs due to pesticide concerns, plus low local supply also led to shipments of U.S. eggs to Iraq.

Exports are not up everywhere, of course. Exports to Canada are reduced, and imports from there to the United States are higher, due to the closing of a Canadian drier plant that caused the surplus eggs to be shipped to the United States.

In addition, "to a certain extent, our exports will slow down," Ballas says. "We've come off a cheap market, and we had a sizeable inventory of dried eggs that we were able to sell off." And he adds that despite high exports to Europe, sales would be even stronger without the trade barriers that make it difficult for U.S. producers to export to Europe.

Overall, despite major increases in egg exports, there is still a lot of upside potential, USAPEEC officials say, with only 3.3 percent of U.S. eggs exported, far lower than other poultry sectors.

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