Drop in egg price, production could spell trouble
The seasonal decline in egg price following Easter was unprecedented in magnitude.
Although the U-B value has stabilized in the vicinity of break-even, there is cause for concern that in the prevailing economy any disturbance between supply and demand may lead to wide fluctuations in unit revenues. Restraint in expansion, molting and early depletion of flocks are all acceptable strategies when encountering periods of decreased consumption.
An article by Professor David Roland of Auburn University in the June 2009 edition of Egg Industry is timely as it highlights approaches to minimize losses through manipulation of egg output and adjusting nutritional specifications.
Sacrificing performance through reducing feed cost is appropriate to the current situation. Careful evaluation of return taking into account fixed and variable costs of production with prevailing costs of energy and protein will be critical to optimizing return during the present downturn. The seasonality of demand coupled with expectations for a prolonged recovery of the economy suggests a more proactive approach in 2010 when we can expect a recurring decline in demand.