Egg Industry magazine has been conducting a survey of U.S. egg producers for decades. Egg producers are ranked based on the number of hens housed on December 31 each year and this survey has become the benchmark for size of table egg producers in the U.S., said Terrence O’Keefe, content director for WATT Global Media, during the WATTAgNet Top Company - 2019 US egg producer ranking webinar on March 28. This webinar was sponsored by Boehringer Ingelheim and presented by WATT Global Media and IRI.
The 2019 Top Egg Company Survey identified 67 egg producers whose flocks totaled 337.88 million hens housed on December 31, 2018. The survey results are composed of a combination of company-submitted information and estimates made based on input from publicly reported information and industry sources. The USDA Chicken & Egg Report released December 22, 2018, estimated the U.S. table egg laying flock to be 330.95 million hens on December 1, 2018.
Year over year
The level of concentration of the U.S. egg industry hasn’t changed much in the past five years. In the 2015 survey, the top five egg producers controlled the output of 34% of the hens reported in the Top Egg Company Survey. In the 2019 survey, the top five egg producers controlled the output of 36% of the survey’s hens. The amount of the country’s hens housed by the top 10 egg producers has increased from 50% in 2015 to 52.5% in 2019.
There has been very little change in the proportion of the nation’s layer flock controlled by the top 20 producers in the past five years; in 2015 it was 72.0% versus 72.5% in 2019.
In the 2015 survey, the top five egg producers controlled the output of 34% of the hens reported in the Top Egg Company Survey. In the 2019 survey, the top five egg producers controlled the output of 36% of the survey’s hens.
Converting layer housing from cages to cage free
Cage-free layers are afforded more space per bird than are hens housed in conventional or enriched cages. However, survey respondents report that housing for 3.22 million head of cage-housed hens was converted to housing for 4.07 million head of cage-free hens in 2018. This is likely the result of conversion of pit houses to cage free, where the in-house manure storage area under the cages is utilized for cage-free housing in addition to the area of the house where the cages were placed.
Survey respondents report intentions to convert 4.57 million head of cage housing to cage-free housing for 5.37 million layers in 2019.
New housing construction
Survey respondents report adding new buildings to house 5.1 million head of hens in 2018. They also reported re-caging housing for 0.19 million head of hens in 2018.
In 2019, survey respondents report intention to add new housing for 6.58 million head of cage-free hens. Construction of cage housing has not stopped in the U.S. According to survey respondents, new housing will be constructed in 2019 for 0.7 million hens in conventional cages and 0.82 million hens in enriched/enrichable cages.
Cage-free pledges
As part of the 2019 survey, U.S. egg producers were asked what%age of their customers have pledged to purchase only cage-free eggs or egg products by some future date.
Twenty-seven egg producers answered this question. The average of responses was that 54% of their customers have made future cage-free egg or egg product purchase pledges. The responses to this question ranged from 0 to 100% and the median response was 65%. If the responses from two producers who are already are 100% cage free are excluded, then the average response of the other companies is 47% of customers have made future cage-free purchase pledges.
Producers were also asked what%age of their customers have established interim benchmarks on their way to purchasing 100% of their eggs and egg products from cage-free hens by some future date. The average response was 20%, but 14 of the 27 respondents were that none of their customers had established interim goals for moving to 100% cage-free egg purchases. If the responses of egg producers that are already 100% cage free are excluded, then the average%age of customers who have set interim cage-free egg purchase benchmarks falls to 12%.
Price impact due to conversion
Consumer demand will drive the market price of cage-free eggs and determine the premium producers are paid, O’Keefe said. The results of switches to cage free only in Northern Europe and to free range and cage free in Switzerland have shown no real decline in egg consumption, despite the price increases.
“Demand for eggs is highly inelastic in the U.S.," O'Keefe said. "There are numerous examples over time that demonstrate that it takes very little change in supply to result in major changes in price. My expectation is that, once supply of cage-free eggs stabilizes, per capita consumption won’t decrease. Eggs will still be a relatively inexpensive form of high-quality protein."
O’Keefe wrote an article in 2016 about a farm that converted from high rise to cage-free housing. The Henning construction folks estimated then that the cost for typical houses to range from $28-33 per bird. “Remember, you must convert the pullet houses as well,” he said.
Looking ahead: Less than half of hens cage free by 2025
The U.S. Department of Agriculture's Cage-Free Shell Egg report released December 3, 2018, estimates the total U.S. cage-free layer flock (non-organic cage-free layers plus the certified organic cage-free layers) was 57.16 million. The December 2018 USDA Chicken & Egg report estimates the total U.S. table egg population at around 325 million hens, which puts the current cage-free layer flock at 17.6% of the U.S. total flock. It is estimated that less than 1% of U.S. hens are housed in enriched cages.
Thirty-one egg producers provided their estimates of how they think hens in the U.S. will be housed in 2025. The average of the responses was 55, 2 and 43% in conventional cages, enriched cages and cage free, respectively. The responses for the%age of hens housed cage free in the U.S. in 2025 ranged from a low of 20% to a high of 100% and the median response was 40%.
Egg producers have been asked how they thought U.S. hens would be housed in the Top Egg company Survey every year since the 2015 survey. The expected%age of U.S. hens which would be housed cage free in 2025 jumped from 14 in the 2015 survey to 41% in 2016. The prediction for cage-free hen housing has remained in the mid- to low-40% range over the last three surveys.
Egg Industry Center economists estimated 223 million cage-free hens needed by end of 2026 to meet purchase pledges.
Prop 12 impact on cage-free production
Cage-free layers are 17.6% of the U.S. total. California makes up 12.4% of the U.S. human population. If we assume that California eats cage-free eggs at the same rate as the U.S. population, then going to 100% cage-free will increase California’s cage-free egg needs by:
39.54 million people in California X .824 (% of current cage produced egg sales) X 325 million people in the US/325 million hens in the US = 32.6 million more cage-free hens needed to service 100% cage-free eggs for California
