El Salvador’s egg sector
El Salvador’s dynamic egg laying industry has taken an important leadership role in Central America.
At 170 eggs per person/year, El Salvador has the third highest consumption level in Latin America, behind Mexico and Colombia. El Salvador has a population of 6 million people; however, it’s estimated that about half of these live in the U.S. With such high consumption, it is hard to maintain growth, but at least the industry has remained stable for over four years. The country has completely changed its eggs preference. Years ago, it was a 100% white egg market, while today it’s a 90% brown egg market.
It is almost impossible to discuss the laying hen sector in El Salvador without also covering Guatemala and Honduras, because there is so much connection with the industries in these countries. This is mainly due to the fact that the largest Salvadoran egg companies have, for many years, had operations in Guatemala and Honduras.
The Salvadoran egg companies are among the most technologically advanced in the Latin American egg sector. Recent projects include some of the most modern tunnel ventilation poultry houses, not only in Central America, but also in all of Latin America.
The egg mega-distributor concept has been in practice for several years in El Salvador, Honduras, and Guatemala. It is a simple concept: egg producing companies focus on producing the eggs, which they later turn over to the mega-distributors in charge of distribution and sales. Each company takes care of its own packaging, branding, and product delivery to the distributor.
In El Salvador, the mega-distribution company is called EGG – which stands for Empresa de Granjas Guanacas (Salvadoran Farm Company). In Guatemala, they also go by the name EGG – Empresa de Granjas Guatemaltecas (Guatemalan Farm Company) and in Honduras they are known as Megadistribuidora Avicola (Poultry Mega-Distributor). This concept started in Guatemala in 1999, when several egg distribution companies joined together under the name Dansa. This company was not successful and disappeared, but served as the model from which many lessons were drawn and from which other mega-distributors were born. Today, EGG Guatemala has two partners, Megadistribuidora Avicola in Honduras has 23 and EGG El Salvador has four.
Each of the mega-distributors works independently, meaning they supply the local market at local prices, as opposed to regional ones.
The Salvadoran company El Granjero plays an important role in the EGG. In addition, they participate with the Empresa Avícola Julia in the EGG in Guatemala, as well as with Avícola Santa Rosa in the Megadistribuidora Avícola in Honduras. The Lemus-O´Byrne Group also plays an important role in the El Salvador EGG and with CAPH in the Honduran Megadistribuidora Avícola. Avimac and Cocolima are the other two companies with participation in the El Salvador EGG.
José Alberto González, executive director for EGG in El Salvador (and the executive director of El Granjero), explains the concept, “Each company makes a contribution to keep us operating, and we subtract the sales price. That is to say, if the distributor sold 200 but only needed 20, then we keep 20 and return the rest to the egg producers. We do this because we are a non-profit organization. That way we can transfer all benefits to the price, to save on production costs and to create economies of scale in distribution which we can then transfer onto the product. None of the three distributors generate profits, they all generate service.
“The mega-distributors are willing to take on new partners and new products, as long as they are in compliance with our established standards, such as the yolk color, shell thickness, and freshness, controls which are applicable to all.
“We talk about being together, yet apart. That is, we all deliver the eggs at the distribution center, and let them do their own thing. Branded products for supermarkets are packaged by each company under their own label. The bulk eggs, which go to stores and farmers markets, come in 30-egg flats from each company, but they are not branded.
“Distribution companies are concerned about not exceeding the number of days within the distributor’s internal rotation, which should not be more than three or four days in any of the storage facilities. Client rotation can take place as often as required, but what we look for is the egg not to age. We always want to offer a fresh product.
“The vision is to seek out new partners to reduce costs and offer clients a more affordable price. I will offer the end consumer the lowest price in the market, but in exchange, I want a greater market share,” concludes González.
The Lemus-O’Byrne Group
This group owns the second largest laying hen company in El Salvador, with 900,000 Hy-Line layers in production, and 250,000 layers in production in Tegucigalpa, Honduras. Both companies have Roberto Lemus González as the executive president, who also serves as president for Megadistribuidora Avícola in Honduras.
Roberto Lemus-O’Byrne, production director, speaks about the investments in their poultry houses. “The three newest houses, the tunnel ones, are three years old. They were the first of its kind to be installed in Latin America, from Chore-Time. We built them new, as part of an expansion and centralization effort. The new poultry houses are very good, yields are high. If we keep a good temperature, we only have a one-degree (Celsius) temperature difference between the front and center of the poultry houses, because the extractors are on the sides and the cooling pads are on the ends.
“We were affected by the earthquakes in January and February of 2001; 40% of our equipment was damaged, the poultry houses collapsed. We had to undertake a reengineering process unlike any other, which we thought wouldn’t yield results. After eight months of intense work, we were able to rebuild the farm. In October 2005, hurricane Stan hit and we lost 100,000 birds to the flooding on the pullet farms,” recalls Roberto Lemus-O’Byrne.
El Granjero, S.A. is the largest commercial layer company in El Salvador, with 1 million layers in production. Carmen Elena Díaz de Sol is the company’s president and she is also a special Presidential Agricultural Commissioner for El Salvador.
Carmen Elena Díaz de Sol also is president of Avícola Santa Rosa in Honduras, with 210,000 layers in production; president of Avícola Julia in Guatemala, with 950,000 layers; president of the distribution companies in El Salvador and Guatemala; as well as being vice president of the Honduran distribution company. Ms. Díaz de Sol heads the largest egg operations in all Central America.
El Granjero is known throughout Central America for its dynamism and especially for their cutting edge technology in layer production. They were the first in Central America (and very likely in Latin America) to use the most advanced technology to build their new tunnel ventilation houses, back in the year 2000. One of these houses was in place when the 2001 earthquakes hit, which destroyed many of the poultry houses, but did not damage the new tunnel ventilation house, and for this it was nicknamed the “Titanic”. Later, two more of the same type were built. These are Chore-Time houses and equipment.
The poultry houses have “stack deck”-type cages with six levels, each one with a manure belt. There is a second deck for the poultry house workers – three levels of cages are supervised from the bottom and three from the top.
The manure belts are used every other day, which represents less wear and tear on the system, compared to using them once a week. Egg collection takes place automatically, though in the classification area, the work is done manually. The extractors are at the end of the tunnel and the evaporation pads are at the entrance.
Without a doubt, Criaves is one of the best-known names in the Central American poultry industry. With over 30 years of existence, the company is known for being the hatchery which supplies an important percentage of the pullets and one-day-old chicks bred in Central America. Particularly, their market share in the regional egg layer market segment is unmatched.
Criaves produces and sells close to 8 million layer pullets a year, (Hy-Line W98 and Brown) with exclusive distribution rights for the Central American region. Thus, it is the largest pullet hatchery in Central America. Given that at this time there are almost 17 million layers in production in all of Central America, the fact that Criaves hatches almost half of them, is quite remarkable. There are only six companies in all of Latin America which hatch more pullets a year than Criaves. A significant percentage of these pullets remain in El Salvador and the rest are exported.
Before the year 2000, Criaves exported chicks and pullets to Central America and Mexico. All this changed when circulation of the low pathogenic Avian Influenza virus was detected in several countries in the region, affecting regional commerce for chicks and pullets. As a consequence, some hatcheries made adjustments and complied with the sanitary requirements established by international standards to export their products. A few months later they were able to get back to regional commerce. This is considered a very important period for Criaves because, despite the threat, they were able to maintain their presence in the entire region, opening operations in Costa Rica to supply that country as well as the Nicaraguan market.