New US cooperative ProEgg – questions answered

A new egg farmer cooperative ProEgg plans to help stabilize the U.S. shell egg supply while offering collaborative solutions to the industry and creating a stable future for its retail and foodservice customers. 

Because the cooperative is the first of its kind in the U.S., Egg Industry Insight conducted an interview with ProEgg CEO Ric Herrera to better understand the organization’s unique structure.

Egg Industry Insight:

ProEgg’s members include Cal-Maine Foods, Inc.; Central Valley Eggs, LLC; Colorado Egg, LLC; Hickman’s Egg Ranch, Inc.; Oakdell Egg Farms, Inc.; Opal Foods LLC; Ritewood, Inc. and Willamette Egg Farms, LLC. How is the ownership of these companies intertwined?

Herrera: 

“When you think of the cooperative itself, each of the companies retain their ownership and are still independent. They will retain their own personality, heritage and history. The cooperative has no ownership over any of the companies.”

Egg Industry Insight:

How is ProEgg deciding whose production and how much of it will be sold through the cooperative?

Herrera:

"Each producer has put different amounts of eggs or egg production into ProEgg and specific farms are utilized from each producer to simplify traceability."

“That's the unique part of the cooperative. What the companies have done is pledged either a portion or all their production to the cooperative.”

“For example, one company may pledge one million birds’ worth of eggs and another may put in two or three million. Right now, roughly 24 million birds have been pledged. We take that as a pool and then figure out the most efficient and effective way to get it to the correct customers based on their needs in terms of packaging, product type, etc.”

"Even with Cal-Maine being a publicly traded company, it has production dedicated to the cooperative and is operating exactly like the other members of ProEgg."

Egg Industry Insight:

According to ProEgg’s website, it serves 13 western U.S. states including Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. Will these companies still be competing for business in other states outside of the 13?

Herrera: 

“It is our intention to grow beyond the 13 states either with new members, additional volume pledges or customer expansion. The members that have business outside the 13 states still operate normally but have dedicated egg production specific to our region.”

“With that said, as we expand further east, we may get additional farms from those producers who do business in that region, or we may have additional producers come on board as members.”

"ProEgg’s growth model involves seeking out additional members that have the right qualities and characteristics to fit within the cooperative’s expansion plans."

Egg Industry Insight:

How does the organization operate?

Herrera: 

“There is a board of directors. Members from each company have seats on the board, but the producer decides who they want representing them. This does not mean that any producer has ownership over the cooperative.”

"ProEgg does not intend to purposefully raise its prices but hopes to implement sustainable business for its members to continue the organization’s growth."

“It is critical for us to keep the identity of each producer in place. The companies have spent multiple generations building that reputation in their local markets. We don't want to lose that.” 

“We’re simply here to help take over the aspects of the business that they don't excel at or wish to turn over, such as the sales, marketing or logistics aspects. ProEgg wants its members to focus on what they're good at: producing eggs.”