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News and analysis on the global poultry
and animal feed industries.
on October 25, 2007

Further processing egg sector continues to grow

Will Sector Ever Reach 50 Percent of Total?

The egg processing or further processing sector continues to grow, and that growth is likely to continue in the years ahead, industry experts say.

Today, the egg products business is about one-third of the total, and could be as much as 40 percent within five to 10 years, says Larry Seger, president of Wabash Valley Produce, Dubois, Ind. Products that use processed egg products are under development, in addition to increased breakfast offerings from fast food chains that contain egg products. "The egg products business has been very good," he says.

Gene Gregory, president and CEO of United Egg Producers, Atlanta, notes, however, that egg products' production is actually down 2 percent this year from 2006 levels. With the high prices for shell eggs, eggs products' manufacturers are buying fewer eggs to dry. As a result, Gregory points out, dried egg inventories are down 58 percent from year earlier levels. That doesn't mean, however, that demand for egg products has been reduced, he says, just that more inventories are being used to meet demand now that egg prices have risen.

Is it possible that the processed egg sector could take up half of all eggs produced? "Some time back, we though it could get up to 50 percent, but I no longer believe so," Gregory says, although he anticipates modest gains each year. The United States adds 3 million people a year, he says, so for the egg products business to be half of total sales, giant strides in egg product per capita use would be necessary.

Gregory continues that it's great - and good for business - that Wendy's is expanding breakfast offerings, and it's nice to be included, but some of those buying a Wendy's breakfast aren't necessarily buying new egg products. They might be switching from purchases of an Egg McMuffin from McDonald's.

Exports Uncertain

One reason why Gregory is cautious in predicting growth of egg products is that the export market is crucial to egg product growth, and countries can very easily slap bans on products for a whole host of reasons.

In the short term, one factor that could curtail the growth on the egg products side is that more and more customers will be asking for eggs produced meeting animal welfare guidelines like consumer requests on the shell egg side, thus reducing bird numbers, says Mark Oldenkamp, vice president, northwest operations for Valley Fresh Foods, Woodburn, Ore., and increasing liquid egg production costs. But partially offsetting that is an improvement in egg production efficiencies. "You don't gain it all back, but there is not the type of change on cost of production that we thought it would be," he says. On the shell egg side, it was forecast that production costs would increase 10 to 12 cents per dozen, but he says," it did not happen."

Consumer-Friendly Products

Oldenkamp sees opportunities for liquid egg producers to displace some shell eggs at the retail level with consumer-friendly products packaged for easy use.

Marcus Rust, an owner of Rose Acre Farms, Seymour, Ind., sees the further processing industry eventually becoming 50 percent of the market, but for that to happen, it will take more breakfast item offerings at restaurants, which is happening today, and more convenience foods that contain eggs.

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