Unlike what occurred following the high prices of 2004 and previous periods of high prices, most egg producers have not raced out and spent the record egg prices of 2007 to expand in recent months. That said, however, a growing number of producers are taking out equipment that has been used in existing buildings for as much as 20 or 30 years, and replacing it with new, state-of-the art equipment.
"There is significant aging of equipment, and a lot of pent-up demand to replace old equipment," says Rick VanPuffelen, sales and marketing manager for Chore-Time Egg Production Systems, Milford, Ind. Specifically, he notes, producers may take out old A-frame cages, put in manure belt cage systems, "and go vertically. Where they used to go four to five cages high, they're now going seven or eight high."
One motivation for using every inch of space within the laying house, he and others interviewed say, is that as producers replace old cages with those that meet the United Egg Producers (UEP) animal welfare certifications, cages are larger, thus producers lose layer space.
Growing Interest in Manure Systems
Manure is another housing issue that is increasing in importance, VanPuffelen says. In some cases, existing buildings are being reconfigured to have areas within them for manure storage, while in other cases, producers decide that the best way to go is to construct a separate building for manure storage until the proper time to spread it on farm fields.
Also growing, VanPuffelen says, is interest in drying manure, either on the belt or in a separate dryer. For example, more producers have interest in a multiple level or tier belt system and it's perforated.
"Is the Building Okay?"
One question producers need to ask themselves before investing in new cages for an old building "is whether the building will last for another 20 or 30 years," he says, and if it's okay to remove the horizontal beams that have supported the A-frame. "Producers may need to reinforce walls," he adds.
While growing numbers of producers are investing in cage-free facilities, VanPuffelen says that "we think cage-free is 5 percent to 6 percent of the U.S. market. We don't see it increasing in large numbers, but rather a steady increase." Most of the expansion he sees still consists of caged facilities.
He adds that while "we are very busy, a limited amount of that is expansion." He doesn't call using existing buildings expansion. One reason for using existing buildings, he says, is that producers generally don't have to obtain new permits. "They use existing buildings if at all possible, and we can work with them to customize a system that works."
David Leavell, sales and marketing manager for Farmer Automatic of America, Rochester, Ind., says that few are making the decision to put in new caged complexes right now. "More are looking at cage-free," he adds, such as high-density aviary cage-free systems, with feeding, watering, and nest boxes on every level.
For the most part, those investing in their egg operations "are using existing buildings. We're seeing a lot of upgrading and modernizing to make producers more productive, with manure belt systems leading the way."
Leavell is also seeing more interest in composting manure as a value-added fertilizer.
One reason why producers are not investing in new complexes, he says, is the uncertainty over the future of caged production, such as the California referendum, that would ban caged production. Producers also are concerned about getting healthy financially after being on the ropes for three years, and they are facing environmental and permitting issues. Due to the difficulty in obtaining permits, some producers have more interest in acquisition than building new, he says. "That way they don't have to deal with land use and water permits."
Dave Thompson, president of Vencomatic North America, has heard estimates that cage-free is now 5 percent of the total market, and growing. Major egg producing companies are becoming interested in cage-free, Thompson says, now that the UEP "has come up with a standard."
One of the challenges in converting common pyramid caged systems to cage-free without reconfiguring how units are stacked, Thompson says, is that three hens per square feet is reduced to one. But with a stacked system it's possible to go from three down to two.
"We're expecting strong growth in 2008," Thompson says. And if the discussions over the last eight months turn into sales, "we'll have a strong year."
Management More Critical
He adds that management is far more critical with cage-free systems, "where equipment is half the battle, and management is the other half." And birds have to be trained to move up and down, he adds. Vencomatic offers a variety of cage-free systems, such as a row system with integrated layer nests, and a multiple level system that increases available living space. The company also offers a jump-start system for aviary rearing units.
It's inadvisable to use cage-reared pullets in a cage-free system because they have no concept of going up and down, he says.
Some, such as Del Farrer, vice president of Henning Construction Co., Latimer, Iowa, are seeing a blend of new construction and retrofitting of existing buildings. One thing he's seeing is this: producers who used to have a 1.2 million bird operation but are now 900,000 due to UEP standards "are putting up one or two new houses to get back up to a 1.2 million bird capacity."
"And we're seeing everything being builthigh rise, stacked deck systems, organic, free range. We're quoting lots of organic and free range." This is not a record year, but there is quite a lot of new construction, he says. And the expansions are nationwide, he says, from Texas to California to Wisconsin.
More Activity in Alternative Systems
Big Dutchman Inc., Holland, Mich., is seeing more activity in alternative egg production systems than in conventional ones, says Craig England, vice president of sales. "And for the most part, what we're seeing is retrofitting, reconfiguring existing buildings, not a lot of new construction," he says. For those putting in caged systems, what he's seeing most is people taking A-frames out and putting belt systems, stacked cages in.
Sales activity is higher than 2007, "but not what you would typically expect," following a year of such strong egg prices. "And for two reasons. A, producers are not sure the direction the market is going to take on cage-free and organic, and B, people are uncertain as to future legislation."
On cage-free, England is seeing producers putting in everything from simple systems all the way to aviary systems, but mostly in less than 20,000 birds per house.
England also is seeing a lot of interest in manure handling and drying systems, such as tunnel drying, to address environmental issues.