The U.S. has one of the world’s lowest egg production costs, according to 2016 International Egg Commission statistics. This cost advantage has helped the U.S. maintain egg exports of 3 to 5 percent of production annually. While eggs are exported from the U.S. at a much lower percentage of total production than is the case of both broiler and turkey meat, it is still very important to the industry, according to Maro Ibarburu, business analyst, Egg Industry Center.
Demand for shell eggs at retail is relatively inelastic, which means that a relatively small change in supply can result in a large change in price. Ibarburu told the audience at the Midwest Poultry Federation Convention that egg exports help modulate domestic supply excesses or shortages, and this reduces egg price swings. Since cage-free eggs are more costly to produce, if the U.S. egg industry converts to cage free, then it will lose its low-cost position in the world market. This means that the typical U.S. egg export volume will decrease.
If the cage-free transition takes place in the U.S. but not in the rest of the world, then the U.S. egg market would become more isolated and supply fluctuations would have a greater impact on egg price because of lost export markets. Egg exports wouldn’t go away completely, but large volumes would likely have to move at a loss for U.S. producers.
Evidence from egg supply shortages in Europe, associated with the transition out of conventional cages, and in the U.S., as a result of avian influenza, suggest that the inelasticity of demand for shell eggs at retail is still evident even at historically high egg prices.
A transition to cage free will result in greater price volatility for eggs even after the transition is complete. I hope you like riding roller coasters.