2012 Egg Industry Survey: Consolidation continues at top of the egg industry

With 33.5 million hens in lay on December 31, 2012, Cal-Maine Foods ranks number one in Egg Industry’s annual Top Egg Company Survey. Egg producers have had to adapt to record high grain prices, on-farm U.S. Food and Drug Administration inspections, the uncertainty of pending hen welfare and housing standards legislation, and some “creative” enforcement actions by environmental protection agencies over the past few years. All of these factors have combined to fuel a surge in consolidation in the U.S. egg industry, either through outright acquisition or lease arrangements.

Okeefe T Headshot

Egg producers have had to adapt to record high grain prices, on-farm U.S. Food and Drug Administration inspections, the uncertainty of pending hen welfare and housing standards legislation, and some “creative” enforcement actions by environmental protection agencies over the past few years. All of these factors have combined to fuel a surge in consolidation in the U.S. egg industry, either through outright acquisition or lease arrangements.

With 33.5 million hens in lay on December 31, 2012, Cal-Maine Foods ranks number one in Egg Industry’s annual Top Egg Company Survey. The company’s 5.5 million hen increase from last year’s reported 28 million hens was primarily the result of two acquisitions completed in 2012. First, Cal-Maine acquired the two table egg complexes from Pilgrim’s Pride in Texas, which have a combined capacity of approximately 1.4 million hens. Then, later in the year, Cal-Maine purchased the commercial egg operations of Maxim Production Co. Included in this deal were a feed mill and two production complexes with capacity for approximately 3.5 million laying hens and with related pullet capacity, all located near Boling, Texas. The acquisition also included contract capacity for approximately 0.5 million laying hens near Gonzalez, Texas.

Rose Acre Farms remains in the second spot in the survey this year with 23.7 million hens housed, which is virtually unchanged from the prior year. Moark LLC holds down the third spot in this year’s survey with 14.9 million hens, down approximately 0.8 million from the prior year. Moark’s parent company, Land O’Lakes Inc., announced a joint venture with Eggland’s Best Inc. to market Eggland’s Best and Land O’Lakes branded specialty eggs nationally. The joint venture is called Eggland’s Best LLC.

Daybreak Foods with 13.5 million layers is in the number four spot in the survey, up from the eighth spot last year with the addition of 4.0 million layers in new houses. Rembrandt Enterprises, Hillandale Farms and Michael Foods hold down the fifth, sixth and seventh positions, respectively, in the rankings both this year and last.

Trillium Farm Holdings, which operates at former Buckeye Egg Farm facilities in Ohio, moves into the eighth spot in this year’s rankings with 9.1 million hens and Center Fresh Group is at number nine with 8.4 million hens. The ownership groups that own the Center Fresh Group, Trillium Farm Holdings and Centrum Valley Farms have many members in common, and these three entities together had 25.0 million hens in lay on December 31, 2012.

Midwest Poultry Services rounds out the top 10 of this year’s rankings with 8.1 million hens. Sparboe Farms fell out of the top 10 this year as the company reduced its hens housed from 13.5 million hens on December 31, 2011, to 6.0 million hens on December 31, 2012.

The 60 egg companies listed in this year’s survey had a total of 276.3 million hens housed on December 31, 2012. According to the December 2012 U.S. Department of Agriculture National Agricultural Statistics Service Chicken and Eggs report, there were 293 million layers producing table or market type eggs housed on December 1, 2012. This year’s survey captured approximately 94 percent of the USDA figure for hens housed on December 1, 2012. Results for Egg Industry’s Top Egg Company Survey come primarily from the egg producers themselves, but various industry sources are consulted in the formulation of estimates of hen numbers for non-responding producers.

Hen numbers rising

According to Egg Industry Center data, the U.S. layer inventory averaged 292.4 million hens in the month of November 2012, 2.8 percent higher than it was in November of 2011. The number of hens housed on the first of each month of 2012 crept up higher throughout the year than the amount housed in the corresponding month of 2011. The number of hens housed on the first of the month was on average 1.6 million head greater in the first three quarters of 2012 than in the same period in 2011. In the fourth quarter, the increase in the number of hens housed on the first of the month jumped to 7.4 million head in 2012 over 2011.

The Egg Industry Center’s January 2013 report estimates that the average egg producer was just about at break-even for the 2012 calendar year. The Center estimates that the last six months of the year were profitable for the “average” producer. Unfortunately, higher feed costs and a larger national layer flock have the estimated profits for the average producer trending lower over the last few months of 2012.

New construction

Twelve companies responding to this survey report building new layer housing in 2012. These firms combined to build housing for 7 million head of hens in 2012. The reported projects ranged in size from 46,000 to 4 million head of hens. Only one firm reports re-caging an existing 75,000 hen facility in 2012.

Not much house building is anticipated in 2013. Six firms report that they will build housing for a total of just over 4 million head of hens in enrichable/enriched cages. The planned projects range in size from 0.2 to 2.5 million head. Ten firms report that they plan to add housing for approximately 0.7 million head of cage-free layers. The projected cage-free additions range in size from 15,000 to 200,000 head.

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