Addition of cage-free capacity leads industry changes in the US

With the Egg Bill off the table and the clock ticking down on the January 1, 2015, implementation date for California’s Proposition 2, one might expect there to be a building boom in the U.S. layer industry, but there is just a slight increase.

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With the Egg Bill off the table and the clock ticking down on the January 1, 2015, implementation date for California’s Proposition 2 - which will require that layers serving California’s shell egg needs be housed with a minimum of 116 square inches of cage space per hen – one might expect there to be a building boom in the U.S. layer industry. But there is just a slight increase, according to builders and equipment companies contacted by Egg Industry.

Commenting on whether construction of layer houses in 2014 has increased over the rate experienced in 2011 and 2012, David Newman, president, Northeast Agri Systems, said, “In my region of the Northeast U.S., there has been some very moderate expansion, which will continue in 2015. My understanding, though, is that there are many new large projects in other regions. Several are ground-up new complexes.”  

Tom Lohr, director of poultry sales, Henning Construction, said, “In 2014, we have seen some increased interest and actual construction, however not a huge amount at this time.”

Builders report that construction projects, for the most part, fall into one of three categories: conversion of high-rise houses into cage-free or enrichable cage belt-houses, construction of new enrichable cage houses, or construction of new cage-free houses. There is a consensus that all new cages being ordered and installed are enrichable. The most startling change the industry is experiencing is the rapid growth of cage-free housing.

10 percent cage-free

The real growth area seems to be in cage-free projects.

“There is a steady flow of cage-free being built to keep up with increasing demand,” Newman said. “Egg companies are taking advantage of the better profitability of specialty eggs of all types.”

Terry Pollard senior vice president, Egg Systems USA & Canada, Big Dutchman, said he projects cage-free layers in the U.S. will make up 10 percent of total U.S. layers by early 2015, up from 4 percent just a few years ago. Cage-free layers making up 10 percent of the U.S. market means that there will be roughly 29.5 million head of cage-free hens. He also projects that cage-free eggs will make up 15 percent of the U.S. layer flock in just a few years.  

In 2014 alone, Pollard estimates that the U.S. will add 6 to 7 million cage-free hens, with 1.5 million of these being added in California. Some of these additional cage-free hens in the U.S. are going into purpose-built cage-free complexes, but others are being placed in former high-rise houses that have been converted to cage-free.

California layers

“We are seeing a lot of construction to supply California,” Pollard said. But he still thinks there may not be enough hens housed meeting Proposition 2 criteria to supply all of California’s shell egg needs come January 1, 2015. In August, he estimated that the California market will be a few million hens short at the beginning of 2015. 

Pollard said that by January of 2015, California egg producers will have 11 million layers housed, down from 19 million today. The California shell egg market would then need 14 million hens housed outside the state that are cage-free or housed at 116 square inches per bird. He doesn’t think enough housing exists to meet this number.

Lohr said, “There are expansion and conversion (projects) for markets outside of California.” But he went on to say “the unknown of where the bird densities will actually fall is definitely hindering expansion decisions.”

Enrichable cages

With all of the house conversions and new construction projects that have been completed over the past few years, Pollard estimates  there will be space to house about 30 million hens in enrichable cages at 67 square inches by the end of 2014. He said that as of August of this year, about 7 million hens worth of enrichable cages at 67 square inches per hen are committed to California at 116 square inches per bird in 2015.

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