Egg Industry - June 2018 - 22
22 ❙ EggIndustry
CONVERTING TO CAGE-FREE EGGS
at EUR360 million (US$446.54 million). This is an issue
that has not yet impacted the U.S.
Another possible issue producers may encounter in a
cage-free system is floor eggs, which may create a food
safety risk because of contamination to the shell. High
incidences of featherless areas, skin lesions and keel bone
damage will need to be addressed in managing cage-free
systems, Ibarburu also mentioned.
Cost of production
To make this transition, producers will be challenged
with the estimated cost of building cage-free facilities,
which will ultimately be reflected in the price of eggs for
consumers. The estimated cost of building cage-free houses to meet the 2026 goal is about US$11 billion. "That
doesn't include costs associated with building completely
new sites, which will be more expensive with moving dirt,
permitting, bringing electricity, feed mill, egg processing
and other factors," explained Ibarburu.
For producers to invest in cage-free production, they
are looking at both a higher capital cost and higher operating cost. "Most of the time, when you are investing in
your facility, it is because you want to either reduce your
operating cost by becoming more efficient or because you
have a new product that consumers are willing to pay a
premium for," said Ibarburu. If producers don't get a premium for cage-free eggs prior to all the purchase pledges
being fulfilled, it could be a very costly transition.
About 76 percent of the pledges for 2026 comes
from grocers. "This is a challenge because grocers
give their customers choices and consumers tend to
choose the lower price," said Ibarburu. Until grocers
are 100 percent cage free, it will be harder to capture
those higher premiums. ■
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