Egg Industry - February 2008

www.WATTpoultry.com FEBRUARY ²⁰⁰⁸ volume 113 volume 113 number 2

Despite High Feed Costs, Egg Executives
Look for Profitable 2008
Industry News
Infrastructure’s Role in Keeping Egg Prices High
Shell Defects Impact Margins
Calendar
Marketplace

Despite High Feed Costs, Egg Executives Look for Profitable 2008

But industry leaders are concerned about California’s anti-cage ballot initiative.

By Edward Clark, Editor

Bucking historical trends, most egg companies are not plugging much of last year’s record profits into new facilities—yet anyway—and that adds up to one thing: another year of high prices and profits, though perhaps not quite as high as 2007. And 2009 could look good as well, some say.

“Prices will be somewhat less, the hatch is up a little. I don’t know if we can maintain last year’s price, but 2008 will still be profitable,” says Gary West, president of JS West and Cos., Modesto, Calif., and new chairman of the United Egg Producers’ (UEP) board.

West’s view is echoed by others. “Our forecast is that the supply side will be similar to 2007. Prices in 2008 could be as good,” says Dolph Baker, president

of Cal-Maine Foods, Jackson, Miss. “What we learned in 2007 is that we have control of our destiny if we work at it, and as an industry, 2008 could be another super year.”

Growing Through Acquisition

Cal-Maine has no plans to expand in 2008 by building new facilities, he says, adding that “our objective is to grow through acquisition.” The only

exception to that, he says, “is that we are building a facility in West Texas to replace one we had closed down.” One reason why the industry nationwide is doing such little expansion is that “ people are enjoying record profits,” he says, and that there is much uncertainty, such as the future of caged legislation, and high grain prices.

The likelihood of another good profit year in 2008 notwithstanding, however, Baker says that “we’ll always be a commodity business and have ups and downs. It’s hard to look out more than one year.”

Baker says Cal-Maine is very committed to growing the specialty egg side of its business, which last year represented 9 percent of eggs sold but 15 percent of shell egg revenue.