Future prospects for the European egg industry

08-07-2010 | Home | Article

Eggs and egg products are continuously gaining popularity worldwide. The industry, particularly in the EU, will face new challenges. Feed costs are high, more stringent food safety standards are being imposed, and consumers are demanding high quality products with a greater interest in animal welfare.

By Magdelaine Pascale, ITAVI, Paris, France

In 2007, world egg production reached 63 million t (1,000 billion eggs, 16.4 eggs per kg). China is by far the primary producer with a 41% share of world production, followed by the EU and the US. Over the past decade, world production rose by about 3% per year (Table 1). This growth can be attributed to traditional Asian producing countries, which represent more than 60% of world production. China has been responsible for 60% of world growth over the past 10 years. Meanwhile, production decreased in Japan and Thailand. According to OECD, world egg production should continue to increase until 2015, at a rate of approx. 2% per year.

International trade reached 1.2 million t for shell eggs, 52,000 t for egg powder and 205,000 t for liquid egg products in 2006 (source FAO), which is around 1.7 million t shell egg equivalent, intra-EU trade included. International trade of egg products increased 6% each year compared to 4% growth for shell eggs trade. Most of the trade of shell eggs and liquid egg products is intra-EU.

Average consumption in the world was assessed by FAO to 9.1 kg (about 145 eggs) per person in 2005. Strong variations exist: more than 300 eggs per person in Japan, from 230-240 eggs in the EU or the US, and less than 100 eggs in most African countries or in South East Asia.

European systems and markets

EU-27 egg production was 6.38 million t in 2008 (Table 2). EU produces about 1.5 million t of egg products in equivalent liquid that is a little less than a quarter of European egg production. European self-sufficiency level reached 102.3% in 2008.

Production systems within the EU are very diverse, with a switch from cage to alternative housing systems, due first to consumers expectations concerning animal welfare, and secondly to the European welfare regulation (EC/99/74 Directive). By 2012, layer farms in all the European countries must switch to enriched cages with greater space per hen, laying nests and perches, or to alternative systems.

Marketing standards have been defined for the European market. Since 2004, the egg farming method used has to be stated on the eggs and on the boxes with a code.

Various requirements

In 2008, the share of non-cage egg production was 37% against only 8% in 1995. In the future, European welfare regulations could have a negative impact on the European egg industry’s competitiveness. According to Peter van Horne (LEI, the Netherlands), egg production costs at farm level were 32-33% lower in 2006 in the US or Brazil than in the EU. US and Brazil competitiveness can be explained by low inputs costs (feed and labour), but also by lower welfare and sanitary regulatory requirements. Welfare regulations could explain 20-25% gap between EU and US or Brazil egg production costs. Figure 1 shows the impact of welfare criteria on production costs. Within the EU, regulatory backgrounds are quite different and explain the diversity of different rearing methods (Table 3 and Figure 2). Currently, three countries impose further-reaching requirements on the housing of laying hens than the EU. In Sweden, a ban was promulgated 20 years ago against keeping hens in cages. The law was later amended to allow furnished cages. In Germany and the Netherlands, regulation bans cage systems (even furnished cages) and allows only a more demanding systems in term of available space per hen – rearing in small groups in higher (60 cm) and larger cages, so space per hen is 800-900 cm2.

Two main trends

Within the EU-27, the average consumption of eggs and egg products reached 235 eggs per capita per year. Two main trends are common to all the countries: an increasing share of egg products in global egg and egg products consumption; and, an increasing share of alternative eggs in table egg consumption. Nevertheless, segmentation of the table egg market, and the share of the different types of eggs, varies a lot between countries in relation to consumers’ demand and retailers’ strategies (Table 4). For example, egg consumption in France is about 248 eggs per head per year, but only 40% are table egg home consumption. Here, consumers are looking for choice and diversity, and alternative eggs have a market share of 30% in volume and 43% in value (mainly free-range and organic eggs). A further development of these alternative eggs is expected for the next 10 years. The situation is quite different for eggs supplying the food and catering industries, which both represents about half of global consumption today. Here, price and sanitary safety remain the two main criteria, and the share of alternative eggs is below 5%. We can, however, anticipate a low increase of alternative eggs for these markets within the next 10 years, perhaps to 10%.

Future prospects

Enriched, barn, free-range, or organic?

Enriched cages – Cage area per hen should be at least 750 cm². Cages should be enriched with a nest, litter such that pecking and scratching are possible, as well as appropriate perches.

Barn production – Hens can be kept on the floor or in multi-tier systems. The stocking density must not exceed 9 laying hens per m² usable area. If systems of rearing are used where the laying hens can move freely between different levels, there can be no more than four levels.

Free-range production – The requirements are the same in the building as for barn production. Also, hens have continuous daytime access to open-air with maximum stocking density of one hen per 4 m².

Organic production – Hens are kept free-range and should follow specific rules as using organic feed, and limiting the use of veterinary treatments.

Today, the European egg industry appears to be at a very important stage of its history. The regulatory, economic and sanitary context is changing, both within the EU and at an international level.

The different drivers or limitations for the future can include:

+ The European regulation on animal welfare, which should emphasise the production systems’ diversification and the development of alternative systems.

+ Increasing requirements in the field of environment and sanitary safety, which could induce extra productions costs.

+ A strong volatility of raw material prices (for feed) and its incidences on production costs.

+ Trends in purchasing behaviours and consumption habits. On the one hand, the economic crisis reinforces consumer price sensitivity, which is in favour of egg consumption. On the other hand, more and more consumers are aware of animal welfare issues, rearing methods, and the way animals are fed. The increase in demand for organic products is a good example of this trend.

+ A sanitary background marked by the endemic avian flu situation in some parts of the world.

+ WTO negotiations, which could, if an agreement were concluded, lead to a reduction of import duties and to an opening of the European market. In this context, the European egg industry must make much effort to adapt production tools in perspective of 2012. Egg producers have to make some investment decisions, which will commit them for the next 20 years, whereas technical models have yet to be tested or improved. The development of alternative egg production should keep in pace with the demand changes in order to avoid over-supply.

Future production systems will have to consider animal welfare, provide sanitary guarantees, and remain at a competitive price for the catering and food industries, which represent an increasing part of global demand. This competitiveness will increase in a context of globalisation and opening of the European market to supply from third countries, which won’t withstand equivalent.