Germany

* "Self-sufficiency has continued to decline to just 67%"

Animal welfare organisations are still an issue in Germany.

With increased imports, the level of self-sufficiency has continued to decline to just 67% in 2008.

Last year saw a small increase in egg consumption to 211 per person although this is still well below the 1997 level of 227.

The proportion of eggs produced from conventional cages in flocks of more than 3,000 layers has declined again to a new low of 56.1%, which compares with 80.8% in 2003. In contrast, the proportion from deep litter, free-range and organic systems has climbed to 17%, 10.9% and 4.4%, respectively.

The proportion of cage eggs purchased by households stands at 40.4% with deep litter at 23.5% and free-range at 17.3%.

Imports of cage eggs are allowed.

After 2010, there will be no layers in conventional cages.

The Netherlands

* "A new plant was opened that turns poultry manure into sufficient energy for 60,000 households"

Some 55% of egg production in the Netherlands is in alternative systems: barn systems account for 41.2%, free-range 11.8% and organic just 2.5%. So, only just over 44% of hens are still in cages, both traditional and enriched types.

However, nearly 84% of household purchases are barn eggs with only 11% from cages. Dutch consumers do not have a free choice of eggs as the supermarkets sell only alternative (i.e. non-cage) eggs and these outlets account for 80% of the trade.

The imbalance between production and consumption is accounted for by exports, mainly to Germany (50% of the total) but also to other countries with around 5-10% going to third countries outside the EU.

After much discussion as to whether even enriched cages would be allowed after 2012, a compromise has been reached whereby enriched cages that were similar to those accepted in Germany will be permitted. But while it is known that the German cages ('Kleingruppenhaltung') will be larger and higher than conventional enriched cages, the construction details have still to be determined.

Once the Dutch industry adopts the new system, it will be extremely difficult for it to compete in markets outside the EU.

As in many other countries, producers are contending with higher feed prices and low egg prices. They are particularly keen to see how the German market develops as, if retailers there decide to stock only alternative eggs, this offers a big opportunity for Dutch producers.

In the past, producers talked about manure as a problem but now they consider it as an energy source. Recently, as the result of a private initiative by a group of farmers, a plant was opened which turns poultry manure into sufficient energy for 60,000 households.

The newly established Eggnovation Center was looking at new ideas in the shell egg and egg products sectors.

United Kingdom

* "The free-range sector is now 34% by volume and nearly 50% by value of egg sales"

UK producers are also facing increased feed and energy costs. However, they continue to find that they can maintain profits despite high costs - providing that the market is in balance.

The economic crisis that has hit the UK economy is impacting adversely on the egg trade. Sales of the most expensive organic eggs (almost 5% of the market) have dropped by some 20%, forcing some producers to convert back to free-range, as it is expensive to producer organic eggs and effectively sell them to breakers. Nevertheless, the free-range market is still growing strongly.

A significant proportion of the UK flock is expected still to be in conventional cages by the 2012 animal welfare deadline. Currently, cage eggs account for about 60% of production. This is forecast to fall to 40% by 2012.

It is becoming increasingly difficult to get planning permission to erect new units.

Under zoonoses legislation, there is concern that from 1 January 2009, should salmonella be detected even in the environment around a flock, all eggs have to be heat-treated. This could distort the processing market.

The industry was subject to pollution control and any producer with more than 40,000 birds has to pay for an expensive permit. However, the European Commission is now proposing that the bird threshold be reduced to 30,000 layers, which would 'pull in' many free-range flocks.

Discussions are taking place about transferring the cost of animal disease control from government to the industry.

The UK is well placed to meet challenges and the 'Lion' quality egg scheme now embraces about 90% of production, a share that is still growing.

The free-range sector is now 34% by volume and nearly 50% by value of egg sales.

Eggs are largely seen as a healthy item and in particular, the satiety message is working well with most dieticians. However, while health professionals are supportive of the cholesterol message, it has taken a long time to get them to change their views. At this time of the credit crunch, eggs are still the cheapest protein.

Czech Republic

* "Production costs rose by more than 16% between 2006 and 2007"

Egg production in the Czech Republic amounted to around 3200 million eggs in 2006, which was 4.1% up on 2005. About 1.5 billion eggs came from just 39 large-scale producers, two-thirds of which had more than 40,000 layers. Egg yields averaged just over 289 per hen.

Egg consumption in 2007 rose by 3.6% to 3.163 billion eggs with dynamic growth in the sales through retail chains, which are demanding large volumes and a variety of packaging that individual producers cannot supply. Some 70% of producers deal through sales centres that, besides negotiating and delivering to buyers, also export surpluses.

Egg processing has been influenced by a change in eating habits and by the replacement of eggs by the finished food product. It is estimated that producers break out 250-300 million eggs, mainly into melange, while 300-320 million eggs are processed in conventional plants, primarily into spiced or non-spiced liquid egg, separated egg or dried egg.

Some leading producers have moved from three-stage to four-stage cages and meet EU animal welfare standards. Many have also installed grading and packing equipment.

At the start of 2008, with supply and demand relatively in balance, egg prices rose dramatically. However, so many eggs were imported in March that since April, supplies have exceeded demand. This has forced some producers to cut output by early culling.

Some 2,672 tonnes of shell eggs and 562t of egg products were imported in 2007, mainly from Slovakia the USA and Germany. The first half of 2008 witnessed a 3% increase in shell egg imports at 1,240t. Table eggs represented 88% of the total of which almost 80% came from Lithuania and Slovakia.

Production costs rose by more than 16% between 2006 and 2007, primarily as a result of an 11% increase in the cost of feed ingredients. While some easing in feed prices occurred earlier this year, it was assumed that prices would rise again in the second half of 2008, such that production costs would be similar to last year.

Norway

* "Average flock size is only 4,500 birds but this could rise to around 7,500"

Norway, with a human population of just 4.5 million, egg production amounts to around 40,000t a year, of which some 7,000t goes to processors.

Although outside the EU, Norway had adopted much EU legislation into domestic law, hence a major challenge for its egg industry is the EU requirement to ban conventional cages from 2012.

There are just 600 egg producers and currently some 80% of output is in cages. This is why producers are concerned about having to find the €79-80 million that would be required to make the necessary changes by 2012. It is thought that as many as 300 may leave the industry. Average flock size is only 4,500 birds but this could rise to around 7,500 in the next year or so.

Although feed prices have increased, producers have not been hit has hard as many other countries. Although imported grain has increased in price, this represents only a small proportion of the industry's needs as most of its grain requirements are produced domestically and as this is government-controlled, it tends to stabilise prices.

With increased production but stable egg consumption, a surplus is forecast for next year. Trying to balance supply and demand and make the necessary changes for 2012 are the industry's biggest challenges.

Free-range, barn and ecological eggs are selling well though demand is greatest for speciality eggs.

They are not allowed to sell egg product to retailers but have seen increased usage in the industrial and catering sectors. Hard-boiled eggs are being retailed but it is too soon to assess whether this is a successful development.

Austria

* "An insurance scheme has been introduced for producers to cover the risks of salmonella"

Egg consumption increased significantly when supermarkets sold coloured eggs with the national flags of the nations competing in the European soccer tournament.

There will be no laying cages in Austria after 1 January 2009 with the result that the level of self-sufficiency is expected to drop from 74% to 64%.

The price-sensitive catering and food processing industries consume approximately 50% of the eggs.

Only 4% of output comes from enriched cages as the Austrian government has supported the switch, mainly to barn eggs.

As there is little capacity for the food processing sector, there is the danger of imports.

There has been a tightening of the salmonella and hygiene legislation, which is forcing the industry to introduce more controls and certification but the industry wants to know who is going to meet the additional costs.

Consumers are not really concerned about many industry issues - unless they are headlined in the newspapers.

Virtually 100% of all eggs retailed are produced in Austria. Austrian consumers are extremely loyal to Austrian food. Some 25% of the eggs retail via discount stores.

There is a massive marketing campaign, targeted at the catering/industrial sector, which demands that a compulsory declaration is put on industrial products indicating the production systems from which the eggs come. There is a big risk of imports of liquid or powdered eggs from neighbouring countries.

An insurance scheme has been introduced for producers to cover the risks of salmonella.

Switzerland

* "Switzerland's self-sufficiency in eggs is declining"

A serious challenge in Switzerland is the increasing demand for egg products. Swiss egg producers are afraid of losing market share since increasing quantities of egg products are replacing shell eggs. And because the egg products are imported, Switzerland's self-sufficiency in eggs is declining.

With Swiss eggs double the price of imported eggs, currently there is no possibility that the processing sector can produce products from domestic eggs. Therefore producers and packers are trying to produce only the quantities that they can sell as table eggs and thus avoid oversupplies that would have to be down-valued to the prices of imported eggs.

However, because production is now too low to cope with the periods of high consumption, Swiss egg producers are losing market share to imported eggs.

With domestic consumption particularly high at Easter and Christmas, to produce sufficient eggs to meet the demand peaks would lead to a serious oversupply between these periods.

A possible solution, still under discussion, is to produce up to 10% more eggs to meet demand during the high consumption periods and to create a special premium market for egg products such as pasta, biscuits and fresh liquid egg made from Swiss eggs during the periods of surplus. While the prices paid for these eggs could not match the Swiss shell egg prices, it is hoped that the resultant products would still command a premium over the product made from imported eggs. The difference in the prices for the Swiss shell eggs between the two markets would be met by funds, possibly financed by a levy on all hens and/or pullets. However, it remained to be seen whether this plan gained acceptance and would be implemented.

South Africa

* "Per-capita consumption has risen from 124 eggs in 2006 to 137 in 2007"

Although prices have shown a steady increase, the inflation rate in South Africa is higher than in many other countries so in real terms, prices have actually shown a net decrease at farm gate level. Feed prices, as elsewhere, have exhibited a considerable increase since 2007 and the outlook is not rosy.

A major challenge is that Newcastle disease is effectively endemic.

Fuel price increases have hit producers because of the distances that both inputs and outputs have to travel. At the start of 2008, the industry suffered from power cuts because the organisation that controls the energy supply had not bought sufficient coal. Electricity costs have risen by 30-40%.

There is also concern over falling consumer confidence.

The laying flock has grown to 22.8 million by 2007 (up 11.2%) and could have increased further this year to 23.3m, but producers are now starting to cut back.

Per-capita consumption has risen from 124 eggs in 2006 to 137 in 2007 - a massive 10% rise. The bulk of consumption is by poor people who eat relatively few eggs as a function of habit. Hence, the industry is focussing its promotional efforts on generic advertising around emotional issues that appeal to this segment of the market.

The biggest challenge is to continue producing in an environment of increasing costs, coupled with the responsible application of biosecurity to prevent or contain avian influenza, should it appear.

In a growing market, the success of the generic marketing campaign will ensure that they can approach their goal of having an egg every day for every second person.

Further Reading

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You can view other reports from the IEC Annual Meeting 2008 by clicking here.

October 2008