Can the Cage-Free Commitments Be Met?
December 15, 2017
- The avian flu outbreak in 2015 caused egg prices to surge and incentivized egg producers to boost output. Coincidentally, major food companies pledged to use cage-free eggs by 2025 just as egg prices went into freefall. Since then, cage-free production has surged amidst a surplus of less expensive, conventionally produced eggs.
- Cage-free retail prices have swung wildly over the past year. The historical average cage-free premium is 120 percent. During the egg supply shortage, that premium fell to zero. As conventional egg supplies ballooned, the premium peaked at over 250 percent. The premium has fallen in 2017, and is expected to trend toward normalization in 2018.
- The oversupply of conventional table eggs has depressed demand for higher priced cage-free eggs – a problem that is expected to last several more months until the conventional supply is drawn down.
- To fully meet food company cage-free pledges by 2025, nearly three quarters of the U.S. layer flock would need to be transitioned. The estimated cost to the industry would be $10 billion.
- Egg producers will be more cautious in further transitioning to cage-free, which will now be driven by fundamental consumer demand rather than pledges made by retailers and food manufacturers. Cage-free production will adjust lower in the near-term as the market continues to seek equilibrium.
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