How Consumer Choice Is Shaping the Egg Industry
by Laura Ross
By the middle of last year, inflation in the United States had hit a 40-year high, with everything from transportation and housing to food and utility bills becoming more expensive. However, inflation has begun to cool. In December, the Consumer Price Index rose 6.5%, which was the most modest annual increase since October 2021.
However, the price for one particular commodity is still skyrocketing.
This month, the Consumer Price Index released a report revealing that in December egg prices had increased 60% compared to the year before. Let’s explore the factors contributing to this disproportionate price hike, including shifting consumer behaviors and an avian flu.
What Factors Are Driving the Rising Cost of Eggs?
- Labor
At the end of 2021, it was reported that U.S. labor costs had risen the most since 2001. However, because today’s egg production processes include high levels of automation, rising labor costs are proving to be a far bigger challenge in the chicken and beef production industries. Farmers need to hire workers who have robotics skills.
- Chicken Feed
Chicken feed contributes to around 60-70% of an egg’s cost. The cost of chicken feed, typically a mixture of corn and soybean, has been up by 30-50%. One farm owner reported that the cost of feed went from 48 cents a pound in 2020 to 65 cents today.
- Supply Chain
Higher fuel and freight prices are leading to higher transportation costs. When it’s more expensive to move eggs from point A to B, the unit cost of the product also increases.
- COVID-19
The outbreak of COVID-19 saw many housebound Americans develop a passion for baking — and lots of baking requires lots of eggs. As with a consumer demand spike for any product, this quickly drove up the average cost of eggs.
- Demand
The demand for eggs temporarily reduced in line with the lifting of COVID-19 restrictions. But amid today’s economic uncertainty, people are choosing to consume more affordable proteins, and eggs remain the cheaper option compared to red meats, fresh fish, and chicken.
- Bird Flu
At the start of 2022, there was a bird flu outbreak. By mid-year, it had killed 6% of commercial egg-laying chickens. Now, it’s become the deadliest avian flu outbreak on record in the United States. In January 2023, the avian influenza was responsible for impacting 57 million birds, according to the U.S. Department of Agriculture.
- Consumer Preferences
Consumers are more conscious of where their food comes from, and they value having multiple options. Below we explore how consumer choice is shaping the egg industry in a little more detail.
How Are Shifting Consumer Habits Shaping the Egg Industry?
It’s increasingly common for egg farms in the U.S. to operate more than one production system. Why? Because consumer demand for specialty eggs is growing. The most common methods of egg production are as follows.
Conventional Eggs — Laid by hens living in stacked cages that can hold between four and 12 birds. This farming method lends itself to production efficiency, and the birds are protected from disease and predators.
Enriched Colony Eggs — Laid by hens living in cages. Enriched Colony birds are raised in smaller groups, which reduces fighting between the birds and provides additional stimulation, such as perches and scratching posts.
Cage-Free Eggs — Laid by hens living in an open room or area, such as a barn, fitted with nesting space and perches. The birds have access to grains and water and may have the option to forage for food outside. This method enables the hens to express more natural behaviors.
Free-Range Eggs — Laid by hens living in a free-run housing system with access to outdoor space (weather permitting). The birds are given grains and water and can also forage for wild plants or insects.
Organic Eggs — Laid by hens living in free-range conditions, but these birds are given feed that has been certified organic, or without the use of pesticides, herbicides, or fertilizers.
Giving birds additional space in which to roam and more expensive feed comes at a greater cost to the farmer and, ultimately, the consumer. Cage-free eggs are typically around 30% more expensive to produce.
Conventional, free-range, and organic eggs offer pretty much the same nutritional value although notable exceptions include omega-3 and vitamin-enhanced eggs. The former sees the birds fed extra flax, resulting in the eggs they lay containing extra omega-3. Vitamin-enhanced eggs contain higher amounts of certain vitamins, such as vitamin D and vitamin E, thanks to the birds being fed a vitamin-enhanced diet.
Consumer Focus on Animal Welfare
Perhaps the biggest factor driving the demand for alternate egg types is the public’s interest in animal welfare.
Cage farming was introduced in the 1930s but became the predominant farming method in the 1960s when farmers adopted technologies to improve manure handling and egg collection. In the decades that followed, food safety and bird well-being became a bigger focus. Extensive research was conducted and guidelines were produced advising how best to raise birds to ensure consumer safety and bird wellbeing. In the early 2000s, consumer interest in cage-free eggs increased more quickly and many egg farms chose to adopt or expand their offerings to meet changing expectations.
When consumers see boxes of different egg types piled high on grocery store shelves, it’s tempting to indulge in the slightly more expensive option. Not only does it feel good to purchase something special, but they are also supporting ethical farming practices — all the better if the cost difference is marginal.
Changes in the way we view farming and animal welfare are continually driving new legislation. In California, for example, a new law requires that all eggs sold in the state come from cage-free hens, and it’s expected that other states and corporations will follow suit. When legislation like this is enacted, it tightens the product’s commodity market and drives up the cost of all egg types.
With all of these factors in mind, don’t egg-pect the cost of your weekly box of eggs to dip any time soon.
https://www.thomasnet.com/insights/how-consumer-choice-is-shaping-the-egg-industry/
