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Socio-economic implications of the different systems of egg production |
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Author: María del Mar Fernández Poza – INPROVO (Courtesy of the Egg Forum 2007)
The number of laying hens in the different systems of egg production in Spain were in 2005:
(Source: Spanish Ministry of Agriculture– MAPA – Official Registration of laying hen farms)
The main production system is the battery cage. Most of them are traditional cages, lately a small number of farms invested in “enrichable cages”, and only few has been installed fully adapted to the Directive 74/1999, including perches, nest, scratching area and increased space per hen.
Production
The Spanish egg producers have been involved in a process of concentration in the last years, with the effect of a growth of the capacity in commercial farms, together with the disappearance of many small familiar farms. We can find two reasons for this change: on one hand, the pressure and official controls related with the implementation of the EU rules on egg production and marketing and, on the other hand, the lack of generational replacement in the small familiar farms, and difficulties to find workers in rural areas.
This change has been parallel to the concentration of the commercial distribution. So, currently less number of operators are supplying eggs to the retail distribution, mainly big companies and trading groups (several producers that share common labels and marketing strategies). In this process the offer has been adapted to the specific demands, quality requirements, costs and volumes the modern distribution demands.
Consumption
The economical and social evolution in Spain is the same than in other countries of the UE, but it occurs with some years of delaying. This is the main reason for a smaller development of commercial alternative productions at this moment. The improvement of the economical situation in the Spanish society entails changes in consumption habits. One of them is the increasing demand for differentiated products in food consumption.
Traditional, natural, or ecological (organic) products are recorded in the collective memory as “true food”, usually found at their origin and linked with freshness and quality. The decrease of the rural population and the development of poultry production in commercial farms during the last decades make much more difficult at the present time to buy “homemade eggs” from backyard flocks (egg production in backyard flocks in Spain is around 10%, mainly for self consumption).
This demand should be satisfied by differentiated eggs, mainly from “alternative egg production”, nowadays sold in supermarkets instead at the farm.
The Eurobarometer on Animal Welfare 2005 shows the “expressed” patterns of consumption in the EU countries:
Data from the Eurobarometer on Animal Welfare, 2007
The Eurobarometer reflects clearly that Spanish consumers are not so aware on the type of production when they buy eggs…or maybe the perception on the health or food safety of eggs are not so closely linked in Spain to alternative production as it is in other UE countries. We can also conclude from these data that consumers lie in the Eurobarometer when answer about the type of eggs they buy.
Comparing the figures the Spanish consumers gave in the survey with the quota of the different types of eggs in the market, we can conclude that they do not match at all. The survey reflects their interest in show a positive “public” image or attitude towards the animal welfare, as a concept “socially well perceived”. Avoiding “uncomfortable” social or ethical positions in the responses is a well known reaction in this type of surveys about private concerns.
We can find the true response to the question looking at the real consumption data. Answers like “I don’t buy eggs”, “I do not put attention on the type of eggs that I buy”, or “I do not know, I do not answer”, are almost the 60% of the Spanish responses, more than in any other country. This responses can be “re-interpreted”, and added to the declared 11% eggs bought as battery cages, as a total percentage of 70% of “buyers of non alternative eggs”. This approach is closer to the Spanish reality of a market with a 90% market quota for eggs in battery cages,10% of self consumption and less than a 1% in the “alternative” egg market.
Organic food do not reach the 1% of value in the food basket in Spain. Around 70% of the Spanish organic production is exported, mainly to Germany, the Netherlands, France and United Kingdom.
The very low demand of alternative eggs in Spain is the reason for a negligible offer of these types of eggs, and not vice versa. If alternative eggs from other UE countries were able to be sold in Spain at the same price we would import these eggs. This is not the case at all. The problem is that consumers don’t want to pay the extra cost. As result, the number and size of alternative farms dedicated to egg productions are really low, and usually focused in local markets. Those involved in the commercial production (less than 2.5% of the hens) in many cases supply bigger traders at national level.
The alternative/differentiated eggs have been introduced recently in the modern distribution chains (not in discount), as they want to cover a wide range of the egg market, even when most of the types represent only a niche market (enriched, organic, free-range, quail eggs…). This is a good reason for which retailers and distribution chains at national level have not adopted in Spain any policy of discrimination against caged eggs.
Other growing market, eggs for exports (an average 15% of the total Spanish production) is concentrated in the wholesale of eggs in bulk, generally directed to be processed in food industries. The European market, therefore, does not impel changes to alternative egg production in Spain at the moment.
Even when the demand of “differentiated” eggs is insignificant and the Spanish market is evolving really slowly, it is predictable a great development in the future for commercial alternative production. The effect of the policies to prevent the avian influenza and to implement the hygiene and marketing rules will likely make more difficult to produce eggs in small farms and backyard flocks. So, consumers will have to find other suppliers.
They are still confusing in this “changing period”, trying to identify in the shelves of the modern supermarkets "the true egg of old times”. To facilitate the consumers choice, producers of alternative eggs have to work on marketing and advertising, offering to each type of consumer the egg they want to buy. In other countries producers or retailers have defined very clearly the target for each egg: organic, free range, enriched, etc. We need to find or create (with information) our own differentiated costumer for the new eggs.
Evolution of the production systems in Spain
The alternative egg production in Spain are now taking off, so the future is very optimistic. In this context, to promote traditional foods and local “quality and differentiated” productions should be a good target for subsidies dedicated to rural development under the new Common Agricultural Policy.
We need support to the production, promotion and certification of differentiated eggs based on alternative systems of production or certain quality specifications demanded by the consumers. It is likely to expect that distributors and retailers will agree and co-operate in this new strategies including the new value added products to the supermarket shelves. The premium price is a good incentive that increase the margin for retailers and, at least for the beginning of the process, for producers also.
Implementation of the welfare Directive
The egg production in the UE is bases mostly in hens in traditional cages. The change to the new enriched cage or to alternative systems have not been made in most of the UE production. Only countries where the social pressure leads to regional or national rules for egg production even more restrictive than the UE ones are changing in fact the type of farming. These countries introduced the welfare policy in the EU agenda some years ago as a way to maintain their competitiveness in the common market when their national rules made it difficult.
It was the driving force for the publication of the current Directive, and not the “consumer demand” (in fact, you can choose in the market the type of products you want; if you pay the price). In this Member States the main reason for changes is that lobbies involved in animal welfare are powerful and very active in the media. So governments pay attention to them as in welfare matters usually consumers pay the cost and the public image of politicians is clearly improved. They go ahead in the welfare policy, and try to export it to other UE countries. This is not clearly the Spanish case. And we can say also that this is not the case for a wide number of UE member States.
Egg price in Spain are usually much lower than the UE average. This situation, added to the difficulties on the European egg market in the last years (crises caused by the dioxins, avian influenza and scandals of salmonella and other “collateral” crises in animal production) have affected the economical results of the companies. Most of them are not able to invest the significant amounts needed to adapt the farms to the Directive requirements by year 2012. To forecast the future return of these investments we have to take in account that the total egg consumption in the EU does not grow, the UE market is open to imports and the great development of the world market of processed dried eggs. The balance can be very negative, as we assume that there will be a substantial part of clients/consumers/market not able to pay the “premium” price for the“UE egg”.
We cannot agree with the European Commission in the way they adopted the Directive on the welfare rules for egg production. The consumer demand, used as the main reason by politicians, cannot explain by itself the changes, as it is very different in each country. To offer a proper image to the public opinion of a Commission “concerned and responsible” in the middle of the dioxins crisis is a more credible history. But it doesn’t justify the added cost of this policy.
The EU legislation imposes increasing costs for the European production while the door is open to imports of eggs produced in third countries under laws and conditions by far less restrictive. This is a clear discrimination against the EU producers, and at the same time limits the consumer decision and increase the cost with non demonstrable benefits in terms of hens welfare or egg quality and safety.
We think the Commission are now aware of the potential damage of this policy for the EU egg sector. That’s the reason that explains the Commission have been more careful and realistic in the welfare rules published for other animal productions after the Directive 74/99. We expect the Commission will prepare a good report in order to review the welfare Directive in egg production in a realistic way. The Council have to decide taking in account the socio-economical consequences for the sector and consumers. The Directive have to be amended to meet a balance between the improvement of the welfare of laying hens and the future of the UE egg production.
PRESENTATION AT THE EGG FORUM
Egg production systems
Hens in the different systems of egg production in Spain
- 88.287 - (0,2%) organic (0)
- 536.125 – (1,16 %) free-range (1)
- 536.699 – (1,16%) barn (2)
- 45.243.000 - (97%) battery (3)
- 46.404.111 total laying hens
Trends in production
- Process of concentration in the last years:
- growth of the capacity in commercial farms
- many small familiar farms stop activity
- Reasons for the changes:
- pressure and official controls on the EU rules on egg production and marketing
- young people do not replace elderly owners/farmers in the small familiar farms - difficulties to find workers
Trends in the egg market
- Less number of operators supplies eggs to the retail distribution
- Mainly big egg companies and trading groups (several producers that share common labels and marketing strategies)
- Offer adapted to the specific demands, quality requirements, costs and volumes
- More demand for quality, safety, certification and guaranties from big clients to suppliers
- Margin for egg suppliers is dropping in modern distribution
Trends in distribution
- No policy against caged eggs in the Spanish big retailers
- More variety of eggs in the shelves of the supermarkets, but slow change: (commercial alternative eggs is 1% market quota).
- More margin in “new and differentiated” products, less in “standard” eggs
- More “distribution labels”
- Other demand in catering, restaurants, colectivities: cheap and safe eggs
Trends in consumption
- Spanish market is years later than Northern countries in social trends and consumption habits
- Decreasing of rural population, development of egg production in commercial farms: less “homemade eggs” (egg production in backyard flocks in Spain is 10% of total production, mainly for self consumption).
- This demand should now be satisfied buying “differentiated eggs”, mainly from alternative egg production, sold in supermarkets instead at the farm.
Euro barometer on Animal Welfare 2005
Euro barometer on Animal Welfare 2007
Trends in consumption
- Spanish consumers are not so aware on the type of production when they buy eggs…
- Data in the EUROBAROMETER:
- “I do not put attention on the type of eggs that I buy”- 24%
- “I don’t know, I don’t answer”- 28%
- Battery and “other cages” (¿?) – 17%
- TOTAL BUYING “non alternative eggs”: 80%
- TOTAL “buyers of alternative eggs”: 20%
- Real data: (1% free-range+organic + 7%“I don’t buy eggs”=self consumption)
- Real data: 99% of Spanish egg market is “battery”
Exports market
Mainly for
- Egg industry: for boiling or pasteurising
- Wholesale, in bulk: for dealers to sell eggs to other operators (caterers, restaurants, small shops)
NO demand for “alternative” or “differentiated” – ONLY CHEAP EGGS
Future for egg market
TARGETS IN PRODUCTION
- Promoting “traditional” and local food production: opportunity for free range/organic
- Increasing production, promotion and certification of “differentiated” eggs based on feeding, origin, safety controls or quality specifications demanded by the consumer/client
TARGETS IN CONSUMPTION
- Promotional effort to consumers to change the perception of eggs: is a naturally healthy product, and also “traditional”, “special” and “modern”
- Promotion of new products for market niches, matching the demand for new value added products
- Follow the market model of other UE countries, taking in account the singularities of Spanish market and consumers
- A better image of eggs will lead to better prices/margin
Welfare directive
- Companies are not able to invest to adapt all the farms to the Directive by year 2012.
- Future return of these investments?, taking in account…
- the total egg consumption in the EU does not grow
- the UE market is open to imports
- the great development of the world market of processed dried eggs
- there will be a substantial part of clients/consumers/market not able to pay the “premium” price for the “UE egg”
- We cannot agree in the way the European Commission adopted the Directive on the welfare rules for egg production.
Welfare directive - politics
- Consumer demands (the driving force “used” by politicians), cannot justify the changes: each UE country and society is very different.
- Lobbies power is a better reason for the quick changes:
- The Commission reacted to critics and lobbist pressure in the dioxins crisis publishing the Directive 99/74
- Directive 74/99 damages the competitiveness of the UE egg sector. Welfare improvements are not the target.
- More cost for eggs, is not explained to consumers
- The Commission have to prepare a report in order to review the welfare Directive in egg production in a realistic way, taking in account the socio-economical consequences for sector and consumers
- Directive have to be amended to meet a balance between the improvement of the welfare of laying hens, the consumer demands, and the future of the UE egg production in a world market with new WTO rules
- Consumers cannot decide when the UE have not properly explained the policy. Lobbies are the main source of information and they spoil the public debate.
- EUROBAROMETERS are not a trustable tool. Please, do not use them as “scientific” reports to justify changes…we are adults
Author: María del Mar Fernández Poza – INPROVO (Courtesy of the Egg Forum 2007)
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