Poultry Egg Market Update & Price Increase

On Thursday 6th December 2012 the Minister of Agriculture released the Layer Hen Code of Welfare. This new Code has banned the use of Conventional Cages for the production of eggs with a phase out period enforced under the Code.

The Egg Producers Federation of NZ had conveyed to NAWAC (National Animal Welfare Advisory Council) through a lengthy consultation process and independent economic reports that any phase out period under 10 years would be unsustainable and cause severe market disruption.

NAWAC advised the Minister of Agriculture to structure the phase out in a shorter timeframe with a weighted average of 6-7 years which was against the advice of MPI economists.  Industry is naturally shocked at this decision which was against all independent economic modelling.

This will have a significant impact on the supply, availability and price of eggs in the New Zealand market.

The impact will be twofold firstly the EPFNZ estimate that the cage industry will need to invest a minimum of $150 million over the next 10 years to meet compliance. $60-70m of this will need to be invested to meet the first major deadline of 31 December 2016 when 1.2m layers or 40% of the current industry will need to be re housed.  Ultimately consumers will need to pay for this level of capital investment.

Secondly the phase out dates have the potential to create supply shortages, due to the large number of Farms affected.  As an example the first milestone of January 1 2014 is fast approaching when 192,000 hens will be removed from production. Our industry estimates that these hens will not be replaced.

Bidvest Fresh (Hamilton) Situation

Whilst the above situation will create disruption to our business we are confident of being able to maintain continuity of supply to existing customers as we work with the supplier to transition their Production base. This will require a substantial Capital investment over the next 10 years to essentially rebuild their farming operation.

There will be some egg producers that will be slow or hesitant to increase their price rather than risk losing sales, those that do will find it difficult to fund the transition and could even spell the end for them.

I believe these industry changes will narrow the price gap between layer hen eggs and free range and if you are considering a change talk to us about how we can help.  Otherwise my advice is to stay loyal to your supplier(s) whether that be Bidvest Fresh or any other supplier to ensure you have a consistent and continuous supply.

Gus Tissink
General Manager
Bidvest Fresh Hamilton
0800 346 3366

Further reading & references
Craddock Family Farm
http://www.3news.co.nz/Battery-cage-phase-out-could-cripple-industry---EPF/tabid/423/articleID/279604/Default.aspx
http://www.safe.org.nz/Campaigns/Battery-hens/
http://www.teara.govt.nz/en/poultry-industry/page-1
http://www.foodsafety.govt.nz/industry/sectors/poultry-eggs/
www.foodsafety.govt.nz/elibrary/industry/code-practice-egg-cop/egg-cop-ch3.pdf
http://www.stuff.co.nz/business/farming/8045847/Battery-hens-phased-out-in-10-years