economic perspective for the eu egg industry peter van horne lei wageningen ur indianapolis, april...
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Economic Perspective for the EU egg Industry
Peter van Horne
LEI Wageningen UR
Indianapolis, April 2014
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LEI research Institute
Agricultural Economics Research Institute (LEI)
Independent Research Institute in the Netherlands
Part of Wageningen University and Research Centre
Projects: NL Ministry, EU, EP, Industry, FAO etc
Peter van Horne: Poultry economist.
● Chairman of WPSA working group 1 (poultry economics)
● Economic analyst / advisor Int Egg Commission (IEC)
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Content
EU Egg Industry
Production / consumption
Legislation
Production costs
Egg price / farm income
International trade
Future / perspective / conclusions
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EU Egg Industry
28 countries (very different)
Number of layers 370 to 380 million (saturated market)
• Intra trade between countries
• Self sufficiency rate 102 - 103%
• Shell eggs (74%), egg products (26%)
• Import / export: • Shell eggs: region• Egg powder: Outside EU
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Egg Surplus and Deficit in Europe by country
Exporters:•Netherlands•Spain•PolandImporters:•Germany•France •UK
Source: WING, Windhorst
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Consumption NL (eggs/hd/yr)in shell egg and eggproducts
Source: PVE, IEC Hungary: 235 eggs, decreasingGermany: 217 eggs, slightly increasingItaly: 206 eggs, decreasingUK: 182 eggs, stable
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Household purchase Germany by type of eggs (vol %)
Source: GfK / MEG
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Market shell eggs in % of total purchase in 2011 in
some EU countries (consumer panels)
Sources: GfK, Itavi, kantor
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Layer farms in the NL / Europe
Average 40.000 layers (30.000 – 150.000 layers)
Family owned, independent farms
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Barn: 30 -35%
Free range: 7% + 3% organic
Cage (enriched/ colony) 55 - 60%
Housing systems in EU (% 2013, non official estimate, PvH)
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Source: Rabobank, Mulder
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Legislation
Environment ●Nitrate Directive / IPPC Directive
●Reduce ammonia emission
Food safety ●Salmonella control
●No meat and bone meal in feed
●Restrictions on use of GMO feed ingredients
Welfare
●Density, 550 cm2 per hen (since 2003)
●Beak trimming regulations
●Housing systems: enriched cage with 750 cm2/hen
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Legislation:Housing system layers in EU
Barn / aviary system:
January 2012:
Ban on traditional cage:
Enriched cage
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EU legislation: enriched cage +7%
EU legislation ....
EU directive:
Enriched cages
Alternative systems
Gmo
MBM
etc.
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International comparison production cost eggs
Collecting basic data on cage production, 2010
• Countries in EU : NL, FR, ES, IT, UK, DK, PL
• Countries non-EU : UKR, USA , ARG, INDIA
• NL calculation method
• Focus on:
• Primary: pullet, feed, housing, labour
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Production costs eggs 2010 (Euro/kg)
in some EU countries
15.0 18.0 16.0 17.0 18.7 15.423.5
44.249.0 48.6 48.5
53.2 49.8
43.3
0
10
20
30
40
50
60
70
80
90
100
NL FR ES IT UK PL DK
cen
t per
kg
hen feed other labour housing general
Source: LEI Wageningen UR
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Production costs eggs 2010 (Euro/kg)
in selected non EU countries
17.7 9.9 12.1 13.6 11.8
48.1
43.9 36.4 34.445.1
-10
0
10
20
30
40
50
60
70
80
90
EU UKR USA AR INDIA
cent
per
kg
hen feed other labour housing general
Source: LEI Wageningen UR
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Production chain in the Netherlands
hatchery
Rearing pullets
Layer farm
Packing station
Feed mill
RetailExport Egg processing
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Layer farms in the Netherlands
Farmer and family is running the farms: labour and capital.
Input:
● Pullets from hatchery / pullet farm
● Layer feed from feed mill
Output:
● Contracts for one flock with market price for eggs
● Contracts with ‘fixed’ price (20 – 30%)
Farmer has ‘risk’ on feed price and egg price
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Income layer farm (blue) and broiler farm (red) 2001-2013
2009: record high income (cage ban in Germany) 2012: high income (cage ban EU)2011 and 2013: record low income
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Development feed price NL and USA 2000-2014
(layer feed euro and US$/100 kg)
Source: LEI, price information
2008: higher feed prices2013: first half; record high feed prices2014: decrease, still at high level !
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Development egg price (NL, CAGE eggs, in eurocent/kg)
Bron: LEI, price information
2010 jan 1th: cage ban in Germany2012 jan 1th: cage ban in EU
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Development egg price (NL, BARN eggs, in eurocent/kg)
Bron: LEI, price information
2009 end 2010 start: high prices barn eggs 2012: first months peak in cage and barn eggs
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Development Egg prices in some EU countries
Source: MEG, EMA, Windhorst
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Shell eggs
●Fresh, mainly local
Liquid egg products
●Short shelf life, Mainly local
Dried egg products
●Long shelf life
●Low transport costs
Limited trade in eggs
and egg-products
International trade in eggs and egg products
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Regional trade in shell eggs
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Dried egg exports 2010
Exporters Importers:USA JapanIndia EuropeArgentina Middle East
Source : IEC Global Atlas
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Free trade agreements
WTO: no world wide general agreement on free trade
Trend: Bi-lateral and multi-lateral agreements
EU with:● India
●Ukraine
●Canada
●USA
USA
●EU
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Offer price eggs in Germany 2012 (Euro/kg)
84
66 63 60 68
6
-
3
11 19 19 18
30 30 30
30
0
20
40
60
80
100
120
140
EU UKR USA ARG IND
cent
per
kg
production cost (excl EU-Directive) cost of EU-Directive transport levy on imports
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Offer price whole egg powder in Germany 2012 (Euro/kg)
477
377 380 358 381
26
--
3
9 15 16
15
137 137 137
137
0
100
200
300
400
500
600
EU UKR USA ARG IND
cent
per
kg
production cost (excl EU-Directive) cost of EU-Directive transport levy on imports
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EU Imports third countries (1000 ton egg equivalent)
USA, ARG and India take 70 to 80% of imports)
Factors:-Egg market prices local-Egg market prices in EU-Exchange rates-Trade connections-Special egg products
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Free trade Fair trade
Import levies Production cost in EU due to public concern
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Example of Imbalance
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Conclusions (1)
EU has large Egg industry
Mainly intra trade / Total consumption stable
Extensive legislation in environment, food safety and animal welfare
High production costs of eggs; (USA -25%)
EU market protected with import levies
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Conclusions (2)
Extreme fluctuations in Farm Income
High egg prices during transition period in Germany (end 2009) and EU (start 2012)
Low egg prices after transition period
●Large supply barn eggs in NL and DE
●Large supply of cage eggs in EU
Fluctuaties has negative impact for farmers, packers, industry and retail
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Conclusions (3)
Cage ban:
Farmers wait till last moment to change
Combine renovation/change with expansion
Farmers in NL and DE (North-West Europe) choose for alternative systems
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Conclusions (4)
Lessons on ‘cage ban’:
Regulate a more gradual change (e.g increase space allowance by steps)
Farmers respond on legislation and ‘long term’ market perspective
Industry: EU only sets conditions on food safety, not on animal welfare. No ‘level playing field’.
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Be Prepared! Legislation, free trade, market changes...