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Egg industry cracking

Countdown’s general manager of perishables Nikhil Sawan says their supermarkets are experiencing a reduced supply of eggs and cost increases from many egg farmers. Prices are higher than ever and are one of the top drivers of food price increases of 10% in the last year (the highest increase since 2008).

Retail price of eggs in New Zealand: Weighted average, cheapest brand per 1 dozen, Sep 2012–Sep 2022
Egg industry cracking 2

There are three contributing factors (besides wide spread inflationary effects over the time period):

The end of cage farming

In 2012 the “Layer Hens Code” of Welfare was enacted to end battery cage farming by the end of 2022. At the time, 84% of eggs were produced in battery cages. Of the likely impact Government said:

Eggs are a valuable source of cheap protein for low income families, so it is important that egg prices do not rise significantly.

Alternative hen housing systems are less productive than battery cage systems, and have higher running costs. Over time, the Government expects that there will be consolidation in the industry and a long-run increase in the price of eggs of between 10-14%.

Consolidation means smaller farms going out of business. That’s eggsactly what happened, and it is continuing as farms are unable to afford to transition to one of the alternative methods: colony, barn or free range. Many have spent millions to shift to colony, which uses large cages with up to 60 hens with a nesting area, scratching post and perches, and has the lowest hen mortality rate. However, most major supermarkets have promised to stop selling colony eggs by 2027 – or 2025 for Countdown.

While many people in Wellington and some parts of Auckland and Christchurch are willing to pay for free range eggs, most are not.

Extra pressure

Over two thirds of the cost of egg farming is feed. The price of feed has increased over 40% thanks to the loss of wheat production from Ukraine, one of the world’s top producers.

Many smaller farms supply cafes and farmers markets, and were unable to sell their eggs during lockdowns. This drove some out of business, while others survived but are feeling the strain. As a result there are fewer laying hens in the country, causing continuing shortages.

The reduction in smaller producers has increased the power of major supermarkets to further push producers toward more expensive farming methods and drive out small farms.

The combination of the largely urban desire for free range eggs, destruction of small producers by lockdowns, and war, has created a more fragile industry.

Poultry Industry Association executive director Michael Brooks expects prices to continue to rise with inflation.

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