More costly cage-free eggs can’t crack the U.S. market
Farmers working to provide more-humane products, but buyers haven’t materialized
The great American egg glut keeps claiming victims, among them millions of hens that won’t be moving any time soon into lodgings spacious enough for what they lay to be called “cage free.”
This was supposed to be a golden-goose designation, after the likes of McDonald’s Corp. and Wal-Mart Stores Inc. pledged to switch to eggs from birds able to actually spread their wings. Farmers stepped up to provide cage-free products, but buyers haven’t materialized in the anticipated droves, or anything close.
“It’s been bad,” said Marcus Rust, chief executive officer of Seymour, Ind.-based Rose Acre Farms Inc., the second-largest U.S. egg producer. It spent $250 million (U.S.) over four years to upgrade conditions; today about 20 per cent of its hens are cage free. And now, Rust said, “we are shutting our construction program down.”
The whole industry is slowly climbing out of a period of losses, which sets up a sort of chicken-and-egg predicament: Many farmers are too strapped at the moment to build facilities they may need in a few years, when — some skeptics say if — big buyers make good on their cage-free promises.
Few “are in a hurry to make the transition,” said Jesse Laflamme, CEO of Pete and Gerry’s Organics in Monroe, N.H. Farmers aren’t sure which way to turn or how fast. “It’s going to be turbulent.”
The cage-free revolution looked big not long ago. Eggs from hens that aren’t so cooped up taste better by some accounts. They’re also a salve for shoppers interested in more-- humane treatment of the animals that stock supermarkets. A cage-free bird isn’t exactly allowed to run wild in the open, but does get more room. At Rose Acre, she has 929 square centimetres of space, while a squeezed sister in a traditional setting is confined to 432. Consumer sentiment seemed clear.
Then came the glut, and now the regular variety is too darn cheap for many to resist. A dozen cage-free large browns cost as much as $2.99 in the U.S. Midwest last week, for example, while a carton of Grade AA white conventionals went for as little as 39 cents, according to the U.S. Department of Agriculture.
That “higher-price gap,” as CalMaine Foods Inc. CEO Dolph Baker called it, has cut into specialty-egg demand. The company, the largest U.S. egg producer, said earlier this month it is adjusting its cage-free output accordingly.
The egg oversupply built up after the 2015 avian-flu outbreak killed tens of millions of chickens, sent prices soaring and spurred aggressive restocking. At the same time, some producers started expanding hens’ living quarters. A California law that year required eggs sold in the state to be laid by chickens whose confinement allows them to lie down, stand up, extend their limbs and turn around. McDonald’s and Wal-Mart said they’d aim to make the cage-free shift by 2025. Others in the business of acquiring wholesale eggs set similar goals.
Some pledgers, such as food-service providers Sodexo Inc. and Aramark, are well along the way to completely converting to cage-free for eggs in shells in the U.S., according to the advocacy group Compassion in World Farming. It said in a recent report that others, including Marriott International Inc. and Walt Disney Co., haven’t made public how they’re progressing.
McDonald’s is on track to meet its 2025 mark, the company said.