WattAgNet: Will US egg producers expand too much in 2016?

Written January 25, 2016 By Terrence O'Keefe
As egg producers restock farms affected by avian flu and new farms are built in response to profitable egg prices, how long will it be before we have too many eggs?

One of the benefits I get out of conducting Egg Industry’s Top Egg Company survey each year is the conversations I have with egg producers about how they view the major factors affecting the industry. My big concern for the industry is that the strong profits earned over the past few years is stimulating an expansion in the U.S. layer flock which will end the economic good times.

Under normal circumstances, you can add up the number of hens expected to be housed in new projects, factor in the timing of bird placement, and then have a reasonable approximation of what the growth in the egg supply will be. Couple this knowledge with the rate of human population growth and any expected change in per capita consumption, and you have an idea of how supply and demand might match up.

But these aren’t “normal circumstances.” At the start of 2016, there were spots for about 25 million hens waiting to be filled on farms that were affected by avian flu. Most of these will be repopulated by year’s end. The industry is in the midst of a housing boom at the same time it is still adjusting to the increased space given to hens producing eggs for the California market and the expansion in sales of cage-free eggs.

Many of the additional cage-free eggs that foodservice and food manufacturing companies are pledging to buy will come from new construction, but some will come from existing operations that have begun converting buildings from cage-housed to cage-free production. A building that housed 100,000 hens in cages will hold significantly fewer birds cage-free, but the exact number will depend on the type of system used.

It’s going to be a very interesting year.