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January 16, 2019

New Zealand's eggs more expensive due to feed costs, cage-free systems


Higher feed costs and a change to costlier free range and colony systems for poultry bird have driven up New Zealand's egg prices by 11.84% in the past six months, Stuff reported.

A dozen eggs now costs an average $4.25, compared to June 2018 which saw prices at $3.80. With the increased employment of new hen housing systems, prices are expected to rise further.

In New Zealand, most eggs bought by consumers are the cheaper, caged types. However, a rising number are getting non-cage egg types, despite the higher price tag on such products.

Supermarket Countdown sells eggs priced from $3.50 for a caged-egg dozen, up to a maximum of $8 for cage-free.

While consumers appear unfazed by the option of buying costlier eggs, new rules requiring the transition from poultry cage systems had caused significant uncertainty for farmers, said Michael Brooks, chief executive of Poultry Industry Association.

Due to the changes, New Zealand's hen numbers had declined by 600,000 hens to 3.6 million in the last six months. This translated to 300,000 dozen fewer eggs weekly, based on a hen laying an average of six eggs a week.

Furthermore, the poultry industry could not obtain consents for free range systems that consumers were demanding, according to Zeagold, the country's biggest egg producer.

"We are building a new free range farm in Waianakarua and are trying to build a new barn farm in Orini in northern Waikato," Zeagold's general manager for sales and marketing, Hamish Sutherland, said.

"At this point we have not been able to get consent for this farm [Orini] which is difficult given that it is cage-free and in line with what our customers (and government legislation) is telling us they want in the future."

The proposed farm would be a financially sustainable, large scale site, and in the centre of dairy farms. Without obtaining permission to build these farms, this impasse could disrupt New Zealand's egg supply, Sutherland warned.

The poultry sector is required to end the practice of keeping birds in cages by 2022, in accordance with New Zealand's layer hen code of welfare. Not all producers have made the change to cage-free types; some will change to interim "colony cage" systems, which retains cages but avail more space for hens.

But supermarkets have pledged not to take eggs from colony cages, from 2024 (for Countdown, Fresh Choice and Super Value), and 2027 (for Foodstuffs and Pak 'n Save).

"...[Producers] are looking at either exiting or going into other less intensive housing formats. But they - barn or free range - produce fewer eggs per hen, so we've got both volume and efficiency declining," Sutherland said.

Foodstuffs head of external relations Antoinette Laird said the latest egg prices were an average across all types of eggs and reflected what the chain was seeing in sales.

"Consumers are actively buying more free range eggs, which naturally cost more, versus caged - so they are in fact leading the charge," Laird said.

For now, eggs from caged hens take up 69& of supermarket egg sales.  However, over the last year, these egg types had registered a 1.8% drop, losing share to barn, free range and organic eggs, which have all grown (11.5%, 7.2% and 14.4% respectively).

With a 22.6% volume share, free range are the most popular behind caged, followed by barn (6.9%), and organic (1.1%).

Half of the eggs laid goes to supermarkets, while the rest are sold to quick service restaurants - like McDonalds and Burger King, which accept only cage-free eggs - and food service and ingredients businesses. These companies have pledged to be cage-free by 2025.

Currently, New Zealand is still self sufficient in producing its own eggs. Still, Sutherland is concerned that eggs may be priced out of the diet of middle New Zealand.

One alternative would be to import eggs from Australia, but the move might cause a biosecurity issue with the introduction of diseases into New Zealand.

Australia has occasional outbreaks of salmonella in its eggs.

- Stuff

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