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Animal Health

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June 26, 2018
New frontiers in egg supply, demand and marketing
Demand for this rich source of low-cost protein is growing as fast as that of poultry meat or seafood lines -but we need to re-invent the way they are produced and especially how they are marketed.
By Eric J. Brooks
An eFeedLink Hot Topic
Mundane, highly localized and unsexy, the humble egg has long been overlooked as agribusiness's poor cousin -but neither common sense nor hard statistics support overlooking this protein line. Protein consumption is growing most rapidly in highly populated, low-income countries that have religious restrictions on meat eating.
Eggs are never subject to religious restrictions and can be even be consumed in vegetarian majority nations. In such emerging economies, eggs offer a rich source of all amino acids at the lowest cost per gram of any protein line.
While considerable print is devoted to meat lines, FAO statistics show that from 1998 through 2016 inclusive, egg consumption grew at a 2.5% annual rate compared to 1% for beef and 1.8% for pork. While chicken consumption grew a faster 4.1% annual rate over this time, this has not been true in recent years.
In the three years after 2013, world chicken meat consumption grew 1.9% annually, versus 2.9% for eggs and less than 1% for both beef and pork. Going forward, the next decade will see consumption growth of most protein lines is slowing. -On the other hand, highly populated low-income nations with religious restrictions will keep world egg consumption growing near 3% annually for quite some time to come.

This can already be seen in egg production statistics. From 1998 through 2016, egg production expanded at a 6.9% rate in Indonesia's Muslim majority market of 270 million people, 5.9% annually in India's 1.25 billion population, which has a billion vegetarian-friendly Hindus and 250 million Muslims. It also grew at 4.8% rate in the ten-nation 600 million population ASEAN bloc, which has a Muslim majority population.
Over those eighteen years, egg output expanded at a 3.6% rate among South America's 425 million people, which have an average per capita GDP below US$10,000. Due to bird flu and food safety scandals, China's egg production rose by 2.6% annually or just a shade higher than the world average.
Even so, India, China, Southeast Asia and South America collectively have a combined 3.6 billion people whose overall egg consumption jumped by nearly 4% annually since 1998. They also have lower consumer incomes than China and are poised to see their egg consumption rise the way China's did in decades past.
Moreover, after falling to a 2.1% annual expansion rate in 2008-13, growth momentum has picked up in recent years. From 2013 through 2016 inclusive, above-trend egg production growth in India (5.9%) and Indonesia (5.4%) dovetailed with a resurgence of Chinese egg production (3.6%), boosting annual world egg production growth to nearly 3%.
Interestingly, while most nations are self-sufficient in eggs, its production remains highly concentrated. China (39.6%), America (7.5%), India (5.7%), Mexico (3.4%), Japan (3.2%), Russia (3.1%), Brazil (3.0%) and Indonesia (2.2%) collectively produce 68% of the world's eggs. While many nations use species such as ducks in small-scale settings, Bangladesh (29.1%), China (17.7%), Thailand (36.7%) and Southeast Asia (15% to 20%) stand out as the only parts of the world where 15% to 20% of eggs are produced by species other than layer hens.
When we compare an emerging market's world egg output to its share of the world population, we can confidently predict where the fastest growth in egg production will be. With 18% of the world's population, 39.6% of its egg production and rising incomes tending towards eating more meat, China's egg production will grow no faster than the world's average of 2.5%.

On the other hand, with 17% of the world's population, 5.6% of world egg production, low personal incomes and religious restrictions on meat consumption, India's egg production is destined to expand by more than 5% annually for several more decades.
Similarly, with 8% of the world's population, 4% of the world's egg production, average incomes below US$10,000/person and a Muslim dominated population, Southeast Asia's 600 million people are on track to push egg production upwards at annual 4%+ rates for at least two decades. In particular, nations such as Philippines, Myanmar, Indonesia, Vietnam, Laos and Cambodia have significantly lower per capita incomes and per capita egg consumption than that found in China. They are thus on track to enjoy large 5%+ annual rises in egg production like those seen in China in the 1980s and 1990s.
While eggs now rival the growth rates of other protein lines, their perishability, fragility, and ease of local production keeps the international egg trade small by comparison. Only 2.29 million tonnes or 2.8% of the 80.75 million eggs produced in 2016 crossed borders. By comparison, 10% or more of the world's beef, chicken, pork, shrimp and salmon are traded internationally.
Moreover, the so-called "world egg trade" is a largely European affair: Four of the world's top six egg exporters are European. In 2016 they shipped 1.15 million tonnes of egg exports to neighboring EU countries. Netherlands (443,700 tonnes), Turkey (289,364), Poland (259,040 tonnes), Germany (171,427 tonnes) collectively accounted for over half the world's egg exports.

Together with the United States (166,009 tonnes) and China (107,900 tonnes), these six nations account for 60% of the world's egg exports. America mostly exports to NAFTA trading partners Mexico and Canada, while China mostly sells to neighboring East Asian countries. The Netherlands and Germany have highly integrated layer sectors that export to each other's country. Poland and Turkey act as low-cost export bases to neighboring East European and Central Asian nations.
Interestingly, egg exports differ greatly in revenue per unit. Based on 2015 export figures on exported eggs in shell, America enjoys US$3.10/kg of revenues in eggs it mostly exports to Canada and Mexico. Hence, while it trails Netherlands, Germany, Poland Turkey in export volume, it is second only to the Netherlands in exported egg value, which totals over $515 million.
At US$1.80/kg to US$1.85/kg, China, Germany, and the Netherlands earn an intermediate level of revenue per kilo from their shell egg exports. Low margin producers Turkey(U$$1.25/kg) and Poland (US$1.19/kg) exported 31% and 41% more eggs than America by volume. Despite exporting a far larger quantity of eggs, both Turkey (US$274 million) and Poland (US$274 million) had egg revenues that were a fraction of those earned by the United States (US$515 million).
In theory, the rise of liquid egg preservation increases the scope for international exporting. In practice, no country except Netherlands (21%) exports more than a tenth of its eggs in liquid form. And there are good reasons why both liquid eggs and overall exports don't rise too high.
First, while liquid eggs are widely used in hotels, restaurants or public institutions, mass-market consumers prefer fresh eggs. Second, many governments protect local egg production from foreign competition. Consumer preferences, government protectionism, fragility and the perishability of fresh eggs mean that unlike other meat lines, this one will be locally produced far into the future.
Going forward, eggs face two important opportunities and challenges. First, recent scientific research has proven that eggs do not cause high cholesterol or heart disease. 80% of the body's cholesterol is not even derived from food at all but produced the liver.
The human liver in turn, produces excess cholesterol in response to high carbohydrate levels -and eggs contain no carbohydrates. After reviewing studies, the Mayo Clinic states that "The effect of egg consumption on blood cholesterol is minimal when compared with the effect of trans fats and saturated fats."
To the industry's shame, science exonerated eggs of playing a major role in heart disease nearly twenty years ago -but no major egg marketing campaign has capitalized on this important scientific findings. Instead, everyone from chatting housewives to radio DJs and non-medical journalists continue to warn of "cholesterol in eggs" -and holding back their consumption in rich and poor countries alike. Clearly, egg marketers need to smarten up: They should leverage scientific findings that eggs are nutritious and not detrimental to health as soon as possible.
Second, just as is the case with aqua feed and salmonids, poultry feed profoundly impacts the quality and nutritional characteristics of eggs. Feeding layers fishmeal, flax seed, beta-carotene, vitamin E or lutein grossly inflate production costs -but many consumers will happily pay twice as much for the resulting eggs, which then contain significant amounts of omega 3 oils or antioxidants.
By leveraging both eggs non-culpability in heart disease and the human health benefits of value-added feed, eggs can be transformed from a feared source of protein to one with a reputation for being healthy, cheap and nutritious.

With all this in mind, we see several qualitative, quantitative and geological challenges to egg production's bright future. First, there is a mismatch between stagnant countries that have the best layer rearing and egg processing technology and fast-growing but technically backward markets. Nearly half the world's population lives in fast-growing economies with incomes levels equal to those of China or lower. That's a dream come true for western suppliers of layer farming and egg processing technology.
Second, the false belief that eggs are harmful to cardiovascular health is so widespread that it would not be surprising if some of the people reading this article still believe that eggs cause heart disease. -This has been proven false -and the world egg industry's unwillingness to leverage this scientific fact is unforgivable.
Third, with a fifty-year egg health scare having been scientifically discredited, it is time to use superior feed ingredients to brand eggs and re-market them as products that boost your health. Economic statistics and scientific research imply that the number of eggs consumed and consumers' perception of their nutritional value can be profoundly transformed -It's now up to egg marketers to transform the way the world sees the cheapest most nutritionally-rich source of protein.

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