2120 final report.pdf - Agra CEAS Consulting

THE SOCIO-ECONOMIC IMPLICATIONS OF THE VARIOUS SYSTEMS TO KEEP LAYING HENSTable A1.19: Own and cross-price elasticities derived from retailer scanner dataProduction systemCage Barn Free range Organic PasteurisedCage -1.25 0.28 0.10 0.11 -0.03Barn 0.28 -1.35 -0.00 0.31 0.02Free range 0.03 0.12 -1.44 0.58 -0.02Organic 0.03 0.04 0.05 -1.77 0.02Pasteurised -0.26 -0.06 0.20 -0.02 -0.99Source: Fødevareefterspørgsel i Danmark – perspektiver for produktdifferentiering.Fødevareøkonomisk Institut. Rapport nr. 165A1.3.6. The impact of Directive 1999/74/ECA1.3.6.1. Implementation to dateThere has been no significant investment to date (May 2004) in enriched cages in Denmark. Oneproducer has been using an enriched system for about five months and another has just started. Thisstems from a degree of uncertainty over the authorisation of particular cage systems by the Danishgovernment, but is explained mainly by the fact that producers are unwilling to make the investmentuntil they are certain that the Directive will be implemented and in what form this will be. Individualproducers are also unwilling to incur the investment costs in advance of the rest of the industry toavoid being placed at a cost disadvantage.A1.3.6.2. Expected implementationThe industry is currently paying close attention to the situation in Germany and is unlikely to start toconsider its strategy until the German position is certain. The review of the Directive adds furtheruncertainty and investment is not likely until after these uncertainties have been removed, i.e. in theperiod 2007 to 2012. The expectation in Denmark is that the majority of producers who chooseultimately to invest will do so as late as possible prior to 2012. However, there is a recognition inthe packing sector that they may have to take steps to encourage investment as 2012 draws closerto avoid a shortage of eggs. A contribution to the cost of investment would be welcomed byproducers. There is considerable unease in the Danish industry over the degree to which thenational government has added additional requirements to the Directive and it is understandablydifficult for producers to tease apart requirements put forward nationally from those contained inthe Directive. As a result of this the Danish industry would prefer rules governing productionpractices to be issued as a Regulation, which cannot be added to, rather than a Directive.As 2012 approaches, packers are likely to consider offering limited financial incentives to helpproducers make necessary investments. In fact, Danægg has already outlined a scheme wherebyproducers using enriched systems will be offered a price guarantee (linked to feed cost) for threelaying cycles once a range of systems of enriched cages has been approved by the Danishgovernment. These producers will operate quality control systems which will allow them to sell in142