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2120 final report.pdf - Agra CEAS Consulting

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THE SOCIO-ECONOMIC IMPLICATIONS OF THE VARIOUS SYSTEMS TO KEEP LAYING HENSA1.5.5.3. Demand and supply elasticitiesWhile there is no data on demand elasticities it is thought that given there is relatively littlesubstitutability for eggs the price elasticity will be close to one.A1.5.6. The impact of Directive 1999/74/ECA1.5.6.1. Implementation to dateWhile the requirements to date of Directive 1999/74 have been implemented in France there hasbeen no private investment to date in enriched cages in France 79 . This is explained mainly by the factthat producers are unwilling to make the investment until they are certain that the ban onunenriched cages in line with Chapter II, Article 5.2 of the Directive will be implemented and in whatform this will be. Individual producers are also unwilling to incur the investment costs in advance ofthe rest of the industry to avoid being placed at a cost disadvantage.A1.5.6.2. Impact on the industryThere is a strong expectation that the implementation of the ban on unenriched cages in line withChapter II, Article 5.2 of the Directive will bring further consolidation to the industry with asignificant number of producers (approximately 35%) suggesting that they will use their traditionalcaged facilities as long as they are able to and then retire in preference to making the necessaryinvestments. According to research, not yet published, concerning how producers are likely to reactto the full implementation of the Directive, the majority of producers are awaiting the outcome ofthe Commission’s <strong>report</strong> in 2005. According to a survey 80 conducted with a sample of 20% of Frenchproducers:20% of producers will cease production. These are mainly smaller producers with facilitiesdating from before 1985 of whom an estimated 50% have no heirs;for producers with more recent facilities (post 1985) the conclusions were: 15% of producers will cease production; 23% will reduce production, due to the increase in area per hen; 27% will enlarge their facilities in order to maintain their production levels (mainly,producers with over 50,000 hens, new facilities and younger management); 20% are still undecided; 6-8% will change to alternative systems; the remainder did not answer.79 ITAVI is conducting a field study on the operation of enriched cages over a number of production cycles. The first production cycle willhave been completed in May/June 2004.80 This survey is part of a Traineeship Report coordinated by Luc Mirabito,of ITAVI due to be concluded in June 2004.178

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