2120 final report.pdf - Agra CEAS Consulting

APPENDIX 2: THIRD COUNTRIESremaining production, most is produced under production contracts while less than 3% is producedunder marketing contracts.There are also substantial differences in the degree of vertical integration among firms within the eggindustry. In part, this appears to depend on the extent to which firms are exposed to the relativeuncertainty of the shell egg market versus the more stable processed product market. Thisdifference is illustrated by the different approaches of two of the leading firms in the industry, Cal-Maine Foods, the largest producer for the shell egg market, and Michael Foods, the largest eggprocessor. Cal-Maine’s sales in 2003 were almost exclusively (99%) shell egg sales. (The companyestimates that their sales represented about 13% of all shell eggs sold in the U.S. that year.) Cal-Maine is highly integrated with company-owned facilities accounting for about 87% of its 2003 eggproduction.Michael Foods, in contrast, concentrates on the production of processed egg products and is theleading egg breaker. In 2002, 97% of its sales were from egg products and only 3% from the sale ofshell eggs. The firm is also less highly integrated. In 2002, it reported that it acquired about 70% ofits eggs through grower contracts and on the spot market.A2.4.2.2. Main production systemsMost commercial egg production takes place in battery cages. There are no legislative standards foregg production, however, the U.S. egg industry has taken a proactive approach to promoting theadoption of animal welfare standards. Beginning in 1999, the United Egg Producers (UEP), working inconcert with McDonald’s Corporation, began working on a set of industry guidelines. The guidelineswere developed by a scientific advisory committee chaired by the Dean of the College of Agricultureat Michigan State University. The resulting guidelines were adopted by the industry in 2002 and havesince become the basis for the acquisition requirements of many of the largest buyers of eggs and eggproducts in the U.S., including McDonald’s.Adoption of the guidelines is voluntary. Firms that adopt the guidelines are recognised as ‘AnimalCare Certified’ companies and are authorised to display the Animal Care Certified logo on theirpackaging and to market their eggs as Animal Care Certified. The UEP reported in late 2003 thatmore than 200 egg producers representing 84% of U.S. laying hens had adopted the guidelines andwere implementing them.Some of the main features of the guidelines are as follows:Depending on the size of the bird and the size and style of the cage, floor space of 432cm 2 to555cm 2 per hen are to be provided. This requirement is to be phased in over a 5-year periodending in 2008 (see Table A2.38).Humane disposal of unviable chicks and pipped eggs at the hatchery.On-farm ammonia levels not to exceed 50ppm and to work toward reduction to 25ppm.372