2120 final report.pdf - Agra CEAS Consulting

APPENDIX 2: THIRD COUNTRIES7060504030201001980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Figure A2.11: Trend in cost of egg production in the U.S. 1980-2003 (€)Source: USDA ERSOn the basis of this analysis, the average national cost of production for 2001/02 was estimated at41.3¢/dozen. This compares to USDA’s average estimate of 43.8¢/dozen for the same period.Regionally, the average cost was estimated to range from a low of 38.8¢/dozen in the West NorthCentral region (Minneapolis/Kansas City feed delivery points) to a high of 44.7¢/dozen in the West(Los Angeles/San Francisco).Another basis of comparison are the publicly released operating results of Cal-Maine Foods, Inc., theleading producer of eggs in the U.S. In the firm’s 2003 Annual Report to Shareholders, (June 2002-May 2003), feed costs are reported to have ranged from 54% to 56% of the total cost of eggproduction over the period 1999 to 2003 with feed cost in 2003 reported to have been 21.3¢/dozeneggs sold. This indicates a total cost of 38.0¢/dozen to 39.4¢/dozen in 2003. The total cost of salesthat year, as reported by Cal-Maine, was 55.2¢/dozen while the average reported selling price was64.5¢/dozen. These results are generally consistent with those reported above. Given Cal-Maine’ssize and degree of integration, its per unit cost of production should be among the lowest in theindustry.A recent study of egg production by economists at Iowa State University developed cost ofproduction estimates for different production regions of the U.S. and under alternative feed costassumptions. For reasons that aren’t clear, the Iowa State total cost estimates are about 25% belowthose derived by the University of California for the same production regions. Discussions with thelead researcher at Iowa State suggest that their analysis probably excluded some overhead costs thataccount for at least part of the difference.381