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2120 final report.pdf - Agra CEAS Consulting

2120 final report.pdf - Agra CEAS Consulting

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THE SOCIO-ECONOMIC IMPLICATIONS OF THE VARIOUS SYSTEMS TO KEEP LAYING HENSFinally, weighting gross margins by the importance of Member State egg sectors within the EU-15,results in Figure 2.43 which shows total output split into the portion needed to cover variable costsand the balance left as gross margin (gross margin only is shown in Figure 2.44). Whilst higher totaloutputs are achieved in the alternative systems, this is necessary to cover higher variable costs,although this still leaves a higher gross margin. The lowest cost system appears to be the enrichedcage, although the caveats associated with the data suggest that this would not be the case in realityleaving the traditional cage, as expected, the lowest cost system. A higher gross margin is availablefrom the enriched cage system, due mainly to the high price of eggs in Sweden, but also as a functionof the small number of examples to draw upon and as such is not considered robust. Gross marginsin modern, automated enriched cage systems are not expected to be significantly different fromthose achieved in similar size traditional cage facilities, at least in per dozen or per kg egg terms.However, fixed costs are expected to be higher and performance per unit of floor space will beweaker as a result of greater space allowance and possibly also because less tiers of cages can beemployed in the same size building.Barn systems appear to offer little advantage in gross margin terms over traditional cage systems,although free range systems more clearly offer higher returns, albeit on top of higher variable costs.Perhaps surprisingly the significantly higher variable costs of the organic system are not as wellcompensated by available premia as might be expected and this systems offers a gross margin onlyslightly superior to that obtained in the barn system.180.00160.00Weighted average total output per kg eggs (Euro cents)140.00120.00100.0080.0060.0040.0020.00-Traditional cage Barn Free range Organic All systemsTotal variable costsGross marginFigure 2.43: Weighted average total output for all Member States and all systems(2003)53

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