2120 final report.pdf - Agra CEAS Consulting

THE SOCIO-ECONOMIC IMPLICATIONS OF THE VARIOUS SYSTEMS TO KEEP LAYING HENSThat said, the processing sector is expected to face severe pressure. Demand for processedproducts is growing, dictated mainly by lifestyle changes, and within the processed egg productmarket, demand is growing for dried rather than liquid products 26 . This makes the EU sectormore vulnerable to imports from third countries as powder can be transported more cheaplyand has a longer shelf life increasing the number of potential exporting countries.The sector organisations contacted feel that, without the necessary border protection, there is ahigh risk that that proportion of the market which currently takes eggs from caged production,mainly the processing and the food service sectors in addition to retailers, will no longer sourcethe bulk of their eggs from the EU if (potentially more costly) enriched cages are introduced.This means that the growing proportion of the market, estimated at 30% plus, which goes intoprocessing and the food service, which by and large do not differentiate their products by type ofproduction system, could be vulnerable to competition from third country imports which wouldreduce production and employment in the EU sector 27 . This potential for this displacement ofEU sourced eggs in the processing sector is thought to be more likely to increase in futurebecause of the structure of the processing sector and the changing pattern of trade in this sector.In terms of structure the sector can be broken down into large international companies who dryegg products and those, mainly national players, who currently produce liquid egg and othermore processed (and hence value added) egg products.In future, the latter group of companies is likely to come under pressure as the traded marketbecomes increasingly dominated by dried egg (the cost of transporting egg in this form withoutwater is much lower and the shelf life is longer) and they will either have to move into moreadded value products such as blends, mixes etc. or they are thought unlikely to be able tosurvive. Thus as trade becomes increasingly dominated by large international players trading indried egg this will enhance the scope for imports further (as well as driving consolidation in theprocessing sector).In this context it is important to note that a number of countries currently only have onesignificant processor (Austria, Ireland, Portugal, Greece, Finland). The loss of the singleprocessor available in such countries will remove the market producers in these countriescurrently have for second quality and other eggs which currently cannot be sold directly to theconsumer. The likely returns from these eggs, once cross-border transport has been taken intoaccount, will be lower and producers may have to recoup this loss from shell egg sales eitherpushing up prices for consumers in these markets or resulting in increased imports and lowerdomestic production.With respect to alternative systems the sector considers that in some countries demand forproduction from alternative systems has peaked. This factor combined with the fact that the26 Current demand for powdered egg products is 25% of total egg product demand.27 According to some players in the processing sector it is already cheaper to import.84