Hans-WilhelmWindhorst
Director of theInstitute of Spatial Analysis and Planning in Areas of Intensive Agriculture(ISPA),
University ofVechta,
Germany
1. Introduction: The new role of developing countries
Between 1970 and2005, global egg production increased from 19.5 M. t to 59.2 M. t or by 203%.
In a preceding paper(2005a), the changing pattern of global egg production was analysed on thebasis of continents and leading countries in production and trade. In that paper,the dramatic change in the contribution of developed and developing countries [the classification of the countries is based onthe FAO data base] to global eggproduction was only mentioned briefly. A closer look at the available datashowed, however, that it would make sense to analyse the data set under thisparticular aspect.
Table 1 shows that until the early 1990s developed countries produced themajority of eggs, then, because of continuously high growth rates, developingcountries surpassed them and contributed more than two thirds to global eggproduction in 2005. It is remarkable that between 1970 and 2000 the productionvolume in developing countries more or less doubled within each decade. Becauseof the Avian Influenza outbreaks in Italy and the Netherlands, egg productionin developed countries decreased from the 1990s onward and it was not before2004 that the value of 1990 could be reached again.
The futuredevelopment of egg production in Europe will depend on the implementation ofdirective 1999/74/EC which bans conventional cages from 2012 on and demands theinstallation of so called enriched cages from 2003 on. As Europe is stilldominating egg trade, it will be of interest to analyse what impacts thisdirective has already had on the number of laying hens, egg production andchanges in husbandry forms.
The analysis will becarried out in several steps. In a first step, the changing pattern of eggproduction between 1970 and 2005 will be analysed, in a second, the changingpatterns of egg trade. The third and fourth step will deal with the impacts ofthe decision of the EU to ban conventional cages and the roles that alternativehusbandry forms and organic egg production play in the EU.
2. The changing regionalpattern of egg production
In a first step, thechanging regional pattern of egg production between 1970 and 2005 will beanalysed. The imbalanced growth in developed and developing countries will formthe centre of this part of the analysis.
From the data in Table 2 one can see that thecontribution of developed countries to global egg production decreased fromover 76% in 1970 to less than 33% in 2005, the share of the ten leadingcountries from 64.4% to 25.3%. The USA, Japan, and Russia, respectively theUSSR in 1970, are ranked in the top three positions. In 2005, six of the tenleading countries were EU member states. Poland and Canada, which belonged tothe ten leading egg producing developed countries in 1970, were replaced by theUkraine and the Netherlands. These few data alone show the dramatic regionalshift in global egg production.
The rapid growth ofegg production in developing countries between 1970 and 2005 contrasts withthat in developed countries. From Table 3 one can see that the contribution toglobal egg production increased from less than 24% to almost 68% in theanalysed time period and that of the ten leading countries from 16.5% to 57.5%.Even though this shift is mainly due to the dramatic growth in China, severalother countries also show a remarkable increase of their production volume.This is especially true for India, Mexico, and Brazil. Quite obviously, Southand East Asia as well as Latin America have become new centres of egg production.
More than 90% ofglobal egg production is concentrated in Asia, Europe and North and CentralAmerica. It will be of interest to see how the contribution of these threeregions to global egg production has changed over time. From Table4 one can see that the threeleading countries in each of these regions together had a share of 56.4% ofglobal egg production in 1970 and of 66.6% in 2005. A comparison of thesituation in 1970 and 2005 shows that in spite of a remarkable increase of theproduction volume, the USA, Canada, and Mexico lost almost half of their formershare. The three leading EU member states even had to face a decrease of theirproduction volume and their contribution to global egg production was reducedfrom 13.9% to only 4.3%. In contrast to this development, the three leadingAsian countries were able to increase their production volume by 25.7 M. t or717%. In 2005, these three countries contributed almost 50% to the globalproduction volume. This table impressively documents the regional shift thathas occurred in egg production during the past 35 years.
The main results ofthe first step of this analysis can be summarised as follows:
Global egg production has shown a remarkable dynamic over the past three decades, it has, however, been a very imbalanced growth. Developing countries have been able to increase their production much faster than developed countries. Countries in South and East Asia as well as in Latin America were the winners, European and North American countries the losers. In 2005, more than two thirds of global egg production was located in developing countries, over 41% in China alone. The dramatic increase of the production volume in this country has completely changed the spatial pattern of egg production. The centre of production shifted from Europe (1970) to East Asia (2005).
3. The changing regionalpattern of egg trade
In a second step, itwill be analysed what impacts the regional shift in egg production had on eggtrade. Here, too, the specific developments in developed and developingcountries will be analysed separately.
Table 5 shows that developing countries could increase their export volume fromonly 60,000 t in 1970 to 250,000 t in 2004 and reach a market share of 24.1.%.Quite obviously, most of the produced eggs are used for domestic consumption.In spite of the decreasing production, developed countries, especially inEurope, are still dominating egg exports.
The data in Table 6 reveal that in 1970, with the exception of theUSA, all leading developed export countries were located in Europe with Belgiumand the Netherlands in the top two positions. It is worth mentioning that fourof the top ten egg exporting countries belonged to the former COMECON block. In2004, eight of the ten leading countries were EU member states, the USA rankednumber 4 and Belarus number 7. The Netherlands were by far the most importantegg exporting country with a share of 25.5% of global egg exports. The decreasein the regional concentration indicates the growing importance of developingcountries.
Table 7 shows that the contribution of developing countries to global eggexports increased from 14.7% in 1970 to 24.1% in 2004. In 1970, most of theexporting countries were located in East Asia and Latin America. In 2004, noLatin American country was ranked any longer among the top ten countries. ThreeSouth and East Asian countries were to be found in the leading positions with ashare of 18.2% of global egg exports. It is worth mentioning that in particularegg producers in the Near East have been able to gain market shares.
Parallel to theregional concentration process in egg production, a similar process can beobserved in egg exports (Table 8). In1970, the three leading egg-exporting countries of the EU contributed 44.3% tothe global export volume. In 2004, their share decreased to 42.9%, nevertheless,they still were in a dominating position. The NAFTA members were able to doubletheir contribution, mainly a result of the rapid increase of US exports. Thethree leading Asian countries had a share of 18.2% in 2004, 8.4% more than in1970. This development is a result of the growing importance of Malaysia andIndia as egg exporting countries. The regional concentration also increased,the nine countries had a share of 68.5% of global egg exports in 2004, almost11% higher than in 1970.
Table 9 shows that developing countries more than tripled their egg importsbetween 1970 and 2004. Their share of the global import volume reached amaximum in the mid 1980s with 35.1% and has been fairly stable since then withthe exception of the early 1990s. It can be observed, however, that between2000 and 2004 egg imports of developed countries increased much faster thanthat of developing countries. This is mainly due to the Avian Influenzaoutbreak in the Netherlands which caused a rapid increase of the import volumeof this country.
From the data in Table 10 one can see that global egg imports increasedby over 600,000 t or 151% between 1970 and 2004. The share of the ten leadingdeveloped countries as well as of the developed countries in total decreasedconsiderably. Nevertheless, developed countries still imported about 71% of allshell eggs that reached the world market. Germany has been the leading eggimporting country for several decades. In 1970, almost 32% of the traded eggswere imported by this country, in 2004, the share was 25.2%. It is worth mentioningthat eight of the ten leading developed countries in egg imports were EU memberstates in 2004, in 1970 it had only been five. This documents that egg trade isstill dominated by European countries.
In 1970, seven ofthe ten leading developing countries in egg imports were located in the NearEast, two in Central America, and one in East Asia. Hong Kong, ranked in thetop position, had a share of 47% of the total import volume of the developingcountries. In 2004, China, which includes Hong Kong and Macao, was still in theleading position, but the composition and the ranking of the ten leadingcountries had changed considerably. Singapore now ranked in second place; Oman,Angola, the Libyan A. R. as well as Mexico had become major importing countrieseven though their total share of the global import volume was still less than4%. Central American countries were no longer to be found in the top ten ranks.
Even though theregional concentration in egg imports has also increased between 1970 and 2004(Table 12), it is quite obvious thatthe concentration process was much faster in exports. This is mainly due to thefact that the number of egg importing countries has increased over the analysedtime period. The three EU member states are still in a dominating position witha share of over 40% of the global import volume. A comparison of Tables 6, 8, 10 and 12 reveals that in spite of the regionaldynamic in egg exports and imports, most of the shell eggs are traded betweenEU member states.
The main results ofthe second step of the analysis can be summarised as follows:
- Parallel to the regional shift in production, ashift in the regional pattern of egg trade can be observed. Developingcountries were able to increase their share of egg exports from 15% in 1970 to24% in 2004 and of egg imports from 24% to 30% in the same time period.
- In spite of the changing regional pattern,Europe is still dominating egg trade, followed by Asia and North and CentralAmerica.
- The regional concentration in egg exports andimports is still very high. The ten leading developed countries contributedover 67% to the global export volume in 2004. The Netherlands are the leadingegg exporting country, Germany is leading in imports.
4. Banning of conventionalcages in the EU: A first analysis of the impacts on production and trade
In a third step, afirst analysis of the impacts of directive 1999/74/EC on egg production and eggtrade in the EU will be presented.
The background forthe decision of the EU to ban conventional cages and the impacts that the newdirective will have on egg production and egg trade cannot be discussed here indetail (c.f. Windhorst 2000, 2001, 2004; Wolffram 2002). Some information isnecessary, however, to understand the present situation.
The new directiveprohibits conventional layer cages from January 1st, 2012 on in allEU member states and demands the installation of such cages from January 1st,2003 on.
The situation inGermany differs from the EU regulations. In October 2001, the German Bundesrat passed a directive for layinghen husbandry which states that from January 1st, 2007 onconventional cages will be prohibited and from January 1st, 2012 onalso enriched cages. This directive became effective in Germany on March 13th,2002 and is still valid in spite of the new administration. If the newadministration does not alter the directive in consensus with the Bundesrat, it will have far reaching impactson the German egg and egg products industries and also on the global tradepatterns of eggs and egg products as Germany is already now the leadingimporter of shell eggs with a share of 25.2% of the global imports as could beshown (c. f. Table 10).
The following impacts of the EU and German directiveswere expected:
- A decrease of the number of laying hens by atleast 10% in farms with conventional cages from 2003 on (assumption: 9 insteadof 10 hens in a combined standard cage with a usable space of 5,500 cm2).
- A reduction of the number of laying hens by atleast 32 million between 2000 and 2003 in the EU (15) (assumption: about 80% ofthe 400 million laying hens were kept in conventional cages in 2000).
- A decrease of the self-sufficiency rate forshell eggs in the EU (15) from about 101% to less than 100%.
- In Germany, the national directive should leadto a reduction of the number of laying hens from 40.8 million in 2002 to 36.7million in 2003 (only farms with 3,000 and more hens).
These hypotheseswill be compared with the real development in the analysed time period.
Table 13 shows that the number of laying hens in the EU decreased by 32 millionbirds or 8.1% between 2000 and 2003. The absolute reduction reached theexpected value, but it was not an even relative decrease. The high relativedecrease in Italy and the Netherlands may be attributed to the impacts of theAvian Influenza outbreaks. In Sweden, it is a consequence of the implementationof enriched cages in which each hen has a usable space of 750 cm2instead of 550 cm2. The reduction of the number of laying hens inGermany is lower than expected. This may be a consequence of the fast expansionof alternative husbandry forms and the fact that the real hen density per m2is higher than permitted as a reaction to the high mortality rates in freerange systems. To prevent economic losses, farmers often place 10% to 15% morepullets than the permitted density allows.
In spite of the 8.1%reduction of the number of laying hens, egg production in the EU (15) reachedthe same volume in 2004 as in 2000, as can be seen from table 14. Only in 2003,a considerable decrease of the production volume can be observed. This ismainly due to the dramatic decrease in the Netherlands (- 206,000 t) as aresult of the Avian Influenza outbreak and in Germany (- 77,000 t). It is worthmentioning that in several countries, for example Portugal and Denmark, eggproduction increased between 8% and almost 10% in spite of decreasing layinghen flocks. In Spain, the production volume was about 10% higher in 2003 thanin 2000 even though the number of laying hens only increased by 4.7%. Between2003 and 2004, egg production also increased in Austria, Sweden, andBelgium/Luxembourg. How it was possible to increase egg production in spite ofdecreasing flocks, is an open question. Even if one assumes that the layingrate rose by 2 or 3 eggs per hen or 1% in this time period, the observed growthcannot be explained. One explanation could be that directive 1999/74/EC has notbeen fully applied in several countries and the laying hen flocks areconsiderably larger than the published numbers.
The self-sufficiencyrate for shell eggs in the EU remained fairly stable over a longer time period.In 2003, however, it fell below 100% as expected (Table 15). If in that year per capita consumption had not decreasedfrom 13.7 kg to 13.3 kg because of the impacts of the Avian Influenza outbreakin the Netherlands on the buying behaviour of the consumers, theself-sufficiency rate would have been at least as low as 95%. As a consequence,shell egg imports into the EU increased from 16,230 t to 48,407 t. In thefollowing year, the production volume recovered and the self-sufficiency rateincreased to 101% in spite of the fact that the per capita consumption reachedthe same value as in 2002.
The main results ofthe third step of the analysis can be summarised as follows:
- The EU directive 1999/74/EC has shown firstimpacts. The number of laying hens decreased by 8.1% between 2000 and 2003. Thereduction of egg production was much lower with only 4%. Between 2003 and 2004,egg production increased again and reached the same volume as in 2000.
- In 2003, the self-sufficiency rate for shelleggs decreased to 98% but recovered to 101% in 2004. Quite obviously, thedirective has not yet had a lasting impact on the production volume.
- A closer analysis of the data leads to theimpression that, with the exception of Sweden and Germany, the Avian Influenzaoutbreaks in Italy and the Netherlands had more lasting impacts on the numberof laying hens and on egg production than the implementation of the new EU directivefor keeping laying hens.
5. Alternative husbandryforms and organic egg production in the EU
The final step ofthe analysis will deal with the development of alternative husbandry forms andorganic egg production in the EU. When directive 1999/74/EC was passed, it wasexpected that alternative husbandry forms for laying hens would become moreimportant, especially, when several food retailers declared that they would nolonger sell eggs which were produced in conventional cages.
Unfortunately, thereis no complete data set available for alternative husbandry forms in the EUmember states. Another problem arises from the fact that no generally accepteddefinition is available for alternative husbandry forms. According to estimatesof the German Market and Price Reporting Service (ZMP), about 47 million layinghens or 12% were kept in floor management systems, aviaries and free rangesystems in EU member states in 2004. Table16 shows that the largest number of hens in such husbandry forms was to befound in Germany, the Netherlands, and the United Kingdom. The highest relativeshare showed Sweden, Denmark, and Austria. Quite obviously, in Sweden, layersin enriched cages were counted as kept in alternative systems.
The question, howalternative husbandry forms have developed in Germany, is of particularinterest, as the still valid directive will ban conventional cages from 2007and enriched cages from 2012 on. Table 17shows that between 1995 and 2004 the share of laying hens, which were kept inconventional cages, decreased from 96% to 77.5%. In the same time period, floormanagement as well as free range systems gained in importance. It is, however,difficult to decide, if this shift was more a result of the German directive ora consequence of some major discounters, no longer to sell eggs fromconventional cages.
One special segmentof the egg market is organic eggs. Unfortunately, there are hardly any officialdata available, as most of the EU member states do not distinguish betweenconventional and organic eggs in their statistics. This was the reason for adetailed analysis by this author (Windhorst 2005b) about the development oforganic egg production and marketing in the EU. It was expected that the new EUdirective for keeping laying hens and the decision of leading food retailers tofavour eggs from alternative husbandry forms would also have impacts on organicegg production.
The data in Table 18 show that organic eggproduction is still of minor importance in most of the EU member states. In2000, a more recent data set is not available, organic eggs only contributed1.2% to total egg production and had a share of 1.2% of total egg consumption.One can easily see that, with the exception of Denmark and Austria, organiceggs had a share of less than 2% of total egg consumption. Southern Europeancountries, Ireland, and Belgium showed hardly any production and consumption oforganic eggs. One reason for the limited market success of these eggs is themuch higher retail price. Quite obviously, only a limited number of consumerswas willing, to pay up to 150% more for organic eggs than for eggs which wereproduced in conventional cages.
Due to thedevelopment of the last decade and the low growth rates it can be expected thatorganic eggs will remain a niche product for several more years in spite of theongoing discussion about product quality, product safety, animal welfare, andsupporting government programmes in several EU member states. The dissonancebetween the buying behaviour of the consumers and their statements as citizensabout the food they prefer and plan to buy is quite obvious.
The recent cases ofAvian Influenza infections in wild birds in several Central European countriesand in one turkey herd in France increased the risk of a further disseminationof this highly infectious disease. As a first reaction, consumers refrainedfrom eating eggs and poultry meat, which already resulted in considerable economicproblems for some poultry meat processing companies. Several countries issueddirectives which prohibit free range husbandry of poultry. If statements ofvirologists are correct that it may take between 50 and 150 years until a wildbird population develops that is resistant against the H5N1 virus, then thepoultry industry will for al long time be confronted with the risk of freerange systems. So it is not surprising that in several countries theprohibition of such systems for a limited time, especially in densely populatedpoultry areas, is being discussed.
The main results ofthe fourth step of this analysis can be summarised as follows:
- In2004, about 47 million laying hens or 12% of the total hen population were keptin alternative husbandry forms in EU member states.
- Theshare of alternative husbandry forms is higher in Scandinavia, the UnitedKingdom, and Ireland than in most of the Central and Southern Europeancountries.
- Theincreasing demand for non-cage eggs has led to a continuous growth of the shareof alternative husbandry forms. In Germany, the decision of some leadingretailers, especially discounters, not to sell cage eggs any longer, has led toa remarkable increase of alternative egg production within a few years.
- Inspite of this trend, organic eggs are still a niche product in most of the EUmember states. Their share of total egg consumption is less than 2% with theexception of Denmark and Austria.
- Onereason for the limited success of organic eggs is the much higher retail pricefor these eggs compared to eggs produced in conventional cages or floormanagement respectively free range systems.
- Recentcases of Avian Influenza infections in wild birds and a turkey herd in Francemay have lasting impacts on free ranges systems in poultry husbandry and evenlead to a banning of this form in several countries.
6. Perspectives
What are theforeseeable perspectives for the global and the EU egg industry?
It can be expectedthat the next decade will also be one of a remarkable dynamic and that thecontribution of developing countries to global egg production will furtherincrease with a growing buying power of the population. New centres ofproduction will develop in South and in Southeast Asia as well as in LatinAmerica. Some of the countries may even become attractive trade partners forthe EU from 2012 on when the full implementation of the EU directive forkeeping laying hens (1999/74/EC) will make the EU an egg deficit region.
The futuredevelopment of alternative husbandry forms for laying hens in the EU willdepend on the decision of the leading food retailers to either ban cage eggs orto further sell them, and on the buying behaviour of the consumers. Theirreaction to recent cases of Avian Influenza in several EU member states hasshown that a further dissemination of the highly infectious disease will havefar reaching impacts on egg and poultry meat consumption. If the disseminationcannot be stopped within the next months and the industry has to live with thethreat of a virus transfer from wild birds to poultry flocks, the result couldbe a banning of free range systems in densely populated poultry areas. Severalcountries would then have to review their decisions to promote a shift fromkeeping laying hens under roof and in enriched cages to free range systems.
References
EUROSTAT:http://europa.eu.int/comm/eurostat/
FAO database: www.fao.org.
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Windhorst, H.-W.(2004). Will Germany actually ban cages in 2004? ? Zootecnica International 26,no. 4, 18-29.
Windhorst, H.-W. (2005a). Challenges for theglobal egg industry. ?Zootecnica International 27, no. 5, 14-28.
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