Overview of the European Egg Market EPC Conference, 18 th October - PowerPoint PPT Presentation

Overview of the European Egg Market EPC ‐ Conference, 18 th October 2011 Enno Herlyn

Overview of the European Egg Market 1. Actual European egg market 2. Cage Ban from 1.1.2012 ‐ Impact of the cage ban – the example of Germany 3. Outlook and conclusion

Overview of the European Egg Market 1.Actual European egg market

1. Actual European egg market Per Capita Consumption of Eggs in the EU, 2010 - 4 -

1. Actual European egg market Development of production and consumption - 5 -

1. Actual European egg market Self Sufficiency - 6 -

1. Actual European egg market Supply balance - 7 -

- 8 - World production

2010: egg shortage due to transformation period + high demand (Easter) � highest price 14 € (~ 20 $)! 1. Actual European egg market 2011: Further price decline due to Dioxin crisis to 5.4 € (~7.7 $) Prices - 9 -

Actual Situation in Europe Reduction of placements in Europe Placements of layer chicks in 06.2011 in comparison to 06.2010 (ema) France 16,0% ‐ +/- 0,0% Italy Spain ‐ 11,7% Poland ‐ 19,3% Germany + 4,0% +/- 0,0% Portugal UK ‐ 5,1%

Overview of the European Egg Market 2. Cage Ban from 1.1.2012

2. Cage Ban • EU – Derective 1999/74/EG from 19.7.1999 for all EU-Countries: No conventional cage as of 1st January 2012

2. Cage Ban • The directive decided that: � from January 1st, 2012 on all cages will be prohibited. � from January 1st, 2003 on no such cages must be installed in EU member countries. � Member countries may decide to ban cages earlier and to tighten regulations of the directive

2. Cage Ban for example Germany Legal background (1) • The German administration made use of the regulation in Directive 1999/74/EC that the member countries could tighten the regulations of the directive and apply the directive earlier than January 1st, 2012. • In 2006, the German Parliament (Bundestag) passed the Animal Welfare Law which stated that: � conventional cages would be prohibited in Germany by January 1st, 2009 (three years earlier than in other member countries of the EU), � the regulatory statutes for keeping laying hens would deviate from the EU directive in the following way: ISPA

Legal background (2): • Enriched cages according to Directive 1999/74/EC would not be permitted in Germany. • Instead, colony nests ( Kleingruppenhaltungen ) would be permitted, if: ISPA

Enriched Cage Europe vs. Colony Cage Germany Legal background (3): Enriched cage Colony cage 25.000 cm ² Minimum area 20.000 cm² (3100 sq inch) (3875 sq inch) Minimum area per 750 cm ² (116 sq inch) 800 cm ² (124 sq inch) Layer over 2 kg 900 cm ² Hight of the cages 20 cm (7.9 inch) at 45 cm (17,7 inch) partly every point, including 20 cm (7,9 inch) the perch area possible. Nest Yes, but not defined 90 cm ² 90 cm ² Litter Yes, but not defined Perch per layer 15 cm (5.9 inch) 15 cm (2 levels) Feed offering per layer 12 cm (4,7 inch) 12 cm

The transformation process: • The transformation of cages to alternative systems began in 2007, but most of new systems were not implemented before 2009 and 2010. • In the fourth quarter of 2009, many egg companies placed pullets in their old cages because of the lower production costs. • In 2010, the leading food retailers announced that they would no longer list eggs produced in any form of cages, including colony nests (pressure of NGOs). • The installation of colony nests immediately stopped and most of the egg companies switched to barn systems, which caused high financial losses.

Development of German egg production (in 1,000 t) • continuous decrease of egg production since 2000 • impacts of the banning of cages FAO / EMA 2011 Decrease by 23.5 %

Development of the German self sufficiency rate between 2002 and 2009 • The self sufficiency rate fell from 74 % to only 59 % in 2009, while the share of imports increased by 1.4 billion eggs (between 2008 and 2009). 450 80 Import volume of shell eggs in t Self sufficiency rate in % 400 74,0 75 350 Import volume of shell eggs in 1,000 t 71,2 70,7 70,6 300 70 68,5 Self sufficiency rate in % 67,8 67,4 250 65 430 200 391 346 59,0 307 150 60 273 258 251 246 100 55 50 0 50 2002 2003 2004 2005 2006 2007 2008 2009

Development of German shell egg imports between 2008 and 2010; data in mill. pieces Imports 2008 2010 Change absolute % (mill.) Total 5,606 7,701 + 2,095 + 37.4 Imports from: Netherlands 4,203 5,427 + 1,224 + 29.1 Poland 404 674 + 270 + 66.8 Import share of the Netherlands: 2008: 75.0 % 2009: 77.6 % 2010: 70.5 % Share of the Netherlands regarding Germany´s import increase: 58.4 % MEG

Results: _______________________________________________ • Layer flocks in Germany decreased by over 15.6 % between 2005 and 2010. • Egg production decreased by over 800 mill. pieces between June 2009 and June 2010. • The self sufficiency rate fell from 74 % to only 59 %. • Shell egg imports increased from 5.6 billion eggs in 2008 to over 7 billion eggs in 2009. • About 200 mill. € were invested by the industry to meet the German legal regulations. • At the end of 2010, about 18 % of the layers were housed in so-called „Kleingruppenhaltungen“ and enriched cages.* Most of the layers were housed in barn systems (62.8 %). Organic systems shared 6.2% and free range systems 12.9 %.

Status of reconstruction Layer in Cage Status of production Production reconstruction (total 2010) 2010 (Estimation) Italy 49 Mio. 75% 50% 45 Mio. 70% France 78% Spain 44 Mio. 96% 40% Germany 41 Mio. 20% 100% UK 34 Mio. 90% 52% 37 Mio. 50% Poland 92% Netherlands 33 Mio. 66% 90% Belgium 9 Mio Portugal 6 Mio. 50% Hungary 5,5 Mio 75 %

Costs…….

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Overview of the European Egg Market 3. Outlook and conclusion

Development of the population _____________________________________________________________________ Quelle: UN Population Reference Bureau ____________________________________________________________________ Breeding for success....together F

Development of the population _____________________________________________________________________ Quelle: UN Population Reference Bureau ____________________________________________________________________ Breeding for success....together F

- 29 - 2. Outlook

Conclusion Europa • Cage production is going back. Alternative systems coming up. • Consumers and trading companies determines more and more markets. It will be interesting to be seen when the last cages are changed in Europe and how a change in consumer behavior affect the production structure. • Due to the delayed and slow change in the production and use of the old systems to the end the forecast will be right that there will be no decline in egg production in 2011. • During the year 2012, but - at least temporarily, we will see a decreasing egg production. This will then also lead to a discharge to the European markets and thus hopefully lead to a increase of the egg price.

Conclusion World The world egg production will increase further. a. Population growth by enhancing growth rate (2050 about 30% increase). b. Rising per capita consumption (instead of 154 to 194 eggs, then cover eggs). If the current trend continues, it is necessary to increase the production by 64%). • Eggs are a good opportunity to satisfy the increased demand for animal protein. • A limiting factor could be the availability of feed.

Thank you for your attention