W37: Chicken Egg Update

In W37 in the chicken-egg landscape, the European Commission (EC) is considering easing the constraints of its animal welfare plan to limit its potential impact on inflation and egg prices. This animal welfare plan is part of a broader strategy to revise European standards across the entire food supply chain. Proposed initiatives include expanding poultry breeding areas, modernizing slaughterhouses, and implementing a ban on grinding and gassing male chicks. However, adopting these proposals to improve animal welfare could raise production costs for producers and breeders by up to 15%, ultimately impacting consumer prices. For example, banning the grinding and gassing of male chicks could increase the cost of a dozen eggs by USD 0.60.

In China, during the first week of Sept-23, the national average price of eggs reached USD 1.70 per kilogram (kg), reflecting a 1.3% week-on-week (WoW) increase but a 1.9% decrease year-on-year (YoY). The price was slightly lower in the ten main egg-producing provinces, including Hebei and Liaoning, at USD 1.62 /kg, up 2.3% WoW and down 4.5% YoY.

China has been grappling with an ongoing egg shortage issue that originated in Jul-21 due to reduced demand amid the pandemic. The Ministry of Agriculture attempted to address the problem with a reward system for culling laying hens but overlooked the time required to raise new ones. Consequently, egg shortages persisted towards the end of 2021, resulting in price hikes. Additionally, disruptions in egg supplies from Japan to Taiwan due to avian influenza in late 2022 aggravated the egg shortage situation in 2023. The problem was exacerbated by flawed reporting mechanisms, and the Ministry of Agriculture's failure to conduct inspections allowed the issue to persist. The proposed solution was to import eggs from Brazil, but this initiative remains controversial.

Lastly, in the Netherlands, laying poultry farmers experienced historically high egg prices in the first half of 2023, although prices have since decreased. Nonetheless, the sector still benefits from favorable margins due to lower feed prices. Broiler farmers are also enjoying above-average profitability. However, the presence of bird flu creates uncertainty and challenges for forecasting in the poultry sector.