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Rows of brown chicken eggs

The Changing Egg Market

When an average American consumer goes to the grocery store, they might be amazed at the difference from 15 years ago. Gone are the days where a consumer had limited options in the egg aisle. Now a consumer must decide between options such as conventional, cage-free, free-range, organic, vegetarian fed, and so much more. At times the amount of options and considerations can be overwhelming for consumers. Most consumers simply want to pay as little as possible for eggs, but many consumers also want to choose the healthiest eggs for their families and to purchase eggs produced from the most humane methods available. The federal government does not provide consumers with any guidance, however some states have affected the way consumers buy eggs at the store, especially concerning cage-free and conventional eggs. For example, California and Massachusetts have passed laws that require all eggs produced and sold in their states are produced using cage-free systems or enriched colony systems.

Let’s first take a look at how eggs are produced in the United States. Over the last ten years the United States egg industry has seen a drastic change in consumer preferences and state laws. For decades, the “conventional” cage system has been considered the industry norm. Conventional houses are designed with the hens located in a wire cage. The eggs have the ability to roll onto an egg belt, where they can be collected periodically during the day. Manure is collected on a manure belt to help manage and control litter. However, some companies are starting to switch to a cage free system. A cage-free house allows the hens to freely roam around the houses and allows the hens to have access to nest boxes/areas, perches, and a floor area. This gives the birds more room to exhibit natural behaviors. A combination of these two systems can be used, which is called an enriched colony. An enriched colony system puts the hens in cages, however it also allows them additional room to stand, sit, and extend their wings. Enriched colony systems also have perches and scratch pads available, but uses manure belts to control litter and egg belts to collect eggs. A great illustration of how the conventional egg system, cage-free system, and enriched colony system are set up can be found here.

In 2010, the Coalition for Sustainable Egg Supply began a project to look at the costs and benefits for each of the three different laying hen systems. In terms of animal health and well-being, there appears to be a positive impact in regards to behavior and tibia/humerus strength with both the cage-free system and the enriched colony system. This improvement in health is a result of the hen’s ability to move freely around the house. These two systems also have significantly fewer hens located within each house than a conventional system. Although cage-free systems have numerous benefits, there are also significant costs associated with a cage-free system, such as a significant increase in cannibalism, aggression, mortality, and keel damage. Indoor air quality and PM emissions appear to be worse in cage-free systems as well. There is more worker access to the hens in cage-free systems, but worker’s particulate matter and endotoxin exposure appears to be substantially worse. Enriched colony systems are similar, but also have the benefit of better controlled ammonia emissions. Overall, the biggest complaint concerning cage-free system and enriched colony system is the increase of cost in the eggs. This is due to an increase in operating cost and total capital.

The conversion to the cage-free system and enriched colony system seems to have started in 2008 with the passage of Proposition 2 in California, when it passed with 63.5% of the votes. Proposition 2 requires all egg-laying hens “be confined only in ways that allow these animals to lie down, stand up, fully extend their limbs and turn around freely.” In 2010, Governor Arnold Schwarzenegger signed AB 1437. into law. This bill, which was implemented in 2015, “prohibit[ed] the sale of a shelled egg for human consumption if it is the product of an egg-laying hen that was confined on a farm or place that is not in compliance with those animal care standards and would make violations of these provisions a crime.” This required any eggs produced or sold in California must comply with AB 1437. In addition, the Shell Egg Safety Rule provided a stocking density for number of hens per cage, which became effective in 2015. The stocking density is provided here:

No. Of Hens 1 2 3 4 5 6 7 8 ≥9
Sq. Inch / Hen 322 205 166 146 135 127 121 117 116

There is a misconception that these laws banned hens from being in battery cages, which is far from true. As seen in the Shell Egg Safety Rule, hens can be in a cage, but California has ensured that these hens have more freedom of movement. Although many companies have converted to cage-free, this has led to some companies using an enriched colony approach to their egg-laying facilities. This still places the hens in a control environment within a cage setting, however allows them to have the 116 square inches required by the Shell Egg Safety Rule.

Naturally, these laws were not met with favorable views from the agriculture industry, states, and companies. Since 2008, there have been three lawsuits that have attacked California’s laws. The first case, Cramer v. Harris et al., was brought by California egg producers in 2012. The district court dismissed the case and the egg producers appealed to the 9th Circuit. They argued that Proposition 2 was unconstitutionally vague. The Court affirmed, finding that a “person of reasonable intelligence can determine the dimensions of an appropriate confinement that will comply with Proposition 2.” Also in 2012, the Association of California Egg Farms filed suit against California. The ACEF also argued “language of Proposition 2 is unconstitutionally vague according to California law.” The Superior Court rejected this argument, but granted leave to amend. It held that the statute’s definition of confinement in terms of animal behavior instead of square inches “does not render the statute facially ambiguous.” The ACEF never amended their complaint and the suit was dropped.

The final case filed was State of Missouri v. Harris. Six states (Missouri, Nebraska, Alabama, Kentucky, Iowa, and Oklahoma), argued that AB 1437 violated the Commerce and Supremacy Clauses of the United States Constitution. The states argued that producers in their states could either “incur massive capital improvement costs to build larger habitats for some or all of their egg-laying hens, or they can walk away from the largest egg market in the country.” The Court dismissed this case for a lack of standing, which was then appealed to the Ninth Circuit Court of Appeals. On November 17, 2016, the Court of Appeals affirmed the dismissal of the case. The Court found the states did not establish standing because there were “no specific allegations about the statewide magnitude of these difficulties or the extent to which they affect more than just an identifiable group of individual egg farmers.” The Court also concluded there was no discrimination because “California egg farmers are subject to the same rules as egg farmers from all other states, including California itself.” It is not known what the states next action will be in this matter.

After the 2015 implementation of California’s laws, 77% of Massachusetts’s citizens decided to pass a similar bill in November 2016. Question 3 prohibits a “farm owner or operator from knowingly confining . . . egg-laying hen in a way that prevents the animal from lying down, standing up, fully extending its limbs, or turning around freely.” Question 3 further prohibits a business owner selling “whole eggs intended for human consumption . . . if the business owner or operator knows or should know that the hen . . . produced these products was confined in a manner prohibited by the proposed law.” This, like California, will prohibit the sales of eggs outside of the state that are produced in conventional cages. So far it is still too early to know what effects this law will have on the egg industry, Question 3 won’t be implemented until January 1, 2022, but will likely have additional effect on companies producing eggs outside of the state.

Despite these new laws, market changes have potentially been the biggest change to the egg industry. In the past few years, many stores and restaurants started requiring their supplier to provide cage-free eggs. Wal-Mart, the world’s largest retailer, announced in 2016 it would switch to cage-free eggs by 2025. This makes Wal-Mart join other companies like McDonald’s and Burger King, which have set a 2025 and 2017 deadline respectively. This has caused companies like Rose Acre, the second largest egg producer, to pledge “every facility it builds or refurbishes will lack cages.” Michael Foods and Cal-Maine are also is investing in cage-free systems.

No one knows what will happen over the next few years, but it does appear that the egg industry will drastically change. We could see more state laws passed, maybe a future federal standard, or more changes with consumer preference and the market. One thing is for certain though; this is not an issue that will go away any time soon.

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Due to the frequency and speed of changing laws, no guarantee is made as to the current validity or applicability of the information contained herein. Though we try to update information often, we recommend that readers with questions investigate current law or contact TLGNWA directly through our contact form or by calling (479) 334-3411.