Effects of housing system on the costs of commercial egg production.

This article reports the first publicly available egg production costs compared across 3 hen-housing systems. We collected detailed data from 2 flock cycles from a commercial egg farm operating a conventional barn, an aviary, and an enriched colony system at the same location. The farm employed the same operational and accounting procedures for each housing system. Results provide clear evidence that egg production costs are much higher for the aviary system than the other 2 housing systems. Feed costs per dozen eggs are somewhat higher for the aviary and lower for the enriched house compared with the conventional house. Labor costs are much lower for the conventional house than the other 2, and pullet costs are much higher for the aviary. Energy and miscellaneous costs are a minimal part of total operating costs and do not differ by housing system. Total capital investments per hen-capacity are much higher for the aviary and the enriched house. Capital costs per dozen eggs depend on assumptions about appropriate interest and depreciation rates. Using the same 10% rate for each housing system shows capital costs per dozen for the aviary and the enriched housing system are much higher than capital costs per dozen for the conventional house. The aviary has average operating costs (feed, labor, pullet, energy, and miscellaneous costs that recur for each flock and vary with egg production) about 23% higher and average total costs about 36% higher compared with the conventional house. The enriched housing system has average operating costs only about 4% higher compared with the conventional house, but average total costs are 13% higher than for the conventional house.

Sustainability of egg production in the United States--the policy and market context.

The US egg industry is being pressured from many directions to change its production practices, particularly to address concerns about hen welfare in conventional cage systems. Responding to similar pressures, in 1999, the European Union banned conventional laying cages starting in 2012. This now impending European ban has led to the development of several alternative housing systems. These include noncage systems like aviaries and modified (enriched or furnished) cages that include perches, areas in which the hens can forage and dustbathe, and nests. Understanding the European experience is valuable as the United States considers the future direction of the egg industry. In the United States, the proportion of eggs produced in alternative systems is small (less than 5% of output) but growing, in part due to market and political incentives for systems that provide hens with more behavioral freedom than conventional cages. Animal welfare, however, is only one element of a sustainable production system. Other elements include those related to public values, the environment, economics, worker health, and food safety and quality. Eggs are a primary source of animal protein globally, and the United States is the third largest producer of eggs in the world, behind China and the European Union. The national table egg flock comprises about 280 million hens housed in all regions but with approximately 60% of eggs produced in the 10 leading states. Adopting new housing systems will have substantial effects on costs and other aspects of egg production on both a regional and national scale, with some positive effects but also potential negative effects that need to be carefully considered. This paper discusses the US egg industry in the context of legislation and standards related to hen housing systems. It also addresses initiatives by retailers, nongovernmental organizations, and private certification organizations to shape production practices in the egg industry as well as how those initiatives might affect various aspects of the sustainability of egg production.

Economic and market issues on the sustainability of egg production in the United States: analysis of alternative production systems.

Conventional cage housing for laying hens evolved as a cost-effective egg production system. Complying with mandated hen housing alternatives would raise marginal production costs and require sizable capital investment. California data indicate that shifts from conventional cages to barn housing would likely cause farm-level cost increases of about 40% per dozen. The US data on production costs of such alternatives as furnished cages are not readily available and European data are not applicable to the US industry structure. Economic analysis relies on key facts about production and marketing of conventional and noncage eggs. Even if mandated by government or buyers, shifts to alternative housing would likely occur with lead times of at least 5 yr. Therefore, egg producers and input suppliers would have considerable time to plan new systems and build new facilities. Relatively few US consumers now pay the high retail premiums required for nonconventional eggs from hens housed in alternative systems. However, data from consumer experiments indicate that additional consumers would also be willing to pay some premium. Nonetheless, current data do not allow easy extrapolation to understand the willingness to pay for such eggs by the vast majority of conventional egg consumers. Egg consumption in the United States tends to be relatively unresponsive to price changes, such that sustained farm price increases of 40% would likely reduce consumption by less than 10%. This combination of facts and relationships suggests that, unless low-cost imports grew rapidly, requirements for higher cost hen housing systems would raise US egg prices considerably while reducing egg consumption marginally. Eggs are a low-cost source of animal protein and low-income consumers would be hardest hit. However, because egg expenditures are a very small share of the consumer budget, real income loss for consumers would be small in percentage terms. Finally, the high egg prices imposed by alternative hen housing systems raise complex issues about linking public policy costs to policy beneficiaries.

Anticipating market effects of new uses for whey and evaluating returns to research and development.

As U.S. dairy farms continue to become more productive, increasing demand is a key to improved economic prospects for the dairy industry. One way to expand demand for dairy products is to find new, economically viable uses for milk. Ex ante economic analysis of new uses for agricultural products anticipates the potential market effects of innovations, and provides a basis for evaluating investment in research and development and setting research priorities. This study evaluated potential economic effects of new applications of films and coatings made from whey protein. An economic simulation model was used to predict the likely effects of the innovations on dairy markets. Cost comparisons with existing technologies and interviews with industry officials were the basis for evaluating potential for commercial adoption of the innovations. The economic simulation model traces the projected increased demand for whey through the markets for dairy products and milk. The associated increased demand for milk could result in benefits to U.S. milk producers of $123.0 million in present value terms, compared to a research cost of $ 4.9 million, with the dairy industry, consumers, and taxpayers all contributing. Interpreting the cost of the research program as an investment on behalf of milk producers, the benefits to producers from development of new whey uses represent an annual rate of return between 28 and 33%. These results are useful for evaluating further investment in the whey research program. The methods illustrated here are applicable to the evaluation of a wide range of research and promotion efforts.

Migration plans and hours of work in Malaysia.

"This article describes characteristics of prospective migrants in the Malaysian Family Life Survey and investigates how planning to move affects hours of work. [The authors] use ideas about intertemporal substitution...to discuss the response to temporary and permanent wage expectations on the part of potential migrants. [An] econometric section presents reduced-form estimates for wage rates and planned migration equations and two-stage least squares estimates for hours of work. Men currently planning a move were found to work fewer hours. Those originally planning only a temporary stay at their current location work more hours."