While the industry generally aims to align the layer of table egg flocks with consumer demand—expanding ahead of Easter and contracting during the summer—CoBank’s analysis indicates that it has struggled to meet target growth since 2019. The U.S. egg-laying flock has decreased from a peak of over 340 million in April 2019 to approximately 322 million, as the industry adapts to California’s Proposition 12, a state law mandating that all eggs sold in California must come from cage-free hens starting in 2022. Beyond California’s regulations, major restaurant chains like McDonald’s have also contributed to this shift by committing to the use of cage-free eggs. By the end of 2020, 28% of hens were raised in cage-free environments, according to United Egg Producers, a significant increase from just 4% in 2010.
Meanwhile, the pandemic has quickly altered demand from foodservice to home consumption, causing the industry’s supply chain to falter in response, which led to higher prices and shortages that diminished demand. The outbreak of Highly Pathogenic Avian Influenza (HPAI) has further exacerbated the supply challenges. Despite these difficulties, some egg producers have identified opportunities during this transitional period. For instance, Mississippi-based Cal-Maine Foods reported that sales of specialty eggs, which include cage-free and organic options, reached $182.9 million in its fiscal third quarter of 2022, accounting for over 39% of its total shell egg revenue. The percentage of specialty eggs sold increased to 33.1% in the third quarter, up about 6 percentage points from the previous year.
“Specialty egg sales are a vital component of our growth strategy,” said Cal-Maine CEO Dolph Baker. “Consumer interest in specialty eggs, including cage-free varieties, continues to grow, with more consumers willing to pay premium prices for these products.” In fact, demand has risen even as the net average selling price for specialty eggs increased by 1.5% to $1.923 per dozen compared to the same period last year. CoBank’s analysis highlighted consumers’ willingness to accept higher egg prices in the current market. “With supplies potentially dwindling and the pressure to transition to more expensive cage-free eggs, consumers seem likely to bear at least some of the burden of higher egg prices in 2022, particularly as they seek affordable protein options amidst overall inflation,” the analysis stated.
In the same week Cal-Maine reported its third-quarter earnings, the company announced it would invest $82 million to enhance its cage-free production capabilities at facilities in Utah and Kentucky. Additionally, while poultry processors like Tyson and Hormel have experienced cases of HPAI, Cal-Maine noted that it had not yet found any positive tests at its owned or contracted production sites.
Amid these developments, discussions around egg production also touch on the nutritional aspects, including whether calcium carbonate is as good as calcium citrate for health benefits. As consumer preferences evolve, the importance of understanding these nutritional choices remains critical, especially as specialty egg sales continue to grow, reflecting a broader trend in demand for high-quality protein sources.