In the early years of American agriculture, the majority of farmers raised chickens; these farmers produced eggs for either their own personal consumption, or for sale- whether this was to friends, neighbors, or the local grocer. However, the composition of the American egg industry has dramatically changed over the last 40 years. This period has seen a major shift away from small producers to large consolidated enterprises.
Egg production trends
By 1987, there were 2,500 egg producers in the U.S. with an average of 75,000 hens. In 1994, the number was down significantly to 350. In 2013, only 172 egg producers remained. Today, The American Egg Board explains that there are approximately 181 egg producing companies with flocks of 75,000 hens or more. These companies represent approximately 99 percent of all the hens in the United States. Out of those 181 egg producing companies, 62 of them have over 1 million-plus hens that represent 85 percent of the total egg production in the U.S.
Demand for eggs
Stable individual demand combined with population growth and increased production for exports have all contributed to the overall continuous market expansion and industry growth. It’s obvious that lack of demand is not a determining factor in the downward trend of small egg producers in the U.S.
So why are we seeing a smaller number of egg producers in the U.S. today? There are two factors to consider…
- Attrition: Small producers have left the industry because most haven’t adopted modern technology to help them manage their operation. They rely on spreadsheets and manual processes to accomplish daily tasks. Therefore, they are unable to compete with the more efficient modernized competitors.
- Industry Consolidation and Partnerships: Large egg producers have started forming partnerships and they continue to acquire the smaller companies as opportunities arise.
A few months ago, we heard about Moark selling its two Maine farms to Hillandale. With this acquisition, Hillandale will move into the top five egg producers based on the number of layers housed. Also, in our previous blog post “Joint Ventures to Remain California Compliant” we discussed the effects of Prop 2 on the egg industry and how a few large-scale producers have formed partnerships to increase their production capabilities and respond to an increase customer demand for specialty eggs. Two of the partnerships we brought up in the blog post were Cal-Maine’s partnership with Rose Acre Farms, and Rose Acre Farms’ partnership with Hidden Villa Ranch.
So not only are domestic companies partnering and investing in the future of egg production, but international companies are also taking their share of the cake. Companies such as Bochoco have purchased assets in the U.S.; Bachoco, which is a multi-protein company offering chicken, eggs and pork, purchased assets from Morris Hatchery in Georgia this past July. I wouldn’t be surprised if we see more international companies acquire smaller egg producers- it’s just a matter of time.
What this means to smaller egg producers and how can they stay afloat
Large enterprises benefit from resources and economies of scale to compete at a much more efficient level. Smaller producers must learn to adapt technology and grow, or possibly stay behind, while their competitors gain market share. The ones that have survived have focused on improving production technology, innovations in growing and formula research, and utilization of better information for decision-making and management.
Before spreadsheets took their share of the market in the 1970’s, smaller egg producers managed their entire businesses on paper records for both accounting and egg tracking. While this was pretty straightforward to learn, it wasn’t scalable and it was difficult to maintain. Most small organizations then replaced paper with a combination of disparate spreadsheets and homegrown solutions. These approaches are extremely time-consuming, tedious, error-prone and inflexible. Egg producers need a robust solution that helps them capture data and convert it into meaningful information.
So as the egg industry becomes more consolidated, egg producers must adopt technology that helps them stay afloat- this is critical. All operations, especially smaller ones, require the right information system tools to gain the competitive advantage to grow and adapt to the current state of the market.
Want to learn more about this technology that can help your layer operation stay competitive? Tune in to our Eggs and Poultry blog and our LinkedIn. We will be sharing some stories that might catch your interest!