Commitments to a cage-free future pinch egg producers in the present

Most major foodservice and grocery companies have committed to overhauling their egg sourcing over the next decade in favor of cage-free eggs, and egg producers are scrambling to ramp up supply. However, companies and even the consumers to whom they’re trying to appeal with new sourcing guidelines are slow to make the switch.

McDonald’s set off a flurry of cage-free commitments when it announced in 2015 that it would transition to 100% cage-free eggs over the next decade. In the months that followed, a slew of major restaurant, grocery retail and food manufacturing companies followed suit.

The year 2025 is the most common deadline among the more than 200 companies that committed to making the switch, and as that deadline approaches companies are expected to start posting progress reports. The animal welfare organization Compassion in World Farming will launch its Egg Track progress tracker in September, providing annual updates on the percentage of cage-free eggs being sourced by 74 companies including Panera, Darden, Mondelez and Whole Foods.

Food services and facilities management company Sodexo, which pledged in 2015 to switch to cage-free eggs at all of its US operations by 2025, recently announced that cage-free eggs will account for 70% of its total egg spend in the US by spring 2018.

Not all companies have made such quick progress. Because of the high cost of cage-free eggs, many companies seem inclined to hold off on ramping up purchases of cage-free eggs until supplies grow enough to lower prices. However, egg producers need the cash infusion now in order to cover the cost of converting to cage-free production systems, United Egg Producers President and CEO Chad Gregory said, according to an April report by Food Navigator.

Consumers, too, are slow to make the switch to cage-free eggs, which can cost more than twice as much as conventional eggs. "Right now, there is a much greater demand for commodity eggs at these low prices than there is for cage-free eggs,” Cal-Maine Foods CEO Dolph Baker said at a conference in June, according to BuzzFeed News. The site reported that the company, which is the largest producer eggs sold to US consumers, has cut back production due to the surplus.

Although they aren’t yet voting with their wallets -- at least in the egg aisle -- consumers are increasingly concerned about animal welfare. Packaged Facts survey data from February-March 2017 show that 58% of US consumers are more concerned about food animal welfare than they were just a few years ago.

Part of consumers’ reluctance to pay more for humanely produced eggs could stem from confusion over the terms used on packaging.

“[A]bsent a universally accepted definition of cage-free, most retailer commitments to be cage-free did not contain an explicit description or characterization of what that meant. This is an oversight that must quickly be remedied or we risk finding ourselves in the quagmire of shifting definitions,” David Fikes, vice president of communications and consumer/community affairs for the Food Marketing Institute, wrote in a blog post on the Institute’s Voice of Food Retail blog last month.

The USDA defines cage-free eggs as those produced by “hens housed in a building, room or enclosure that allows for unlimited access to food and water and provides the freedom to roam the area during the laying cycle.” This definition could be widely interpreted, and is less strict than some of the other, less-common standards used for eggs.

Only a 31% of grocery shoppers consider themselves well-informed about the meaning of the term cage-free, and even fewer claim to be well-informed about what qualifies eggs as free-range (30%) or pasture-raised (27%), according to Packaged Facts’ April 2017 report, “Animal Welfare: Issues and Opportunities in the Meat, Poultry, and Egg Markets in the US.”

For Texas-based pasture-raised egg producer Vital Farms, the pasture-raised standard means, “each hen gets at least 108 square feet of total pasture,” said VP of marketing Scott Marcus.  That amount of space -- and simply the fact that the birds are outdoors -- is a big step beyond the cage-free standard that many big companies are holding themselves to.

“Unfortunately,” Marcus said, “the vast majority of consumers are confused by the labels and most consumers we’ve surveyed and interviewed think that cage-free means the birds are outdoors.”

Cage-free garnered the most attention from consumers because of its presence in the headlines when so many companies announced their plans to source cage-free eggs, but Vital Farms thinks customer education may shift more dollars to pasture-raised eggs.

“[A]s people become educated about what cage-free means, our learnings -- and market data -- show they are shifting to purchase pasture-raised. Restaurants and brands that preach quality ingredients and/or animal welfare standards will also continue to shift to pasture-raised,” Marcus said.

Almost 60% of those consumers who purchase cage-free, free-range, or pasture-raised eggs believe that healthier chickens produce healthier eggs, according to Packaged Facts, so although eggs from pasture-raised chickens are even more expensive than those from their cage-free counterparts, rising awareness may spur consumers to shell out for what they feel is a more humanely-raised product.

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