WASHINGTON, March 2, 2016 - U.S. food manufacturers’ and retailers’ demand for eggs from hens free of confinement in cages has created “the most fundamental change in the egg industry that I’ve ever witnessed,” says the CEO and co-founder of Rembrandt Foods, in Spirit Lake, Iowa, “and there’s a lot more to come.”

Addressing USDA’s 92nd annual Agricultural Outlook Forum, David Rettig predicted that more than one-third of the nation’s 300 million egg-laying hens would be in a cage-free environment within seven years. “It’s the most significant change that we’ve ever been part of,” he said. “What is truly unprecedented is the amount of capital required to make these changes.”

“A majority of the leading food companies within the food service, restaurant and CPG (retail) categories have made a commitment to cage-free eggs,” Rettig said, many of them committed to a 10-year time frame. “Ahold USA, one of the largest suppliers of retail eggs, has committed to all private label eggs being cage-free by 2022.”

Just since September 2015, the Humane Society of the United States (HSUS) has issued press releases claiming credit for obtaining cage-free commitments from McDonald’s, Starbuck’s, Jack in the Box, General Mills, Trader Joe’s, Kellogg, Flowers Food and Ahold. Albertson’s and Kraft Heinz announced this week that they’ll use or sell only cage-free eggs by 2025. Costco agreed to go cage-free but with no deadline, saying it will “take time because currently over 90 percent of the supply of eggs is from caged hens and because other retailers and restaurants are also moving to cage free requirements, placing greater demands on the limited supply.”

Rembrandt appears to have anticipated the demand. “We have been investing almost solely in cage-free (facilities) for the last five years,” Rettig said. “The general industry, up until recently, has taken a different view.” He senses that a consensus is forming and new production will just pivot to cage-free, skipping the “enhanced cages” mandated by California. “The last six months has pivoted a lot of producers into that.”

In addition to investments in new houses, Rettig described “a variety of extra costs” to produce cage-free eggs. “The huge amounts of capital” required are “truly unprecedented,” he said. “People think it’s cheaper – actually it’s more expensive.” In addition to capital, he said, cage-free production entails “higher feed costs; birds are expending more energy during the day than traditional formats. There is the collection issue – more traditional operations get 100 percent, almost assured. Within cage free, that is being worked on but certainly it is not 100 percent today.”

While Rettig did not predict the extent of the increase, a 2015 industry-funded study concluded that a dozen cage-free eggs cost about 15 cents more to produce, likely passed to the consumer.

Cage-free production has seen a 13.6 percent annual growth since 2007, he said, with about 23.6 million layers today “almost tripling in eight years,” Rettig said. He anticipates that cage-free eggs in retail stores will increase from about 12 percent of the market today to 30 percent in the next seven years. He expects food service companies and manufacturers, who today use only about 4 percent to 5 percent cage-free eggs, to increase that to the 40 percent rate by 2022. “If these views are accurate, we will need 116 million cage free layers by 2022, up from 23.5 million in 2015.”

Rettig described privately-held Rembrandt Foods as the third largest egg production company in the U.S. and likely the fifth or sixth largest in the world, but the largest “in line” producer of egg products, making more than 200 ingredients that end up in mayonnaise, sauces and other foods.


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