Roughly 95 percent of consumers purchase eggs, and the demand for organic eggs has been steadily increasing since their sales first became regulated and monitored in 1999. Between 2000 and 2005, organic egg sales grew an average of 19 percent a year. At the moment, they represent 12.8 percent of the shell-egg market. Why is there such a demand? One reason is concern over the regular use of antibiotics in traditional layer flocks, and whether those antibiotics are being passed on to and affecting the quality of human immune systems. Another is concern for the hens. A growing number of consumers are willing to pay more for eggs they know came from a hen that is not spending her life in a cage. The fact that cage-free eggs hold over 25 percent of the shell-egg market speaks to that.
What is particularly interesting about this market is the premium organic eggs have over conventional eggs. The USDA AMS releases its egg market news report every Friday, and essentially it’s a summary on how much eggs are going for at the retail level. As I write, the most recent report shows 530 supermarkets in the Northeast are selling large, brown organic eggs for $3 to $3.99 a dozen. The average is $3.96. Meanwhile, the going price for USDA Grade A large, white (brown was not listed), conventional eggs in 170 supermarkets is $.88 to $1.29 a dozen. The average is $.90. So, the current price for a dozen organic eggs in the Northeast is more than quadruple the price for a dozen conventional eggs. From 2004 through mid-2006, the USDA AMS tracked organic egg premiums. The data show premiums ranged from 113 percent to as high as 414 percent. The average was 278 percent.
Why do organic eggs cost the consumer so much more than conventional eggs? The number one reason is the cost of organic feed. It’s estimated to cost 50 to 100 percent more than conventional feed and accounts for up to 70 percent of the cost of keeping organic layer hens. Why does the grain cost so much? The supply is limited with respect to the amount of acreage certified for organic grain production. As more and more farms have transitioned to organic practices, the supply has not kept up with demand.
In 2005, there were 25,762 certified organic acres dedicated to grain production in the Northeast. New York dominated with 16,002 acres, while New Hampshire and Rhode Island did not have any acres contributing to organic grain production. We all know what happens when demand exceeds supply. Many Northeastern organic livestock owners are forced to purchase grains grown in the Southeast or Midwest, and trucking grain comes at a price. Pennsylvania is one of the top states in the country when it comes to the production of organic eggs. In 2003, those farmers were purchasing grains shipped from other regions and paying 2.09 to 2.18 times the price of conventional grains. At the time, these were the highest prices paid for grain in the United States. They were able to do this because they passed that cost on to consumers who were willing to pay for it.
Another factor that plays into the price of organic eggs is there tends to be a lower rate of production and a higher rate of mortality in organic layer flocks. Consequently, the cost associated with replacement pullets is higher. The higher mortality rate is largely attributed to the free-ranging birds’ increased exposure to disease and parasites. They also experience a higher rate of predation, a predictable consequence that comes with the ability to roam free on the range. The majority of these deaths were due to infectious diseases. An organic layer flock’s health care is largely preventative. Adequate, high-quality food; clean, fresh water; and access to the outdoors will go a long way towards reducing stress and the incidence of disease. Another approach that reduces parasite loads is to rotate the hens from pasture to pasture through the use of portable “chicken tractors.” Vaccines can be used, but antibiotics, growth hormones and other unapproved synthetic and nonsynthetic substances are not allowed.
Although the price of organic grain and high mortality rates make up the majority of the cost of producing organic eggs, the time and money the farmer spends on organic certification and the process of documenting the layer flock’s management must also be factored in.
Is it all worth it? The farmers think so. The number of organic layer hens in 1997 was 537,826. By 2005, that number had risen to 2,031,056.
So, as long as those cartons of organic eggs keep moving off the shelf, there will be farmers willing and ready to replace them.
The author, a brand new contributor to Farming, is a biologist who lives and farms in Vermont’s Northeast Kingdom. Comment or question? Visit www.farmingforumsite.com and join in the discussions.