EGG INDUSTRY STATS SUMMARY FOR 2016

INDUSTRY OVERVIEW 1. Egg prices

According to Statistics SA (Stats SA), the average producer price for 2016, for all sizes, was

R15.34/dozen, compared to R14.79 for 2015; a 3.7% increase. These averages are weighted according to

the expected grade-out. They do not take all the rebates into account but allow for discount offered off

the list price.

Data collected from members of SAPA indicates that the average producer price of all sizes, net of

discounts and rebates, was R12.84/dozen (cage eggs). The percentage representation of the survey

increased from 13.2% in 2015 to 19.1% in 2016.

The average producer price for barn and free-range eggs in 2016 was R26.32/dozen. The overall

weighted average egg price for all production systems (cage, barn and free-range) was R13.32/dozen. In

the sample, 96.4% of the eggs were produced in cages and 3.6% in barns and free-range systems.

The difference between the two prices (SAPA versus Stats SA) was -R2.02/dozen (-13.2%) which is an

indication of the rebates taken by the retailers.

The retail price reported by Stats SA was R24.60/dozen large; a 6.5% annual increase. Stats SA’s

producer price for large eggs was R14.59/dozen. During the past five years, the mark-up on eggs has

increased steadily from 54% in 2012 to 69% in 2016 (Figure 1).

Figure 1: Annual producer and retail price of large eggs (source: Stats SA)

2. Price comparison with other protein sources

For the first time, eggs lost their position as the most affordable animal protein source, costing

R18.97/kg in comparison with R18.92/kg for broiler meat (at farm-gate level). Other prices were

R24.35/kg for pork (at abattoir level), and R31.11/kg and R37.79/kg for beef (class C2/C3 and A2/A3

respectively, at abattoir level).

3. International price comparison

The average price in the northeast region of the United States of America (USA) in 2016 for white, size

large, was US$0.91; for white, size medium, US$0.71; and for brown, size large, US$0.88 per dozen

(source: Urner Barry). Depicted in rands, using the average exchange rate of R14.70 to the US dollar for

the year 2016, white, size large, was R13.43; white, size medium, R10.49; and brown, size large, R12.89

per dozen.

The US Department of Agriculture gives the average prices per dozen for the northeast region for extra-

large, large and medium eggs as $0.80, $0.77 and $0.56 respectively. These equate to R11.76, R11.32

and R8.23 per dozen respectively.

Figure 2 shows the movement in egg prices in the USA over the past five years. The soaring prices in the

second half of 2015 were caused by egg shortages following the slaughter of over 40 million layers

infected with highly pathogenic avian influenza.

Figure 2: USA egg prices

4. Layer breeders

In 2016 there were an estimated 8 900 layer breeding hens in the grandparent operations producing

layer parents, and another estimated 327 000 layer breeding hens in the parent operations producing

layers. There are no pure lines or great-grandparents in South Africa.

5. Day-old pullets

Day-old pullet placements decreased by 3.5% in 2016, reaching a total of 24 021 063; an average of 460

740 per week (Figure 3). In terms of feather colour, 58.7% were silver and 41.3% were brown strains.

Figure 3: Trend in day-old pullets placed

6. Layer flock

The size of the national layer flock decreased by 0.2% during 2016 to 24.80 million hens (Figure 4). An

average flock of 24.26 million hens is projected for April 2017; a decrease of 792 000 hens (-3.2%)

compared to April 2016.

Figure 4: The national layer flock

7. Egg production

This year, 2016, saw a stabilisation in egg production (Figure 5). The average number of cases produced

per week was 406 773, a decrease of 996 cases (-0.2%) per week. Total egg production in 2016

amounted to 21.27 million cases, or 638 million dozen eggs; an increase of 0.03% compared to 2015.

Figure 5: Cases of eggs produced

Of all the forecasted marketable graded eggs (Grade 1) that were sold in 2016, 8.4% were size medium,

43.8% were large, 43.7% were extra-large and 4.1% were jumbo. There was a 3.4% increase in extra-

large and jumbo eggs compared to 2015, due to a decrease in the percentage of silver birds in the

national flock. The percentage of silvers has decreased from 66.2% in 2014 to 59.2% in 2015 and to

58.4% in 2016.

The table below summarises bird numbers and egg production and shows the changes for 2016

compared to the previous year.

Bird and egg numbers for the egg industry (millions)

Year DOP placed LRP placed Laying hens Cases of eggs

Per annum Per annum Avg. no. Depop. Per annum

2015 24.901 23.645 24.851 21.641 21.262

2016 24.021 23.393 24.801 21.975 21.268

Change -0.880 -0.251 -0.050 0.334 0.005

% Change -3.53 -1.06 -0.20 1.54 0.03

DOP = day-old pullets LRP = layer replacement pullets

Figure 6 illustrates the relationship between egg volume and producer price. The high year-on-year

increases in producer prices of 2013/14 were associated with a decreasing supply of eggs, or negative

growth in egg production. In 2015 and the first half of 2016, there was a small growth in egg volumes

and large increases in the producer price from mid-2015. Part of the price increase was due to the

change from a straight average to a weighted mean egg price.

Figure 6: Percentage change in egg volume and producer price

Figure 7 shows the trends in the official Producer Price Index (PPI) and Consumer Price Index (CPI) since

2013, with December 2012 as a base. As input costs rise, the producer price tends to adjust

automatically over time and this is reflected in changes to the PPI. The PPI for eggs has consistently

lagged behind the other indexes, except for a short period at the end of 2015.

Figure 7: Trends in PPI and CPI (source: Stats SA)

8. Prospects for 2017

The number of point-of-lay pullets placed is expected to decrease by 4.4% during the first four months

of 2017, compared to the same period in 2016.

An average flock of 24.3 million layers is projected for the first four months of 2017. This will be a

decrease of approximately 700 000 layers (-2.8%) compared to the same period in 2016. Consequently,

egg production is expected to decrease by 2.8% (an average of 11 270 cases per week) to an average of

398 000 cases per week in the first four months of 2017.

9. Gross value

With a gross turnover of R10.19 billion at producer level, eggs remain the fourth largest animal product

sector in agriculture in South Africa, after poultry meat, beef and milk (source: Department of

Agriculture, Forestry and Fisheries (DAFF)). The turnover increased by only 3.6% compared to 2015,

after an annual increase of 6.9% the previous year. Eggs’ share of the gross value of animal products was

8.5% and of all agricultural production 3.9%, down from 8.6% and 4.2% the previous year.

The total value at retail level was R16.3 billion for 2016. About 638 million dozen eggs were sold in 2016

through various channels.

10. Input costs

The average layer feed price for 2016 was R4 069/tonne; an annual increase of 18.9%. This followed

year-on-year increases of 23.7%, 12.0%, 4.8% and 0.5% in the previous four years. The layer feed price

includes distribution but excludes medication, additives and VAT. The movement in the feed price is

shown in Figure 8.

In 2016, the South African rand exchange rate averaged R14.70 to the US dollar, compared to R12.73 in

2015.

Figure 8: Layer feed price

11. Feed usage

The feed usage for layers and pullets is summarised in the table below.

Feed usage for the egg industry (tonnes)

Year Rearing Laying Total feed usage

Per annum Per annum Per annum Per week

2015 145 051 1 032 999 1 178 049 22 593

2016 140 811 1 034 185 1 174 996 22 534

Change -4 240 1 186 -3 053 -59

% Change -2.92 0.11 -0.26 -0.26

According to the Animal Feed Manufacturers Association (AFMA), national feed sales for the layer

industry from 1 April 2015 to 31 March 2016 amounted to 951 536 tonnes; a 0.1% year-on-year

decrease. Their national estimate, including feed manufactured by non-AFMA members, was 1 276 342

tonnes. SAPA’s forecasting models predicted a feed intake of 1 183 654 tonnes for the same period;

92_688 tonnes less (-7.3%).

12. Consumption

The per capita consumption for 2016 was 141.4 eggs or 8.05 kg, compared to 142.4 or 8.12 kg in 2015

(source: SAPA). While the population increased by a midyear estimate of 1.3%, the total consumption of

eggs decreased by 0.7%. Peak egg consumption in South Africa occurred in 2012 at 152.5 eggs per

person (Figure 9).

DAFF estimated the per capita consumption for 2016 as 134.8 eggs or 7.89 kg, allowing for a 5% loss.

Figure 9: Per capita egg consumption in South Africa

The annual per capita consumption of eggs for some of the top egg-eating nations is shown in Figure 10.

South Africa ranked 31st out of the 33 countries that took part in the 2015 International Egg Commission

(IEC) survey. Considerable scope still exists for increasing the per capita consumption of eggs in South

Africa, particularly when taking into account the price competitiveness compared to other animal

proteins.

Figure 10: Per capita consumption (source: IEC)

INDUSTRY TURNOVER

The estimated turnover from the egg industry is shown in the table below. Point-of-lay sales are not

included.

Year

DOP industry Egg industry Total

Price R/dop

Turnover (R million)

Producer price

(R/doz)

Turnover (R million)

Cull price

(R/bird)

Turnover (R million)

Turnover (R million)

2015 8.43 209.9 13.34 8 508.1 27.78 601.2 9 319.2

2016 8.63 207.3 13.32 8 500.2 27.84 588.3 9 295.8

Change 0.20 -2.6 -0.02 -7.9 0.06 -12.9 -23.4

% change 2.4 -1.2 -0.1 -0.1 0.2 -2.1 -0.3

SMALL-SCALE EGG FARMERS

These statistics summarise quarterly surveys conducted by Silverpath Consulting. All prices exclude

transport and VAT.

1. Hatcheries

An average of four hatcheries hatching day-old pullets, from four different provinces, responded to the

survey each quarter in 2016. The average representation in each quarter was in Limpopo (two) and

Eastern Cape, Free State and Gauteng (one each). On average, 75% of the businesses were owned by

females and 25% by males.

In total, 72 898 fertile eggs were produced for incubation in 2016. All of the hatcheries produced their

own fertile hatching eggs from breeding stock and did not buy fertile eggs in. The total number of day-

old pullets sold in 2016 was 50 971 at a weighted average price of R6.59/bird. The hatchery owners

battled to find a market and were thus forced to sell their stock below market value. Because of this,

there were fewer and fewer day-old pullet hatcheries contributing to the survey, declining from five in

the first quarter to only two in the fourth quarter. The weighted average selling price per day-old pullet

also saw an increase from R5.83 in Q1 to R9.19 in Q4. The total value of day-old pullet sales in 2016 was

R303 745.

2. Day-old pullets

An average of 11 pullet rearers, from four different provinces, responded to the survey each quarter in

2016. The average representation of farms in each quarter was in Limpopo (six), Gauteng (four), Eastern

Cape (one) and KwaZulu-Natal (one). On average, 44% of the businesses were owned by females and

56% by males.

The average number of pullets being reared across all farms was 14 954. The weighted average purchase

price per day-old pullet was R10.17. In 2016, 42% of the capacity of the rearing facilities was used; this

declined from 64% in Q1 to 33% in Q4.

3. Pullet feed

Apart from one respondent in Q1, all respondents bought their feed in bags in 2016. The average price

paid per 50 kg bag for starter mash was R296.81; for grower mash R294.97; and for developer mash

R288.08. The total quantity of bagged feed purchased during 2016 by pullet rearers was 337.4 tonnes,

that is, an average of 600 bags per farmer. The total value of bag feed purchases was approximately

R1 847 709 for 2016.

4. Point-of-lay sales

Of the pullet rearers selling point-of-lay birds, and not keeping them for their own laying operations,

total sales amounted to 28 223 birds for 2016. The weighted average selling price was R53.26 per bird.

5. Point-of-lay hens

An average of 62 egg producers, from all 9 provinces, responded to the survey each quarter in 2016. The

average representations of farms in each quarter were in Gauteng (24), Limpopo (11), Free State and

Northern Cape (7 each), Mpumalanga and North West (4 each), Eastern Cape, KwaZulu-Natal and the

Western Cape (2 each). On average, 46% ownership of the businesses was by females, and 54% by

males.

Ninety-four percent of egg producers bought point-of-lays, while the remaining 6% reared their own

pullets in 2016. Seventy-seven percent of the hens were kept in battery cages; free-range farms

represented 19%, 2% of egg producers had both free range and caged hens, while 1% of hens were kept

in barns.

Small-scale farmers responding to the survey owned a total of 141 812 hens on average during the year.

The weighted average purchase price per point-of-lay pullet was R61.92. In 2016, 49% of the capacity of

the laying facilities was used; there was a general decline from 52% in Q1 to 47% in Q4.

6. Layer feed

Eighty-eight percent of respondents bought their feed in bags in 2016, while the remaining 12%

purchased in bulk. The average price for laying mash, excluding VAT and transport, was R266.53/50 kg

bag. In total, 1 933.4 tonnes of bagged layer feed was purchased during 2016; approximately 626 bags

per farmer. The total value of bag feed purchases was R10 224 310 for the year. The respondents buying

in bulk bought 3 540 tonnes at a weighted average price of R4 349.32/tonne for layer mash. The total

value of bulk feed purchases was R15 601 584.

7. Egg sales

Total sales amounted to 2 095 271 dozen in 2016, at a weighted average egg price of R13.18/doz. The

average rate of lay was 60.7%. The total value of eggs sold amounted to R27 535 609.

8. Cull hen sales

In total 358 059 culls were sold in 2016 at a weighted average selling price of R35.43/hen.

TRADE

1. Exports

During 2016, exports of chicken eggs for consumption totalled 6 410 tonnes, with a value of R153.7

million; a 26.9% decrease compared to 2015. In addition, 8 941 tonnes of fertile chicken eggs were

exported during the year, with an export value of R249.5 million.

Product (Gallus domesticus) Value (R million) Quantity (tonnes) % of exports

Fertilised eggs for incubation 249.5 8 941.4 58.2

Shell eggs (fresh and preserved) 127.8 5 366.7 35.0

Egg product (yolks, raw pulp, albumins) 25.9 1 043.6 6.8

liquid egg product 4.7 112.6

dried egg product 21.2 931.0

Total exports 403.2 15 351.7 100.0

The destinations of egg exports (for consumption and fertilised) were mainly Mozambique with 68.2% of

the total exports, followed by Swaziland with 8.7%, Zimbabwe 8.3%, Lesotho 7.4%, Cote d’Ivoire 2.3%,

Botswana 1.2%, Namibia 1.1%, and Angola 1.1%. These eight countries received 98.3% of South Africa’s

exports.

2. Imports

Total imports of chicken eggs, including shell eggs and egg products (liquid and dried), was 216.3 tonnes

in 2016; 125.9 tonnes less (-36.8%) than in 2015. The egg product component amounted to 215.8

tonnes, of which 215.7 tonnes was dried egg product. Imports of chicken shell eggs totalled 0.5 tonnes.

The total value of the chicken egg imports was R26.9 million; a 28.2% decrease compared to 2015.

France was the main country of origin (46.4% of egg imports), followed by Italy (42.1%), and Denmark

(10.2%).

THE GLOBAL EGG INDUSTRY

After a gradual recovery from the effects of the 2015 avian influenza outbreaks, the global poultry

industry faced another year of trade disruptions and challenges as the virus surfaced once again in the

USA and several countries in Asia, Europe, and Africa. Various strains of highly pathogenic avian

influenza and low pathogenic avian influenza were found in turkeys, ducks, wild birds, and commercial

and backyard poultry. Millions of birds died or were destroyed by authorities. Several countries banned

imports of live birds, poultry products, and table and hatching eggs.

Determined to make the egg industry more acceptable to consumers, the USA has committed to

discontinue the practice of destroying millions of male day-old chicks by the year 2020. In contrast, the

German courts have recently defended the industry’s rights to continue with the disposal of male chicks.

The technology to allow sexing of chicks in ovo is now only years away from being commercially viable.

Scientists have been successful in determining the sex of an egg within a few days of it being laid.

According to the IEC database, the five largest egg-producing countries in the world are China, the USA,

India, Mexico and Japan. India’s production increased by more than 80% between 2006 and 2014, while

within the European Union (EU), egg production was fairly stable over the same period. Seven countries

(France, Italy, Germany, Spain, the Netherlands, the United Kingdom and Poland) produce 75% of the

EU’s eggs.

The drive for the industry’s transition to cage-free production continues to gather momentum,

especially in Europe, Canada and the USA. The list of international fast-food chains, supermarkets, food

service companies, hotel and hospitality operations and food manufacturers that have committed to

sourcing from cage-free egg producers continues to lengthen. Burger King and McDonalds have

committed to switching to 100% cage-free eggs, eliminating eggs produced by hens kept in cages from

their egg supply chains. Although these commitments are not tied to specific dates, the companies

continue to use these pledges as a marketing tool. Attention is now turning to how the industry should

respond to these pledges and how to safeguard revenues during the transition years.

There are large differences between EU countries in the populations of laying hens kept in cage, barn

and free-range housing systems. Switzerland has no hens in cages, and Austria has only 2%, while in

Germany, the Netherlands and Sweden less than 20% of hens are caged. The majority of these hens are

housed in barns. Outside of Europe the cage system remains the dominant housing type. Between 85%

and 95% of laying hens are caged in South Africa, the USA, Japan, China, Argentina, and Canada (source:

IEC).