Charting a Smooth
It’s long been one of the egg
industry’s major problems:
instability of output and prices.
Hence, instability of income for
the egg producer.
And so this was one of the
leading problems considered by
USDA’s egg marketing team
when it began its study of the egg
industry earlier this year. Unlike
many other businesses, the egg
industry has not had the cushion
of increased demand within
which to solve its supply
problems.
Demand drops
Per capita demand for shell
eggs has dropped sharply since
World War 11. Back then, each
American ate roughly 385 eggs
per year—compared with about
322 today. Mainly blamed are
changing eating habits—
particularly the shift away from
large breakfasts—and adverse
publicity linking cholesterol
(which egg yolks contain) to
heart disease.
Because shell eggs lack any
close substitute, have no large
secondary market, and are
largely preferred as a fresh
product, demand is highly
inelastic. The result: slight
changes in egg supplies produce
large changes in prices.
Instability of output and prices
plague the industry on both a
seasonal and a cyclical basis.
Seasonal oversupplies stem
from traditional layer hen
placement patterns that cause
production to peak in the spring
months. Producer prices usually
bottom out in May, and pick up as
supplies begin to contract later in
the year.
Lengthy price dips
Of greater concern is the egg
price cycle. Unlike seasonal ups
and downs, cyclical fluctuations
in recent years have been
marked by long price troughs and
short price peaks. Cyclical price
movements of 3-4 years duration
since 1965 have resulted from
unexpected changes in demand,
and technological advances that
produced sharp increases in
supply.
The egg marketing team cited
several methods to stimulate
demand and alleviate price
depressions.
To smooth over seasonal price
dips, the industry should step up
promotion of fresh shell eggs.
The value of eggs as a protein
source, and favorable consumer
prices should be emphasized.
This may prove the quickest way
to ease seasonal surpluses, as
table eggs move through
marketing channels in a matter
of days.
Processed eggs
A second move against low
seasonal returns is to develop
processed egg products that are
easy to prepare, have long shelf
lives, and are acceptable sub
stitutes for other food products.
Manufacturers would tend to
concentrate production when
if there,
panmt
Course for Eggs
prices are seasonally low.
The marketing team also
recommended that government
agencies that regularly purchase
eggs for various distribution
programs should expand and
coordinate purchases during low
seasonal price periods.
Regarding prolonged lows of
the egg price cycle, the egg
marketing team noted that
demand expansion programs
should make reasonable price
levels their goal. This is to
prevent prices from dropping so
low that producers incur large
losses or leave the business in
excessive numbers.
The team added, however, that
prices should not be maintained
at such high plateaus that
markets aren’t cleared and
public agencies accumulate large
supplies.
The marketing team saw
promotion and development of
processed egg products with wide
consumer appeal as one way to
smooth cyclical as well as
seasonal price depressions.
Substantial demand for
processed egg products might
give rise to a broad base egg
market with a relatively stable
“floor” price.
The egg team noted that
government programs might
have to be expanded con
siderably during long price
troughs. For example, foreign
distribution of high protein egg
products might be enlarged
under P.L. 480.
Many developing nations are
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Clearing the market
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Lancaster Farming, Saturday, December 30,1972 —
approaching self-sufficency
in carbohydrate feeds, but most
lack sufficient protein foods.
Large quantities of shell eggs
could be processed into foods
with build-in appeal for con
sumers in these countries.
Expansion of the School Break
fast Program, which uses large
amounts of both shell and
processed eggs, would provide a
broad domestic outlet.
The School Breakfast Program
currently feeds 1 million break
fasts a day (180 days a year) in
8.000 schools. Enlargement to
30.000 schools and 4-5 million
breakfasts a day is under con
sideration.
Several other programs that
could increase demand are the
Nonschool Feeding Program,
conducted during the summer
1980 Beef
(Continued From Page 18)
Turning to the factors that
would tend to encourage or
discourage expansion of cow
numbers, the opinions varied.
Nonetheless, ERS found some
common threads:
Government’s role
The majority of the panel
members believed that public
policy would favor continuing
programs to spur expansion of
cattle raising. But the respon
dents felt the impact on beef
production would be greatest if
accompanied by incentives to
shift cropland to forage
production on a whole-farm
basis.
Beef production in the future
may be influenced by restrictions
on antibiotics. “How much so,”
the ERS report said, “will depend
on which drugs are withdrawn
and what substitutes are found.”
Increased regulation of her
bicides, pesticides, and fetf ilizers
could check crop output and raise
forage production.
Higher calving rates would
directly contribute to beef sup
ply—they’re expected to rise
from 90 percent in 1970 to 91.6
percent in 1980—as would lower
calf death rates, which are likely
to decline from the 5.8-percent
rate of 1969.
Though larger herd sizes will
be the case in 1980, a high pr
portion will still remain in small
herds, averaging under 50 head.
About calf weights, the panel
figured they’d average about 50
pounds heavier for a 205-day-old
steer calf in 1980 for the eastern
half of the country, and almost as
much in the Southwest. Weight
gains would result from im
proved selection of breeding
stock, crossbreeding, and im
proved nutrition of cows and
calves.
JOHN Z. MARTIN
New Holland RDI
Phone 717-354-5848
liquid supplements
months, and the Child Day Care
Center Feeding Program.
Another possibility is USDA’s
Commodity Surplus Disposal
Program, which provides surplus
commodities to the needy.
During periods of low egg prices,
large shares might be purchased
for current and future
distribution. Purchases could be
moderate as prices rise.
Though government programs
can have a significant impact on
egg use, the egg industry itself
must play a larger role in lifting
demand.
Limits on expansion
The marketing team also cited
the need for limits on supply
expansion as fundamental to
realizing long-term benefits from
increased demand.
Previous promotion efforts by
the industry have often been
fragmented, underfinanced, and
short-lived. The marketing team
suggested that promotion could
be better coordinated if funded
through a national “checkoff”
program.
Under the program g
producers would contribun. a set
amount per case to a national egg
board. The funds would be used
according to predetermined
guidelines—to finance
promotional and research efforts
on a prevasive, nationwide level.
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