livestock
Eggs
- GVP $389.3 million est. Flat from the previous year.
- 65% of layer hens in NSW were managed in free-range systems in 2020-21.
- Retail premium for free-range eggs over caged eggs has decreased 6% annually since 2014-15.
Egg production is estimated to have decreased by 2% in 2021-22 over the previous year, following on from a previous increase in the NSW flock size reported in 2020-21. The shift in production toward free-range continued, with 52% of egg sales in volume terms through the major supermarket chains produced from free range system in 2020-21.
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While cage egg sales in 2020-21 declined, to represent 36% of the volume through these chains from 39% reported in the prior year.
Retail egg prices through the major grocery chains increased by 4% for cage eggs in 2021-22. In contrast, the retail prices for free-range eggs increased by 0.6% and was flat for barn-laid eggs in 2021-22 over the previous year, reflecting a long-term trend for reduced retail premiums achieved by these cage free systems as their market share expands. Demand for eggs continues to recover from the COVID-19 pandemic, and demand remained closely linked to population growth. The transition to non-cage production systems represents a major factor impacting the industry outlook and supply in the medium term.
Production
Egg production in NSW in 2021-22 is anticipated to decline by 2% year-on-year. This reduction follows on from the previous year’s lift in NSW share of the national flock to 29.8% in 2020-21 from 28.3% in 2019-20, attributed in part to an Avian Influenza outbreak that impacted a number of suppliers especially in Victoria during 2020.
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Overall, the national layer flock increased 5% year-on-year to total 21.95 million layers for 2020-21.
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Commercial egg production in New South Wales totalled 144 million dozen in 2020-21 from 6.0 million layers. This total flock size managed by commercial producers represented a 26% increase over the previous year.
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Reflecting the shift in sales of eggs by production type, 65% of layer hens were managed in free-range systems in 2020-21.
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The share of egg sale volumes by production system confirmed the long-term in-shell egg trend through the major grocery chains for free range eggs, which represented 52% by volume. These volumes were substituted for cage egg sales, which declined to a market share of 36% in the prior year in 2020-21 down from 39%. 2020-21 also resulted in a recovery in the small specialty egg category, which includes eggs marketed as organic which had dipped in the prior year, although still represented only 2% of major grocery chain sales.
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Price
Nationally, the average gross unit value of eggs is expected to increase modestly in 2021-22 by 3% year-on-year to $2.50 per dozen. This price reflects not only farm gate price but also some marketing and transport costs, with egg producer prices received expected to be flat in 2021-22 compared to the prior year.
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The price of eggs at the retail level, from the major grocery chains, increased by 4% for cage eggs in 2021-22. In contrast, the retail prices for free-range eggs increased by 0.6% and was flat for barn-laid eggs in 2021-22 over the previous year.
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The relative flat increases in free range and barn-laid products over 2021-22 reflects the trend of decreasing premiums paid at the retail level for these production systems relative to cage eggs.
Since 2014-15 the retail premium for free range eggs has decreased 6.4% annually to 2021-22, while the premium for barn-laid eggs has decreased 11.6% annually over the same period.
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This would be expected as more supply becomes available and larger investments and improved technologies for these production systems increase competition amongst suppliers in these categories.
Average gross value of eggs and retail prices per dozen 252 5
- Average gross unit value
- Retail Cage
- Retail Free Range
- Retail Barn-Laid
Trade
Exports of egg products were valued at $1.1 million in 2021-22, an increase of 22% on the previous year. Singapore and Philippines were the major markets receiving $0.35 million each. Most of the value of these exports, some 88%, are for in-shell products. In the case of imports, the value increased 34% in 2021-22 over the previous year to total $9.5m but still below the 11.3m that was reported in 2019-20. In contrast to exports, the majority of imports, 57% by value, are not in shell products.
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The increased value of exports over the previous year is in part due to the disease-free status for Highly Pathogenic Avian Influenza achieved by the Australian industry in 2021 following an outbreak amongst some commercial flocks in 2020. Presence of the disease restricts both exports with trading partners of poultry products.
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Macroeconomic Conditions
An over-supply of eggs reported at the end of calendar year 2021 is attributed to several factors including stalled population growth.
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While rebalancing of domestic egg markets including between retail demand and food services since the COVID pandemic disruptions continues. The domestically focussed egg industry has seen per capita consumption increase to 249 eggs in 2020-21, up from 246 egg in the prior year. Average annual egg consumption has increased 10%of 5 years to 2020-21.
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Demand is supported by a broad consumer base that identify eggs as low cost and high quality protein source.
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Input cost increases have been a feature during 2021-22 and remains a challenge for egg producers, as for most agricultural industries. For example, key inputs such as feed costs have typically risen by 45%, started pullets had increased some 20%, and packaging boxes and cartons has increased 12% over the 12-month period to 2022. As with other sectors egg farmers have been challenged by a limited labour market.
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Outlook
Demand for eggs continues to recover from the COVID pandemic which caused shifts between egg market away from food services while important markets for liquid eggs such as the cruise industry has recommenced.
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Further, demand for eggs remains closely linked to population growth, with a recovery from the COVID pandemic which paused immigration through 2020 and 2021, and is expected to take a several years to fully recover.
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Eggs remain an important and relatively cheap protein source for households and growth in demand is expected to continue in the medium term at least matching longer term population growth of 1.5%.
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The transition to non-cage production systems represents a major factor impacting the industry outlook and supply in the medium term. Major retailers have indicated their intentions to only sell shell eggs produced from cage-free systems, including eggs used in their other own brand products from 2025.
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These supermarket grocery chains’ egg sales account for 46% of national egg production and 36% of these egg sales by volume in 2021 were cage eggs.
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This means that there is substantial investment required by industry still to occur to meet proposed supply requirements. If this were to occur, producers with cage egg systems would be constrained to the non-retail box market such as food services, although a number of these customers are also indicating a desire for non-cage eggs.
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Consequently, excess supply of cage eggs into this market would be expected to put downward pressure on prices for this category in the medium term.
Stronger Primary Industries Strategy
Young Farmer Business Program
The Young Farmer Business Program is focused on building business and social resilience of the next generation of young farmers and fishers aged 18-35, providing them with access to bespoke workshops, events and resources.
Upskilling the next generation to have strong, solid businesses which can manage risks, make sound business decisions and prepare for future challenges and opportunities is a key ingredient for stronger primary industries in NSW.
Strategic Outcome
Response Capacity
The Bank Ready workshop was co-developed with the NSW Farmers Association as a pilot offering in 2016. Bank Ready is now one of the most popular workshops in the program’s resource suite and is one of the program's entry-level workshops which is part of the ‘Getting Ready’ series.
Bank Ready is designed to give young farmers the skills and knowledge to navigate the finance approval process and ensure they are confident and prepared when approaching a bank or finance lender. Working in partnerships with industry, Bank Ready is facilitated by NSW Farmers and delivered by a local agribusiness banker. The workshop covers topics such as;
- Various financing options, including buying, leasing and equipment loans
- Finance ‘need to knows' including documents, deposits and required evidence
- Key finance terms
- How to form good relationships with the bank
In 2021-2022, seven Bank Ready workshops were delivered across NSW reaching 145 people. In the program’s evaluation findings, 88% of attendees said the workshop was useful or very useful to them. 74% of respondents said they learned something new at the workshops. 68% of Bank Ready participants intended to take action as a result of what they had learnt at the workshop. Participants have said:
"I am a young person working in a transport business and looking to buy a farm. Following the Bank Ready event, I have prioritised paying off my tax bill, and I have taken steps to buy a farm. I have started compiling the information that I need, had a follow up discussion with the accountant to get things up to date, and approached lenders other than my existing bank."
"Before the event we wanted to buy a farm, but I just didn't have enough confidence to know I was going about things the right way to get the finance. This stepped out the process and gave me the confidence that I'm doing the right thing."
"It's made getting everything together more efficient with my time. This means in the future it will be more efficient for the bank as well and makes me appear more professional. It's made the process less stressful, and I feel more confident.” Bank Ready attendee."
Since 2016, 59 Bank Ready workshops have been run across NSW with over 1370 attendees. The workshop continues to be requested by young farmers across NSW, even 6 years after it started.
