How did egg prices double in a year?

At its simplest, it’s an issue of supply and demand. We want more eggs than we have. But this reality is driven by complex factors including legislation passed 10 years ago, supermarket decision-making, a poor wheat harvest, a fire and a major conflict in Europe.

Legislative change bans battery farming

At the heart of the egg shortage is a piece of legislation called the Animal Welfare (Layer Hens) Code of Welfare 2012. This legislation sets minimum standards for the care of layer hens and, in doing so, effectively bans the use of battery cages. When it came into force, in 2012, over 80% of eggs in New Zealand were laid in battery cages.

To give egg farmers time to transition, the ban was to be implemented in phases. Battery cages were banned completely from 1 January 2023. Colony cages, which give hens slightly more space, remain legal, although animal welfare groups claim these cages continue to breach the Animal Welfare Act.

Michael Brooks, executive director of the Egg Producers Federation of New Zealand, says that the industry supported the phasing out of battery cages, but felt it happened too fast.

“In the European Union, the phase out period was 13 years … in New Zealand it was 10. When people say 10 years is a long time, it’s the shortest time any poultry industry in the world has been given on this in terms of regulation.”

For context, Australia has recently announced plans to ban battery cages by 2036, a 13-year phase out period.

Pieter Bloem, a Dunedin-based poultry farmer, says that the changes introduced by the legislation, hot on the heels of changes made in 2005, failed to understand long-term investments already made by farmers, and the long lead-in necessary to shift production.

“A lot of people would say that we should have started earlier but in 2012, we’d only had 7 years out of our new installation, which was a substantial investment. That facility should have had an economic lifespan of about 35 years,” said Bloem.

Writing off a 35-year investment halfway through its lifespan was a tough pill to swallow for Bloem, but the coronavirus pandemic made things much harder. Bloem’s farm was waiting on poultry equipment from Italy, the arrival of which was delayed due to the pandemic. This delay meant that the farm’s new cages were not in place by the 1st of January deadline and Bloem felt he had no choice but to sell his livestock and leave the industry.

Jessica Chambers is head of campaigns at animal rights charity SAFE for Animals and a custodian of some retired layer hens. She sympathises with egg farmers, but feels we are simply seeing the effects of short-sighted legislation that allowed farmers to adopt colony cages despite shifting consumer attitudes on animal welfare.

“In 2012, the ban on battery cages was announced, with colony cages introduced as an alternative. That was a big mistake. The government should have had the foresight to know that if New Zealanders don’t want battery cages, they’re probably not going to like colony cages.”

Those chickens came home to roost 5 years later.

The supermarkets go cage-free

By 2017, 33% of battery cage farms had converted to colony cages, but then came a hammer blow as shifts in the market overtook the pace of legislative change.

In 2017, Countdown announced it would be moving to cage-free eggs by the end of 2025. Foodstuffs followed suit, setting a 2027 deadline. The supermarkets said that these changes were prompted by increased consumer demand for barn-raised and free-range eggs.

Bloem said these announcements had a massive impact on egg farmers.

“Some farms had completely changed from battery to colony cages and then got told the supermarkets didn’t want the eggs. There were some large farms involved that had already purchased the equipment and were then told those eggs weren’t wanted by 2027.”

For Brooks, there is a question of financial exclusion from a cost-effective source of protein. “What you've got here is a decision by the supermarket which says to low-income people, ‘Sorry, you don't have a choice. You don't have a choice of a lawful source of eggs’.”

War, weather and fire make matters worse

In addition to these two major changes, a series of unpredictable events in 2022 and 2023 made things tougher for egg farmers, and more expensive for consumers.

As farmers prepared for the end of battery farming, the Russian invasion of Ukraine saw the price of feed rise globally. Locally, a bad wheat crop made things worse.

“A lot of the wheat crop in Canterbury got wiped out that harvest when they had two consecutive weekends with 100mm of rain. Our prices went up from $450 a tonne to $650 a tonne,” Bloem said.

Finally, with New Zealand reported to be 400,000 laying hens short of the required amount, a fire ripped through two Zeagold laying sheds in the Waikato, killing 50,000 birds.

What has been the impact on egg prices?

Between September 2006 and July 2018, the Food Price Index showed that the price of a dozen eggs rose gradually, from $3.04 to $3.86. But the disruption of 2022 and 2023 then saw the price rise significantly.

In May 2022, a dozen eggs cost $4.86, but just over a year later, in July 2023, the price had almost doubled, reaching $9.19 in September 2023.

What do the classifications mean?

We probably all have something in mind when we think of caged, barn or free-range eggs, and legislation relating to these categories has driven huge disruption. But what do the classifications really mean?

In all farming types, hens must have access to perching, nesting and scratching areas, food and water, and 8 hours of darkness each day. These are the minimum standards laid out in the Animal Welfare (Layer Hens) Code of Welfare 2018.

That’s where the similarities end. Colony-caged hens are kept in cages with around 13 hens per square metre and no space to roam. Barn-raised hens have things slightly better, with seven hens per square metre and some indoor roaming space. Free-range hens have space to roam outside and are kept in enclosures with four hens per square metre.

Egg classifications explained

Free range is not what it’s cracked up to be

When you read “free range” you might think of a wide-open field where hens can roam to their hearts’ content, but this is sadly not the case, said Bloem.

“The reality is predators, mud and cold weather, and they don’t have access to the hygienic conditions and constant temperatures in those laying sheds which are kept at 20 degrees all the time.”

Chambers has a slightly different perspective. She said that free-range farming is far from perfect, but that if you ranked farming methods from the most-cruel to the least, “free range would be better than colony or barn-raised eggs”.

Colony-caged and barn-raised eggs have tight definitions, but the broad definition of free range poses other problems, according to Chambers.

“You could have two free-range farms next door to each other, and they could be selling eggs under the same label. If you visited one, you could have 2,500 chickens crammed into a hectare. Next door, you can have 500 chickens in a hectare.”

Some hens have it better than others, but in all forms of farming, there are unpleasant outcomes for hens.

Industrial farms can be stressful environments for hens, who have defined hierarchies of dominance, which are enforced violently – this is where the phrase “pecking order” comes from. To prevent hens injuring each other they have their beaks trimmed at between 1 and 3 days old to reduce pain, but this can affect the sensory properties of hens' beaks.

Male chickens do not lay eggs, and their meat is not required, so they are often killed within a day of hatching. SAFE estimates that around 4 million chicks are killed within a day of hatching each year in New Zealand, either by being gassed or shredded alive. In 2022, Germany passed legislation banning this practice.

Labelling remains a problem

Labelling is one area where market demand for better treatment of animals could drive improvements for layer hens. Chambers said that “New Zealanders aren’t being given all of the information they need to make informed purchasing choices.”

“If you go to the supermarket and you’re looking at free-range, barn and colony-caged eggs, the word ‘cage’ might not be on colony-caged eggs ... it’s a challenge for consumers to actually understand what’s going on.”

Product labelling is governed by the Fair Trading Act 1986. We asked the Commerce Commission a series of questions around the labelling of eggs, and whether it is legal to omit the word “cage” on colony-caged eggs.

Kirsten Mannix, general manager of fair trading at the Commission says that, “We haven’t investigated this matter so can’t comment on it specifically, but businesses need to take care that their packaging is not misleading and consider the impression made by imagery or by omitting words … the Commission is aware that what consumers understand ‘colony eggs’ to mean is a live issue and it is something the we may consider further.”

For Chambers, requiring the word cage, or even images or information about the scale of the farm that eggs are from, would allow consumers to make better informed choices about the eggs they buy.

“If the egg industry showed photographs of what their farms actually looked like on their website, people would be able to make that choice themselves. Sometimes they do, and those farms look pleasant, but others would certainly not want anyone to know what they’re doing with their birds.”

The future

New Zealand is ahead of the curve globally but the disruption is not over. In the short-term, the crisis may ease, but it’s possible that as supermarkets stop supplying caged eggs in the next 4 years, there is more disruption on the way.