The number of laying hens across the EU needs to decline by around 20-40 million in order to stabilise the egg market, though prices are unlikely to increase until Easter 2012.
Addressing a dinner for egg producers in Shropshire, Klaus Torborg of Lohmann Animal Health predicted that many producers would go out of business because they did not have the money to reinvest in new production systems once the conventional cage ban comes in on 1 January 2012.
Reports from the field suggested that the final transition from cages to alternative systems in Europe would take two years. But Mr Torborg did not expect non-compliant producers to be penalised in the first half of 2012, as the EU authorities had other priorities, such as dealing with the financial crisis.
Mr Torborg also warned British producers of the consequences of unilateral political decisions. Germany had banned conventional cages two years earlier than other EU countries. Many poultry farmers had then invested in enriched colony systems.
But, due to pressure from welfare groups, major buyers such as Lidl and Aldi would not accept eggs from these systems. As a result, German producers had had to switch to barn systems, which caused high financial losses. Producers who stuck with enriched cages were now having to sell their eggs for processing. It is predicted that in Germany a total colony ban will come into place by 2020.
Meanwhile, Germany faces huge imports from The Netherlands and Poland. Currently in Germany it costs 8.3 to 8.6 cents to produce each egg in a barn system, but the discounting stores are buying them at 7.8 cents, delivered to a central depot, leaving a negative margin of more than 0.5 cents.
However, free-range producers – who only accounted for a small proportion of German production – were making a small margin of 0.5 cents per egg, Mr Torborg added, in contrast to the situation in the UK where free-range producers continued to lose money.