May 14, 2003                                                                                                                                                                                                                                                                         No. 29

 

Don Bell’s Table Egg Layer Flock Projections and Economic Commentary - 2003

 

(This report was written by Don Bell, University of California Poultry Specialist, emeritus, under the sponsorship of United Egg Producers)

 

               

Evaluating Eggs of Differing Sizes Relative to the

 Weight and the Price of Large Eggs

 

            Several years ago we had the opportunity to visit an egg processing company in Japan where we observed the normal sizing of eggs into separate categories, but with different prices per carton based upon individual carton weights.  In other words, a series of cartons could all be “large”, but each carton would have a different selling price - based on its weight.  This not only reflected the value of weight, but allowed eggs of a common size to be grouped together as it is in the U.S.

 

            Since this visit, we visited a supermarket in the Midwest region of the US that was selling a container of eggs based purely upon the net weight of the purchase at so much per pound.  If the consumer wanted 7 eggs and they weighed 14 ounces, the price was based upon this weight.  The buyer chose the eggs they wanted from a stack of filler flats.  Interestingly, you could mix brown, white, x-large and medium eggs all in the same purchase.

 

                        In most developed nations, eggs are categorized into 5-6 size groupings and each size is priced differently.  In addition, price relationships between sizes will change from season to season based upon the relative proportion of each size.  Variability in individual eggs within a category is perfectly normal and must be allowed.  In different countries weights normally vary within categories from 2-3 ounces per dozen or 5-7 grams per egg.  In the US, tolerances for variation are defined for the consumer carton.  For example, samples may contain 3-5% of the next lower weight category, but there are no limits on placing larger eggs in a container marked as a lower weight dozen.

 

            In a 1996 National Study of eggs in the marketplace, large eggs were sampled in 115 stores in 38 cities.  Individual one-dozen weights (white eggs, without the carton) ranged from 24.7 oz./doz. in Pennsylvania to 25.6 oz./doz. in California.  Shell color had no effect on the average one-dozen weight with both white and brown eggs averaging 25.2 oz./doz.  Individual cartons with one or more eggs below the minimum weight (below 23 oz./doz.) averaged approximately 5% with no significant differences between regions or shell color groupings.

 

            The 0.9 oz./doz. difference between California’s large eggs and those produced in Pennsylvania probably reflect the higher use of flock recycling in California and/or different State minimum weight standards.  For example, California graded eggs (not USDA) may all weigh 23 ounces/12 per egg with no per dozen requirement, whereas the USDA and other agencies require a 24 ounce dozen weight as well.

            Using the assumptions listed in Table 1, the average farm value of the different graded large egg weights by state are shown. (assumption: large & above @ 50¢/dozen, medium @ 37¢/dozen).

 

Table 1.  One-dozen egg weights (large) in U.S. supermarkets - 1996

* based upon next run eggs at the listed case weights - same average weight, but different ranges in weights between graded and not graded eggs.

 

            Regardless of the reason for packing larger eggs in the large carton, the producer price represented in the California large carton was 46.7 ¢/dozen compared to 45.7¢/dozen in Pennsylvania.  This reflects the heavier one-dozen weights observed in California supermarkets and the inclusion of more extra large eggs in the large egg packs.

           

Pricing Eggs of Different Weights

 

            The price of the different sizes usually does not represent a comparable price per unit of weight - neither on a monthly or annual basis.  Based upon absolute weight differences, the figures in Table 2 illustrate adjustments required for the various sizes to result in comparable prices per pound.

 

Table 2. Egg price adjustments relative to prices for large eggs (equivalent prices based upon weight).

* Farm, wholesale or retail

 

 

 

          Based upon the data shown in Table 2, if large eggs were valued at $.50¢/dozen, extra large eggs should be priced 6.0¢/dozen higher or $.56/dozen.  Based upon UB MW prices for 2002 and 2001, extra large prices were  only 2.9¢ and 2.0¢/dozen higher or $.529 or $.520 respectively.

 

What Is The Effect of Pricing Policies on Net Egg Prices?

 

          Modern strains of White Leghorn layers produce more than 80% of their eggs in large, extra large and jumbo categories.  The distribution of weight classes is dependent upon strain, definition of weight classes, and the replacement program used.  Today’s strains of layers differ in their ability to produce large eggs.  A recent study of more than 400 white-egg flocks showed a range in average case weights from 45.8 to 48.2 pounds per case through 60 weeks of age.  Assuming 20 dozen eggs by this age, this would represent 28¢/hen or 1.4¢/dozen differences in egg value.

 

Tables 3 and 4 illustrate the typical yield of the various categories of size for different periods of time in dozens and percentages.

 

Table 3.  Egg size distribution for various replacement periods.  (Dozens)

* based on size alone - undergrade eggs would usually be subtracted from the larger sizes.  Classes are based upon minimum individual egg weights.

 

 

Table 4.  Egg size distribution for various replacement periods.  (%)

 

            In general, producers receive the same price for large, extra large, and jumbo eggs.  This policy effectively penalizes the production of these larger sizes and is why many producers attempt to maximize their egg weights between 48 and 50 pounds per case.  If prices were adjusted to reflect weight values, higher case weights would be justified.   Table 5 illustrates the effects of different pricing policies on average egg values for one and two cycle management programs.

 

Table 5.  The effect of pricing policy on average egg prices and egg income per hen.

 

            Two cent per dozen premium prices for Extra Large and another two cents for  Jumbo eggs is equivalent to a 1.1 to 1.3 cent increase per dozen for all eggs.  In a one cycle program, it would increase income by $.32 per hen; in a two cycle program, it would increase income by $.50 per hen.

 

            Five cent per dozen premium prices for Extra Large and another five cents for Jumbo eggs is equivalent to a 2.8 to 3.2 cent increase per dozen for all eggs.  In a one cycle program, it would increase income by $.89 per hen; in a two cycle program, it would increase income by $1.25 per hen.

 

Managing Egg Size

 

            As indicated earlier, strain selection, proper definition of minimum weights on the egg grading machine, and pricing policies which recognize the added values of the larger size categories will all contribute to optimizing the average prices you receive for your eggs.  In addition, pullet rearing programs for raising heavier pullets at point-of-lay (or delayed maturity programs) will benefit early egg size and thus egg value - especially during the hot summer months when price spreads between large and medium eggs exceed 20¢ per dozen.  Many egg producers control house temperatures to increase feed consumption in young flocks and to reduce feed consumption in their older flocks.  The emphasis is to get more feed into the flock when normal egg weights are low and the higher feed consumption is more that offset by the improvement in egg value.  On the other hand, after the flock reaches an optimum yield of large and above eggs, the emphasis must be shifted to reduce feed consumption and costs. - the effect on egg size (and value) at this point in time is insignificant compared to the saving of feed which can be accomplished with the added temperature.

           

What Are Ideal Case Weights?

 

            The answer to this question goes back to the payment method used.  Table 6 compares average egg values for each of the payment systems listed in Table 5

 

Table 6.  Optimum case weights for maximizing average egg values using different payment policies.

* medium eggs = 37¢/dozen, small eggs = 15¢/dozen, undergrade eggs = 20¢/dozen.

 

            Without premiums, the 50 pound case would appear to optimize the average egg price - but not necessarily costs.  As premiums increase, the optimum case weight also increases as a result of the higher proportion of the larger egg sizes.

 

Summary

 

            Egg size management at the production, processing, and marketing levels represents a major opportunity to improve returns in an egg production company.  The opportunity to share in the “extra value” of the larger egg sizes is important to all segments of the industry and one which is fully justified.  The industry, as a whole, must make an effort to see that all categories of eggs are priced relative to their value by weight.

 

The University of California Cooperative Extension Web Site address is listed below.  New items are added monthly.

 

animalscience.ucdavis.edu/avian