Voluntary Report - public distribution

**Date:** 3/31/2005

**GAIN Report Number:** E35065

E35065

**EU-25**

**Poultry and Products**

**Abolition of battery cages to cost €354 million to EU-25 egg
producers**

**2005**

**Approved by:**

![](media/image1.wmf)Norval E. Francis

U.S. Mission to the EU

**Prepared by:**

Yvan Polet

**Report Highlights:**

The EU ban on traditional cages for laying hens, which is scheduled for
2012, could cost European egg producers up to €354 million per year. An
EC report calculates the cost of egg production indicating that
switching to free range egg production increases cost by 20 percent and
barn egg production increases cost by 12 percent. The European Food
Safety Authority (EFSA) also recently opined that a marked increase in
bacteriological, health and welfare problems should be expected.

Council Directive 1999/74/EC, which was meant to improve physiological
welfare of laying hens, appears to in fact increase animal health and
food safety concerns at a huge economical cost to producers.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E3\]

**Animal welfare for laying hens**

Animal welfare in animal production has become an increasingly important
concern in European agricultural politics and for the European
Commission (EC). The reason for this is the unscientific perception by
animal rights groups and the broader public that there is a direct link
between recent years European food crises and intensive animal
production. For the EU egg production sector, this resulted in
[Directive
1999/74/EC[^1]](http://europa.eu.int/eur-lex/lex/LexUriServ/LexUriServ.do?uri=CELEX:31999L0074:EN:HTML),
which is aimed at banning the traditional cages for egg production by
2012. This Directive leaves it up to member states (MS) to set the
minimal standards for the replacement of these cages for laying hens.
While the Directive was approved in 1999, two studies to assess the
socio-economic impact and the impact on food safety and animal welfare
became available only recently.

# Economic impact of Directive 1999/74/EC

An EC sponsored "[Study on the socio-economic implications of the
various systems to keep laying
hens](http://europa.eu.int/comm/food/animal/welfare/farm/socio_economic_study_en.pdf)"[^2],
assessing the socio-economic impact of Directive 1999/74/EC and in
particular the implications of the 2012 ban on traditional caged egg
production at a potential annual loss of €315 million (EU-15) and €354
million (EU-25) for producers. The implementation of the battery cage
ban would reportedly increase egg production costs by 20 percent as a
result of switching to free range production and by 12 percent for barn
production, with a smaller increase to implement the enriched cage
system[^3]. The study involved extensive field research in the EU-15 MS
as well as in five third countries (Brazil, India, Mexico, Ukraine and
the United States). While the traditional battery cage still accounts
for 85 percent of egg production across the EU (apart from Sweden, which
has banned the use of such cages), in some MS (e.g. Austria, Denmark,
Ireland, Netherlands, Sweden and the UK) alternative non-cage systems
now account for a substantial share of output. Some MS (like Germany,
UK, Netherlands and France) show a high degree of vertical integration
from producer to packer to processor. These MS generally tend to have
large production units (as do Italy and Spain) while other MS tend to
have more fragmented production units (like Austria, Greece, Ireland,
Portugal).

The EU-25 produced 6.349 million tons of eggs for human consumption in
2003, an increase of 10% since 1995, with the new MS accounting for 15
to 17 percent of EU-25 production. The EU-25 produces just over 100
percent of its domestic egg requirements and is a marginal net exporter
of eggs. It is expected that imports will increase by 3-4 percent when
battery cages are banned.

![](media/image2.png){width="5.502777777777778in"
height="3.6618055555555555in"}

![](media/image3.png){width="5.542361111111111in"
height="3.9138888888888888in"}

# Variation in production costs between Member States

Important variations in production costs exist between MS. Key points to
note are as follows:

-   feed per bird per day varies from 109 grams in France to 120 in
    Ireland and Portugal;

-   average annual egg collection ranges from 261 in Portugal to 293 in
    the Netherlands;

-   feed conversion ratios in efficient MS are 2.10 kg feed per kg eggs
    (the Netherlands) and 2.13 kg feed per kg eggs (France and Denmark)
    compared to 2.59 kg feed per kg eggs in Portugal and 2.41 kg feed
    per kg eggs in Austria and Ireland;

-   mortality is 4.0% in Ireland and Portugal, but reaches 7.5% in Spain
    and 7.0% in Italy;

-   larger scale producer MS such as Belgium, the Netherlands, Italy and
    the UK have a bird to laborer ratio of 50,000, whereas Ireland has a
    ratio of 10,000 and Denmark a ratio of 12,000;

-   the end of lay hen price is positive in some Member States, but in
    some MS it is a cost.

![](media/image4.png){width="6.495138888888889in"
height="2.5368055555555555in"}

![](media/image5.png){width="4.613194444444445in"
height="3.0131944444444443in"}

Charts on EU egg production and costs of production were copied from the
EC report.

Legends to the cost tables: - dark purple sections are variable costs

\- light blue sections are fixed costs

![](media/image6.png){width="4.595138888888889in"
height="3.0520833333333335in"}

![](media/image7.png){width="4.581944444444445in"
height="3.022222222222222in"}

![](media/image8.png){width="4.685416666666667in"
height="2.8916666666666666in"}

![](media/image9.png){width="4.604861111111111in"
height="0.17916666666666667in"}

![](media/image10.png){width="4.521527777777778in"
height="2.988888888888889in"}

# Opinion of European Food Safety Authority (EFSA) on health and welfare problems

EFSA's Scientific Panel on Animal Health and Welfare (AHAW) recently
issued an "[Opinion of the AHAW Panel related to the welfare aspects of
various systems of keeping laying
hens](http://www.efsa.eu.int/science/ahaw/ahaw_opinions/831/lh_opinion1.pdf)"[^4],
in which it signals that the removal of battery cages is likely to see
an increase in bacteriological, health and welfare problems. Most
difficult problems, e.g. insect-borne infections, feather-pecking and
cannibalism, are expected to occur in alternative and outdoor systems,
with much depending on the management of the holding itself. While this
study only focused on the food safety and animal welfare aspects of the
different egg production systems, it is obvious that the potential
problems identified will come at a serious economic cost to the
producer.

# Conclusion

The fact that studies on the socio-economic impact and the impact on
food safety and animal welfare of Directive 1999/74/EC were published
only five years after the approval of the Directive indicates that the
potential impact of this directive was underestimated. On the other
hand, animal welfare aspects of animal farming are becoming more
important, not only in Europe but also in the United States and other
parts of the world; e.g. alternative egg production systems are also
developing in the U.S., however more on a voluntary industry basis.
Therefore, the studies referenced in this report can offer a valuable
benchmark.

**Visit our website:** our website
**[www.useu.be/agri/usda.html]{.underline}** provides a broad range of
useful information on EU import rules and food laws and allows easy
access to USEU reports, trade information and other practical
information. E-mail: AgUSEUBrussels@usda.gov

Related reports from USEU Brussels:

  ------------------------------------------------------------ --------------------------------------- ---------------
  **Report Number**                                            **Title**                               **Date
                                                                                                       Released**

  E35054                                                       EU Debate on Humane Trapping Standards  3/16/2005
                                                               for Certain Animal Species              

  E34089                                                       Animal Welfare Legislation in the EU -  11/16/2004
                                                               Update                                  

  These reports can be accessed through our website                                                    
  [www.useu.be/agri](http://www.useu.be/agri) or through the                                           
  FAS website                                                                                          
  <http://www.fas.usda.gov/scriptsw/attacherep/default.asp>.                                           
  ------------------------------------------------------------ --------------------------------------- ---------------

[^1]: http://europa.eu.int/eur-lex/lex/LexUriServ/LexUriServ.do?uri=CELEX:31999L0074:EN:HTML

[^2]: http://europa.eu.int/comm/food/animal/welfare/farm/socio_economic_study_en.pdf

[^3]: Below charts on EU egg production and costs of production were
    copied from the report

[^4]: http://www.efsa.eu.int/science/ahaw/ahaw_opinions/831/lh_opinion1.pdf