Friday, February 5, 2016

The Insanely Complicated Logistics of Cage-Free Eggs for All



What we really need is modern inefficiencies built into organic methods. that needs to mean one hundred bird flocks along with a mobile coop egg laying house along with a portible fence system able to contain the flock inside an appropriate section of sod.  My guess is that a thousand birds can with ten coops process twenty acres in ten weeks.

The purpose of all that is that the birds will dig up all that dirt and strip it of all plant material and all insects to depth.  Significant fertilization takes place as well.  In short the field is effectively sterilized in preparation for a new crop.

This integrates the hen operation into the organic soil preparation and captures most of the costs associated with soil preparation.  That may well be enough to offset the increased costs of having free range birds.

Better yet, since feed stops been a significant external cost it becomes possible to breed far superior bird to produce both eggs and meat.

Thus a 640 acre farm can plausibly handle ten to even twenty thousand birds as well as ample plantings as well.

The Insanely Complicated Logistics of Cage-Free Eggs for All

You may not have noticed while you were scarfing your avocado toast, but 2015 was the year of the egg, at least as far as the food industry was concerned. An Avian flu outbreak briefly sent egg prices soaring. Meanwhile, McDonald’s, the world’s largest fast food chain and one of the biggest egg buyers anywhere, announced it would ditch its conventionally farmed eggs and sell nothing but cage-free eggs in all of its US and Canadian restaurants. By the end of the year, just about every major fast food chain and a handful of multinational food companies had followed suit, including Subway, Starbucks, Nestle and most recently Wendy’s, which joined in just this month. But these announcements had a catch. The companies said the switch to cage-free would take anywhere from five years to a decade to complete. How could it possibly take ten years to let a bunch of chickens out of their cages? 

As it turns out, going cage-free requires much more planning, money, and logistical engineering than the seemingly simple notion of setting some hens free would suggest. Ironically, this massive supply chain overhaul stems from consumer demand to return to the egg-producing practices of our pre-industrial past, but without undoing all the positive benefits of scale, affordability, and safety that were achieved through industrialization. It actually took farmers a really long time to figure out how to put the bird in the cage—and it’s going to take a while to figure out how to get it back out.

Think of it less like a romp through green fields surrounded by happy, clucking hens and more like a decade-long design challenge with no single rulebook and a lot of breakfast plates at stake. 
To understand how we got here, let’s do some time traveling. Back in the 1920s, chicken egg farmers were pretty small-scale operations. Even the big guys only had about 400, maybe 500, hens, and these birds all just waddled around in the dirt, coo-cooing and laying eggs everywhere. People then had to collect those eggs by hand and clean them manually. Sometimes animals would attack the chickens in the night. Sometimes they attacked each other. Sometimes they stepped in their own waste and got sick, or they hung around with other animals or birds and got sick. Quite a few of them died. Life as a chicken has its risks. 

So farmers learned how to mitigate those risks. They perfected hen nutrition. They built enclosures, and they invented all kinds of chicken meds. They even came up with standards for how bright the lighting in a hen house should be, which industry experts still hilariously describe as being just bright enough for a farmer to squat down and read a newspaper at bird height (to think of all those squatting farmers, reading newspapers!). Most importantly, in the 1950s, they started housing hens in little cubbies made of chicken wire – a practice that took off in California because it was an insta-fix for various inefficiencies. With hens now in cages, farmers could house about one-third to two-thirds as many birds in a single hen house. Hens walked on raised floors so they weren’t stepping in their own waste. They couldn’t peck each other as much and they were protected from other animals. Mortality went down. 

Over the years, cage systems have evolved in various ways. But they remain the single most important innovation in egg production because they’ve turned what was once a cottage industry into a global commodity. Without caged birds, it’s entirely possible that the Egg McMuffin itself may never have existed and would certainly not be as globally accessible—and affordable—as it is today.

The Outcry Against Cages

Rose Acre Farms, one of the biggest egg producers in the US, has about 25 million laying hens. In 2014, the US as a whole produced nearly 100 billion eggs, totaling $10.2 billion in revenue. This kind of mass production depends on cages. With those tiny wire boxes, farmers can micromanage everything about a bird’s life. They can even help automate egg collection by forcing the bird to lay its eggs directly into a funnel that drops down into a collection area.

Today, eggs are widely available and cheap mostly because of caging systems. 

But keeping a living thing in a metal cage so small that it can’t move its wings or stand up for the duration of its short life has raised inevitable questions about animal suffering and welfare. It’s no longer enough to churn out cheap eggs. Especially in recent years, consumers have increasingly demanded to know more about their food’s origins—where it’s from, how it was raised, and under what conditions. 

Cage-free systems require more labor and less control, which together can cost a farmer a lot of extra money. 
And many are finding the lives of caged chickens too rough to stomach. Pictures of molting, sickly birds flooded the Internet. The egg, once the epitome of the wholesome American breakfast and the key ingredient of delicate French pastries, became a flashpoint of criticism for industries that rely on living animals in order to produce a commodity. 

That distaste has spurred increased demand for what’s still known in the industry as specialty eggs – most of all “cage-free,” which first started popping up at places like Whole Foods, and have since made their steady way into the mainstream. Yet even as the pressure for farmers to convert to cage-free began building, few wanted to give up the caged system.

Cage-free systems require more labor and less control, which together can cost a farmer a lot of extra money. But the biggest hindrance to going cage-free is the imperative of efficiency—meeting today’s huge demand for eggs with yesterday’s techniques. Back when birds weren’t in cages, farmers produced a fraction as many eggs. And the cage-free systems of today only house about a third to two-thirds as many birds as a conventional caging system. Cage-free is, by design, less efficient than the conventional cage. And since most agricultural innovation has been focused on improving the efficiency of the cage, large scale farmers today don’t feel like they have access to a system they trust that will allow chickens more living space while still keeping production up and mortality down on the scale of traditional caged systems. In order to do cage-free properly, farmers have to reduce their flock numbers, which means a decrease in production and an increase in price.

“In the industry as a whole, people felt like they were doing the right thing (with conventional cages),” says Rick Brown, a market analyst who’s been following the egg industry for 30 years. “We got away from cage-free in the 50’s for a whole host of reasons. People felt that the cages were better for the birds.” 
But in 2015, egg suppliers were left with little choice. Big Food companies, in all their pre-cooked, kids’ meal, drive-thru glory, began announcing one after the other that they would stop using eggs from chickens kept in conventional cages and only buy from farmers who raise cage-free hens. The surge in demand seems likely to force fundamental changes in how the egg industry operates. McDonald’s alone buys up two billion eggs a year for its US restaurants alone. “You’re talking about a scale that is completely unprecedented,” says Sam Oches, who edits QSR, a trade publication covering the fast food industry. “At the end of the day, these decisions are built around consumer demand.”

Pressure to Convert

Now, egg suppliers are left with an obvious choice: meet the growing demand for cage-free eggs or lose your biggest customers. So, suppliers are caving. They didn’t like it, but if it’s what their customers wanted, they’d do it. “Now Rose Acre Farms is converting its operations to cage-free, a switch that all the major suppliers are likely to make, if they’re not in the process of doing so already.
This means that in the future, the pasteurized liquid egg product fast food restaurants serve up at drive-thru’s across the US will come from the same chickens that pop out those fancy $6 egg cartons sitting in your Instacart. McDonald’s and a handful of its fast food peers have given their vendors until 2025, which seems like a luxurious amount of time to make the change. That’s until you consider the daunting design and tech challenges that lay ahead for the industry. 

For starters, birds that live in cages can’t be transferred to a cage-free environment halfway through their lives. Farmers have to start with a new generation of chickens. “The chicken itself has to learn how to be in the environment and deal with things that they may not be used to in a caged environment,” says Jonathan Spurway of Rembrandt Foods, the third-largest egg supplier in the US.
Cages remain the single most important innovation in egg production because they’ve turned what was once a cottage industry into a global commodity. 
When a hen is born and raised in a cage, her immune system depends on limited direct contact with other birds, and she falls into a pecking order that is determined in part by the cages. If you placed that hen in a cage-free house, she might get attacked by other hens above her in the pecking order, or her body might not be able to fend off a host of new vectors from other birds. So even as Rembrandt is in the process of switching over its facilities, it’s looking at breeding a massive new generation of chickens. For the entire industry, that’s a huge number of birds. Right now, the US market has about 300 million laying hens, and only about eight percent of them are cage-free. 

Meanwhile, what a large-scale commercial cage-free hen house even looks like is still very much up for grabs—no consensus has emerged yet on what “cage-free” even means. Unlike the “organic” label, which is only bestowed based on specific federal requirements, eggs don’t go through a standardized certification process in order to be called cage-free. Instead, farmers follow one of multiple standards created by third parties. Different states and different fast food companies all have their own criteria for what they consider “cage-free.” In California, for example, all shelled eggs (many fast food joints cook with pasteurized pre-cracked egg liquid, not fresh shelled eggs) are required to be cage-free. By California’s definition, that means a bird should be able to stand up, turn around, and spread its wings—but it can still be housed in a cage and isn’t required to have access to the outdoors. McDonald’s’ cage-free standards, meanwhile, involve what’s called an aviary system, which allows birds to travel vertically throughout a hen house on a series of platforms and ramps.

The Logistics of Egg-Laying

Still, even the ability to move around just a little bit more will increase a supplier’s feed costs as birds burn through more calories. So farmers try to find efficiencies in other ways, like building vertical cage-free systems that maximize the use of floor space in a barn. But switching over to these new systems won’t be easy and it won’t be quick. While there are different ways that a farmer can design a barn to make sure every square inch is used up efficiently, “those differences create cost,” Spurway says. Exactly what that cost is depends on a multitude of factors, like if a farmer is retrofitting an existing barn or building a new barn and what state the barn is in, but Ken Anderson, who helps run a research egg farm at North Carolina State University, says a brand new barn complete with an aviary system can set a farmer back about $4 million. 

But before you can even start thinking about how to redesign a barn, there’s the issue of all those old cages and the equipment that goes with them. For a single barn that houses around 100,000 hens, a farmer can easily spend half-a-million dollars or more on a conventional caged system expected to last 15 to 20 years.

“You don’t take a five-year-old cage system and rip it out,” says Anderson. “The economics of that will put people out of business.” Instead, farmers must find ways to spread out the cost of those cages over time until they’ve gotten their money’s worth. 

That process could take anywhere from, you guessed it, 15 to 20 years plus the amount of time it takes to build the new system (for that, add on another year or so, plus a few million dollars). 

As far as that new system goes, by definition you can’t fit as many chickens in a cage-free house as you can in a caged house. So if you fit 100,000 chickens in your conventional barn before, you’re looking at housing roughly a third of those birds in your new cage-free barn. The rest of them need a new house, so you’re back to square one with getting a building permit and building a new barn. 

While you’re at it, take into consideration all of those risks that chicken egg farmers dealt with back in the day – the disease, the attacks, the efficiency issues – and reintroduce them back into your life. One of the hardest risks to mitigate is chicken behavior. In large groups, hens are surprisingly violent creatures toward one another and can partake in some pretty cutthroat pecking order hazing rituals. The cage was a partial solution to that problem because chickens didn’t have a lot of room to interact, and a better solution doesn’t really exist in mainstream large-scale egg production culture yet. In large-scale “enriched colony systems,” which are “cage-free” houses that are actually like caged houses but with bigger cages and a few added amenities, birds tend to be more violent. 

“Chickens aren’t really trainable,” adds Anderson. “There is no technology that exists to mitigate the social interaction of the birds.” 

In order to address issues like aggression, Anderson says agricultural research will have to work double-time to find and create better technologies and design layouts for cage-free barns in order to meet Big Food’s ambitious ten-year deadline while keeping prices in check. Think of it less like a romp through green fields surrounded by happy, clucking hens and more like a decade-long design challenge with no single rulebook and a lot of breakfast plates at stake.

The Cost of Cage-Free

If you’re wondering who will pay for all of this, join the club. Market analysts, industry reps, and fast food CEOs are all concerned about a myriad of potential fiscal consequences, but no one is sure who will bear the brunt. Ideas vary on how much a surge in prices could impact the market for eggs. But while vendors are reluctant to say so, it seems inevitable that consumers will be the ones to ultimately shoulder the added cost. The question is whether egg-eaters will be willing to take on that burden. Farmers will initially front the bulk of the expense of going cage-free, but there are any number of guesses how that money will be transferred along the supply chain. And it’s that uncertainty that makes the egg industry nervous. 

“What people say they want and what they’ll pay for are different things in many instances,” says Brown. “But somebody will have to pay for it eventually.” 

Eggs are among the many goods known as “inelastic commodities,” which, like gasoline and milk, people still buy even when they’re more expensive. For a place like McDonald’s, a small increase in price per egg becomes a massive cost overall. To pay for it, the company may have to charge more for its iconic McMuffin, trim back the number of menu items that contain eggs, or both. It’s really anyone’s guess, because McDonald’s itself doesn’t know for sure what the cost implications will be, which is why the company gave itself ten years to figure it out. Within that chunk of time, it’s probable that cage-free eggs will be cheaper than they are today because suppliers will be producing more of them, explains Lisa McComb, a representative for McDonald’s. 

“It’s like a weird call-back to Office Space,” says Andrew Alvarez, a food industry analyst for IBISWorld. In Mike Judge’s movie, workers thought they were taking advantage of a computer bug to steal pennies from the company. They didn’t realize those pennies would add up, and they woke up the next morning to find that they’d siphoned off hundreds of thousands of dollars from their company. That’s what a small increase in price does when you’re buying enormous amounts of a commodity every year. “It has a massive impact.” 

Still, when California’s egg prices shot up after it implemented its new cage-free requirements, people still bought eggs. Also, the price hike wasn’t just because the state had switched to cage-free – there was also a massive avian flu outbreak that dwindled supply. Now that the outbreak has passed, farmers can start to rebuild their hen populations, which should help slow the surge just as the higher costs associated with cage-free should begin to self correct thanks to economies of scale, says Alvarez. As more big egg buyers demand cage-free, farmers will really have no choice but to innovate—an irresistible incentive that could lead to a better understanding of how to achieve both commodity-level production and better conditions for animals. 

“Ten years ago this was really something you were paying a premium for because nobody was doing it,” Oches says. “Now that there are more farmers scaling up, all of these dominoes will start falling and the egg industry will be able to provide the supply at the cost they’re looking for.” 

Still, to get there, farmers will have to essentially go back in time and recreate the past fifty-some years of egg production innovation, sans cage. The challenge reflects a strange mix of consumer nostalgia and entitlement: we want it all—eggs raised humanely at scale—and at a price we can still afford. In one respect, it’s the crux of most ‘disruptive’ tech companies’ strategies. They promise to do it all, but only a few can truly make it work—with cost being the compromise that typically undermines the process. But the call for cage-free isn’t just about ‘disrupting’ technology. It’s about fundamentally altering the way the egg industry relies on living, breathing animals with their own unpredictable natures and vulnerabilities to both make a profit and feed the masses.

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