Video: The Effect of Prop 12 and Cage Free Eggs on Food Manufacturers

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The cage-free egg movement is gaining popularity, and California has become the first state to pass legislation requiring that any eggs produced in the state are cage free by the year 2022. In 2018, voters overwhelmingly passed the law, known as Proposition 12, requiring that factory farms provide larger cages for hens or face penalties. 

Similar initiatives are being pursued in other states and hundreds of national restaurant chains and food manufacturers have committed to going cage free by 2025 in response to consumer demands. The impact on food manufacturers that include eggs in their formulations could be significant and will come at a cost. 

Watch the video to hear food industry insights from Grande Custom Ingredients Group’s thought leader, Brad Nielsen.

 

Video Transcript:

Prop 12 was new legislation that was passed through voting in the state of California requiring all their egg production to be produced from a cage-free source. This has a large impact within the egg industry as California is the largest consumer of eggs in the United States. 

A lot of the eggs produced in the United States are actually produced in the Midwest area and transported throughout the rest of the country. A lot of food production — in particular, eggs — is not currently set up for movement to a cage free system. Not only is there a higher cost of production for cage free eggs, but it would require a pretty significant investment by the industry in order to service this new production system. 

We’ve seen information posted throughout the Ag industry, with costs increasing on the capital side. Companies need to make somewhere between $9-10 billion of investment in order to be able to service the overall industry in a cage-free perspective. 

There’s a lot of uncertainty over whether the rest of the country is going to follow California in this way, or if California is going to stay a little bit isolated. There’s certainly no question that egg producers are going to have to do something about it simply because California is a large consumer of eggs. 

Eggs are used quite a bit within our households. In my household, I know we purchase a lot of eggs. But you don’t even think about what the impact could be when you understand where eggs are actually used in different food products. You’re not just buying whole eggs that you use for your own cooking, but eggs actually end up in a lot of different food systems (e.g., mayonnaise, salad dressings, a lot of different bakery type products). 

As these markets continue to move forward and consumers look for more products that are wholesome, sustainable and have ingredient transparency in their food systems, it provides a lot of uncertainty with regard to eggs.

And the movement toward cage free eggs is certainly no surprise when you look at those other larger trends within the food industry. I think these trends within the food industry in the short term will likely push prices up. There’s no question that producing eggs in a cage free environment is higher in cost. We’ve seen information that it’s somewhere between 30–50% more expensive to raise these chickens which will only increase costs. 

The longer term question is, “How are producers going to continue to drive those costs down to become more efficient through this different production system?” I think it’s definitely going to impact prices in the short term. Longer term, I think there’s still a lot of uncertainty over what’s going to happen in the market. 

How to Address the Volatile Egg Market

As consumers become more concerned with animal welfare, where their food comes from, and whether it was sustainably and ethically sourced, the demand for cage free eggs in formulations will also grow. 

Grande Custom Ingredients Group is poised to address the issue of volatile egg prices by offering an all-natural and sustainable alternative that consumers know and trust. Grande Bravo® functional whey proteins can be used as a substitute for eggs in a wide range of applications, such as dressings, sauces and baked goods, while maintaining all the functional properties that eggs provide. 

Check out our Egg Replacement 101 whitepaper below to see how it can work for you. And learn more about this innovative, shelf-stable and cost-effective ingredient that has helped hundreds of notable food manufacturers and restaurants perfect their formulations to the delight of customers. Reach out to us today.

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