EGG INDUSTRY STATS SUMMARY FOR 2015

Transcription

1 EGG INDUSTRY STATS SUMMARY FOR 2015 INDUSTRY OVERVIEW 1. Egg prices According to Statistics SA (Stats SA), the average producer price for 2015 was R14.79/dozen, compared to R14.35 for 2014; a 3.1% increase. These averages are weighted according to the expected grade-out. They do not take rebates into account. The retail price was R23.10/dozen large. During the past five years, the mark-up on eggs has increased steadily from 51% in 2011 to 65% in 2015 (Figure 1). Figure 1: Annual producer and retail price of large eggs (source: Stats SA) Data collected by SAPA indicates that the average producer price of all sizes, net of discounts and rebates, was R 11.65/dozen. The percentage representation of the survey increased from 9.7% in

2 December 2014 to 19.5% in December The difference between the two prices (SAPA versus Stats SA) was -R3.14/dozen (-21.2%) which is an indication of the total rebates taken by the retailers. SAPA is in the process of extending the survey to include producer prices of barn and free-range eggs. Any producer who would like to take part is encouraged to contact Silverpath Consulting. 2. Price comparison with other protein sources Eggs remained an economical source of animal protein in 2015, costing R16.65/kg. This compared to R18.43/kg for broiler meat (at farm-gate level), R22.83/kg for pork (at abattoir level), and R27.27/kg and R34.17/kg for beef (class C2/C3 and A2/A3 respectively, at abattoir level). 3. International price comparison The average price in the northeast region of the United States of America (USA) in 2015 for white, size large, was US$1.90; for white, size medium, US$1.57; and for brown, size large, US$2.05 per dozen (source: Urner Barry). Depicted in rands, using the average exchange rate of R12.73 to the US dollar for the year 2015, white, size large, was R24.15; white, size medium, R20.02; and brown, size large, R26.05 per dozen. The US Department of Agriculture gives the average prices per dozen for the northeast region for extralarge, large and medium eggs as $1.78, $1.75 and $1.43 respectively. Figure 2 shows the movement in egg prices in the USA over the past five years. The soaring prices in the second half of 2015 were caused by egg shortages following the slaughter of over 40 million layers infected with avian influenza (AI). 4. Layer breeders Figure 2: USA egg prices

3 Due to outbreaks of highly pathogenic avian influenza (HPAI) in the USA, difficulties were experienced importing grandparent stock into South Africa. In 2015 there were an estimated layer breeding hens in the grandparent operations producing layer parents, and another estimated layer breeding hens in the parent operations producing layers. There are no pure lines or great-grandparents in South Africa. 5. Day-old pullets Day-old pullet placements increased by 1.9% in 2015, reaching a total of ; an average of per week (Figure 3). In terms of feather colour, 59.1% were silver and 40.9% were brown strains. 6. Layer flock Figure 3: Trend in day-old pullets placed The size of the national layer flock increased by 2.1% during 2015 to million hens (Figure 4). An average flock of million hens is projected for April 2016; an increase of hens (+1.1%) compared to April This growth is not due to the adjustment in culling age in the egg forecasting model. Age at hen depopulation was increased from 72 to 74 weeks in November 2013 and the change was gradually phased in during 2014.

4 Figure 4: The national layer flock 7. Egg production This year, 2015, saw a reversal in the downward trend in egg production of the past two years (Figure 5). The average number of cases produced per week was , an increase of cases (+2.1%) per week. Total egg production in 2015 amounted to million cases, or 638 million dozen eggs. Figure 5: Cases of eggs produced

5 Of all the forecasted marketable graded eggs (Grade 1) that were sold in 2015, 8.8% were size medium, 45.0% were large, 42.4% were extra-large and 3.8% were jumbo. There was a 1.8% increase in extralarge and jumbo eggs compared to 2014, no doubt because of the longer laying cycle. The table below summarises bird numbers and egg production and shows the changes for 2015 compared to the previous year. BIRD AND EGG NUMBERS FOR THE EGG INDUSTRY (MILLIONS) YEAR DOP placed LRP placed Laying hens Cases of eggs Per annum Per annum Avg. no. Depop. Per annum Change % Change DOP = Day-old pullets LRP = Layer replacement pullets Figure 6 depicts the relationship between egg volume and producer price. From January 2011 to February 2013, positive growth in egg production was projected and the producer price for eggs decreased relative to the overall Producer Price Index (PPI). The high year-on-year increases in producer prices of 2013/14 were associated with a decreasing supply of eggs, or negative growth in egg production. In 2015 there was a small growth in egg volumes compared to the previous year, and large increases in the producer price towards the end of the year. Figure 6: Percentage change in egg volume and producer price

6 It is important to note that an adjustment was made during the year to the method of calculating the mean egg price from the sample data. In the first nine months, a straight average was used. From October, a weighted average egg price was calculated taking the volume of eggs produced into account. Indications are that during this period larger producers were getting higher prices than their smaller counterparts, because the weighted average egg price was higher than the straight average. Figure 7 shows the trends in the official PPI and Consumer Price Index (CPI) since 2013, with December 2012 as a base. As input costs rise, the producer price tends to adjust automatically over time and this is reflected in changes to the PPI. The PPI for eggs had consistently lagged behind the other indexes, until August 2015 when it increased rapidly. Egg prices are normally governed by supply and demand; a reduction in hen numbers would lead to a shortage of eggs and hence an increase in the price per dozen (Prof. Gerald Ortmann, University of KwaZulu-Natal). Egg producers would have been happy with realisations at the end of the year, but that period has in all likelihood been followed by decreased sales volumes and surplus stocks. 8. Prospects for 2016 Figure 7: Trends in PPI and CPI (source: Stats SA) The number of point-of-lay pullets placed is expected to increase by 3.8% during the first four months of 2016, compared to the same period in An average flock of 25.0 million layers is projected for the first four months of This will be an increase of approximately layers (+1.0%) compared to the same period in Consequently, egg production is expected to increase by 0.8% (an average of cases per week) to an average of cases per week in the first four months of Gross value

7 With a gross turnover of R9.83 billion at producer level, eggs remain the fourth largest animal product sector in agriculture in South Africa, after poultry meat, beef and milk (source: Department of Agriculture, Forestry and Fisheries (DAFF)). The turnover increased by 6.9% compared to Eggs share of the gross value of animal products was 8.6% and of all agricultural production 4.2%. The total value at retail level was R14.7 billion for About 638 million dozen eggs were sold in 2015 through various channels. 10. Input costs The average layer feed price for 2015 was R3 422/ton; an annual increase of 0.5%. This followed yearon-year increases of 23.7%, 12.0% and 4.8% in the previous three years. The layer feed price includes distribution, but excludes medication, additives and VAT. The movement in the feed price is shown in Figure 8. The South African rand exchange rate for December 2015 averaged R15.32 to the US dollar, R3.72 higher than the December 2014 rate of R The highest exchange rate for the rand to the US dollar over the 12 months of 2015 was R16.05, recorded in the last week of December. The most favourable exchange rate of R11.48 to the dollar was achieved in January Feed usage Figure 8: Layer feed price The feed usage for layers and pullets is summarised in the table below.

8 FEED USAGE FOR THE EGG INDUSTRY (TONS) YEAR Rearing Laying Total feed usage Per annum Per annum Per annum Per week Change % Change According to the Animal Feed Manufacturers Association (AFMA), national feed sales for the layer industry from 1 April 2014 to 31 March 2015 amounted to tons; a 0.4% year-on-year increase. Their national estimate, including feed manufactured by non-afma members, was tons. SAPA s forecasting models predicted a feed intake of tons for the same period; tons less (-6.1%). 12. Consumption The per capita consumption for 2015 was 150 eggs or 8.76 kg, compared to 147 or 8.55 kg in 2014 (source: DAFF). While the population increased by a midyear estimate of 1.8%, the total consumption of eggs increased by 2.3%. Peak egg consumption in South Africa occurred in 2012 at 162 eggs per person (Figure 9). Figure 9: Per capita egg consumption in South Africa The annual per capita consumption of eggs for some of the top egg-eating nations is shown in Figure 10. South Africa ranked 29 th out of the 31 countries that took part in the 2014 International Egg Commission (IEC) survey. Considerable scope still exists for increasing the per capita consumption of eggs in South Africa, particularly when taking into account the price competitiveness compared with other animal proteins.

9 Figure 10: Per capita consumption (source: IEC) INDUSTRY TURNOVER The estimated turnover from the egg industry is shown in the table below. Point-of-lay sales are not included. The egg industry contributes 20% to total turnover of the poultry (broiler plus egg) industry. DOP INDUSTRY EGG INDUSTRY TOTAL Producer Cull Year Price Turnover Turnover Turnover Turnover price price R/dop (R million) (R million) (R million) (R million) (R/doz) (R/bird) Change % change SMALL-SCALE EGG FARMERS These statistics summarise a quarterly survey conducted by Silverpath Consulting. All prices exclude VAT. The data collection forms were amended during the year to improve the quality of the statistics; for this reason, it is not possible to report on the entire year. 1. Pullet rearing

10 A total of pullets were being reared during the fourth quarter of 2015 (4Q2015) by 10 pullet rearers. The weighted average price per day-old pullet was R7.29. The previous quarter s average price was R9.55. The average price paid per 50 kg bag for starter mash was R262.00, for grower mash R250.20, and for developer mash R The total quantity purchased per month during 4Q2015 was 553 bags (26.8 tons). The total value of the feed purchases was R per month. Total sales of point-of-lay pullets amounted to birds. The average selling price was R57.87 per bird. 2. Point-of-lay hens Sixty-five egg producers bought point-of-lays from recognised pullet rearers, as well as smaller independent rearers and traders. Three of the egg producers reared their own pullets. Hens were kept in battery cages on sixty-one farms; there were four free-range farms and one that had both housing types. A total of hens were purchased at a weighted average purchase price of R The flock size for the 68 respondents was The laying facilities could hold hens, which means that they were stocked at 53.8% of their capacity during 4Q Layer feed Sixty of the respondents bought their feed in 40 kg or 50 kg bags. In total bags were purchased per month. This equated to 147 tons per month of layer feed. The weighted average price for laying mash, excluding VAT and transport, was R208.99/50 kg. This equated to R /ton. Eight of the survey respondents were buying in bulk. They purchased 371 tons per month at an average price of R /ton. The total value of the layer feed purchases was R per month, that is, R per quarter. 4. Egg sales Eggs were sold to the community, schools, restaurants, a hospital, bed and breakfast establishments, and local spaza shops. The average egg price during 4Q2015 was R13.40/dozen, although the weighted average was R11.83/dozen. Total sales amounted to dozen per week, that is, dozen per quarter. The average rate of lay for the hens was 110%. (This indicates that either the egg or hen numbers are not entirely correct as the farm average rate of lay should be about 80 85%.) The total value of the eggs produced for 4Q2015 was R Cull hen sales

11 Old hens were sold live to the community via informal markets and hawkers, and to schools. In total culls were sold at a weighted average selling price of R33.76/hen. TRADE During 2015, exports of eggs for consumption totalled tons (9 832 tons if you include preserved or cooked ostrich eggs). Chicken shell eggs (fresh and preserved) contributed tons (63.1%) to total egg exports, with shell eggs from other poultry types amounting to tons (24.4%). An amount of 4.1 tons of preserved or cooked ostrich eggs were exported. Egg product (yolks, raw pulp, albumins) contributed tons (12.5%). The egg product consisted of 200 tons (16.2%) of liquid egg product and tons (83.8%) of dried egg (Figure 11). The total value of the egg exports for consumption was R227.7 million (including the ostrich eggs above); a 10.5% increase compared to In addition, tons of fertile chicken eggs and 365 tons of fertile eggs from other bird species were exported during the year. The export value of the fertile chicken eggs was R247 million and the value of the fertile eggs from other species was R5.4 million. Figure 11: Product mix of egg exports for consumption The destinations of egg exports (for consumption and fertilised) were mainly Mozambique with 56.2% of the total exports, followed by Zimbabwe with 12.3%, Angola 9.5%, Swaziland 8.8%, Lesotho 4.4% and Namibia 4.1%. These six countries received 95.6% of South Africa s exports. Total imports of eggs, including shell eggs and egg products (liquid and dried), was tons in 2015; 120 tons less (-25.9%) than in The egg product component amounted to tons, of which tons was dried egg product. Imports of chicken shell eggs totalled 8.5 tons.

12 The total value of the egg imports was R37.4 million; a 4.0% decrease compared to THE GLOBAL EGG INDUSTRY At the end of 2015, the news dominating the global egg market centred on the stampede of big corporations from battery-produced eggs to cage-free eggs. Concerns about a resurgence of AI outbreaks in the northern hemisphere winter also made headlines. Despite the effects of AI, the global egg industry was expected to produce 70 million tons of shell eggs and egg products during the year. Global growth in egg production has averaged 2.8% per annum since More than half of the global flock is located in the Asia-Pacific region. About 16% of the laying hen flock is found in the 28 European Union (EU) countries and 9% in North America. In terms of individual countries, the top four egg producers are China, the USA, India and Japan. Both Mexico and Turkey have seen over 40% growth in their egg industries since the start of the millennium.