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Victory, Frustration & Defeat: The Unfolding Drama of Humans and Eggs – Part 2

cagedHens
cagedHens

Like the rest of the commercial world, the egg industry is continuing to consolidate. Much of that consolidation is being done around the small leghorn hen – God help this breed and the ongoing loss of genetic diversity in the laying hen pool.

With the help of genetic, management and chemical manipulations, this bird has been configured to lay an abnormal number of large eggs – 250 a year. This is in contrast to the one or two clutches of about a dozen per clutch laid by her wild relatives.

Notwithstanding the stress of producing so many eggs, most birds are housed in what is called a “battery cage.” A standard battery cage – about the size of a filing cabinet drawer – houses 8 to 10 birds. This allows each bird approximately 67 square inches – not enough to stretch their wings. However, there are modest changes (even a victory) to increase the size chickens are allowed to work in. Most large industrial egg producers are now filling niche markets for eggs from free-range chickens. This trend is still small and counts for about 10 percent of hens. Battery cages have been outlawed in the European Union.

The bigger victory unfolded on January 1, 2015. California Proposition 2 requires that all eggs sold in California, after 1/1/2015, must come from hens with access to more room – larger cages or fewer hens in a cage. The new law requires at least 116 square inches per bird as opposed to the standard 67 square inches.

Consolidation among egg producers continues. The largest egg producer – Cal-Maine – boasts that it is the industry leader in consolidation. Since 1989 they have completed 18 acquisitions. According to the USDA, 88 percent of all eggs come from only 52 producers. The top 10 producers own approximately 48 percent of the laying hens. Cal-Maine believes industry consolidation will continue and plans to capitalize on opportunities.

In stark contrast to the Cal-Maine position is another position spoken a few years back from one of America’s top celebrity economists – John Kenneth Galbraith. Galbraith served in the Presidential administrations of Roosevelt, Truman, Kennedy and Johnson. In his own words, Galbraith explained:

[quote]The free enterprise system fully embraces the right to inflict limitless damage on itself. The mergers and acquisitions mania was, without doubt, the most striking exercise in self-destruction.[/quote]

— John Kenneth Galbraith (1908-2006).

Despite outrage, caution is advised when pointing fingers at large companies like Cal-Maine and its executives. Management teams must respond to the demands of stockholders. Americans have funneled trillions of dollars to institutional investors to manage pensions and 401(k) retirement plans demanding a maximum return.

As of 9/30/2014, the Investment Company Institute reports that total retirement assets totaled $24.2 trillion. These dollars drive much of what happens in the commercial landscape including battery cages, loss of genetic diversity in laying hens and virtually everything else that we might complain about.

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