5 December 2022

7 minute read

By: FAI Farms

Asia

China's 4^th Egg Quality and Hen Welfare Summit, although shifted online due to Covid-19 restrictions, demonstrates the growing partnerships across the cage-free egg supply chain in China. The event attracted more than 270,000 online viewings on November 10, 2022. 

Speakers were carefully chosen for the conference to represent all stakeholders shaping the industry, including production service providers, retailers and NGOs. They celebrated achievements in developing standards and industry reports, shared experiences of utilizing vertical integration in cage-free egg production and analysed the market trend and consumer groups. Evidence and experiences from both China and abroad were used to model a unique path for cage-free eggs in China.

Keynote

Professor Hai Lin, vice president of Shandong Agricultural University, provided the keynote speech for this conference: Precision Farming and Laying Hen Welfare. Modernisation is a political goal and prospect in China. Referring to the words from President Xi, “modernisation in China is modernisation of the harmonic coexistence of humans and nature” (中国式现代化是人与自然和谐共生的现代化). Giving special attention to laying hen welfare, Professor Lin discussed how precision farming can be achieved with smart technology, including individual-specific monitoring and real-time farm management.

Industry

Focusing on cage-free production in China, several service providers described innovative steps they’re taking to improve production systems. Big Dutchman is renowned to offer high-standard cage-free housing and equipment in China. The sales director, Philip Prang, compared best practices of cage-free layer farms around the world. Although the overall cost of aviary housing systems is 36% more than conventional cages, it is undeniable that cage-free systems are replacing cages in Europe and the US. Prang also addressed some significant differences between these markets, such that in Europe, small-scale organic farms are gaining popularity, while farms in the US are falling behind with adopting cage-free systems due to management challenges. 

Elanco and Alltech were invited to share insights from the animal health and nutrition sector. Lei Wang from Elanco presented the opportunities and challenges of 'edible raw eggs’ in China. Eggs being marketed as ‘can be eaten raw’ (可生食) are increasing exponentially in China. Wang explained that this trend can be explained by consumers’ growing concern for food safety, especially with limited legislative control. Egg producers are applying standardised protocols to detect and control Salmonella, then marketing these eggs as superior to other ‘normal’ eggs without such procedures. However, “salmonella control should be the ‘passing line’, not the ‘excellent line’” (鸡蛋沙门氏菌控制是及格线而非优秀线), Wang said. Food safety should be an inherent responsibility of all egg producers and Salmonella can be effectively detected and controlled, as shown from evidence abroad. 

Dr. Gang Lin, research and technical director from Alltech, listed other qualities of eggs that consumers would pay a premium for. Lin described how younger, educated consumers in urban areas will steer their purchasing patterns towards high-quality eggs. Besides from ‘edible raw eggs’, consumers will also be concerned about sustainability.

Egg Innovation in the U.S. and Ovodan in China shared their cage-free journey as egg producers. Interestingly, they both utilized elements of vertical integration to build a profitable model for their companies. Dr. John Brunnquell, founder, CEO, and President of Egg Innovations, described how the company controls the entire supply chain of egg production, from feed mills to layer facilities then to packaging and selling eggs. Brunnquell highly values the needs of layers to express natural behaviours and facilitating contract farmers to adopt best practices. By operating a vertically integrated business model, he was able to direct the profit gained at each stage to improving animal welfare, concentrating the cost to improving free-range layer facilities. Egg Innovation is also promoting regenerative agriculture through introducing a new brand, ‘Helpful Hens’, where laying hens and consumers could take action and tackle climate change. 

Ovodan manages farm input, farm facilities, and egg processing plants. Although mainly operating caged systems, the vice president of Ovodan, Taixin Han, is very confident that cage-free eggs will increase in their company and in China. He also placed layer welfare within the framework of CSR (corporate social responsibility), alongside Ovodan’s other environmental and social sustainability goals.

Retailers & food service

Next along the supply chain are retailers and food service companies. Huawen Huang, purchasing director of RT-Mart, and Maisie Ganzler, chief strategy and brand officer of Bon Appetit, emphasized the needs of consumers. Huang shared extensive research conducted on the changing market and consumer interests. She drew particular attention to the expanding middle-class, especially people in their 20s. This group of consumers have higher disposable income, less time availability, and more willingness to pay for high-quality products. For egg products, Huang categorised different descriptors to match different values and prices, such as ‘Selenium eggs’ and ‘no-bacteria eggs’ correspond with health standards, whilst ‘cage-free’ and ‘edible raw eggs’ indicate a better life for animals and humans. Most importantly, she said “we need to know more about consumers than they know about themselves… consumers are paying for ‘solutions’, not the product, nor the channel” (比消费者更了解消费者… 消费者购买的是 “解决方案” ，而不是产品、渠道). 

Ganzler from Bon Appetit told stories in her presentation to illustrate the importance of listening to their consumers and being transparent to their clients. With just one student requesting cage-free eggs, Ganzler reached out to an animal advocacy group and made commitments to improve the welfare of laying hens. Despite challenges with avian flu and Covid, Bon Appetit then became the first food service company to source 100% cage-free shelled and liquid eggs. Their competitors also had to follow suit to meet increasing demand from their consumers.

Associations, consulting companies & NGOs

Associations, consulting companies, and NGOs are other key players in building, enhancing and shaping the cage-free industry. Xing Jiang, deputy director of industrial policy research department of CCFA (China Chain Store & Franchise Association), sets the framework of high-quality food products in China. CCFA represents a collaborative platform where members share resources and develop industry standards. The “Evaluation guidelines of cage free egg production” (“cage-free group standards”), published by CCFA in October 2021, was a significant milestone in the industry as it’s the first set of standards for cage-free egg production in China. 

Director of FAI Farms Brazil, Murilo Henrique Quintiliano, then benchmarked the cage-free group standards with similar standards widely used globally, such as Certified Humane and RSPCA. Quintiliano demonstrated that the CCFA standard is equal to, or better than, 90% of all the other cage-free egg standards assessed. This sends a positive message to Chinese producers, as they will comply with most international certifications by following the CCFA cage-free group standards. 

Regarding how Chinese producers perceived cage-free systems, project director of Lever China Muci Huang conducted a survey that showed 85% of Chinese cage producers are willing to begin producing cage-free eggs, which is partially due to increasing demand from their clients and consumers. Another market research study that Huang conducted in first-tier cities found that 17% of eggs sold in large supermarkets are marketed as cage-free. 

Pei Zhang, deputy secretary-general of ICCAW (International Cooperation Committee of Animal Welfare), also shared results from the farm and market research they’ve conducted. Zhang visited 26 cage-free farms and discussed four major limitations of transitioning to cage-free: cost (especially labour), substrate (including concerns around dust, parasite, and hygiene), immune (may be more difficult to catch birds), and floor eggs. She also quoted one cage-free farmer, “if we apply the ‘caged’ mindset to cage-free farming, we will never succeed. We can only compare with ourselves, not with cage systems.” Regarding the egg market, Zhang suggested cage-free producers to focus on developing intensive farms with sufficient output to supply retailers and establish B2B models. 

The chief representative of CIWF (Compassion in World Farming) China, Jeff Zhou, took a step back from the Chinese egg market and mapped out the global trends of cage-free eggs. The EU, for instance, has committed to end the cage age by 2027. To monitor the progress of companies committed to sourcing 100% cage-free eggs by 2025, Zhou introduced a publicly available tool, Egg Track, CIWF developed since 2017 (the latest 2022 report is available here).

Congcong Li, animal welfare project manager of IQC (Integrated Quality Consulting), summarised the ‘Industry report of China Cage-Free Egg in 2022’. This report is the outcome of the Welfare Egg Advancing Working Group, which was launched in August 2022. The report consists of four chapters, including 1) industry overview, 2) industry analysis, 3) challenges and countermeasures, and 4) Chinese cage-free producer case studies.