WattAgNet: Legislation compliance costs European egg sector dearly



Additional costs relate to animal welfare, environmental protection and food safety

Complying with European Union legislation adds, on average, an extra 16 percent to the cost of egg production in Europe, a new study reveals.

These additional costs of egg production at the farm level directly relate to European legislation on animal welfare, environmental protection and food safety, according to new research from the Economic Research Institute (LEI) of Wageningen University in the Netherlands. Most of the additional cost arises from the minimum 750 square centimeter space allowance per bird in enriched cages in the EU.

The study — by P.L.M. van Horne and N. Bondt — also demonstrates the importance of import levies on shell eggs and egg products to protect European egg producers and processors from high volumes of imports from third countries.

Within the EU, the average cost of production of one kilo of shell eggs from enriched cages in 2015 was EUR0.89 (currently US$1.05), ranging from EUR0.83 in Poland to EUR0.97 in Denmark. Compared to the EU average, production costs were lower at that time in Ukraine (by 24 percent), the U.S. (21 percent), Argentina (16 percent), and India (13 percent).

Compared with the EU, the competitive situation of third-countries for whole egg powder was, if anything, even stronger. Production costs were lower in Ukraine (22 percent), the U.S. (19 percent), Argentina (15 percent), and India (14 percent), and freight costs for this type of product are low.

Currently, import levies protect EU egg producers and processors from imports from these countries.

When the researchers applied different scenarios relating to the level of import levy and exchange rate differences to their data, they found that European production of whole egg powder would be under great threat from imports.

If the import levy were to be reduced by 50 percent, egg powder from Ukraine and the U.S. would be cheaper than the European average.

In a “worst case scenario” in the absence of any import levy and a 10 percent reduction in exchange rate for all currencies against the Euro, all countries outside the region would be able to offer whole egg powder at a lower price.


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