The market
The global egg market was estimated at $85 billion in 2010, producing approximately 1.3 billion eggs annually. Global egg production tripled between 1970 and 2005, rising from 19.5 million tons to nearly 60 million tons. Asia is by far the largest producing region, with China, India, and Japan controlling over 50% of global production. If India consumed as much as Mexico, we would see another tripling in the coming decades. The European Union, with its 27 member states, accounts for only 10% of global production, and its future is heavily influenced by animal health and welfare considerations. There are just under 5 billion laying hens worldwide, 68% of which are confined to cages with a standard of eight chickens per 3,720 cm² area, or 465 cm² per chicken. In the United States, 95% of chickens are caged. In 2015, California will join Switzerland and Sweden, where cage bans have been in place for years. Although chickens were domesticated 7,000 years ago and are now part of the modern food supply, animal welfare standards will determine the future of the industry. The European Union has mandated that, since 2012, each laying hen must have a minimum of 750 cm². This requires an overhaul of capital equipment and a redefinition of profitability standards. Global demand for eggs has fluctuated since avian flu, salmonella, and dioxin contamination cases received widespread media coverage that undermined consumer confidence. The amount of eggs consumed varies greatly from country to country. Every day, 29 million eggs are eaten in the United Kingdom. Australians consume 170 eggs per person per year, compared to 246 for Americans, while India consumes only 40. Mexicans are the world's largest consumers per capita, averaging 355 eggs per person. The industry is increasingly concentrated. In the United States, 12 companies have an average of more than 5 million laying hens. 172 companies control 95% of the business. Market prices vary considerably: a dozen caged eggs cost an average of 87 cents in 2010, while cage-free eggs cost $2.62 and organic, free-range eggs $4.06. To combat costs, the Thai government introduced a weight-based pricing system, overcoming the tradition of selling eggs individually
Innovation
The living conditions of chickens are a top priority in the industrialized world, with numerous design innovations ranging from self-cleaning waterers and automatic feeders to lighting systems and waste control. Since the biggest expense is feed, particularly additives to control weight, health, molting (feather replacement), and even egg yolk color, special attention has been paid to the sorghum, soy, and corn mix. Almost all animal feed today comes from genetically modified (GM) crops, even in Europe, so even organic eggs and free-range animals rely on GM feed. In some countries, feed will include processed chickens that have reached the end of their laying life. While this practice is banned in Europe, it is unfortunately still carried out elsewhere. Angus MacIntosch, who made his career as an investment banker at Goldman Sachs, took over the management of Domaine Spier in Stellenbosch, South Africa, with a clear commitment to transforming the vineyard, hotel, and farm into a socially and environmentally sustainable operation. Dedicated to quality and delivering fresh vegetables, eggs, and poultry to top chefs in the Western Cape, Angus quickly realized that while the quality of his free-range eggs was widely recognized, the farm's "free vegetables and worms" only covered 30% of their daily feed. The remaining 70% had to be purchased. To his dismay, his certified organic eggs came from chickens fed genetically modified corn. He was caught between the uncomfortable option of closing the egg farm or undertaking a major cost-cutting operation that would almost certainly impact both quality and organic certification. Although its operation of 21,600 chickens per year is modest by international standards, it is an important driver of local job creation. With 900 chickens slaughtered each week, the first potential feed supplement could come from the protein-rich maggots (case 2) raised with the offal. Cutting-edge industrial research on maggot farming is now based in South Africa. This allows for the provision of high-quality nutrients to the chickens, reduces slaughterhouse waste management costs, and the saliva collected from the maggots is recognized as a wound treatment. Furthermore, the substrate of locally grown fungi provides a full range of essential amino acids. It's a good start. Then, drawing on the experience of Latin America, where chickens are fed organic plantains and grass, the farm can tap into an additional feed supply that includes organic bananas wasted from local supermarkets. This rich mix is supplemented with fishmeal produced from the non-commercial catches of local fishermen. To top it all off, the chickens receive a fine mixture of seaweed washed up on the beaches, enriching their feed with micronutrients that improve their health, while also giving the egg yolks a deep yellow color, making them highly desirable and appetizing.
The first cash flow
Professor George Chan's integrated farming model demonstrated how a piggery and a fishery can cascade nutrients. Free-range chicken farming recognizes that reliance on feed from external suppliers can be replaced by intelligent management of regional waste, reducing feed costs by up to 50%. This makes organic chicken farming commercially viable while integrating operations into the local business network. Establishing these relationships with other businesses as diverse as retail (handling food with expiration dates), beach maintenance (seaweed removal), fisheries resource efficiency, amino acid recovery from fungal substrate, and slaughterhouse hygiene creates a platform for competitive, free-range, organic chicken farming. This supply network resembles an ecosystem with multiple benefits and revenue streams. This is one of the essential characteristics of a competitive and sustainable Blue Economy which is likely to offer high-quality products at a lower price.
The opportunity
The animal feed industry has become an important component of supply chain management. Waste streams from various industries, combined with a high grain supply and micronutrient blends, have given rise to a self-sustaining business that has begun to represent a larger share of the added value in the production chain. It appears that fish and chicken feed suppliers are making more money than the fish and chicken farmers themselves, who are able to manipulate costs for customers. The animal feed industry is like the hardware store owner in the gold rush; he's the only one who becomes a millionaire. The opportunities available to Angus to produce quality feed locally allow us to redefine the business model where the number of eggs per year is not the sole metric, but where intelligent feed management, like managing the electricity grid in a city, enables increased production of quality feed at a lower cost by utilizing locally available resources. This is a platform on which many entrepreneurs could build a future.
