Cage-Free Eggs Face Demand Issues

Companies like Walmart, McDonalds, and Taco Bell have stated they are going to go 100 percent cage-free eggs. But to get the supply needed, the industry has a $10 billion price tag.

Cage-free layers have higher up front investments and operating costs.

That brings egg producers to a conundrum. While companies that produce food products are demanding cage free, in stores it's a different story. The supply of cage-free eggs have increased to 16 percent, but many consumers are choosing not to buy them.

Maro Ibarburu with the Egg Industry Center says, "If you look, there are many companies that decided to build cage-free facilities and what they found was there wasn't enough demand for the cage-free eggs. And now they stopped building facilities that had been planned until the demand is there."

One of the reasons for less demand in stores is the premium. In the last 12 months, cage-free eggs averaged $2.77 a dozen while conventional eggs are $1.43 a dozen.

A restaurant or food product might be able to slowly adjust prices for a more expensive egg, but the store prices will have observable differences. For a while at least, the egg industry has been struggling to keep eggs above the cost of production. In 16 of the last 24 months, producers have been losing money.

Ibarburu says a lot of research is going on asking why consumers are less willing to buy cage-free eggs, "Every consumer is different when it comes to what they value. And their budget as well. So they value animal welfare, or environmental footprint, or food safety, they value price. And what we need is broadly more education in terms of what are the pros and cons of different systems."

Ibarburu says giving consumers the ability to choose what product is valuable to them is important. Although, it may take the market some time to find the right balance.