Controversy over lack of eggs has been years in the making

Monday, 2 January 2023

It was meant to mark the end of battery cages, instead the end of 2022 welcomed a new controversy in the egg industry as supermarket shelves lay bare. But was it lazy planning by farmers that led to egg-gate? Nadine Roberts reports.

It was 2013 – just a year after the government committed to banning battery chicken cages for layer hens by the end of 2022 – when then Primary Industries minister Nathan Guy backed down.

As part of a progressional phase-out process, battery cages installed before the end of 1999 had to be gone by the end of 2016, while those installed before the end of 2001 had until the end of 2018 to be replaced.

But on the advice of the independent National Animal Welfare Advisory Committee (NAWAC), Guy was forced to extend both dates by two years because of a fear that the time frames would lead to a disruption in egg supply and incur price hikes.

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**

“Amending the dates will give farmers the time they need to get resource consents and build new sheds,” Guy stated at the time.

It seemed the government hadn’t initially factored in the lengthy wait many egg producers were already facing to get the resource consents they needed to change their systems.

Poultry Industry Association executive director Michael Brooks summarised industry reaction to the initial time frames.

“It was ridiculous,” he said.

At the same time, in Canterbury, an egg farmer was on the hunt for a new farm after the property on which he was running 9000 hens in both a battery and free-range operation was bought by the Crown for the Southern motorway development.

Always a believer in the free-range system, Andrew – whose surname is being withheld to protect his identity – initially bought a property in West Melton in 2015 and set about getting the required resource consents from Environment Canterbury.

But 18 months later, after a protracted fight with neighbours through the Environment Court, Andrew’s consent was turned down, and he was forced to sell the property and start the process again.

Luckily, the next Canterbury property he chose took only 14 days from when the consent application was lodged to be granted.

Setting up the property was the easy part, Andrew said, and in 2016 the free-range infrastructure was complete.

Then he had to raise thousands of chickens – and all of it while the clock ticked away on the government deadline.

Andrew admits if it hadn’t been for the lucky and unexpected purchase of his initial farm, he may have exited the industry. He didn’t have the land to turn his system into a free-range farm, and buying valuable agricultural land in Canterbury often priced chicken farmers out of the real estate market.

Since the deadline was introduced, Andrew has seen small producers leave the industry. Those who stayed began transitioning away from battery cages promptly but many were delayed by the Resource Management Act (RMA).

Brooks agrees. He knew of one company that was held up for three-and-a-half years because of the act.

That same company was to face an even bigger blow after spending $60 million dollars converting from battery cages to colony cages (a home with enrichment areas with a capacity of 60 hens), only to be told in 2019 the supermarkets would only take free-range or barn raised eggs from 2025 to 2027.

“When you put it together,” Brooks says, “it’s a multitude of factors that caused the shortage, but you can see why farmers have been battered by decisions outside their control.”

Frustrations over change

Two days after Christmas and the tweets are posted thick and fast.

“They’ve had 10 years to phase stuff out, and we have shortages,” one tweeter mocks.

“Impressed that farmers had 10 years to adjust to the end of eggs from caged hens and still managed to screw things up,” another types.

All over the country, angry consumers who have been turned away from empty supermarket shelves are searching for someone to blame.

Brooks is suddenly inundated with media calls, and he’s frustrated at the anger vented at producers.

“The industry would argue strenuously that there was a whole range of issues beyond our control. People say we are opposed to change – well no, we’re not!”

If Brooks sounds fired up, it’s because he is. He says the industry signalled from 2012 that the decade-long deadline to eradicate battery cages would cause disruption in supply chains.

Throw in the two main supermarkets’ announcement in 2019 of a ban on every other egg producing system except free-range or barn raised in six to eight years, after 33% of battery cages had already been converted to colony cages, and you begin to understand the complexities farmers have been dealing with.

“Suddenly farmers are saying, ‘What is my choice now? Where do I go? Do I have to buy a whole new farm to go free-range? And what about the money I’ve already invested?’”

Brooks doesn’t buy the supermarkets’ argument that consumers want to buy free-range or barn eggs.

“Really? So in Otara and Cannons Creek they are battering down the doors to tell you they want free-range eggs? It’s bollocks.”

Brooks can’t understand why the supermarkets went against NAWAC research showing colony cage systems had acceptable animal welfare standards.

He believes the decision was more to do with profit margins than the health of the bird. Regardless, the abrupt decision blindsided farmers and led to some exiting the industry altogether.

Other, smaller free-range farmers with customer bases centralised around cafes, small retail shops and farmers markets saw their markets wiped out overnight due to the Covid-19 induced lockdowns.

This year, 18 small free-range farms have closed down alone and Brooks is concerned that there have been no applications for new farms of a similar size during the same 12-month period.

“It’s just too hard.”

On average, industry research back in 2012 found the average cost to convert a smaller to mid-sized farm from battery to colony cages was $1m. For those choosing to stay in the industry, financing became another time barrier to meet the deadline.

“Think about it,” Brooks says emphatically. “From 84% of the industry having battery cages to zero in 10 years is a phenomenal change. No other industry has had to do that.”

Lumpy or vacant supply chains in the face of the pandemic have also severely affected those farmers transitioning to new systems, he says.

Meanwhile, feed costs have risen dramatically, with a decrease in Ukraine grain damaging the global feed market because of the ongoing war with Russia. With 65% of egg production costs coming from feed, any increase has a large financial flow-on effect, as Burnham Free Range Eggs owner Nigel Gould found out.

In the past two months his 20-tonne feed bill for the 6000 hens he farms has risen by $4000.

Gould also knows of other similar-sized farmers who have left the industry because of the pace of change, and he believes all the changes directed at the industry have led to the current egg shortage.

To meet demand, New Zealand needs between 2.8 million and 2.9 million commercial laying hens, but the number of such hens has fallen to 2.5 million, leaving the supply chain “tight”, says Brooks.

Raising the 300,000 chicks needed to meet the gap takes about five months to the point of laying, meaning pressure on supply could be around until May.

While both Countdown and Foodstuffs concede egg farmers have experienced significant challenges due to regulatory changes, neither acknowledge their role in the shortage.

And that’s something Brooks can’t accept.

“I think the timing of their decision (to ban battery and colony systems) was really, really poor.”