EU egg sector under serious threat without import levies
Import levies protect the EU egg sector from large volumes of imports from third countries. If bi- and multilateral negotiations with non-EU countries result in reducing or abolishing import levies, competition from non-EU countries is a threat, especially when it comes to egg powder. In the EU, producers have to comply with regulations concerning environment, animal welfare and food safety. This raises the total production costs with an estimated 16% at farm level.
These findings are reflected in a study by Wageningen Economic Research, for the EU trade association for egg packers, egg traders and egg processors (EUWEP). The report shows the impact of reducing or removing import levies on the competitiveness of the EU egg sector, for both shell eggs and whole egg powder.
Basic production costs (84%) and costs directly related to EU legislation (16%) in 2017
Lower importlevies: some scenario’s
In a scenario with 50% lower import levies, Ukraine and the USA already offer whole egg powder at a lower price compared to the EU egg sector. Combined with a 10% lower exchange rate, all non-EU countries have a considerably lower offer price of whole egg powder.
With a 50% decrease in import levies and a 10% lower exchange rate for the non-EU currencies, offer prices could be 6% (Argentina, India) to even 14% (Ukraine) below the average EU level. The ‘worst-case scenario’ consists of no import levies and a 10% lower exchange rate for the non-EU currency. In this scenario all non-EU countries would be very cheap suppliers of whole egg powder to the EU market. Offer prices could be as low as 18% (Argentina, India) to even 27% (Ukraine) below the average EU level.
Offer price of whole egg powder in Germany from EU average (horizontal line) and non-EU countries (Ukraine, USA, Argentina, India) in eurocents per kilogram based on scenario 3: 50% lower import levies and 10% lower exchange rate.
Production costs shell eggs and egg powder compared
The production costs of shell eggs produced in enriched cages in the EU in 2017 was on average 0,88 euro per kg of eggs. Between the main egg producing countries, the production costs of shell eggs in 2017 ranged from 0,96 euro per kg in Denmark and 0,94 in the UK to 0,82 in Spain and 0,83 euro per kg of eggs in Poland. The costs in the Netherlands, Germany and Italy are around the EU average. Compared to the average level within the EU, the production costs for shell eggs in 2017 were lower in USA (-24%), Ukraine (-22%), Argentina (-14%) and India (-11%).
For whole egg powder, the non-EU countries were even more competitive. Compared to the average level within the EU, the production costs of whole egg powder in 2017 were lower in USA (-21%), Ukraine (-20%), Argentina (-13%) and India (-13%). Because the cost of transportation of powder is low, the offer price of whole egg powder from third countries is relatively low. Current import levies protect the EU from imports from these countries.
European legislation for egg producers
In the EU, egg producers have to comply with European legislation covering environmental protection, animal welfare and food safety. The additional costs directly related to European legislation, based on the situation in 2017, are estimated to be 16% of the total production costs of eggs at farm level. The extra costs of keeping layers in enriched cages (with 750 cm2 per hen) take a large share of this increase. In Argentina, India and Ukraine there is no legislation on animal welfare and laying hens are housed in conventional cages with a space allowance of 350 to 400 cm2 per hen. Between countries, regions and farms the density differs due to climate and management strategy.