Livestock and Poultry: An overview of international egg production and trade

An overview of international egg production and trade – U.S. Dept. of Agriculture, Economic Research Service report

Lee Christensen

Abstract: International egg production is concentrated in four countries that produce about

60 percent of the total. Most are consumed in the countries of origin, with only 3 percent

exported, and much of the trade is within the EC. Germany, the world’s largest importer of

eggs, buys primarily from other EC countries. Many policies designed to protect domestic

producers also impede trade.

Keywords: Eggs, egg production, trade, trade policies, trade barriers While eggs are a major food product around the world, most are consumed in the producing country. Production is slowly increasing, and during 1986-1990 averaged about 524 billion eggs (43.7 billion dozen). International trade averaged about 18 billion eggs (1.5 billion dozen). Egg trade is affected by a myriad of country policies restricting trade.

Major Egg Producers and Traders

According to the USDA’s Foreign Agricultural Service, the largest egg producing countries during 1986-90 and their shares of the total were China (25 percent), the USSR (16 percent), the United States (13 percent), Japan (8 percent), and Mexico (3 percent). The EC produced 16 percent of the total. Among the large egg-producing countries, the United States is the only one that is also a major egg exporter. Major egg export markets for the United States are Canada, Japan, some of the Caribbean nations, Hong Kong, and Mexico. The largest egg exporters and their shares of exports in 1986-1990 were the Netherlands (44 percent), China (10 percent), Belgium-Luxembourg (8 percent), the United States (7 percent), and West Germany (6 percent). Approximately half of the eggs traded during 1986-1990 were among the EC countries. Germany, the world’s largest importer, received most of its imported eggs from other EC countries. Other large importers are Japan and Hong Kong. The Netherlands is by far the world’s largest exporter of eggs with 7,896 million eggs (about 680 million dozen) in 1990, 76 percent of its production. The Dutch are efficient producers and have ready access to world grain markets through the port of Rotterdam. Most Dutch exports are to other EC countries. The United States exported about 2 percent of its egg production in 1990, some 1,200 million eggs including shell equivalent of egg products. U.S. exports reached a record 234 million dozen in 1981 when exports to the Middle East and other oil exporters were high. Exports reached a recent high in 1988 of 1,702 million eggs (about 142 million dozen) due to large egg-product sales to Japan, large table-egg sales to the Middle East and Hong Kong under the Export Enhancement Program (EEP), and a pickup in exports to Mexico. The United States is generally a small importer, only 109 million eggs (over 9 million dozen) in 1990, mostly shell eggs for breaking and processing into egg products. German unification created the largest egg producer in the EC, followed by France and the United Kingdom. EC countries are large traders of eggs but almost all among themselves.

Trade Policies in World Egg Markets

World egg trade is influenced by a variety of policies. An assortment of import levies and tariffs is used to keep eggs out of major markets in the EC. Export subsidies and bonuses are used by exporters to compete in major markets, for example the EC and the United States in the Middle East and Asia. Tariffs on eggs and egg products are used in the United States and Japan. Other government policies affecting world trade include producer subsidy programs, preferential trade agreements, state trading and licensing, quotas, and, in some cases, virtual bans on egg imports.

Policies of Major Exporters

The United States Government does not play a large direct role in the egg industry but trade and policy measures spill over into the sector. Export sales under EEP totaled about 57 million dozen table eggs with total bonus payments estimated at $15.4 million since beginning in 1986 and through July 1991. The general tariff rate of 3.5 cents per dozen on imports applies to all countries not entitled to special treatment, such as countries under the Generalized System of Preferences (GSP), the Caribbean Basin countries, and Israel. The Canadian tariff was 2.8 cents per dozen in 1990 as provided for under the Free Trade Agreement. Egg products have general tariffs of around 59 cents per kilogram for dried, and 12 cents on products other than dried. Occasional government purchases of frozen whole eggs and dried-egg mix are included as part of the general support for commodities. While the European Community (EC) has no direct intervention or market support arrangements for eggs under its Common Agricultural Policy (CAP), its border and subsidy measures have a large impact on trade. To control imports and boost exports, the EC uses (1) sluicegate prices (SGP), (2) basic and variable import levies, and (3) export refunds on all shell eggs and products. The SGP is a theoretical, calculated price at which poultry imports should be priced to the EC, given world grain costs. The import levy is fixed at a level to protect EC egg producers from imports from outside the EC that benefit from world cereal prices considerably below EC cereal prices. The sluicegate price is set to prevent eggs from entering the EC at prices below world cost. The levy is based on the difference between world and EC cereal prices, on current feed conversion ratios, transportation costs, and a standard amount for other production and marketing costs. In addition, to calculate the import levy, the difference between world and EC prices for cereals is augmented by 7 percent of the sluicegate price. An additional levy can be imposed if the import prices are lower than the sluicegate price. A safeguard clause allows the EC to suspend imports if the EC market is threatened with serious disturbances such as a flood of low-priced imports. Refunds are paid to EC exporters from the CAP budget to help them compete outside the EC, where producer costs can be lower due to lower feed grain prices, for example. Currently, refunds for exports to the Middle East and Hong Kong on eggs, other than for hatching, are about 23 cents per dozen, and to other locations about 16 cents. Also, refunds are granted on egg products to all destinations uniformly. The refund on dried yolks is $1.18 per kilogram, other than yolks $1.11, liquid egg yolks $0.58, and on frozen yolks, $0.63 per kilogram. Export refunds are based on a tendering system. Export refunds for eggs, including egg products, in recent years ranged from 20.2 cents per dozen in 1986 to 41 cents in 1989. Refunds to exporters totaled $53.3 million that year. Turkey has recently become a large exporter of eggs, surpassing the United States in 1989. It encourages production with subsidized credit and supports exports with subsidy payments. Almost all its exports go to the Middle East. Imports have dropped to very low levels and incur border taxes and charges. China’s egg exports have declined despite increasing production. Small farmers still produce 80-90 percent of China’s eggs. The modern sector receives subsidized feeds. China is the major supplier to Hong Kong, which accounts for about 90 percent of China’s exports. Finland in some years is a major source of imported eggs for the United States. When Finland has surpluses it uses export subsidies. Its exports are widespread, but in 1989 about one-half came to the United States.

Policies of Major Importers

EC countries are substantial importers of eggs, led by Germany. However, EC import policies severely restrict the flow of trade from countries outside, and most of the trade is within the Community. Japan’s main suppliers are the EC, the United States, Brazil, and Canada. In 1990 the EC had nearly a 40-percent share followed by the United States with nearly 20 percent. Japan is the second-largest importer of U.S. eggs on a value basis. While the United States is the largest supplier of frozen yolks, it is generally losing market share due to price competition. EC subsidies on egg-product exports to Japan are a major factor in its market-share gain. In 1990, these subsidies were estimated to be about 15 percent of the cost and freight-price quotes for products. Dried-yolk and whole-egg products have a 25-percent ad valorem duty and frozen yolk and whole eggs also are at 25 percent or a 60-yen-per-kilogram specific duty, whichever is higher. There is also a 25-percent tariff on shell eggs. Japanese producers have a price stabilization fund for shell eggs to which they, as well as the government, contribute. Production control is a condition for assistance. Hong Kong is mainly a fresh (about 85 percent), and mostly brown table egg market. China provided about 33 percent of the total egg imports in 1990, followed by the Netherlands with 18 percent, and the United States with 10 percent. Thailand, Germany, and Finland are other major sources. Hong Kong is a relatively free market with no duties on eggs. Price competition is intense. These are 15 egg importers and 42 wholesalers. Both the EC and the United States use export subsidies in this market. Thailand’s exports are declining as domestic demand grows. Over 90 percent of its exports go to Hong Kong and almost all the rest to Singapore. Canada was the leading egg export market of the United States in 1990, with purchases valued at about $30 million. Sixty percent of the value of U.S. exports to Canada was for hatching eggs, with the remainder split about equally between table eggs and egg products. Canada retains its supply control and import quota programs under the Free Trade Agreement (FTA) with the United States. However, under the agreement, the global quota was increased from .675 percent of Canada’s egg production in the previous year to 1.647 percent. The egg-product quota was also increased. Supplementary quotas are granted by the government when it judges supplies to be tight. The United States and Canada had 3.5-cents-per-dozen tariffs on imports, but these are being mutually phased out by 10 percent a year under the FTA. Egg products are partially subsidized in Canada. Excess table eggs are put up for bids by breakers. Losses suffered on sales at lower breaker prices are covered by Canadian consumers and producers. These low-priced eggs help Canadian breakers compete in the export market. Recent concerns over broiler hatching eggs and chick supplies and prices in Canada have resulted in their addition to the list of products controlled by quotas. Canada has set an import quota of 21.1 percent of estimated production in a year (17.4 percent for broiler hatching eggs and 3.7 percent for chicks). Mexico’s protection measures vary and are sometimes used as part of domestic economic policies such as anti-inflation programs. Some input subsidies are granted to producers. Currently, permits are required to import eggs and a 10-percent tariff is imposed. Eggs are considered a necessity and prices are generally controlled. Conasupo, a quasi-government agency, sometimes purchases eggs for distribution among the poor. The Middle East is an important but violatile market for eggs. Production is generally rising, so egg imports are tending lower. Turkey has become an important exporter to this area. Israel is also an exporter and Saudi Arabia a small net exporter to neighboring countries. Israel has reduced its subsidies to egg producers but table egg imports continue to be severely restricted. The United Arab Emirates, Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia are a customs union with free trade among themselves. In attempting to increase their self-sufficiency, they subsidize and protect their egg industry. Jordan has a preferential trade agreement with Saudi Arabia, Iraq, Syria, and Egypt. Jordan’s imports are restricted by lack of credit and foreign exchange. In Iraq, state trading prevails and countertrade agreements are used for some imports because the country has long had difficulty obtaining credit. Some private importers are licensed. Brazil imported about 1.6 million dozen eggs from the United States in 1990 of which about 75 percent were hatching eggs, but imports are restricted and import licenses are required. South Korea’s egg production has usually been sufficient so that imports are small. However, imports from the United States increased sharply in 1990 to about 1 million dozen equivalent, almost all as egg products. Shell egg and dried-yolk product imports were liberalized on January 1, 1989. Tariffs on eggs and egg products continue at 30 percent. Taiwan restricts egg imports and requires import licenses. It imports a small amount of U.S. egg products. Taiwan likely will reduce its tariff from an average 26-percent rate, but reductions might not apply to most value-added agricultural products. [Figure A-1 and A-2 Omitted] [Figures 1 to 6 Omitted] [Table 44 and Table A-1 Omitted]

Lee Christensen, Larry Witucki, Shayle Shagam, David Kelch and Terry Crawford Agricultural economists, Commodity Economics Division, Economic Research Service, USDA. Kelch is in the Agriculture and Trade Analysis Divisions.

COPYRIGHT 1991 U.S. Department of Agriculture

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