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Cage-free eggs are out, pastured ones in as tastes change, again

Chicago

THE bar is rising for what's considered a happy chicken, sparking the hottest trend in the market: the pasture-raised egg.

Pastured eggs come from hens that spend most of their time outdoors, dining on bugs and taking dust baths while also indulging in their favourite activities, such as scratching and perching. That's a step up from cage-free, a label that consumers are finding is slightly less idyllic than they may imagine.

It wasn't that long ago that consumer demands for better animal treatment sparked the rise of the cage-free egg. Hens moved from the confines of 67-square inches (170-square centimetres) to the wilds of the barn, with space to walk and stretch their wings - but rarely, if ever, outside. The pasture movement goes further, sending animals outdoors for ample sunshine and space to spread out.

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Market voices on:

"These birds are jammed day in and day out in their own manure, and humans won't go inside because it hurts their eyes - that's cage-free eggs," said Matt O'Hayer, chief executive officer of Austin, Texas-based Vital Farms, a leading US pastured-egg seller. "Give me the mosh pit over the crowded elevator, but it's still a mosh pit."

Many consumers seemingly agree. Sales of pastured eggs, which didn't exist as a marketing tool a decade ago, jumped 32 per cent this year through Oct 8, according to Vital Farms, which cited data from researcher IRI. Free-range eggs, similar to pastured eggs except the chickens have less space, increased 8.5 per cent. Cage-free eggs were up 3.9 per cent, and the standard product from caged birds rose 0.3 per cent.

At the same, premiums are coming down. Pasture-raised eggs used to fetch a whopping US$12 a dozen at supermarkets. Greater competition among farms and lower costs drove prices down to below US$5 recently in some stores.

As giants such as McDonald's Corp and Walmart Inc pledged to upgrade, the cage-free hen population has exploded to 60 million in the US, double what it was in 2016. Cal-Maine Foods Inc, the biggest US egg producer, said in June it had increased its cage-free capacity. Voters in California passed a ballot initiative this month ensuring all eggs in the state are cage-free.

"Cage-free is going to be a commodity egg," said John Brunnquell, president of Egg Innovations, the biggest pasture-raised and free-range producer with 1.2 million chickens. Increasingly efficient cage-free farms are driving down costs, and soon those eggs "will dominate the landscape", said Mr Brunnquell, who supplies Whole Foods Market Inc's 365 private-label brand.

As that change takes place, demands for better welfare are likely to keep increasing - that's where the pastured egg comes in.

To be sure, even at US$5 a carton, pastured eggs still fetch a hefty premium that many consumers aren't willing to pay. Standard grade A large eggs averaged US$1.78 a dozen in the 10 months ended Oct 31, government data show. Pastured and free-range eggs are also still a small sliver of total production. Out of 330 million hens in the US egg industry, fewer than 10 million go outside, Mr Brunnquell estimates.

Most giant retailers already sell free-range or pastured eggs, and offerings are increasing, producers say.

There are also incentives for farmers to make the switch. Producers can get higher, more-sustainable incomes and longer contracts by offering pastured eggs, industry executives said. Vital Farms says it has a long waiting list of farmers that want to supply the brand.

In the past, "eggs suffered as a commodity where brands didn't matter", said Billy Roberts, a senior food and drink analyst at researcher Mintel. "But in recent years, with more premium offerings, there's a market in consumers' mind for egg options." BLOOMBERG