Economic and Marketing Information
FOR INDIANA   FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
July  31,   1965
Future of the Egg Industry In Indiana
by R. J. Williams, Agricultural Economics
Significant changes have occurred in the egg industry
since the mid-1950's in size of firm, vertical integration
and adoption of new technology. Continued pressure on
egg prices has stimulated these changes.
Nationally, egg production is expected to increase
more rapidly than demand from now through 1970. With
continued downward pressure on egg prices, egg production and marketing firms will continually strive for
increased efficiencies to maintain a satisfactory return
on capital. Indiana's competitive position in the egg industry compared to some of the newer growth areas of
the United States is not expected to improve in the next
five years. Egg production in Indiana will become more
concentrated and specialized. A larger number of production units will be coordinated into various types of
egg production-marketing organizations.
Consumption
Domestic—Total egg requirements for 1970 are exerted to average 68.5 billion eggs, an increase of 6 per-
;ent over the 1964 egg production level of 64.6 billion
3ggs. This amounts to an annual increase in total demand
of 1 percent. This assumes an increase in population of
about 1.5 percent per year which will increase total egg
consumption; but, expected changing consumer preferences away from eggs will likely partially offset the
increase in demand for eggs resulting from population
growth.
Per capita consumption of eggs has declined 20 percent in the last 13 years from an average of 393 eggs in
1951 (the highest year since World War II) to 314 eggs
in 1964. The decline of the large breakfast, increase in
coffee breaks, and the substitution of convenience foods
have contributed to this decrease. While egg consumption
per person will probably continue to decline slightly,
the factors responsible for this downtrend may operate
with less force in the future. Per capita civilian consumption in 1970 is estimated at 305 eggs annually, down
about 9 eggs from the 1964 level. Total egg utilization
expected in 1970 is: total domestic consumption, 63.8
billion eggs; eggs for hatching, 4.4 billion eggs; and
exports, .3 billion eggs.
Foreign—United States exports since World War II
and the Korean Conflict have been relatively insignificant.
In 1964 about 0.6 percent of the eggs produced were
exported. Tariffs, quotas and other restrictions limit the
movement of United States eggs, as well as those of other
exporters, into many of the major importing countries.
Except for some increase in hatching egg sales, the outlook for  U.  S.  eggs  in  world  markets  is  not  bright.
Production
Egg production per layer for the United States and
Indiana increased from 174 and 179 eggs, respectively,
in 1950 to 217 and 216 eggs, respectively, in 1964.
Indiana's rate of increase in eggs per layer in recent
years has been slower than the U. S. average so that
at the present time Indiana's rate of lay is about the same
as that of the United States. It is estimated that Indiana
egg production per layer will average 220-225 eggs and
U.S. production per layer will average about 225 eggs
in 1970.
Based on the above projected U.S. rate of lay, about
304.4 million layers will be required to produce the 68.5
billion eggs needed in 1970. This means an increase of
5.3 million layers or 2 percent over the average number
of layers in 1964.
Indiana continues to be one of the top ten egg producing states. Since 1950, Indiana has been in ninth or
tenth place. However, its share of total U.S. production
has declined from 4.1 percent in 1950 to 3.4 percent in
1964. Expectations are that Indiana's share of total U.S.
egg production will decline to 3.1 percent by 1970.
Present trends indicate that Indiana will lose some of
its market share to the rapid growing egg production
areas of the South.
The number of farms selling eggs in Indiana dropped
40 percent in five years, from 73,212 in 1954 to 43,999
in 1959. This decline, however, has come mainly on farms
with small flocks. In 1959, there were 433 farms with
3,200 or more layers. It is expected that egg production in Indiana will become more specialized and concentrated.
Price and Income
It is impossible to estimate egg prices and income to
1970 with any degree of accuracy because of many uncertainties, including periodic government purchasing
programs. Adoption of new technology will continue to
lower per unit costs of production. Lower per unit costs
of production and production increasing more rapidly
than demand will keep egg prices under pressure. In
addition, prices will likely continue to fluctuate widely
because of short-run changes in the supply of eggs. This
suggests that egg prices will continue to trend downward at a rate between .5 to 1 cent per dozen per year
as has been the case in recent years.
Historical evidence shows that egg prices continue
to exhibit a seasonal pattern with November being the
high month and May the low month for egg prices. The
range in egg prices within the production year has been
steadily narrowing because of year-around placement
of pullets.
Studies show that the demand for eggs is inelastic
with a one percent change in the quantity of eggs taken
being associated with a change in farm price of about 4
to 5 percent in the opposite direction. Seasonality, changes
in consumer preference, the prices of substitute products,