The familiar sound of eggs cracking in the backroom may be poised for a decline inside America’s retail bakeries for a variety of reasons. First, liquid eggs offer labor and storage savings advantages, compared with shell eggs. Plus, increasing pressures on the food safety and animal welfare fronts are changing the way shell eggs are perceived.

A new animal welfare law that took effect in California on January 1, 2015, ultimately may abolish the close confinement of chickens in cramped cages and crates. Animal advocates argue that current practices can cause animal suffering and boost the likelihood of salmonella contamination.

California consumes more eggs than any other in the country, and roughly a third of its supply is brought in from other states. Iowa, Ohio, Indiana, Pennsylvania and California are the nation’s largest egg producing states. Under a separate bill signed in 2010 by former California Governor Arnold Schwarzenegger, all shell eggs arriving from other states also have to comply with the new California animal welfare law this year.

As a result, prices for wholesale eggs are expected to rise 10 percent to 40 percent this year because of infrastructure upgrades across the country and the reduction of flocks to provide animals more space, according to Dan Sumner, an agricultural economist at the University of California-Davis.

On the federal level, the US Food and Drug Administration estimates as many as 79,000 illnesses and 30 deaths due to consumption of eggs contaminated with the bacterium Salmonella Enteritidis may be avoided each year with stricter food safety requirements for large-scale egg producers. Several years ago, FDA implemented a rule for egg producers having 50,000 or more laying hens (about 80 percent of production), requiring them to adopt preventive measures and to use refrigeration during egg storage and transportation.

Salmonella Enteritidis can be found inside eggs that appear normal, according to FDA. If the eggs are eaten raw or undercooked, the bacterium can cause illness. Eggs in the shell become contaminated on the farm, primarily because of infection in the laying hens.

Labor and storage savings

For retail bakeries, the issue over which type of eggs to purchase often boils down to economics.

Retail owner Kirk Rossberg of Torrance Bakery in Torrance, California, estimates that 90 percent of the eggs they use are liquid eggs (that are shipped frozen in 30-pound pails). “It saves us a lot of space,” he says. “It comes down to cost savings because you’re paying rent on your cooler. It also saves labor because (with shell eggs) you still have to have somebody crack the eggs.”

On the flip side, Jerry Manderfield of Manderfield’s Bakery in Appleton, Wisconsin, says their bakery uses an egg cracking machine that helps save on labor costs. “We crack our own shell eggs, and we crack about 20 cases (one case equals 30 dozen eggs) a week,” he says.

Manderfield did a cost analysis last year that showed savings of about $500 a week by using shell eggs over liquid eggs. “The labor costs are not that bad if you have a machine,” he says.

Rick Boone of Rick’s Bakery in Fayetteville, Arkansas, also uses an egg cracking machine because they have encountered problems with thawing the frozen pails of liquid eggs to match the timing of their production needs. “Using fresh shell eggs is more economical for us,” Boone says. “But it really depends on your operation and what works for you. In some states, you are not allowed to crack eggs with a machine.”

Paul Sapienza of Sapienza Bake Shop in Elmont, New York, confirmed that to best of his knowledge, “during the 42 years I've been in business, the NY State Dept. of Agriculture and the local health departments have never allowed the use of egg cracking machines.”

Liquid Egg Conversion

Elisa Maloberti, director of egg product marketing for the American Egg Board, explains that liquid eggs offer numerous advantages over shell eggs, including those related to consistency. “Shell eggs can vary in solid content based on the season of the year, and you may get protein content variations with shell eggs,” she says. “Because of this, you may not get a consistent product.”
 
Converting from shell eggs to liquid or dried eggs in your formulas is really quite easy and won’t affect your bowl cost, according to the American Egg Board. It’s simply a weight for weight substitution.

Other conversion benefits include the following:
•Saves time, labor and waste
•Reduces cold storage space needed
•Increases shelf life – simplifies inventory tracking
•Streamlines ingredient preparation
•Provides batch-to-batch consistency
•Improves long-term product quality

The Real Egg Advantage

Over the past few years there’s been a great deal of discussion, research and application work done to replace eggs with various products. While some companies are working hard to develop a product that can compete head on with eggs, the fact of the matter is when eggs are added, it simply appears on the ingredient statement as eggs. On the other hand, adding replacers increases the complexity of your ingredient statement.

In addition, multiple studies confirm consumers are sold on protein-fortified foods and the benefits protein supplies to a healthy diet. However, formulators are left with the puzzle of fitting extra protein into foods that still need to achieve target goals for structure, taste, appearance and texture.

Eggs already are considered a perfect protein against which all other proteins are measured. Equally as important egg ingredients supply critical functional properties, an agreeable flavor profile and also enjoy a high degree of familiarity and acceptance among consumers.

The perfect complement to fortification is functionality, but it's a rare protein that can supply both. Egg ingredients provide more than 20 functional benefits to food applications, among them foaming and aeration, coagulation, gelation and shelf life extension. The protein component bears responsibility for many of these functional attributes.

For example, egg white protein can take credit for its ability to form a foam that is six to eight times larger than the original volume of liquid. No other natural ingredient can create foam equal to that from egg whites. Egg white protein is particularly useful helping bind breading to frozen appetizers, with a protein level of 10 to 15 percent recommended as the most effective level to ensure proper adhesion in this type of application.

Egg yolk is well known for the emulsification properties supplied by lecithin, but its proteins are active in formulation as well. They aid in coagulation and help form gels. Protein functionality in egg white and egg yolk help create structure that also aids in extending shelf life due to entrapped moisture.

Further, new transparent labeling laws are going to make it easier for consumers to determine what ingredients and nutrients snack foods contain. Egg ingredients stand ready to answer the call in new product introductions designed to capture a share of the snack market, while helping supply a positive nutritional profile under new transparent labeling reforms.

Maloberti of the American Egg Board lists some key attributes research has shown might help build a successful nutritious snack food. “Key indicators show that increasingly consumers want snacks to be convenient and portable. The impressive sales growth of nutritional and snack bars helps illustrates this.”

In nutrition or snack bars, eggs contribute functional properties such as binding or crumb structure and aid sensory characteristics like mouthfeel and texture. In addition, eggs are an excellent source of protein and a good source of naturally occurring Vitamin D—both areas that will remain highlighted on FDA’s newly proposed nutrition labels.

“Not only do eggs contain an excellent source of protein, the protein in real eggs is easily digestible and readily available,” says Maloberti. “This helps create more nutritious snacks that truly satisfy hunger pangs. And whether in liquid or dried form, formulators can rely on egg ingredients to supply the functionality needed in snack applications while contributing to a clean or more transparent label statement.”

Egg Prices

Even with higher table egg production in October, wholesale prices for eggs continued strong, as of January. The fourth-quarter 2014 wholesale price for one dozen Grade A eggs in the New York market is expected to average $1.64 to $1.67, roughly 16 percent higher than in the previous year.

At the beginning of November, wholesale prices for Grade A large eggs in the New York market were in the high-$1.20s per dozen, but over the next 4 weeks prices peaked at $2.18 per dozen. It is uncertain what the chief driving force for this large jump in prices has been, as overall table egg production has been higher than the previous year. Some possible factors are greater numbers of eggs being broken and a strong increase in exports of table eggs.

The new animal welfare law in California could lead to pricing increases for shell eggs this year. Preliminary estimates principally from academic institutions forecast shell egg prices initially may rise 10 percent to 40 percent and maybe more because of the law. While the greatest impact is expected in California, the entire nation may see higher prices as producers who ship eggs to California must comply with the law. A number of producers already have made changes in crate sizes, both in California and in other states.

Retail bakery owners like Rick Boone say that the impact of higher prices for eggs would not be dramatic. He explains that eggs contribute anywhere from 1 cent to 5 cents of total food costs in a retail bakery product, depending on the item. “Very few products have lots of eggs in them,” he says. “If we did see a 40 percent increase in egg prices, we’d just adjust our retail price accordingly.”

While some animal rights groups maintained the California law meant “cage free” egg production, the state interpreted the law to require production facilities provide at least 116 square inches per hen. That’s 73% larger than the industry norm of 67 square inches in what are known as “battery cages” that allow minimal movement. A law banning “battery cages” went into effect in the European Union in 2012, significantly disrupting the egg industry in member countries for a period.

“While there are various ways to achieve these requirements, all of them lead to a higher cost of production,” according to the Egg Industry Center (EIC) at Iowa State University. The study estimated the additional cost at 15 percent. Producers have two options: build additional hen houses to maintain similar flock sizes or downsize flock sizes and modify existing facilities.

Ironically, the restrictions on out-of-state producers were enacted in 2010 when it was realized the new law put California egg producers (a subset of the general population) at a distinct disadvantage to producers in other states. That’s important because California is an “egg deficit” state, importing from other states more than 50% of the estimated 10 billion shell eggs consumed annually. California is the nation’s fifth largest egg producer but the nation’s largest egg consumer and the world’s ninth largest market.

According to the EIC, between July 1, 2012, and June 30, 2013, Iowa shipped more than 1,311 million eggs, or 9 percent of its production, to California, and accounted for 30 percent of California’s egg imports. Missouri shipped about 572 million eggs, or 33 percent of its production, equal to 13 percent of California’s egg imports.

The EIC estimated the changes would increase the cost of a dozen eggs 26.55 cents, based on a five-year average price of $1.77 per dozen. Should families buy fewer eggs because of higher prices, the EIC said it “seems most likely” the reduction would be by “lower income families or those who are already very heavy users of eggs.”

Whether the California law ultimately will stand the interstate commerce test and how it will affect supply, demand and prices remains to be seen. Egg producers in other states, and the broader agricultural industry, have expressed great concern that if the California law stands, the barn door is open for more restrictions that will not only increase food prices but may ultimately cripple free trade between the states.