Tuesday, October 6, 2009

Egg Housing Transition Study

Feedstuffs recently ran a story about an economic study detailing the impacts of a nationwide shift from cage to cage-free egg production. Last week I attended a presentation by the economic firm conducting the study, and can say that they generally did a good job with the analysis. A narrative of the results is shown below.

However, there is one area in which the analysis could be improved. The study, conducted by Promar International, detailed the costs of a nationwide switch to cage-free production, but they ignored the benefits. My research (detailed in an academic working paper and a forthcoming book) provides a good deal of evidence suggesting that consumers as a whole prefer cage-free egg production, and when educated about egg production, the value they place on cage-free eggs over cage eggs is greater than the cost premium. Put differently, we find that although cage-free eggs do cost more to produce, educated consumers are more than willing to pay this cost.

There are many more complicated issues to consider, and I am not trying to persuade readers to support a nationwide ban (I do not support/oppose anything). What I am saying is that a study that analyzes the cost of a policy without considering the benefits will always be somewhat misleading.

Excerpt from Promar Study...
Such a transition would increase the cost of eggs for consumers 25% or more, would increase the cost of eggs for government nutrition programs $169 million per year and could increase egg imports from virtually zero now to 7 billion eggs per year, according to the study, commissioned by the United Egg Producers (UEP) and conducted by Promar International, an economic consulting firm in Washington, D.C.