Economic comparison of unenriched and alternative cage systems used in laying hen husbandry - recent experience under Turkish commercial conditions

Abstract

This review provides a comparative analysis on the unenriched and alternative cage systems used in commercial egg production as required by the directive (99/74/EC) of the EU Council on animal welfare in terms of technical performance indicators, distribution of cost items, egg sales revenue, and profitability. Unenriched (conventional) cages are commonly used in Turkey. However these cages don't provide for the laying hens natural needs. The comparison was taken from data regarding Lohmann Brown Classic and Lohmann LSL Classic laying hybrids kept in two caging systems. The rearing period was composed of 399 days starting when 16-week-old commercial pullets were put into unenriched and alternative cage systems and ending at the end of their 73rd weeks of age when laying hens were removed from production. The average shares of the some important cost items in the total cost in the production period were calculated to be as follows for unenriched and alternative cage systems, respectively: pullet 22.17% and 21.17%; feed 61.31% and 58.29%; labour 2.67% and 2.55%; veterinary and health 0.74% and 0.98%; egg packaging 3.23% and 3.48%; maintenance and repair expenses 1.50% and 2.29%; and depreciation costs 5.48% and 8.35%. The average cost of producing one egg was found to be 0.094 US$ and 0.097 US$, respectively. It was determined that investment costs in alternative cage systems was 14.93% higher and the production cost per hen was 2.03% higher than that in unenriched cage systems. In Turkey, on January 1, 2023, all systems will be converted to alternative cages. Investment amounts and production costs for the alternative cage systems are very important in this transformation process. Therefore the present review is to examine the available information on the production data of laying hens reared in the unenriched and alternative cages and to make economic feasibility conclusions under Turkey conditions.

Full text

Economic comparison of unenriched and
alternative cage systems used in laying
hen husbandry - recent experience under
Turkish commercial conditions
Y. ARAL
1
*, M.S. ARIKAN
1
, E.E. ONBASILAR
2
, N. UNAL
2
, A. GOKDAI
1
and
E. ERDEM
3
1
Department of Animal Health Economics and Management, Faculty of Veterinary
Medicine, Ankara University, Ankara, Turkey;
2
Department of Animal Breeding
and Husbandry, Faculty of Veterinary Medicine, Ankara University, Ankara,
Turkey;
3
Department of Animal Breeding and Husbandry, Faculty of Veterinary
Medicine, Kırıkkale University, Kırıkkale, Turkey
*Corresponding author: yaral@veterinary.ankara.edu.tr
This review provides a comparative analysis on the unenriched and alternative cage
systems used in commercial egg production as required by the directive (99/74/EC)
of the EU Council on animal welfare in terms of technical performance indicators,
distribution of cost items, egg sales revenue, and profitability. Unenriched
(conventional) cages are commonly used in Turkey. However these cages don't
provide for the laying hens natural needs. The comparison was taken from data
regarding Lohmann Brown Classic and Lohmann LSL Classic laying hybrids kept
in two caging systems. The rearing period was composed of 399 days starting when
16-week-old commercial pullets were put into unenriched and alternative cage
systems and ending at the end of their 73rd weeks of age when laying hens were
removed from production. The average shares of the some important cost items in
the total cost in the production period were calculated to be as follows for
unenriched and alternative cage systems, respectively: pullet 22.17% and
21.17%; feed 61.31% and 58.29%; labour 2.67% and 2.55%; veterinary and
health 0.74% and 0.98%; egg packaging 3.23% and 3.48%; maintenance and
repair expenses 1.50% and 2.29%; and depreciation costs 5.48% and 8.35%.
The average cost of producing one egg was found to be 0.094 US$ and 0.097 US
$, respectively. It was determined that investment costs in alternative cage systems
was 14.93% higher and the production cost per hen was 2.03% higher than that in
unenriched cage systems. In Turkey, on January 1, 2023, all systems will be
converted to alternative cages. Investment amounts and production costs for the
alternative cage systems are very important in this transformation process.
Therefore the present review is to examine the available information on the
© World's Poultry Science Association 2017
World's Poultry Science Journal, Vol. 73, March 2017
Received for publication April 15, 2016
Accepted for publication September 14, 2016 1
doi:10.1017/S0043933916000799
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production data of laying hens reared in the unenriched and alternative cages and
to make economic feasibility conclusions under Turkey conditions.
Keywords: laying hen; commercial egg; cage systems; cost; economic analysis
Introduction
In laying hen husbandry, birds are reared in various production systems. Conventional
(unenriched) cage systems are commonly used in Turkey and globally. As rearing and
egg production in restricted conventional cages hamper natural behaviour, such as
scratching, perching and laying in nests, new regulations have been enacted to protect
animal welfare, particularly in European Union (EU) countries. By setting minimum
standards for laying hen husbandry and banning the use of conventional cage systems
in the member countries as from January 1, 2012, the EU Council ensured the emergence
of alternative systems for commercial egg production (Directive EU, 1999).
Major alternative rearing systems used in egg production, such as enriched cages,
aviary systems, and free range, have different technical features (Tauson, 2005; Lay et
al., 2011). Such systems are designed to balance animal health and welfare in accordance
with the demands of consumers and the poultry sector (Singh et al., 2009). Enriched cage
systems are one of the alternative systems developed to remedy the deficiencies of
conventional cage systems relating to animal welfare. These systems provide each hen
with a larger usable area, and are furnished with equipment that helps them exhibit their
natural behaviour, such as a nest, scratching area and perching (Sumner et al., 2008).
At the end of production using the most advanced models of enriched cage systems, it
has been reported that they produced similar results to conventional cage systems in
relation to egg productivity, feed conversion ratio and mortality (Abrahamsson et al.,
1995a; 1995b; Guesdon and Faure, 2004; Tauson, 2005). However, a few studies have
reported that average operating costs, total expenses, and investment costs per hen in
enriched cage systems are higher than those in conventional cage systems (Van Horne,
2003; Bell, 2006; Matthews and Sumner, 2015).
It has been reported that the main determinant in investment and economic feasibility
studies for improving animal welfare conditions in enterprises from different animal
husbandry sectors is the producer price levels. This has been determined from
intensive animal production carried out in the Netherlands, and states that the
volatility and precision of the levels of premiums for production are important in
taking the decision to convert to alternative production systems (Gocsik et al., 2015).
Economic importance and assessment of alternative cage systems for
laying hen
The ban imposed by the EU Council has led to the emergence of alternative enriched
cage systems, and the increasing investments in equipment and coop modernisation
needed have resulted in significant differences in production costs. Various scientific
studies have been conducted on the use of alternative cage systems in laying hen
husbandry (Sumner et al., 2008). These include major factors affecting egg production
in conventional or enriched cage systems (Abrahamsson et al., 1995a; 1995b; Guesdon
and Faure, 2004), and costs for different systems (Van Horne and Bondt, 2003; Bell,
2006; Sumner et al., 2008; Matthews and Sumner, 2015).
2 World's Poultry Science Journal, Vol. 73, March 2017
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In a study investigating the effects of cage systems (C: conventional; E: enriched) in
230 enterprises operating in EU member countries, feed consumption (C: 114.97 g/hen/
day; E: 113.82 g/hen/day), egg production (C: 85.76% hen/day; E: 84.74% hen/day), feed
conversion ratio (C: 2.14; E: 2.14), percentage of broken/cracked eggs (C: 6.50%; E:
7.78%), and egg weight (C: 65.09 g/egg; E: 63.01 g/egg) were monitored. These results
suggested lower productivity in enriched cages, but productivity was not a sufficient
indicator by itself to determine animal welfare. The study further noted that such systems
are economically promising when combined with other measures such as early diagnosis
of poultry diseases and elimination of barriers to access of feed and water (Blokhuis et
al., 2007).
Regulations made to improve animal welfare conditions can result in a decrease in the
number of hens raised per unit area in enriched cage systems and an increase in egg
production costs.
The following comparison between hen housing consists of the technical and economic
operating data obtained by comparing the production for Brown (LB) and White (LSL)
commercial laying hybrids which were kept in unenriched or alternative cage systems
(Onbasılar et al., 2015). These data were applied to a 48-compartment battery cage for
each group, and economic parameters used to determine the cost items and revenue items
of the unenriched and alternative cage systems in the production period were set. The
production period was 399 days starting with 16-week-old commercial beak-trimmed
pullets being placed into the cage systems and ending at 73
rd
weeks of age, when laying
hens were removed from production.
Feeding, pullet and labour costs were included in the calculations. The costs of
veterinary and health services included vaccine and disinfectant expenses. The egg
packaging costs included purchasing and materials used to package the eggs. The
water, electricity and fuel cost was calculated by multiplying the unit prices of water,
electricity and fuel by the amounts of water, electricity and fuel used throughout the
production period. Other expenses included the costs such as transportation of the eggs
produced and insurance cost. General administrative expenses were assumed to be 3% of
the total costs. Depreciation costs were based on the assumption that the tools and
equipment used in production had an economic life of 10 years (Sariozkan and
Sakarya, 2006). Maintenance and repair expenses consisted of the expenditures made
for tools and equipment, with 1% as the maintenance cost, and 2% for repairs (Acil,
1980).
Revenues from sale of broken/cracked eggs and hens removed from production were
categorised as ancillary revenues. Sale of broken/cracked eggs was included into the
calculations as the total revenue generated, albeit at lower prices. Value of hens removed
from production were generated at the end of the laying period from average sale prices.
The revenues from sale of eggs, making up the majority of the operating income, was
calculated by multiplying the amount of eggs produced and sold by the average sale price
throughout the production period. The total cost was obtained by subtracting the ancillary
revenues from the grand total costs. Net profit/loss was calculated by subtracting the total
costs from egg sales income (Muftuoglu, 1989). Production cost of an egg was calculated
by subtracting the ancillary revenues from the grand total cost and dividing it by the total
amount of eggs sold. These calculations were used to gauge the effect of different cage
systems on unit cost of egg production (pcs./US$), production cost per unit area (US$/
m
2
), production cost per hen (US$/number of hens) and total costs.
The technical and economic parameters obtained from White and Brown commercial
laying hybrids in unenriched and alternative cage systems in the research unit within the
rearing period of 399 days, and the average prices are given in Table 1.
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Table 1 Technical and economic parameters for the rearing period and the average prices to 48 cages/
group (adapted from Onbasılar et al., 2015).
Technical and Economic Parameters Unenriched Cage System Alternative Cage System
Brown White Brown White
laying laying laying laying
hybrids hybrids hybrids hybrids
Available Area (cm²/hen) 600 600 667 667
Nest Area (cm²/hen) - - 167 167
Number of Cage Compartments 48 48 48 48
Rearing Period (day) 399 399 399 399
Beginning-of-Period Number of Pullets 1200 1200 864 864
Number of Mortality and Mortality Rate 47 (3.93%) 34 (2.86%) 17 (1.98%) 24 (2.78%)
Number of Hens per Cage 27 27 18 18
End-of-Period Number of Hens Removed 1153 1166 847 840
Average Number of Eggs per Hen (piece) 355 352 360 358
Average Number of Cracked Eggs
per Hen (piece) 4359
Total Egg Production (piece) 425605 422924 310607 309538
Total Production of Sellable Eggs (piece) 421264 419541 306321 301986
Feed Conversion Ratio (feed in g/egg in g) 2.06 1.97 1.99 1.93
Average Cost of Pullet per Hen (US$) 7.68 7.13 7.68 7.13
Average Cost of Feed per Hen (US$) 21.05 19.88 20.90 19.85
Average Sale Price of Cracked Egg
per Hen (US$) 0.049 0.046 0.049 0.047
Average Sale Price of Removed Hen
per Hen (US$) 0.48 0.46 0.48 0.46
Average Sale Price of Egg per Hen (US$) 0.103 0.098 0.103 0.098
Average Cost of Egg Packaging per Hen (US$) 1.081 1.072 1.096 1.090
Average Cost of Labour per Hen (US$) 0.89 0.89 0.89 0.89
Investment Cost per Hen (US$) 16.72 16.72 26.69 26.69
*The calculations made in Turkish Lira ( ) were converted into US dollar using the exchange rate in the
relevant period (Average exchange rate for 2013-2014: US$1= 1.97).
Financial and economic comparison of unenriched and alternative
cage systems used in laying hen enterprises
A study was conducted to investigate the socio-economic effects of animal welfare
directives issued by the EU Commission in 15 member countries state that there are
significant differences between the production costs, and that these differences are
associated with the cage systems used in production. When the technical parameters
of production in conventional cages (C) and enriched cages (E) (Belgium, Sweden and
the United Kingdom) were compared, the production time (E: 449 days; C: 388 days),
daily feed consumption (E: 114 g/hen; C: 112 g/hen) and pullet cost (E: €3.49/hen; C:
€3.17/hen) were found to be higher in enriched cages (Agra Ceas, 2004).
On the other hand, the number of eggs produced (C: 280 pcs./year; E: 266 pcs./year),
mortality rate (C: 6.0%; E: 4.47%), and number of hens raised in unit area (C: 78 hens/
m
2
; E: 49 hens/m
2
) were found to be higher in conventional cages. Variable costs and
fixed costs in conventional cages were 73% and 27%, respectively, whereas in enriched
cages the variables costs accounted for the two-thirds of the total cost in Sweden, 70% of
the total cost in Belgium and 79% of the total cost in the United Kingdom (Agra Ceas,
2004).
4 World's Poultry Science Journal, Vol. 73, March 2017
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In an investigation of the effect of animal welfare standards imposed by the EU
Commission in relation to cage systems used in laying hen husbandry in the
Netherlands, the production cost in enriched cage systems was found to result in a
cost increase 7.8% lower compared to conventional cage systems, and the reason for
this difference was accounted for by supply of feed at lower prices than average in EU
countries (Van Horne et al., 2007).
Table 2 presents the effect of inputs used in the current comparison for laying hens in
Turkey on the production cost, its distribution in different genotype and cage systems,
and the findings obtained in the economic analysis.
Table 2 Costs in the production period and economic analysis.
Elements of Total Cost Unenriched Cage System Alternative Cage System
Brown laying White laying Brown laying White laying
Hybrids hybrids hybrids hybrids
US$ % US$ % US$ % US$ %
Feed Costs 25257.26 61.4 23859.90 61.2 18056.28 58.4 17151.94 58.2
Pullet Costs 9210.15 22.4 8552.28 21.9 6631.31 21.5 6157.64 20.9
Labour Costs 1068.40 2.6 1068.40 2.7 769.25 2.5 769.25 2.6
Veterinary and Health
Costs 295.37 0.7 295.37 0.8 295.37 1.0 295.37 1.0
Egg Packaging Costs 1297.46 3.2 1286.50 3.3 1052.59 3.4 1046.74 3.6
Water- Electricity and
Fuel Costs 63.45 0.2 63.45 0.2 71.07 0.2 71.07 0.2
Other Costs 15.23 0.04 15.23 0.04 15.23 0.05 15.23 0.05
A-Total Costs 37207.32 90.5 35141.13 90.1 26891.09 87.0 25507.23 86.5
General Administrative
Expenses 1116.22 2.7 1054.23 2.7 806.73 2.6 765.22 2.6
Building- Equipment
Depreciation Costs 2193.52 5.3 2193.52 5.6 2520.91 8.2 2520.91 8.5
Building- Equipment
Maintenance and Repair
Expenses Costs 601.98 1.5 601.98 1.5 691.83 2.2 691.83 2.3
B-The Grand Total
Costs 41119.03 100.0 38990.85 100.0 30910.56 100.0 29485.18 100.0
C-Total Ancillary
Revenues 769.69 690.55 619.46 736.46
a-Revenues from Sale
Of Removed Hens 555.94 532.54 408.40 383.75
b-Revenues from Sale
of Cracked Eggs 213.75 158.01 211.06 352.72
D-Total Cost (B-C) 40349.34 38300.30 30291.10 28748.71
Production Cost per Egg
(US$/piece) 0.096 0.091 0.099 0.095
Production Cost per Unit
Area (US$/m²) 560.41 531.95 420.71 399.29
Production Cost per Hen
(US$/Number of Hens) 33.62 31.92 34.17 32.71
E-Revenues from Sale
of Eggs 43409.45 41102.21 31565.03 29585.40
F-Net Profit/Loss (E-D) 3060.11 2801.90 1273.93 836.69
Profit per Egg
(US$/piece) 0.0073 0.0067 0.0042 0.0028
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Table 2 shows that the feed costs in both cage systems have the highest share in the
total cost. The total cost of feed per unit area (US$/m
2
) in the unenriched system was
12% higher, pullet cost and labour expenses were 11% higher, and total cost 7% higher
than that the alternative cage system. On the other hand, the water, electricity and fuel
costs in the alternative cage system were 29% higher, and depreciation, maintenance and
repair expenses 30% higher than that the unenriched cage system.
Furthermore, in relation to the distribution of production costs, it was found that the
ratio of average variable costs in unenriched and alternative cages were 90.3% and
86.8%, respectively, that the fixed costs were 9.7% and 13.2%, respectively. The
average variable costs in unit area (US$/m
2
) in the unenriched cages were 10.51%
higher than that in the alternative cages, and that the average fixed costs in the
alternative cages were 22.32% higher than that in unenriched cages.
Production cost per egg (US$/egg) and per hen (US$/hen) were the highest in brown
laying hybrids kept in alternative cages and the lowest in white laying hybrids kept in
unenriched cages. These costs in the alternative cage system were in average 3.80% and
2.03% higher than in the unenriched cage system, respectively.
As for calculated revenue, net profitability per egg (US$/egg) was highest in brown
laying hybrids kept in unenriched cages and the lowest in white laying hens kept in
alternative cages. In both groups, profitability from brown eggs was found to be higher
than that from white eggs. The investment cost in the alternative cage systems was found
to be 14.93% higher than that in the unenriched cage systems.
In a study examining the effect of new animal welfare directives on the
competitiveness of the egg industry in EU member countries and making a projection
for 2012 on the basis of the data for 2001, the production cost in enriched cage systems
was estimated to be higher than that in conventional cage systems. Production cost of an
egg in enriched cage systems was estimated to be €0.63 higher than that in conventional
cage systems (Van Horne and Bondt, 2003). In research conducted on enterprises the
same region in the US, the effects of three different cage systems on egg production costs
were examined on the basis of the data obtained for two production periods from
conventional cages with a capacity of 199,680 hens where each compartment contains
six hens (516.13 cm
2
/hen), enriched cages with a capacity of 46,800 hens where each
compartment contains 60 hens (753.22 cm
2
/hen), and a system without cage with a
capacity of 50.000 hens (Matthews and Sumner, 2015). The study reported that
majority of the costs throughout the production period consisted was feed. Hens
raised in enriched cages consumed more feed than those in conventional cages, and
egg productivity per unit amount of feed consumed in enriched cages was 1.5% higher
than that in conventional cages. Mortality was 5.2% in enriched cages and 4.8% in
conventional cages.
It was found that egg production per hen in enriched cages was on average 3.3% higher
than that in conventional cages, and pullet costs required to produce a dozen of eggs in
enriched cages was 2.7% lower than that in conventional cages. It was reported that
operating costs in enriched cage systems were 4% higher than those in conventional cage
systems, and that the reason for this difference despite lower feed costs was associated
with higher labour costs. The study stated that in conclusion the total cost in enriched
cages was 13% higher than that in conventional cages (Matthews and Sumner, 2015).
The reason of mortality was substantially higher in the brown laying hens in
unenriched cages compared to brown laying hens in alternative cages in the present
study arose from negative animal welfare conditions in cages and more health problems
due to this situation.
With the new regulations being introduced in Turkey, farmers will convert
conventional cage systems to enriched or other alternative cage systems before
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January 1, 2023 in accordance with the directives on animal welfare in the EU
harmonisation process. The average proportions of cost in the total cost in the
production period were calculated to be as follows for unenriched and alternative
cages, respectively: pullet 22.17% and 21.17%; feed 61.31% and 58.29%; labour
2.67% and 2.55%; veterinary and health 0.74% and 0.98%; water, electricity and fuel
0.16% and 0.24%; egg packaging 3.23% and 3.48%; other expenses 0.04% and 0.05%;
general administrative expenses 2.71% and 2.60%; maintenance and repair expenses
1.50% and 2.29% and depreciation costs 5.48% and 8.35%. The ancillary revenue
was found to be US$730.12 and US$677.96, respectively. The average cost of
producing one egg was calculated to be US$0.094 and US$0.097, respectively.
The present study found that investment cost in alternative (enriched) cage systems
was, on average, 14.9% higher and the production cost per hen (US$/hen) 2.03% higher
than for unenriched (conventional) cage systems. In relation to the distribution production
costs, the ratio of variable costs to fixed costs was 90.3/9.7 (9.3:1) in unenriched cages
and 86.8/13.2 (6.6:1) in alternative cages. Finally, the total cost per unit area (US$/m
2
)
used for egg production in the unenriched cage system was found to be in average 7%
higher than that in the alternative cage system.
Conclusions
Subsidies need to be granted to producers to facilitate changes in housing systems, and
increases in price levels will play an important role in achieving the conversion. During
this transformation, it will be essential to research the practices for animal welfare in the
current production conditions and the economic potential of sector investments, in order
to convey the data obtained to the enterprises operating in the industry, as this will ensure
most efficient change over to enriched cages for laying hens in Turkey.
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