Free range eggs and supermarket hypocrisy

If you are shopping for eggs in the supermarket, free range eggs will be at eye level, barn laid eggs somewhere higher or lower, and cage eggs, if they are stocked at all, inconveniently located near the floor. You will also find a wide range of prices, from organic free-range eggs at more than $12 a dozen, to ordinary free-range eggs at $6 to $10, barn laid eggs around $4 to $5, and cage eggs under $4.

The federal government has a policy of phasing out cage eggs by 2036, but this requires the agreement of the states and territories to take effect. Coles and Woolworths, which account for two-thirds of the retail market, are not waiting; both have declared they will cease selling cage eggs from 2025 and are attempting to wean customers off them.

Consumers have been buying free range and other non-cage eggs in increasing quantities for some years, encouraged by animal rights campaigns against cage production and a public debate about the definition of free range. However, the shift is by no means overwhelming; of the 24 million chickens in the egg industry, 62% remain housed in cages.

The reason for the shift is a phenomenon known as anthropomorphism, or the attribution of human characteristics to animals. That is, some people assume because they would not like to live in a cage, chickens feel the same. They similarly assume that because they would prefer to wander around in the open rather than live in a large shed, so would chickens.

It is not at all obvious that chickens would agree though. If they are concerned about the risk of dying, for example, chickens might actually prefer to live in a cage. The annual death rate among cage chickens is less than 2%, versus 7-9% for those housed in barns and 10-12% for free range. Chickens housed in cages also lay more eggs – on average 335 eggs per year compared to 310-320 for chickens in barns and 300 in free range – and remain healthier, requiring minimal medication. Unconfined chickens are prone to mass pileups, in which large numbers can die, and 40% remain steadfastly inside when given the opportunity to roam outdoors.

Nonetheless, some consumers believe they are being kinder to chickens by buying free range or barn laid eggs. And mistaken or not, they are entitled to spend their money as they choose.

What the supermarkets are doing is not responding to consumer preferences though. Rather, they are engaged in a deliberate campaign to push consumers in a particular direction. The term for that is corporate activism, in which directors and managers use shareholder resources to pursue their own agenda. It is worth examining why, and what the consequences might be.

Contrary to what you might expect, it is not driven by a desire to increase profits. Neither egg farmers nor supermarkets make much out of cage eggs; the supermarkets sell them at low prices and pay egg farmers miserable prices as an inducement to switch to barn and free-range production.

It is also not driven by a desire to be kind to chickens. Ignorant, naive consumers are one thing, but senior supermarket managers are well informed about what they sell. It is inconceivable that they are unaware of the facts about egg production.

What the supermarkets are doing is signalling their virtue in the hope it will enhance their reputation. Customer satisfaction, sales and profits are no longer sufficient; they want to be loved. Quite a lot of big companies are now doing this, not only on climate change but also on social issues.

As for the consequences, they will be substantial, not least for egg producers. They face paying millions to convert their sheds from cage to barn or free-range production. Not only that, but a shed that houses birds in cages will only house two-thirds that number in barn or free-range format. They will need to build more sheds merely to maintain the same level of production. And these are not ordinary sheds; not only are they insect and vermin proof but temperature and airflow are controlled, there are automatic waterers and feeders, plus roosting boxes and egg collection systems. The total cost to the industry will be more than $700 million.

For many small and medium egg producers the cost will be unaffordable, and they will ultimately leave the industry. Indeed, the egg industry will likely shrink to a small number of very large producers, what economists call an oligopoly. The cost of production will inevitably be higher, and the price of eggs to consumers will rise. In low-income households, where eggs an important source of nutrition, that is not something to be welcomed.

Finally, there is no realistic chance that by 2025 the supermarkets will be able to meet consumer demand without stocking cage eggs. Not enough sheds will have been converted or new sheds constructed. As 2025 approaches and this becomes apparent, the supermarkets will declare that although their virtuous intentions remain undiminished, the date will have to be moved back.

All because some people think like chickens.