Iowa Study Shows Economics Impact of Iowa Egg Industry

AMES, Iowa — The egg production and processing industry has a significant impact on Iowa's economy. If consumer demand for eggs increases and Iowa continues its commitment to grow the industry, expansion of Iowa's egg industry will continue. Those are two of the findings in a new study by Iowa State University economists. The study, "Economic Importance of the Iowa Egg Industry," was commissioned by the Iowa Egg Council. ISU economists John Lawrence, Gary May, Dan Otto and John Miranowski conducted the study and wrote the final report. Iowa regained its status as the largest egg-producing state in the nation in 2001. The last time the state held that position was 1958, when farm flocks dominated the industry. When new production technology allowed the industry to grow near population centers, production in Iowa declined. In recent years, the trend to increased processed eggs, improved transportation and modern facilities encouraged new investment in Iowa egg production. Feed is the largest component in the cost of egg production, representing 60 percent. The primary advantage Iowa producers enjoy over other egg producing regions is access to high-quality feed. "Since Iowa's feed price advantage is rooted in its natural endowment of farmland, Iowa likely will maintain its feed cost advantage for the foreseeable future," the report states. Since 1991, increasing population and rising per capita consumption has enabled the U.S. egg industry to expand production by an average of 2.1 percent per year. The growth in egg consumption occurred primarily in egg products, rather than shell eggs. The researchers found that since Iowa's primary competitive disadvantage is distance to major population centers, this trend benefits the state because processing reduces transportation costs. Eggs are an important value-added industry in Iowa. Based on the latest U.S. Department of Agriculture data, more than 32 million layers in Iowa consumed an estimated 34 million bushels of corn and 370,000 tons of soybean meal in 2001. The industry employed more than 2,600 production and processing workers and generated more than $60 million in direct payroll. The Iowa Egg Council estimates Iowa now has more than 40 million layers and researchers said corn, soybean and labor inputs can be adjusted upward accordingly. The ISU researchers looked at the value of inputs such as feed grains, transportation, handling and business services as well as induced effects of consumer-related spending by workers who earn paychecks in these sectors. They found that by including the direct and secondary impacts, the total economic effects attributable to the Iowa egg industry include $747 million of total industrial sales, about 6,000 jobs, $160 million of personal income and value-added of $224 million. The researchers concluded that if demand conditions allow the egg industry to expand profitably, Iowa is in a favorable position to benefit. "The advantages Iowa producers enjoy over their counterparts in other regions are relatively stable," the report states. "Threats to Iowa's production cost advantage likely would be through technological advances that improve feed efficiency or by industry shifts that reduce pullet costs. Any advantages created by these changes would likely be short-lived, as Iowa producers would be able to adopt these changes as well." The report is online at: https://www2.econ.iastate.edu/papers/p15917-2013-01-11.pdf