Egg revolution hatching down on the farm

Buying a box of fresh eggs in a mainland supermarket can present consumers with a confusing array of choices. Judging by the labels, there are 'green eggs', 'ecological eggs', 'tu eggs' and 'grain eggs'. There are also 'early eggs', which the producer says is the first egg that a pullet ever laid, and 'baby eggs', which is said to be rich in DHA, an omega-3 fatty acid, good for children's brain development.

One Sichuan egg farm claims its hens are raised in bigger cages so that they can get more exercise and produce better quality eggs, while a Shanghai firm says its hens are given only vegetarian food and their eggs can be eaten raw, thanks to certain technology introduced from Japan.

Although the prices of these eggs are usually twice that of ordinary eggs, the sales gimmicks they use are often effective in attracting health-conscious buyers.

'I only buy branded eggs,' said Zhang Fengxia, a Beijing mother of a two-year-old girl. She is a loyal customer of 'tu eggs' or, literally, 'earth eggs', whose producers say their hens are raised cage-free and fed worms.

'I know it's hard to verify whether what the producers say is true or not,' Zhang said. 'But I generally believe something with a brand rather than those coming from somewhere unknown.'

Big opportunities in the egg industry are emerging in China, the world's number one egg-consuming country, as people become more concerned about food safety and the quality of life. An increasing number of egg producers are building larger plants, packing their eggs attractively and promoting them as a safe and nutritious food.

There are about 770,000 egg farms on the mainland, raising more than 1.3 billion laying hens and producing 40 per cent of the eggs in the world. Most are small-scale operations with fewer than 10,000 hens.

'This situation will change in three to five years,' said Moksa Zhang Xuan, the marketing director of Beijing DQY Agricultural Technology, the biggest egg producer in Asia.

He said China's egg industry would follow the development of the United States and Europe, where the markets are dominated by several industry leaders.

DQY operates a farm with 3 million hens in Yanqing, near Beijing, producing 1.5 million to 1.6 million eggs daily. Nearly 80 per cent are sold to supermarkets in Beijing, Shanghai, Guangdong, Hong Kong and other mainland cities, while the rest go to bakeries, hotels and restaurants in the form of liquid eggs.

Zhang said the quality of their eggs were ensured as their hens 'drink mountain spring water', 'eat nutritional food' and 'live in air-conditioned units'.

The company is building two more plants, in Anhui and Guangdong province, which will house 6 million hens by 2013.

Zhang said the average gross profit margin in the industry was 20 per cent and the net profit was only 3 to 5 per cent. The company posted 300 million yuan (HK$355.56 million) in sales revenue last year.

To boost the profit margin and capture the high-end demand, DQY launched two lines of specialty eggs, which are nutritionally enhanced with vitamins. Each specialty egg is priced between 1.60 yuan and 2.60 yuan, up to five times the price of the ordinary non-branded eggs.

'Originally, our targeted customers were women between 25 and 45 with a monthly household income of more than 5,000 yuan,' Zhang said. 'Yet we've found recently that younger, older or less well-off customers are also interested in our products.'

He admitted people's concern about food safety is a major reason for the booming sales. In 2006, a batch of eggs in Hubei was found to contain the cancer-causing chemical dye, Sudan Red. Another dangerous chemical, melamine, was also detected in the shell of eggs sold by a Dalian company three years ago.

Han Zhaopeng, a communications manager of the National Engineering Research Centre, said branded eggs would take a much bigger share than their current 5 per cent or so of the entire market, since people tended to trust big brands.

'The traditional way of raising layers in farmers' houses is phasing out generally,' Han said. 'The era of the 'three-nos' for eggs [no standards, no production date and no brands] will end.'

To regulate the egg market, he said, the centre would establish a set of rules jointly with the Ministry of Commerce this year, giving clear definitions of standards for the industry, including how egg producers name and describe their products.

Currently, the US and some European countries classify eggs as 'in cage', 'cage free', 'free range' and 'organic'. But there are no official classifications in China and producers can name their eggs as they see fit.

'Some of them use names like 'tu eggs' or 'organic eggs' to attract buyers, but the eggs are usually not what they claim to be on the packaging,' Han said.

'The future of China's egg industry will be like today's in the US,' he said. 'There were hundreds of egg farms in the US in 1960s and 1970s. But that has been reduced dramatically now. We expect to see the same route in China in the next decade.'

Egged on

Green eggs

from farms where hens are fed corn and beans instead of man-made feed

Early eggs

the first eggs that a pullet has laid

Ecological eggs

from farms where hens eat corn, drink spring water and live in air-conditioned units.

Tu eggs or chai eggs

collected from individual farmers'homes. The hens are raised in an open-air environment and live on worms and natural grains

Grain eggs

from farms where hens are fed only natural grains

Baby eggs

from farms where hens are fed vitamin-enhanced corn and beans. Eggs said to be good for children's brain development

Number of mainland egg farms: 770,000

Hens laying eggs: 1.3b

The proportion of the world's eggs laid in the mainland: 40%

Eggs laid each day at one farm in Yanqing, near Beijing: 1.6m

Price of a specialty egg (yuan): 1.6-2.6 (five times the price of an ordinary egg)