Where once eggs were bought in wet markets, locally from farmers, or just by keeping a few chickens in the back yard, large scale battery farming has given way to an increasingly sophisticated and productive market in China. In recent years the selection of eggs has grown immensely, with egg grading becoming common place as well as so-called 'energy' and 'health' eggs appearing on the market.
Strong economic growth, increased supply and favourable prices have lead to increased consumption of eggs in China, the report says. Now China is the world's second largest per capita egg consumer after Japan, with each person in the country consuming 292 eggs on a yearly basis. However, while per capita consumption is expected to fall in Japan and most other countries, China's per capita consumption is steadily increasing.
In recent years one of the biggest boosts to the industry came with the removal of export quotas on eggs to Hong Kong in 1996, just before the territory was handed over to China by the then British government. This meant that China was able to tap into Hong Kong's 7 million consumers and there particularly advanced food consumer habits.
Market expand but prices drop
In global production terms production of eggs is continuing its upward trend with China leading the expansion. However the lower egg prices resulting from the current egg surplus in China is expected to slow down the sector's rate of expansion in the short run, the report stresses.
Currently it is the US that dominates world egg production. However, the market there is faced with increasing competition from the rapidly expanding China market.
Between 1997 and 2003 the total value of egg sales increased from RMB21.78 billion (€2.14bn) to 37.08 billion in China, reflecting a similar growth in overall food sales from RMB 830.64 billion. During this period total volume sales of eggs rose by 107 per cent to reach 515.56 billion eggs by 2003. This is a much faster growth rate than retail values, indicating that the value of products sold is decreasing. This, says the report, is largely due to continued deflation of egg prices, caused by oversupply in many areas.
In China eggs are a popular food in themselves and also as an ingredient. However, they are relatively low-priced and prices have fallen in recent years as production has increased. The value of the market for eggs has stabilised at just under 2.6 per cent of the total food market.
In such a fragmented market market shares of even the leading companies is relatively small. This is indicative of just how regionalised this industry is, the report says. However, with a massive reduction in the number of companies involved in egg processing and production, and with increased industrialisation of the industry, the leading groups are becoming much more significant. Despite this, the market is still heavily supplied by individual producers, who sell at wet markets, both in the countryside and in the main cities, with this cottage industry trade representing a large slice of the 80 per cent or so market share attributed to "others".
The top three egg producers in 2002 were Xiantao Shuangyuan Eggs, with a 3.61 per cent share of the market, Jiangsu Taizhou No. 2 Foodstuff processing Factory with a 2.52 per cent share of the market and Shanghai Qingxi Poultry Eggs Foodstuff with a 2.44 per cent share.
The bird flu outbreak in 2003 did undermine egg production significantly in the country, the repercussions of which are not expected to be felt until production and consumption figures are revealed for the full 2004 year. However, the Chinese government's swift reaction to the situation is widely considered to have avoided completely decimating the industry.
Although oversupply has continued to impact the profitability of the market, the forecast is that the size of the market will continue to show strong growth. The total market for eggs is forecast to reach a constant 2003 value of RMB79.08bn by 2008, rising by 38.22 per cent in those five years. According to Access Asia, the market will prosper mainly thanks to the spread of supermarket and convenience store chains, especially into more suburban and rural regions, where coverage is currently still weak. This will be aided by improved distribution infrastructure.
The full version of this report, containing comprehensive data about honey production in China is available from Access Asia.