Profile of the Canadian Processed Egg Industry

Table of Contents

Introduction

In this context a processed egg is a whole shell egg which is transformed into some other product before being sold. This includes an egg which has been simply cooked in its shell so that it still looks like a shell egg but is no longer simply a raw egg.

1.0 History

Early growth of the processed egg industry in Canada paralleled, to a certain extent, that of the U.S. with a delay of several years.

A history of the U.S. egg processing industry is documented in "American Poultry History". According to this, the U.S. industry started in the second half of the 1800s. Patents for drying eggs were sought in 1865, although the industry did not really begin expanding until the late 1890s. In about 1915 the industry started declining due to increase in egg prices and higher labour costs. In addition, two American companies had built egg drying plants in China and product was being exported to the U.S. via the newly constructed Panama Canal. The US industry could not compete with Chinese imports and stagnation of the domestic industry set in until the 1920s when war in China, plus the imposition of massive import tariffs by the U.S., combined to activate U.S. output once again.

For liquid and frozen product, the extraction and freezing of egg yolk was started in the 1890s and with the discovery in the early 1900s that the addition of sugar, salt or glycerine before freezing prevented excessive thickening and enhanced baking performance, expansion of the industry accelerated.

In Canada, as in the U.S., Chinese imports played a significant part, particularly during the twenties, when, in an apparent attempt to check Chinese imports, tests were developed to identify impurities in imported and domestic product. Ironically, it was found at this time that the Chinese product had fewer impurities than the domestic product. Hoping to enter the export market, Canadian standards for frozen egg were proposed in the early 30s, but the industry seems to have had difficulty reaching consensus on this issue and nothing was resolved. At this time, egg product was used largely by the baking industries.

The event which had the most effect on the Canadian egg industry and particularly the processed egg industry was the second World War. In the early years of the war Britain made a decision to reduce the imports of bulky feedstuffs for livestock and poultry. Drastic cuts in production were ordered and imports of food products expanded. Initially Canada was exporting shell eggs to Britain in increasing quantities, but in 1942 when submarine warfare was at its height shipping space had to be further reduced and the United Kingdom decided to accept only dried eggs. This necessitated the production of immense quantities of liquid egg which were cold stored and later converted into powder. At the same time arrangements were made to set up plants for the drying and handling of eggs in Canada.

In conjunction with this came quality improvement. In 1941, following repeated requests from the British Ministry of Food (which had become the sole importer of food into Britain) for a central agency to handle food exports in Canada, the Special Products Board was created under the authority of the War Measures Act. This Special Products Board not only purchased all eggs for export, but also established regulations regarding their storage. Specifications for egg quality were laid down by the British Ministry of Food as at this time Canada did not have its own standards for egg product. Canadian standards for frozen eggs were not implemented until 1946 and for egg products - incorporating frozen, liquid and dried eggs - in 1969.

During the war years from 1939 to 1945 egg production increased over 63%. This was to fill not only the demands of the United Kingdom, but of the Canadian armed forces, and of domestic consumption also which, as supplies of other foodstuffs diminished, increased to 300 eggs/capita. Such was the need by Britain, that in order to supply it, Canadians were asked to reduce their own egg consumption in. In 1943 the British Ministry of Food asked Canada for the equivalent of 63 million dozen eggs to be shipped in powdered form. Exports of prepared eggs peaked in 1944 at $21 million, but in the same year exports to Britain of shell eggs were renewed. Britain's egg contract with Canada was continued until 1949, and although about one third was for dried eggs consumer demand was for fresh, and efforts were concentrated on supplying this market. Exports of processed egg declined and with it the egg processing industry.

In the U.S. production of eggs produced specifically to supply egg breaking plants started in the late 1950s. In Canada, with the exception of the war years, it is only in the last few years that eggs have been produced specifically for further processors. Processing needs have always been met by eggs surplus to the table market. Introduction of supply management for eggs in 1972 reinforced this system of using surplus eggs for the processing industry supplemented by imports.

The Federal/Provincial Comprehensive Agreement for Eggs signed in 1972 regulates and controls the production and marketing of eggs in Canada. In the Agreement provision is made for purchase by the Canadian Egg Marketing Agency of eggs surplus to the table market.

In the last 20 years as demand for easy-to-use ingredients has increased, the processed egg industry has again realized a steady expansion

Over the years it has been a combination of research, innovation, regulation, equipment and technology, and opportunity that has guided the development of the egg processing industry.

2.0 Industry Structure

Figure I: Structure of the Canadian Egg Industry

As seen in the chart above, the starting point for eggs bound for processing is the farm where shell eggs are laid. Most of the eggs laid are destined, via grading stations, for the table egg market. This market is also supplied by small quantities of imports (1.6% of total shell egg production in 1999). About 20% of eggs produced go to federally registered processing stations for breaking and transformation into processed eggs. At the processing stations these supplies are supplemented by imports both of shell eggs (3.5% of total shell egg production in 1999) and processed eggs (3.2% of total egg production). Processed eggs are sold at retail, to the HRI trade (hotels, restaurants and institutions), are exported or are sold to further processors for use in bakery products, speciality items etc. Further processors can supplement their supplies with imported liquid, frozen and dried eggs, providing they are pasteurized. Further processor sales are to retail, HRI and export markets.

Organization and management of the egg system in Canada is outlined in section 5.0. Section 2 below deals with processed egg stations and further processors.

2.1 Processed Egg Stations

Processed egg must be prepared in a federally registered processed egg station in accordance with the Processed Eggs Regulations of the Canada Agricultural Products Act http://laws.justice.gc.ca/en/C-0.4/C.R.C.-c.290/index.html

Currently there are eighteen federally registered egg processing plants in Canada in five provinces. There are no stations in Saskatchewan and none in the Atlantic Provinces. Up until 1975 there were egg processing stations in Saskatchewan and indeed the first egg drying plant in Canada was built in this province in 1932. This was followed in 1934 by a drying plant in Manitoba, and another in Ontario in 1938. As the need for dried eggs for export increased in the 1940s a plant in Alberta was launched in 1942, and in 1944 one in British Columbia. There was an egg processing plant in Nova Scotia for sixteen years from 1967 to 1982. A number of plans have been made to re-open a plant in this province but so far it has not been considered economically feasible.

Data on the number of egg processing plants started in 1952 when 63 &#8216frozen egg plants’ were recorded. Since then there has been a fairly steady decline in numbers. The eighteen stations registered in 2001 are owned by twelve companies. Of these, only two companies in three provinces have egg drying plants.

2.2 Further Processors

These are producers of bakery goods, pasta, mayonnaise, frozen meals etc who use egg products. Some egg processors also produce further processed products. One of the more lucrative further processing activities is the extraction of proteins which possess unique functional properties such as antimicrobial, enzymatic and antienzymatic, cell growth stimulatory, metal binding, vitamin binding and immunological properties. Egg white proteins such as lysozyme, avidin, ovomucoid, ovalbumin and conalbumin are used in the pharmaceutical industry.

Even with extraction this process still allows the albumen to be sold as processed egg.

3.0 Processed and Further Processed Egg Products

Processed egg products include liquid, frozen and dried egg - whole, yolk or albumin - and with or without additives. It also includes boiled or pickled whole eggs, and egg preparations such as scrambled egg mix. Processed eggs are also used to prepare proteins and pharmaceutical products. A list of products available from Canadian processed egg companies is found in Table I.

Table I - Processed Egg Products

* See also "Little Known Uses for Eggs"

4.0 Size and Value of the Industry

4.1 Production

From 1921 to 1998, total egg production (including hatching eggs) increased 289% from 112 to 499 million dozen. From 1963 to 1998 it increased 20%. Total egg supply (including imports but excluding exports) also increased but at a slightly faster rate 302% from 1921 to 1988, and 28% from 1963 to 1998 mostly due to increases in imports

Graph I - Total Egg Production and Supply from 1921 to 1998 in millions of dozens

Source: Statistics Canada

4.2 Population

In these years the population also grew, but at a faster rate than egg production. Since 1963, the population of Canada has grown 60% from 19 million to 30 million. Egg production grew only 20% in this time.

Graph II - Growth in Population of Canada

Source: Statistics Canada

4.3 Total Egg Consumption

Why did egg production and egg supply increase at a slower rate than the Canadian population particularly from the 1960s on? The answer lies in egg consumption. Between 1929 and 1962, the average annual per capita total egg consumption was 20.6 dozen with a high of 25 dozen eggs per capita in 1957. From 1962 on consumption fell steadily from 23 dozen to 15 dozen. This has been attributed to a number of factors - a change in consumer life style with fewer traditional breakfasts being consumed, a changing ethnic population with a subsequent shift in traditional dietary intake, and consumer anxiety about cholesterol and Salmonella. In the last few years there have been increases in egg consumption from 14.9 dozen to 15.7 dozen in 2000.

It should be emphasized that we have been talking about TOTAL egg production, supply and consumption, not just shell eggs.

Graph III - Per Capita Annual Consumption of Eggs from 1921 to 1999 in dozens

Source: Statistics Canada

4.4 Processed Egg Production

Prior to 1950 data are not available for processed egg production, but from 1950 to 1998 eggs used in processing increased 591% from 1 to 6 million dozen. Total egg production over the same period increased 70%, so the rate of growth of the processed egg industry was eight times that of the total egg industry. This is consistent with growth in other processed food areas.

Graph IV - Eggs Broken in Federally* Registered Processing Stations from 1950 to 1998 in 000s dozens

* All existing processed egg stations are federally registered.

Source: Agriculture and Agri-food Canada

A similar picture emerges if we look at eggs broken as a percentage of total egg supply. In 1998, eggs broken represented 20% of total shell egg supply. In 1950 eggs broken were only 10% of total supply.

Graph V - Eggs Broken as a Percentage of Total Egg Supply, 1950 - 1998

Source: Agriculture and Agri-food Canada

4.5 Exports

The fortunes of the egg processing industry can also be tracked from the value of its exports.

Graph VI - Exports of Processed Egg 1944 - 1999 (thousands dollars)

Source: Statistics Canada

As stated in para 1.0, during WWII Canada exported large volumes of ‘prepared egg’ (or dried egg) to the United Kingdom. In 1945 these were valued at $27 million. It took over 50 years for Canada to approach those levels again. Together with many other commodities, post war years saw a decline in processed egg exports, and it was not until 1980 that increases were seen. This is a trend which has continued fairly steadily until the present.

In 2000, Canada exported $26 million to 19 countries. In 1989 exports really started taking off, and the amount was $11 million to 10 countries. Canada's top importers (in $) for the last few years have been Japan (52% of total processed egg exports in 2000), the U.S. (22%) and Austria (8%). Exports to Japan are in the form of high value dried egg yolk.

Graph VII- Exports of Processed Eggs by Country

Source: Statistics Canada

4.6 Imports

Canada imports liquid and dried processed egg. Imports of processed egg in 2000 totalled $10 million, 98% from the U.S.. Small quantities of liquid egg and egg preparations are imported from the United Kingdom and several Asian countries. Interestingly enough, apart from the WWII years, imports from China have continued on a consistent basis. Between 80 to 90% of processed egg imports are destined for further processing companies.

Graph VIII Imports of Processed Eggs - 1944-1999

Source: Statistics Canada

Imports of processed eggs, together with table eggs, are controlled and limited. Under the General Agreement on Tariffs and Trade (GATT), Article XI, with a supply management system for eggs in place, Canada was permitted to control and limit imports. With the signing of the World Trade Organization's (WTO) Agreement on agriculture concluded in December 1993, Canada converted its existing agricultural quantitative import controls to a system of tariff rate quotas (TRQs) which came into effect in 1995. Product up to a certain volume is imported at one tariff rate. Over this permitted level the tariff rate escalates. Under the Canada-U.S. Free Trade Agreement (FTA), the negotiated level for eggs and egg product imports was 2.988% of the previous year's domestic production at tariffs decreasing over a 10 year period and reaching zero in the year 2000. This is split among shell eggs (1.647%), frozen, liquid and further processed eggs (0.714%) and powdered eggs (0.627%). Under the WTO, import volumes were established up to the year 2000.

For 2000, this is 21,370,000 dozen (egg equivalent). This level of access is higher than Canada's FTA/NAFTA commitments, and so prevails. The difference between Canada's FTA/NAFTA and WTO access commitments is normally allocated to the breaking egg segment of the market to import eggs for breaking purposes.

The method for establishing the allocation of import access quantities of eggs and egg products is prescribed in the Export and Import Permits Act and administered by the Export and Import Controls Bureau of the Department of Foreign Affairs and International Trade. Documentation on the allocation system and principles of TRQ allocation, applicable products, and procedures for applying for import permits, together with data on permits issued can be found at: http://www.dfait-maeci.gc.ca/eicb/

Table II - Import Permits Issuance for Eggs and Processed Eggs - 1996 - 2000

Table III - Tariff Rate Quotas for Eggs and Processed Eggs, January 1, 2001

Table IV - Imports for 2000, as reported by Statistics Canada

4.7 Value

5.0 Organization

5.1 Supply Management

Supply management is a system for controlling supply by regulating production and imports and at the same time providing producers with their costs of production over time and providing consumers with consistent supplies at reasonable prices.

Supply management for eggs came into effect in 1972 with the signing of the Federal Provincial Agreement for the Marketing of Eggs. This was preceded by the establishment of the Canadian Egg Marketing Agency (CEMA), representing the Canadian egg industry through producer boards and associations, and the National Farm Products Council which oversees the activities of the national agency. Prior to this provincial boards had been established in the 1960s.

The Federal Provincial Agreement is a contract which sets down provisions for the coordination of a national orderly marketing system through a system of national and provincial regulations and production quotas. This Agreement is currently being revised.

5.2 Industrial Product Program

Not all eggs produced are sold as table eggs. Consumer demand for table eggs fluctuates throughout the year, with sharp increases at holiday periods. To supply consumer demand at these periods means that more eggs are produced than are sold to consumers for the rest of the year, given that chickens lay consistently year round. Those eggs that are surplus to the table egg market are directed towards the breaker market.

Graph IX - Eggs Graded (Grade A and Nest Run) and Eggs Sold to Breakers 000s of dozens - 1999

Source: CEMA

The Federal Provincial Agreement (FPA) contains provision for CEMA to purchase and sell shell eggs. CEMA therefore introduced a surplus removal program which evolved into the Industrial Product Program. Under this program, eggs surplus to the table market are purchased by CEMA at a province's cost of production or the provincial price, whichever is less, plus 3 cents/dozen (for handling). They are sold to the breaker market at negotiated prices based on U.S. breaking stock prices.

The financial viability of the Industrial Product Program is dependent on a number of factors such as supply of, and demand for, surplus eggs, CEMA buy back prices, U.S. egg prices, exchange rates, import tariffs and other factors which might be taken into account in arriving at a negotiated selling price to breakers.

5.3 Domestic supply

The base national supply level (quota) and provincial shares were calculated and agreed to in the original Federal Provincial Agreement, and they were based on historic production levels. The volume of total egg production needed to supply the market is calculated annually by the Canadian Egg Marketing Agency (CEMA).

Despite the growth of the processed egg industry, total egg consumption declined from 1955 onwards and any increases in egg production, were needed only to reflect population increases. Production increases were lower than might be expected due to increases in the rate of lay. However, in the last few years consumption has increased slightly, strongly influenced by the rapid growth in the processed egg industry.

Under the current Supply Management system, the original provincial quota allocations were based on historical production levels. This did not necessarily reflect provincial table egg demand due to some provinces having a substantial processing industry. This led to the percentage of eggs surplus to the table market being higher in some provinces than in others. This has been a potential area of strife with egg producers as those provinces with large surpluses are more of a financial drain on the system than low surplus provinces, and yet to satisfy the demands of the egg processing industry these are the very provinces which need more quota.

Graph X Industrial Product Declarations - 1979, 1989, 1999 by province

From 1979 to 1989, declarations increased in all provinces. From 1989 to 1999 they increased in all provinces except Québec, PEI and Newfoundland

Graph XI Gradings (including Nest Run) 1979, 1989, 1999

Source: AAFC and CEMA

All provinces except British Columbia increased eggs graded from 1979 to 1989. From 1989 to 1999 all provinces except Nova Scotia, PEI and Newfoundland increased eggs graded. In these years the quota exchange program resulted in egg production moving from the Atlantic region to other provinces.

Graph XII Industrial Product Declarations as a Percentage of Gradings 1979, 1989, 1999



Note: ‘Gradings’ include Grade Nest Run

Source: AAFC and CEMA

As can be seen from the above Bar Graph, the Canadian average for industrial product declarations in 1979 was 7.75% of total eggs graded. In that year, Saskatchewan, Manitoba and PEI were above the national average. In 1989 total industrial product declarations were 16.84% of eggs graded, and Manitoba, Nova Scotia, PEI and Newfoundland were above the national average. In 1999 20% of total eggs graded were industrial product declarations, and again, Manitoba, Nova Scotia, PEI and Newfoundland were above the national average.

Manitoba uses a large proportion of eggs in its further processing plants, but Nova Scotia, PEI and Newfoundland have no processing facilities. These provinces, therefore, despite reductions in quota and eggs graded still have a large number of eggs which they cannot themselves use.

British Columbia, Alberta, Saskatchewan, Quebec, Ontario and New Brunswick had fewer surplus declarations than the national average. For true efficiency provinces with egg processing facilities should have more of their egg production going to the breakers relative to other provinces with no processing facilities. However, due to historical allocations of quota, this is not always the case, and in order to meet their processed egg demand provinces without processing facilities have to purchase processed eggs from other provinces.

According to Schedule C of the FPA Proclamation, any increase in quota allocation must take into account the following factors:

a) the principles of comparative advantage
b) any variation in the size of the markets for eggs
c) any failures by egg producers in any province or provinces to market the number of dozens of eggs authorized to be marketed
d) the feasibility of increased production in each province to be marketed, and
e) comparative transportation costs to market areas from alternative sources of production.

The national agency sought for many years to come to terms with the problem of equitable provincial allocation versus greater allocations to those provinces with processing facilities. At the end of 2000 a quota allocation agreement was reached by provincial directors to the Canadian Egg Marketing Agency in which domestic processing needs will be fully met. In 2001, 1.2 million layers will be allocated over and above the quota allocation for table eggs. Of these, Ontario and Manitoba will receive 400,000 each. Saskatchewan will receive 200,000 and B.C. and Québec 100,000 each. Producers receiving ‘industrial quota’ will sell their eggs directly to processors. Levies will not be paid to CEMA for these eggs.

These industrial shell eggs will be produced for domestic processors only, and it will be the processing industry which directs their products to domestic or export markets.

5.4 Pricing

5.41 Producer Price

CEMA calculates provincial costs of costs of production (COP) for grade A large every four weeks. Included in the COP are cost components for feed, labour, plant and administration overhead, building and equipment depreciation, producer returns and interest cost and CEMA administration levies. The provincial marketing boards use the COP values as a guide to setting provincial producer prices.

5.42 Buy-Back Price

Currently the buy-back price for any province is COP plus 3 cents/dozen, or the provincial producer price plus 3 cents/dozen - whichever is less.

5.43 Selling Price

Again, calculation of the selling price to breakers has varied over the years. Currently it is a formula price negotiated with the processors based on the Urner Barry breaking stock price for the central region. This is adjusted for yield difference (U.S./Canada), the U.S./Canada exchange rate; and a 1 cent/dozen washing cost.

5.5 Levies

Currently the national industrial product levy is $0.144 per dozen, all of which is in the COP formula. Provincial industrial product levies vary from $0.0066 per dozen in Saskatchewan to $0.026 per dozen in Ontario. These are paid by producers and not recovered through the COP fund. Administration levies are also imposed.

6.0 The Players - Federally Registered Egg Processors

6.1 Burnbrae Holding Ltd

Burnbrae Holding Ltd (http://www.burnbraefarms.com/) is a private company owned by the Hudson family. The company owns layer barns, grading stations and egg processing establishments. Burnbrae has holdings in Ontario, Québec and Manitoba. Its products are marketed across Canada.

Egg processing companies are in Ontario, Manitoba and Québec.

Processed products include liquid and frozen whole, yolk and albumen in various sizes and packaging, scrambled egg blend, powdered whole egg, yolk and albumen, hard boiled eggs and omega 3 egg whites.

6.2 Canadian Inovatech Inc.

Canadian Inovatech Inc. (http://www.inovatech.ca/) has processing production facilities in British Columbia, Alberta, Manitoba and Ontario and is one of three partners in a joint venture with a U.S. production company Michael Foods Inc and an egg producers coop. Its products are marketed in Canada and exported around the world. Canadian Inovatech Inc has a sales office in Austria.

Processed egg products includes a full range of dried and frozen egg products and products extracted from egg whites such as lysozyme, enzymes and other proteins such as Avidein (immunodiagnostic reagent) and Ovomucoid (protease inhibitor), Ovalbumin, Ovotransferrin, Trypsin and Chrymotrypsin. All products are Kosher and Hallal certified.

6.3 Highland Produce Ltd.

Highland Produce Ltd. is a private company operating an egg processing plant in Alberta producing product for domestic and export markets. It employs 35 people

Products include frozen and liquid whole, yolk and albumen, reduced cholesterol and fat frozen egg mix (this is a Kosher product), omelette mix, whole and yolk powder, and pickled, hard cooked and baked eggs.

6.4 Cericola Farms Ltd.

Cericola Farms Ltd. is a family owned Ontario based

COMPANY operating since 1959 with two facilities. One is an egg processing facility processing liquid whole egg - fresh or frozen mostly for the domestic market, although the company has export capabilities. In a separate facility - Sure Fresh Foods Inc - poultry is processed under the Cericola brand name. The egg processing plant employs 6 people.

6.5 Shelmac Brand Products Ltd.

Shelmac Brand Products Ltd. established in 1945 is a privately owned Ontario Corporation. It manufactures and distributes domestically over 8 million pounds of liquid and frozen egg products annually.

6.6 Lashbrook Produce Ltd.

- an Ontario company established 1940 and serving domestic markets. the company employs 15. products include frozen whole yold and albumen liquid eggs.

6.7 Global Egg Corporation

- based in Ontario, produces liquid and frozen processed egg products in a variety of sizes and packaging. Products include frozen egg white, pelletized frozen yolk and albumen, omelette mix etc. Products are marketed domestically and in the U.S.. Global is working together with Sunny Fresh Foods, MN to market further processed egg products for the Canadian market place.

6.8 Feature Foods Ltd.

- is an Ontario based food processor manufacturing a variety of marinated products such as horseradish, beet relish and pickled herrings and eggs. Products are sold domestically and in the U.S.

6.9 Country Queen Foods Inc.

- is an Ontario company founded in 1980. It produces whole, yolk and albumen liquid and frozen egg and also a line of further processed egg based products such as scrambled, hard-boiled and pickled eggs and omelettes, and a line of packaged salads - macaroni, egg, tuna etc. Country Queen sells coast to coast.

6.10 Vitoeuf Inc.

- a custom egg processor established in1984 and based in Québec. Manufactures liquid whole, yolk and albumen in various sizes and containers, and hard boiled eggs - whole natural or pickled and chopped. Markets are domestic and neighbouring U.S. states.

6.11 Les Aliments Martel Inc.

- is a Québec based food company with two facilities, producing whole hard boiled salad eggs, pastries and prepared meals for domestic institutions and groceries.

7.0 Non-Government Organizations

7.1 Canadian Egg Marketing Agency (CEMA)

CEMA's role is to manage the orderly marketing of shell eggs for consumption. It does this by determining and allocating provincial quota and monitoring individual producers, operating an industrial product program, and establishing pricing according to costs of production. It also engages in promotion and market research, initiates producer health and quality programs, finances research which in the past has covered production practices, new uses for eggs, egg quality, use of fowl meat etc., and disseminates market information. CEMA is financed by levies assessed to producers and marketers.

CEMA is operated by a Board of Directors which is composed of one representative from each provincial marketing board, three Canadian Poultry and Egg Processors Council members representing the hatchery, grading and further processing sectors and a consumer representative appointed by the Consumers' Association

7.2 Canadian Poultry and Egg Processors' Council (CPEPC)

The CPEPC is a national industry association which has been in existence for over fifty years. It represents the interests of the chicken and turkey primary and further processing sectors, the egg grading and egg further processing sectors, and, more recently the hatchery sector, in Canada. There are also sixty associate members representing companies and organizations dealing with poultry infrastructure. The Council has members in every province which together represent in excess of 90% of the feather industries.

CPEPC's purpose are expressed in three goals - to provide a forum for all stakeholders of the industry to pro-actively address the common goal of business prosperity in a mutually respectful partnership; to catalyze the creation of a globally competitive Canadian industry; and to ensure that the development of government policies is consistent with fostering and sustaining a globally competitive Canadian feather industry.

7.3 The International Egg Commission (IEC)

The IEC represents the interests of producers and processors of eggs around the world. Membership from over 30 countries constitutes the majority of world egg producing/trading countries.

Topics which the IEC addresses include Animal Welfare, Environment, Trade, Quality Standardization of shell egg and egg products, Food Safety, Nutrition, Promotion and Marketing

The IEC is able to have a strong influence upon national and international decisions through its membership, its publications, and liaison with other international organizations.

8.0 Government Organizations

8.1 Market and Industry Services Branch (MISB) - AAFC

MISB's stated mandate is "to improve and secure market access to enable the agri-food sector to capture opportunities for trade in domestic and export markets, with a focus on higher value agri-food products.".

This is achieved through trade negotiations, identifying domestic and foreign market opportunities, establishing and maintaining markets information systems, facilitating access to domestic and foreign markets and working with the industry to explore other ways of improving marketing.

AIMS (Agri-food Industry Market Strategies) is a service for developing market responsive strategies.

AFT (Agri-Food Trade Program http://www.agr.gc.ca/review/rb-ep_e.php?page=aftp_eval) is a cost-shared contribution program designed to support Canadian agri-food industry activities in areas of market readiness, market access and market development.

PEMD (Program for Export Market Development - the agri-food element - http://www.dfait-maeci.gc.ca/pemd/menu-en.asp) provides financial assistance to agri-food associations to cost share the implementation of generic activities in acceptable long-term export market strategies.

ATS (The Agri-Food Trade Service - http://ats-sea.agr.ca/general/home-e.htm) provides access to international market information and intelligence, export trade counselling and export support activities.

The Poultry Section Home Page (http://www.agr.gc.ca/poultry/index_e.htm) contains information related to weekly and annual poultry and egg market information, historical trends, trade data, factsheets and publications, federally registered plants and stations, industry associations, links to numerous poultry and egg websites, as well as a search utility.

8.2 Canadian Food Inspection Agency (CFIA)

The CFIA's mandate is the safety, health and quality of animals and plants.

For eggs, this is done by administering and/or enforcing the following Acts through designated inspectors:

Canada Agricultural Products Act; Consumer Packaging and Labelling Act and the Health of Animals Act.

8.3 National Farm Products Council (NFPC)

The NFPC is the overseeing body for four supply managed agencies - the Canadian Egg Marketing Agency, the Canadian Turkey Marketing Agency, the Chicken Farmers of Canada and the Canadian Broiler Hatching Egg Marketing Agency. Council's duties in relation to the national agency and as laid down in the Farm Products Agencies Act (FPAA) are three-fold: to advise the Minister of Agriculture on all matters relating to the establishment and operations of the Agencies under the FPAA; to monitor the operations of the Agency and ensure that these are carried out in accordance with the FPAA; and to work with the Agencies and provincial governments to promote more effective marketing of regulated commodities in interprovincial and export trade.

Council approves marketing orders, and regulations, before they are submitted to the Governor in Council for approval. Council cannot, however, amend or modify orders or regulations, although it can refuse to approve regulations relating to quota and levies. Council can also mediate at disputes between agencies, and industry participants which are affected by agency policies.

Council's membership consists of no less than 3 and no more than 9 members, at least 50% of whom are primary producers. These are all appointed by the Governor in Council.

8.4 Department of Foreign Affairs and International Trade (DFAIT)

The Minister of Foreign Affairs is responsible for the Export and Import Permits Act which authorizes the government to control and monitor the transborder flow of specified goods. This Act and its Regulations are administered by the Export and Import Controls Bureau (EICB) of DFAIT.

Allocation of import quotas is determined by the Minister for Foreign Affairs in collaboration with an industry advisory board. Issuance and control of import quota is administered by the EICB in collaboration with the Customs arm of Revenue Canada.

8.5 Statistics Canada

Statistics Canada is the country's national statistical agency which under the authority of the Statistics Act is required to collect, compile, analyse, abstract and publish statistical information on all aspects of the nations' society and economy.

Data compiled which are relevant to the egg industry include total egg production, rate of lay, egg sales, egg disposition, per capita consumption, stocks in storage and number of farms (Agricultural Census).

Data published by Statistics Canada are used in trade negotiations.

8.6 Canada Customs and Revenue Agency

This Department is responsible for the administration of the federal tax, tariff and trade laws. For the purposes of the egg industry Revenue Canada regulates and collects tariffs on imported eggs and egg products. These data are published by Statistics Canada.

9.0 Canada vis à vis other countries

China is by far the largest egg producing country in the world, producing in 1998 over 4 times as much as the second highest - the United States. Other countries producing over 1 million metric tonnes include Japan, Russia, India, Brazil, Mexico and France. The Netherlands which has always been a large egg producer has fallen just behind these two countries since the Dutch government banned production increases. Canada produces about one third of a million metric tonnes.

Data for processed egg production is reported by the International Egg Commission which has thirty four countries submitting some egg data, although not all of them reporting processed egg production. The United States is the largest producer of egg products, followed by Germany and the Netherlands. Almost thirty six percent of U.S. egg production goes for further processing. In Germany over 28% of egg production goes for further processing. Other countries which use over 10% of their eggs for further processing are Argentina, Australia, Austria, Canada, France, Japan, the Netherlands, Sweden and the United Kingdom.

In 1998, world exports of processed egg totalled $565 million, with Belgium-Luxembourg accounting for 18% ($101.7 million). The Netherlands and France are also large exporters with $99 million and $87 million respectively. Six countries - Belgium-Luxembourg, the Netherlands, France, the USA, Germany and Denmark account for over 76% by value of the world's exports of processed egg.

Canada ranks about ninth in value as an exporter.

The largest importer of processed eggs is Germany with $103 million, and Japan with $82 million. Other countries importing more than $30 million in 1998 were Austria, France, Switzerland and the United Kingdom.

Bibliography

Agriculture and Agri-food Canada, Poultry Market Review

American Poultry History 1823-1973, American Poultry Historical Society Inc., 1974. Chapter 17, "Canada" by A. Drew Davey

Canada Poultryman, 1941 - 1949

Canadian Egg Marketing Agency - Annual Reports

The International Egg Commission, International Egg Market Review, Situation and Outlook Report

McCulloch, A.C., The Development of Governmental Policy in Canada, 1956

Revenue Canada, Customs Tariff, Departmental Consolidation 1999

Statistics Canada, Production of Poultry and Eggs, Catalogue no. 23-202-XPB

Watt Poultry Statistical Yearbook 1999

Tables

I Processed Egg Products

II Import Permits Issuance for Eggs and Processed Eggs - 1996 - 2000

III Tariff Rate Quotas for Eggs and Processed Eggs, January 1, 2001

IV Imports for 2000, as reported by Statistics Canada

Graphics

Figure I Flow Chart of the Canadian Egg System

Graph I total Egg Production and Supply, 1921 - 1998

Graph II Growth in the Population of Canada,1963 - 1999

Graph III Per Capita Annual Consumption of Eggs, 1921 - 1999

Graph IV Eggs Broken in Federally Registered Processing Stations, 1950 -1998

Graph V Eggs Broken as a Percentage of Total Egg Supply, 1950 - 1998

Graph VI Exports of Processed Egg, 1994 - 1999

Graph VII Processed Egg Export Markets, 1996 - 2000

Graph VIII Imports of Processed Eggs, 1944-1999

Graph IX Eggs Graded (Grade A and Nest Run) and Eggs Sold to Breakers, 1999

Graph X Industrial Product Declarations - 1979, 1989, 1999

Graph XI Gradings (including Nest Run) - 1979, 1989, 1999

Graph XII Industrial Product Declarations as a Percentage of Gradings - 1979, 1989, 1999

Definitions of some terms used in the Processed Egg Snapshot

Federal Provincial Agreement - an agreement which each of the four national agencies has with the federal and provincial governments setting out each party's responsibilities. Signatories to the Federal Provincial Agreement for Eggs are - the Minister of Agriculture for Canada and the Minister responsible for agriculture in each of the ten provinces and the Northwest Territories, the National Farm Products Council and the equivalent body in all ten provinces and in the Northwest Territories, the Canadian Egg Marketing Agency and the Provincial Marketing Boards in all ten provinces and in the Northwest Territories.

Import Permits - Under the Canada-U.S. Free Trade Agreement (FTA), Canada agreed to an import access level for eggs and egg products of 2.988% of the previous year's domestic production. This provision was incorporated into the North American Free Trade Agreement (NAFTA). This quantity is theTariff Rate Quota (TRQ) and is subject to low "within access commitment" rates of duty up to a predetermined limit (i.e. until the limit of the import access quantity has been reached). Imports in excess of access levels are permitted by citing General Import Permit No. 100 which allows unrestricted imports at the higher "over access commitment" rate of duty.

If it is deemed that the importation of egg products over and above the import access quantity (TRQ) is required to serve overall Canadian market needs then the Minister responsible for the Export and Import Permits Act, presently the Minister of Foreign Affairs, may authorize excess quantities. These require Supplemental Import Permits.

Imports may also be authorized if the product is imported for further processing and then re-exported. These are Supplementary Import Permits for Re-export

Import permits are also required for importing inedible egg products into Canada, although there are no restrictions on the quantities that can be imported. These are Surveillance Import Permits.

Under the World Trade Organization (WTO), the TRQ level agreed to for eggs and egg products is different from Canada's NAFTA commitments. When the WTO quantity is higher than Canada's NAFTA commitments then the difference can be imported at the low "within access commitment" rates of duty and is allocated to the breaking egg sector of the market.

Further information on the import system can be obtained from the Export and Import Controls Bureau, DFAIT http://www.dfait-maeci.gc.ca/eicb/

Processed egg - a whole shell egg which is transformed into some other product before being sold. This includes an egg which has been simply cooked in its shell so that it still looks like a shell egg but is no longer simply a raw egg.

Processed Egg Industry or Breaker Industry- the industry which breaks shell eggs and prepares processed eggs. These are whole, yolk or albumen in liquid, frozen or dried form.

Further Processed Egg Industry - the industry which uses processed eggs to prepare other products.

Quota Exchange - a CEMA program which under certain conditions permits the sale and purchase of quota across provinces.

Important Notices

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