Case study
Transition to cage-free eggs and the use of Impact Incentives
Food manufacturers
At a glance
Objectives
- Ensure the client can meet its 2025 cage-free commitment in its key markets in Asia, including China, and save money on cage-free sourcing.
Results
- The client is able to meet its commitment deadline in China and Southeast Asian markets, and report incremental progress.
- The client is posed to save 50% compared to sourcing physical cage-free eggs.
Introduction
This case study examines the scenario of a major food manufacturer that has committed to sourcing only cage-free eggs globally by the end of 2025. Despite their commitment, the manufacturer faces significant challenges in sourcing cage-free eggs in Asia. To meet their commitment, they decide to source cage-free eggs wherever available and fill the gaps with cage-free credits (Impact Incentives). This case study will explore the background, challenges, strategies, and outcomes of this transition.
Background
The global movement towards cage-free egg production has gained momentum due to increasing consumer demand for higher animal welfare standards. Many food companies have pledged to transition to cage-free eggs, driven by both ethical considerations and market pressures. However, the availability of cage-free eggs varies significantly across regions, with Asia lagging behind in the adoption of cage-free systems.
Challenges
- High costs: The cost of cage-free eggs is high in China and other Asian markets. Transitioning to cage-free systems involves significant financial investment due to increased space requirements, higher feed consumption, and greater management complexity.
- Limited availability: In Asia, most egg production, including approximately 90% in China, relies on conventional caged systems.
- Contractual barriers: Existing long-term contracts with conventional egg producers hinder the transition to cage-free sourcing.
- Logistical challenges: Segregating and labelling cage-free eggs throughout the supply chain, especially for processed eggs, presents logistical challenges.
- Supplier identification: Identifying suppliers of processed eggs that meet specific requirements, such as different forms and sizes, is challenging.
- Consumer price sensitivity: Addressing consumer price sensitivity and their willingness to pay a premium for cage-free products is crucial.
How GFP helped — Impact Incentives
To address the challenge of sourcing cage-free eggs in Asia, the food manufacturer decides to source physical cage-free eggs (processed eggs) wherever available and fill any gaps using Impact Incentives. The system is based on Book and Claim system which is widely used for responsible palm oil by RSPO and other sustainable initiatives. This system allows companies to support cage-free egg production indirectly by purchasing credits from producers who meet higher welfare standards, even if the physical eggs are not directly supplied to them. Click the button or the brochure below.
Implementation and outcomes
Partnerships and collaborations:
The manufacturer collaborates with organisations like Global Food Partners to identify cost-effective suppliers and to purchase Impact Incentives where physical cage-free processed eggs are not available.
Stakeholder engagement:
The manufacturer engages with stakeholders, including consumers, investors, and animal welfare organisations, to communicate its progress and commitment and the steps taken to support cage-free production.
Monitoring and reporting:
Regular monitoring and reporting are conducted to track the progress of the cage-free commitment. Transparency in reporting helps build trust and accountability.
Benefits of Impact Incentives
Flexibility
Allows the manufacturer to meet its cage-free commitment even in regions where physical sourcing is challenging.
Support for producers
Provides financial incentives to producers who meet higher welfare standards, encouraging more producers to transition to cage-free systems.
Market signalling
Demonstrates the manufacturer's commitment to animal welfare, potentially influencing market trends and consumer preferences.
Cost savings
By using Incentives, the manufacturer is able to save tens of thousands of dollars per year across Asia.
Conclusion
By engaging with Global Food Partners, the company is able to find cost-effective suppliers of physical cage-free processed eggs, and to fill gaps with cage-free Incentives. The use of Impact Incentives (cage-free egg credits) provides a viable solution for food manufacturers committed to sourcing cage-free eggs globally, especially in regions where direct sourcing is challenging. By leveraging this system, the manufacturer can support higher welfare standards, engage stakeholders, and demonstrate its commitment to ethical sourcing.
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