Presented By: Brian Eivers Sales Director The Nest Box Egg Co. Ltd Enriched v Conventional Laying Cages – Managing the transition of the Cage ban: 2012 Presented By: Brian Eivers Sales Director The Nest Box Egg Co. Ltd

Introduction Thank you for the opportunity to share with you my experiences of the 2012 “battery” or conventional cage ban We are a second generation family owned business with 40 years experience in the production packing and processing of free range, enriched cage and organic eggs Employ 50 people who grade 3,000,000 eggs each week for the Irish, UK and Middle East market 20% market share of the retail and foodservice market in Ireland

What was ‘2012’? The welfare of laying hens directive On the 1st January 2012, all standard 550 sq cm battery cages became illegal for egg production, and a 750 sq cm cage (termed the enriched cage) was the minimum allowed for caged egg production ENRICHED CAGES

What was ‘2012’? The welfare of laying hens directive The cage ban was absolutely not welcomed by our industry. It was seen as change for changes sake. Huge investment of €30 per bird was required, this in a period when banks were insolvent. Would the market give a return? This gave rise to huge decisions for producers and was quite a stressful period for individuals and companies. However, the legislation was clear in its requirement.

Producer Options Cease production Change to an Enriched cage model Producers had one of five choices, each with production consequences regarding volume and pricing per unit, as well as investment consequences: Cease production Change to an Enriched cage model Change to a Barn production model Change to a Free Range production system Change to an Organic production model

Irish Production – Number of Laying Hens Egg production in Ireland 2010 – The Challenge Irish Production – Number of Laying Hens Farming Method No. of Farms No. of Hens & % Production Av. Hens / Farm Cage 85 1,200,000 & 61% 14,117 Free Range 130 700,000 & 36% 5,385 Organic 22 60,000 & 3% 2,727 Totals 230 1,960,000 8,347 Total market value*: €77.5m *Kantar world panel Jan 2011

Will the banks provide finance? Considerations for investing 2010-2011 Decision What so Retailers want What do Food service and catering customer want What the Legislations require What do Irish shoppers want Will there be a grant? Will the banks provide finance?

The way forward Following consultation, it was evident that the demand for caged egg production would stay 40% grant to help with the building of new facilities The Department was open and supportive, realising the extent of change imposed. As there were relatively few projects, the Department personnel knew them individually Some producers chose not to continue in production with others willing to invest more. This led to significant consolidation

The Way Forward - Financing the Move Banks were not in a mood to lend money due to the recent financial crash This was made more difficult and painstaking as banks had not lent money to the cage sector in many years Detailed and comprehensive business plans were required in some cases, which was yet another challenge Significant level of security required which included personal guarantees, access to the grant, a signed packing station contract and own funds in varying proportions

2012 Enforcement On the 1st January 2012 all battery cage eggs were illegal. This was policed and enforced in the strictest sense by the Department This placed a lot of pressure (some would say focus!) on the industry to be ready. Old system had to be out and new system in at a very precise point in time There was severe market disruption as 2011 saw effectively two caged production systems producing side by side leading to surplus eggs. In 2012 this reduced to one leading to massive shortages This created market instability and placed significant strain on the industry and its customers. This was short term however

Post 2012 Challenges Enriched colony system still suffers from a poor image from consumers Industry would have a high opinion of the system but unfortunately not shared outside the system Recent announced move from all of the UK retailers from caged eggs to “cage free” Remains to be seen what happens in the ROI

2012 Results Producers numbers fell, and flock sizes increased leading to economies of scale, savings in labour, efficiencies at producer and packing level as well as distribution efficiencies The industry was left with a brand new system with brand new technology which offers better control to the producer delivering better production results We are now producing eggs as we want to. A better environment for both animal and human 2012 provided an opportunity to catch up other countries in terms of scale which would have intimidated before

Irish Production – Number of Laying Hens No. of Hens & % Production Where we are now Irish Production – Number of Laying Hens Farming Method No. of Farms No. of Hens & % Production Av. Hens / Farm Cage 37 1,877,594 & 57.5% 50,746 Free Range 159 1,274,715 & 39% 8,017 Barn 7 36,660 & 1.1% 5,237 Organic 26 79,095 & 2.4% 3,042 Totals 229 3,268,064 14,271 Total Bird numbers: 3.27m (1.96m 2010) Total market value*: €119.7m (+54%)over 2011 *Kantar world panel Jul 2016

Thank you and Questions