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Jackson-based company leads U.S. in egg production

Cal-Maine Foods well positioned for market turnaround

JACKSON — Like nearly all agricultural commodities, prices for eggs have not be profitable in the past year. But the nation’s largest commercial egg company, Cal-Maine Foods, is uniquely positioned to benefit when prices improve.

“We’re seeing a real downside in all of agricultural right now,” said Mike McAlpin, president of the Mississippi Poultry Association. “All the commodity groups have low prices. But history tells us all of agriculture is cyclical. And when things turn around, Cal-Maine will be in an excellent position.”

McAlpin said Cal-Maine Foods has been aggressive in purchasing other egg companies throughout the country, which will put them in a good position when the market turns towards profitability. He credited the company with having an excellent management team that combines the experience of the people who started the modern commercial egg business combined with the aggressiveness of the next generation.

“They have one of the best management teams of any company in the U.S.,” McAlpin said. “This company helps the Mississippi economy, and the economies of all the states they are located in.”

Cal-Maine Foods CEO Fred Adams said that demand for eggs has been very good in the past year with increased consumption. However, supplies have been greater than the demand resulting in unprofitable prices.

“Exports have continued to be poor, although they are improving some as we go into the spring and summer of 2000,” said Adams, a Mississippi native who founded Cal-Maine as Adams Foods in 1957. “Feed prices have been very favorable with ample supplies of corn and soybean meal, which are our two primary input items. The outlook is for continued favorable feed prices. Also, in the last six months we are seeing an adjustment in baby chick placements which should reflect lower end numbers in egg supplies in the months ahead. So we are encouraged by the outlook, although the last 12 months have been poor.”

Adams said the fluctuations in egg prices are a normal part of their business.

Cal-Maine Foods, which began operations in 1969, has facilities in 14 states and markets eggs in 26 states. The company has about 2,000 employees, with about 300 of those located in Mississippi. About 80% of production is on company owned farms, and 20% is produced by contract growers.

As a fully integrated producer, Cal-Maine controls every aspect of production, processing and distribution. The company produces chicks in its own hatcheries and manufactures carefully formulated feed for its laying flocks in its own feed mills.

Cal-Maine’s facilities can hatch 13 million pullet chicks per year, grow 7.8 million pullets per year, house 12 million laying hens, produce 600 tons of feet per hour and process 165,000 dozen eggs per hour. In 1999 Cal-Maine sold about 426 million dozen eggs, representing about 10% of all eggs sold in the U.S.

Adams said there has been a tight labor market. But their farms and plants have been automated to a big degree over the past few years, so the labor requirement is not nearly as great as it was five to 10 years ago.

Eggs purchased by consumers have never been touched by human hands. Eggs are produced, roll out on a conveyer belt to an egg washer and grader and inspection station. Then the eggs are sized automatically and moved right into the final package.

“It is a very highly mechanized and automated system,” Adams said. “The hens are kept in environmentally-controlled housing so we can control temperature at near ideal conditions.”

Twenty-five years ago egg production was affected by extremes of hot and cold weather. But with the environmentally-controlled housing, egg production can continue no matter the season.

While Cal-Maine isn’t involved in genetic breeding to maximize production, the company works with national and international companies that work on improving rates of lay, shell quality and interior quality. Adams said genetics play a big role in improved productivity and efficiency.

While most of its products are sold under the Cal-Maine label or a retailer’s private brand, the company also produces two lines of specialty eggs. Under license from England’s Best Inc, it produces Egg•Land’s Best eggs, which studies show cause no increase in serum cholesterol when eaten as part of a low fat diet. Cal-Maine uses a proprietary vegetarian feed supplement and adheres to special production control standards to produce the eggs.

The company also produces “Farmhouse” brand eggs, which come from hens that are not caged and provided a diet of natural grains. Adams said both types of specialty eggs command premium prices, and offer an excellent opportunity for increasing sales to customers with special needs and preferences.

Cal-Maine has grown considerably since 1989. It completed nine acquisitions, built six state-of-the-art production and processing facilities and one pullet growing facility, and participated in the construction and operation of a joint venture facility.

The egg-laying industry has experienced growing concentrations of production with 10,000 egg-producing operations in 1975 compared to 900 in 1996.

“With a solid foundation of facilities and a leading market share, Cal-Maine is well positioned to continue capitalizing on the consolidation trend,” Adams said.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

About Becky Gillette

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