Introduction

Cal-Maine Foods is the largest producer of eggs in the United States, with approximately 38 million laying hens. (1) They account for about a quarter of all egg consumption in the US. Cal-Main was founded in 1969 and is based in Jackson, MS. Their eggs are mostly sold in the mid-Atlantic, Midwest, southeast, and southwest states. Cal-Maine Farm Incorporated’s principal subsidiaries are Southern Equipment Distributors, Inc., South Texas Applicators, Inc., Cal-Maine Partnership, Ltd., CMF of Kansas, LLC, and Eric Brown, Inc.

For fiscal year 2016, Cal-Maine had revenue of $1.91 billion, up from $1.58 billion for fiscal year 2015. Net income for 2016 was $316 million, up from $161 million in 2015. (2)

 

The Modern US Egg Industry (3)

In the US in 2016, 365 million laying hens laid an average of 279 eggs each, up from 352 million laying 276 eggs each in 2015. This totaled 102 billion eggs, up from 97 billion the previous year. (4) Earlier in the 20th century, the average layer hen laid 100 eggs in a year.

At this time, there is no way to determine the sex of a chicken before hatching. Male chicks born into the egg industry are discarded because they don’t lay eggs and are not the correct breed to be raised for meat. These male chicks are sometimes discarded in trash bins, where they suffocate or are crushed to death under the weight of other chicks. In other cases, male chicks are left on the sorting conveyor belt, and are dumped, fully conscious, into a high-speed grinder (a process called “maceration”). (5, video)

Chickens are very social creatures who establish a specific hierarchical order through pecking (“pecking order”) when leading natural lives. Given the confinement egg-laying hens face, they are unable to establish this order. To prevent damage from excessive pecking, most laying hens have a portion of their beaks amputated (beak “trimming”) without anesthesia. Up to 2/3rd of the beak may be removed, generally with a heated blade.

A chicken’s beak is a highly sensitive organ of touch and taste. It is a main means by which chickens explore their surroundings and interact with each other. In addition to denying the chicken the ability to explore her world, the process of amputation causes tissue damage and nerve injury, as well as acute and sometimes chronic pain. Scar tissue and/or neuromas (a tangled mass of nerves) can prevent a newly debeaked chick from eating, leading her to starve to death.

Because of the pain this mutilation causes, debeaking was banned in Switzerland in 1992 and Denmark in 2014. It is illegal in Sweden, Finland, and Norway. Beak amputation is scheduled to be phased out in Germany in 2017. (6) Hens in battery cages where the birds haven’t been debeaked are subject to painful feather pecking and even cannibalism.

The vast majority of laying hens are kept in battery cages; as of 2016, only 10% of layer hens in the US were being raised cage-free. (7) These small, barren metal cages generally hold 5-10 birds, and are stacked in multiple rows, 3-5 tiers high. The industry standard is to allot each bird as little as 67 square inches, a significantly smaller space than the 93 square inches of a sheet of 8.5” x 11” writing paper.

Because of the way the hens are packed together, they are unable to move freely, let alone spread their wings. Combine this with the nature of the bare wire cage, and hens cannot undertake any of their important natural behavior, such as dust bathing, nesting, perching or foraging. They also suffer from physical injuries and ailments from lack of exercise and being pressed against the wires of the cage. For example, her lack of exercise, combined with the nutrient drain of constant egg production, greatly weakens her bones. According to one study, up to a quarter of all hens have suffered from broken bones by the end of their laying cycle. (8) Hens can also become trapped in the wires of the cage, or collapse from “cage layer fatigue,” leaving her unable to reach food or water, causing a slow, painful death.

Given the price premium for large and extra large eggs, today’s hens have been selected for those breeds who produce the largest eggs. The process of passing oversized eggs often causes cloacal prolapse, where the oviduct – the outer end of the reproductive tract – fails to return to the body after an egg is laid. After a prolapse, the hen can hemorrhage or develop an infection. Given that the hen cannot retreat to a nest, the oviduct can be pecked at by the cage-mates, sometimes leading to full-on cannibalism.

Given the density of waste in barns that hold thousands of birds, levels of ammonia are often very high – so high that hens’ eyes, skin, and lungs can burn. Hens can also develop chronic respiratory disease.

Although hens naturally live 5-8 years, modern laying hens are “spent” after 1-2 years of intense egg production and the stress of confinement. To remove them from their cages, workers called “catchers” grab hens by one or both legs, carrying several birds in each hand before tossing them into crates. The process often re-breaks bones or causes new breaks, as well as causing other skeletal trauma.

Hens who are killed on farm are often discarded alive; still-living hens have been found at landfills and crawling out of composting piles of dead chickens. Those destined for slaughter face additional traumas. Spent hens are accepted at only a few slaughterhouses in the US, so the hens face long journeys in open trucks. They are deprived of food and water before and during the trip. Extremes of heat or cold add to the burden of being jostled about with freshly broken bones and mangled bodies.

Birds are not covered by the Humane Methods of Slaughter Act, so there is no federal requirement that the spent hens be rendered “insensible to pain” before they are shacked and killed. Bruce Webster, a poultry scientist at the University of Georgia, notes that at facilities where stunning is used, spent layer hens are even more likely than broiler chickens to receive inadequate stunning. (9) Birds who are inadequately stunned are more likely to miss the throat cutting, and end up boiled to death in the scalding tank.

The YouTube video “What’s Wrong With Eggs?” describes conditions for hens in the modern egg industry.

 

Cal-Maine Contamination

Because of contamination on one of its Iowa farms, Cal-Maine ultimately recalled nearly 10 million eggs in an ever-expanding 2010 salmonella outbreak. Sample coverage: “Cal-Maine Adds 800,000 Dozen Eggs to Recall.” CBS News.

Cal-Maine’s Ohio Fresh Eggs in Johnstown, OH shipped salmonella-contaminated eggs to Arkansas, California, Illinois, Iowa, Kansas, Missouri, Oklahoma, and Texas during October 2010. It issued a recall for all these eggs. Sample coverage: “More eggs recalled after salmonella found at Ohio farm,” NBC News.

Cal-Maine Investigation, Texas

Over the course of five weeks in November 2010, an investigator went undercover at Cal-Maine’s facility in Waelder, TX. (10) The report and video documented:

• Birds trapped in cage wires, unable to reach food or water. (Cage wires can trap hens’ wings, necks, legs, or feet. Other birds trample the weakened animals. Being trapped away from food and water results in a slow, painful death.)
• Live birds roaming outside their cages, some falling into manure pits.
• Injured birds with bloody feet, open sores, and broken legs.
• Eggs covered in blood and feces.

In the aftermath of this expose, citizens of Travis County and Gonzales County sued the Texas Public Health Commissioner, the Texas Commissioner of Agriculture, and the Texas Animal Health Commission for their failure to protect public health, public safety, and animal welfare in accordance with Texas law. Facilities with conditions like those at Cal-Maine’s Waelder farm have had their eggs recalled in the past. (11)

Sample coverage: “Video shows bird abuse at Cal-Maine Foods egg farm in Texas,” Dallas News.

The Future

Cage-free egg production is the future of the industry in the US. More states are banning battery cages, while more and more restaurant chains, grocery chains, food manufacturers, food service providers, and others have switched or have pledged to switch to cage-free eggs. (12) This process began in earnest in 2015, when McDonald’s pledged to transition to cage-free eggs by 2025; McDonald’s buys about 3% of all eggs in the US. As of March 2017, those who have pledged to go cage-free represent an estimated 70% of US egg demand. (13)

In 2015, Cal-Maine announced it was no longer building new facilities with traditional battery cages. They market eggs that carry a variety of labels, depending on how they are housed and fed: cage-free, omega-3 or vegetarian. (23) However, “natural” and similar labels are not all they are cracked up to be. (14)

MISC

As of June 25, 2017, Cal-Maine (CALM) was trading at around 38, giving it a market capitalization of about $1.85 billion. (15) The price/earnings ratio varies by site, with Marketwatch saying N/A (16), NASDAQ saying 5.77 for 2016 and 0.04 for 2017 (17), and YCharts saying 190 for February (18). Its Its 52 week range has been 35.10 – 46.71. CALM’s one year return is -7.8% (19).

In the spring of 2015, avian flu broke out on farms across the Midwestern states. The subsequent egg shortage led to a spike in egg prices, resulting in greater profits for producers – like Cal-Maine – whose farms and suppliers were not affected by the outbreak. Since then, however, earnings have taken a hit as prices dropped. Cal-Maine continues to expand, however. In November 2016, Cal-Maine bought Foodonics’ 1.6 million hen operation. In March, 2017, they bought Happy Hen Egg Farms in Texas; Happy Hen had a 1.2 million hen capacity operation when it was taken over. (20)

Cal-Maine donated $591,211 in a failed effort to oppose 2008’s Prop 2 ballot initiative in California, which phased out battery cages in the state. They were the largest contributor of any affected company. (21) The Center for Media and Democracy created a Sourcewatch page for Cal-Maine Foods, although it hasn’t been updated for some years. (22)

In 2013, Cal-Maine settled a portion of class-action claims in a series of antitrust lawsuits that had been pending in Pennsylvania federal court. Egg buyers accused the company and others of conspiring to reduce domestic egg supplies and inflate prices. Cal-Maine agreed to pay $28 million to settle those claims. (23)

June 2017