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Egg production: conventional or cage-free?

Carlos Omar Trejo-Pech (Department of Agricultural and Resource Economics, The University of Tennessee at Knoxville, TN, USA)
Susan White (Department of Finance, Robert H. Smith School of Business, University of Maryland, College Park, Maryland, USA)

Publication date: 17 July 2021

Issue publication date: 12 October 2021


Research methodology

This case was primarily researched using academic research papers, industry reports (Egg Industry Center and others), and finance databases including Standard and Poor’s Capital IQ. Regarding the cost and investment budgets, the case relies mainly on an experiment conducted by the Coalition for Sustainable Egg Supply, updated by the authors of this case.

Case overview/synopsis

Eggs produced by cage-free birds, while more expensive than conventionally produced eggs, are gaining in popularity among consumers who want only eggs that are produced more humanely. A number of major distributors, including Whole Foods, McDonalds and Starbucks have pledged to sell only cage-free produced eggs by 2025. Several states including California, Oregon and Michigan have passed laws limiting conventional egg production. The case provides costs and industry information and needed to project free cash flows and risk-adjusted opportunity cost of capital and perform break-even capital budgeting analysis of the two egg production alternatives.

Complexity academic level

This case is appropriate for graduate corporate finance courses. It is particularly appropriate for agribusiness finance courses. A preliminary exercise was used during the fall 2018 in a land grant university, just after the “Prevention of Cruelty to Farm Animals Act,” also known as Proposition 12, was passed in California in favor of cage-free egg production. The exercise was revised and used in the fall 2019 in the same class. This extended version of the case, was classroom tested in the fall 2020 in an agribusiness finance graduate class, with agricultural economics and business students enrolled.



Disclaimer. This case is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.


Trejo-Pech, C.O. and White, S. (2021), "Egg production: conventional or cage-free?", , Vol. 17 No. 4, pp. 462-493.



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