Handan, China (Reuters)-In a new facility in northern China, behind a row of sealed red incubator doors, about 400,000 chicks are hatched every day. This is the rapid modernization of China’s US$37 billion egg industry, the world’s largest egg industry Part of the supply chain.

With China's comprehensive reform of all kinds of production from pork to milk and vegetables, farmers who raise chickens and lay eggs have also switched from backyards to factory farms, where modern standardized processes are expected to improve quality and safety.

This is an important step in a country where melamine-contaminated eggs and eggs with high antibiotic residues have become a series of food safety scandals in recent years. This has also stimulated demand for higher-priced branded eggs instead of eggs sold in bulk on the fresh produce market.

Yuan Song, an analyst at Sino-US Commodity Data Analysis, said: "Now, if you are a small farmer, your eggs will not be able to enter the supermarket."

In terms of handling manure and reducing the impact of farms on the environment, new strict regulations have also driven many small farmers out.

Yuan said that most egg producers now have 20,000 to 50,000 hens, which has changed significantly even from two years ago. The remaining less than 10,000 chickens may be shut down soon because local governments prefer large producers that are easier to censor.

These rapid changes are driving investment, such as the 150 million yuan ($22.6 million) hatchery in Handan, about 400 kilometers (250 miles) southwest of Beijing.

This highly automated factory is owned by a joint venture between China Huayu Agricultural Technology Co., Ltd. and Hyland International, the genetic business of EW Group. It is the world's largest layer hatchery or bird hatchery for the production of eggs instead of meat. .

By producing 200,000 hens per day, or approximately 60 million laying hens per year (one day per week for cleaning), it can meet the needs of large farms that want to buy day-old chicks in bulk," said President Jonathan Cade. Hy-Line International, headquartered in West Des Moines, Iowa.

"This is the best way to start with good biosecurity," he said. When chickens on a farm are the same age, they are less likely to spread diseases.

For pictures of China’s IMG world’s largest hatchery, please click tmsnrt.rs/2J5yeg2

Imported latest generation equipment helps speed up the throughput of the hatchery. An automatic grading machine that can process 60,000 eggs per hour divides the eggs into two acceptable sizes before they enter the incubator-even eggs will produce similarly sized chicks with the same feeding capacity.

Once hatched, the female chicks enter the automatic beak trimmer that processes approximately 3,500 beaks per hour.

Huayu’s chairman Wang Lianzeng said that the new factory only needs 20 employees, while Huayu’s old hatchery needs about 100 employees.

In industries where sales are not expected to increase much, efficiency is very important. The per capita consumption of eggs in China has almost surpassed that of everyone else, about 280 per year, and nearly 1 billion per day in the country, so it is unlikely that consumption will increase significantly.

Breeders like Huayu are trying to achieve growth by taking market share from others. In addition to the new Handan hatchery, it is building another hatchery in Chongqing, which will produce 180 million chicks annually.

According to data from the China Animal Husbandry Association, the stock of layer hens was about 1.2 billion last year.

Chairman Wang said that Huayu is also studying breeding beds and building hatcheries in Southeast Asia and Africa.

The key to industrial-scale facilities is to manage disease risks. After hundreds of people died of bird flu, the price and demand for eggs and poultry plummeted last year, even though the disease left the chickens largely unharmed.

Although this creates new opportunities for large companies to expand after other companies are forced to exit, the impact of disease outbreaks on intensive operations is much higher.

Wang said that Huayu itself has suffered an outbreak recently. Last year, the incidence of the poultry disease Mycoplasma Synovitis (MS) in Chinese breeder flocks was high. This disease will reduce egg production in laying hens.

Wang said that biosecurity is the main advantage of the new hatchery, which uses advanced ventilation and environmental control to keep the new chicks healthy.

"When you enter the hatchery, you don't know that you are in the hatchery," he said, referring to the typical smell in the old facility.

He added that disinfection is carried out at every step of the chain and workers follow strict sanitation procedures.

Wang said that a safe environment with very high biosafety standards is very important for raising chicks.

Jeff Zhou, China representative of the non-profit organization CIWF, said that given such high production pressure, improving animal welfare is not surprising.

China does not have animal welfare regulations, although some companies have begun to voluntarily phase out painful beak cutting practices, including Huayu’s competitor Ningxia Xiaoming Agriculture and Animal Husbandry Co., Ltd.

According to CIWF, Xiao Ming also supplies male chicks from hatcheries to local farmers for raising meat in a free-range environment. Huayu sells its male chickens as food for snakes, and snakes are bred in China as a traditional medicine.

Dominic Button reports. Editor of Lincoln Feast.

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