Subscribe
Share
Share
Embed
Eggheads is the go-to podcast for egg industry professionals who are interested in leadership and innovation in the egg world. Host Greg Schonefeld explores the evolving world of modern egg farming, from the latest in cage-free innovations and organic certifications to navigating the economics of large-scale production. Whether you're an egg producer, supplier, or involved in poultry genetics, this show provides the insights and expert discussions you need to thrive in the industry. Crack open the science, strategies, and stories behind the egg industry’s biggest challenges and opportunities.
Jennifer Volz:
Male chick culling can be solved. The technology exists, it's proven, it's accurate. It can be implemented in small hatcheries, large hatcheries. So with 1 to 2 cents per egg, the problem can be solved.
Greg Schonefeld:
I'm Greg Schonefeld, and this is Eggheads. For a long time, hatcheries have had a problem. They supply layer hens to egg producers, so when they breed their birds, they're really looking for female chickens. But obviously you can't control whether a given egg is going to produce a male or female, so when they hatch, the females are separated out. And without any clear use for them, the males typically get culled. Now obviously. That's not ideal from an animal welfare standpoint, but it also means a waste of time and resources on the part of the hatchery.
Pretty much everyone acknowledges that this is a problem, but clear solutions have been elusive. We've talked before on the show about the concept of in-ovo sexing, the idea that you can determine the sex of an egg before it hatches. In the past, the methods for achieving that were costly and cumbersome, but one company has developed a new piece of tech that they think could completely change the game.
Jennifer Volz:
The potential of scanning eggs with MRI and analyzing the pictures with artificial intelligence opens the door to a whole world of possibilities.
Greg Schonefeld:
That's Jennifer Volz, the Head of Global Business Development at Orbem, a company based in Germany that's trying to use their revolutionary MRI technology to put an end to the practice of male chick culling. And the focus on poultry makes sense when you find out who the brains are behind the operation.
Jennifer Volz:
Orbem has three founders. Two of them have their background in biomedical imaging, so they are kind of the brains behind MRI and making MRI faster with artificial intelligence. And the third founder is a veterinarian.
Greg Schonefeld:
Jennifer herself is an engineer by training and wasn't aware of the chick culling issue until she encountered Orbem, sort of by chance.
Jennifer Volz:
I had a network at the University in Munich and I had heard people talking about this crazy bunch of people that bring eggs into their labs to scan them with an MRI scanner. And anyone would wonder why is anyone doing that?
Greg Schonefeld:
And then after joining the company, Jennifer came to appreciate the scale and complexity of the problem and the incredible potential for their technology to make a difference.
Jennifer Volz:
Once you dive into the topic, it's actually amazing how much impact you can have by scanning eggs with an MRI scanner, analyzing them and sorting out unfertilized eggs before incubation to feed them to the people.
Greg Schonefeld:
Today, I sit down with Jennifer at Orbem's American headquarters in Houston, Texas where they're quarterbacking the company's expansion into the U.S. market. We get into why there seems to be a general push to solve the issue of chick culling, what Orbem sees as their advantages over other in-ovo sexing methods and the general impact that their tech could have on the poultry industry.
Can you just explain in simple terms what leads to chick-culling and why it's a problem?
Jennifer Volz:
Of course. Over the last decades, the poultry industry and the genetics in poultry have improved so much that two different strains of chicken were basically developed. There's the breeds that can build up muscles really quickly, and then there's other breeds that are optimized for laying as much eggs as possible. And for that latter strain, there's of course a big problem for all the male laying hens because they cannot lay any eggs. At the same time, they also don't build up muscles fast enough to be used as broilers for meat. So that puts the male laying hens in quite a pickle. And currently the most common industry practice is to hatch all the chicks, separate the males and the females, and then cull all the male chicks on the first day of their life.
Now over the last 10, 15 years, a lot of technologies have been developed that can detect the sex already inside of the egg. And with those solutions, it's possible to remove all the male eggs during incubation before the embryos start to feel any pain and only hatching the females so no chicks have to be culled.
Greg Schonefeld:
Yeah. Can you talk some to the scale of the issue with the chick culling? I mean, is this a U.S. thing? Is it a global thing? I mean, how many birds does it impact?
Jennifer Volz:
Currently, the industry practice is that all the male chicks are getting culled after hatch. In some countries in Europe, we see that hatcheries have implemented technologies that can stop the practice, but it's billion of baby chicks around the globe that are being culled still today. Step-by-step, different countries are making steps to stop it. There's some in Europe. Recently actually Brazil also, one egg producer decided that they want to stop the chick culling. So step-by-step, it's getting less.
Greg Schonefeld:
What are some of the factors that have made this historically a difficult problem to solve?
Jennifer Volz:
So in science, there have been many technologies being used in order to detect whether an embryo that's developing inside of an egg is male or female. You have to extract some kind of liquid and then you can run a DNA test, for example. Those methods have been around for decades already. However, to turn such a technology from the lab bench into a commercializable product is a big task and it requires a lot of modern technology. For example, methods that can collect data and process data in a commercial scale. In general, having an invasive method that goes into the egg extracting a liquid is probably not the most attractive thing to do. You don't want to risk biosecurity or the hygiene in your hatchery. But also with advances in automation, those methods and technologies have become better and more accurate and more safe.
Now for Orbem at some point, once we saw that there is a market for in-ovo sexing, there is the demand from consumers for a higher level of ethics in the production of eggs, there was a market that we could deliver to where we could enable the production of more ethical eggs. We knew that our product needs to be very fast. Hatcheries, the facilities where installing our technology, they process huge volumes of eggs per year. I think more than any consumer can imagine, 30, 40 million females are produced per hatchery, so 100 million eggs need to be processed in a year. That means the product needs to be very fast.
Greg Schonefeld:
I understand Orbem uses an MRI technology, can you talk just a little bit how that works? And you mentioned MRI typically needs a lot of, let's say, human intervention to run it properly, but you're combining with AI to automate it. Can you talk a little bit more about that?
Jennifer Volz:
So we are basically combining MRI technology with artificial intelligence, and by doing that we turn it from a very slow and expensive technology into a very fast technology that is affordable and makes it viable to apply it in a industrial environment like a hatchery.
The machine is very straightforward to use. It uses standard automation equipment that you see in any hatchery. Our operators basically take a trolley of eggs from the incubator, bring it to the machine. The trolley gets automatically unloaded, the eggs are taken through the MRI machine. Every egg gets scanned, it gets classified by the algorithms of the artificial intelligence. It's either male, female or a clear unviable egg. And then all the females are sorted out, completely automated, put back onto a setter tray, loaded it back on the trolley so the operator can take it back to setters.
Greg Schonefeld:
So if I picture like an MRI scanner when I'm getting my knee scanned, does it look a lot like that?
Jennifer Volz:
Yes and no. The image is the same. It's a 3D image that depicts the interior of your knee or the interior of the egg. However, what we are doing at Orbem is we analyze the image with artificial intelligence that's capable of making sense of an image that's very, very low resolution. Which basically means the image acquisition doesn't take half an hour, but only a split second, and the AI can still pick up the biomarker that is necessary to differentiate between male and female.
Greg Schonefeld:
So where I may go into a doctor's office and someone helps me get situated correctly, they scoop me into the MRI, I'm sitting there for 10 to 15 minutes, and then my doctor calls me three days later, you're kind of doing all of that with no person involved and in a split second.
Jennifer Volz:
Yeah. Right to the point.
Greg Schonefeld:
It's kind of amazing the scale that you've got to hit. If there's 100 million eggs that are going to go through this, it's got to be fast.
Jennifer Volz:
Yeah, and that's really at the core of Orbem's technology at our innovation. We brought down the scan time from 30 minutes to a split second. That means per module of our machine, we can process more than 3,000 eggs per hour. Now we can have several systems in a row in parallel, fully automated, which allows us to scale up to 24,000 eggs per hour. Still, you need only one operator to bring the trolleys to and from the machine. And it allows the hatchery to produce the flock sizes that are required in the U.S., like 300,000 females in a flock, or for a full hatchery, 40 million females per year. You can do that with our machine.
Greg Schonefeld:
At one point I understood, on a brown bird breed, they've got maybe something in their coloring that differentiates the male or the female inside the egg that the MRI picks up on.
Jennifer Volz:
There are indeed certain breeds and layers where females and males have a different feather color. However, the sensor that you would use to detect the color of the feathers is called hyperspectral imaging. This technology only works for brown eggs where the color differs. With MRI, we are looking at a different biomarker, the reproductive organs, which are the same.
Greg Schonefeld:
Ah, okay. Interesting. So I guess the idea has been kind of from the beginning to use this technology to impact the poultry industry.
Jennifer Volz:
Absolutely, impact the poultry industry as a starting point. And now we are also starting to explore some other industries, starting with maybe other samples that look a bit like an egg, like scanning avocados, looking behind the skin of an avocado to see if the fruit is okay or if it's damaged.
Greg Schonefeld:
I understand Orbem didn't really, the in-ovo sexing wasn't the first plan, it was something else. Is that right?
Jennifer Volz:
That's correct. When I joined the company, we were actually focused on the fertilization status detection before incubation, which I thought is amazing. Just the thought of rescuing those eggs before they are put into an incubator, rescuing the unfertilized eggs and potentially feeding them back to people, maybe to people that are in need for food, is such a high-impact application.
Greg Schonefeld:
So in other words, that would be a hatchery, I guess a breeder in the egg market or in the broiler market. And if you can detect whether the egg is unfertilized, then that egg could potentially be a marketable egg?
Jennifer Volz:
Absolutely. There are of course certain regulations around eggs that are used for human consumption, and these regulations are not made for the kind of eggs that we can sort out of the broiler market or the breeder market. So we have to see and we have to work together with the whole industry, even with legislators, I think in order to enable such a use case and to enable the repurposing of such eggs for human consumption, but having the possibility is for sure going to create some value.
Greg Schonefeld:
Okay, good. Kind of back to the in-ovo sexing and getting a picture of how Orbem has progressed, I understand Orbem is a German company, but you first went to the French market. Can you talk a little bit about that?
Jennifer Volz:
Yeah, so that was basically the big pivot point for Orbem. We were working on fertilization status detection, and out of nowhere, France decided to follow Germany and place a law that bans the culling of male chicks. They gave the industry a two-year period where they had to find a solution that can detect the sex in-ovo and implement it in the hatcheries, and that opened a big opportunity for us. We knew that with MRI we can look behind the egg and detect the sex of the developing embryos. We didn't have a final product back then and we didn't put much development efforts into it, but we saw the opportunity, we started to talk with the industry players, found some partners, and then developed the product in very short time, one and a half years to a full commercial scale and managed to deliver the product on time and on spec on the 1st of January, 2023, when the law came into place.
Greg Schonefeld:
Germany at that time had a stipulation that eggs had to be in-ovo sexed within seven days and France had a different standard. Can you talk a little bit about that?
Jennifer Volz:
In Germany at the beginning, we thought we don't have a chance to enter the market for in-ovo sexing, because the law stated clearly that it has to be done before day seven. The biomarker that we are detecting with MRI, the reproductive organs, they only start to differentiate between males and females starting from day six, which means on day seven, the difference is very minimal and very difficult to detect. We decided to develop in-ovo sexing based on the market conditions in France for day 11 and 12, because we knew that the eggs are somewhat stable enough on those days to be taken out of the incubator.
That was one of the big worries that the industry had. Usually you like to bring the eggs into the setter, leave them there, and on day 18, you take them out to transfer them to baskets. And in the meantime they're getting rocked inside of the setter, but you don't want to interfere with them or interrupt the embryonic development process. On day 11 and day 12, we thought they must be somewhat stable. And at the same time, we also knew that the biomarker that we are detecting, the reproductive organs, are significantly different.
We didn't have a chance to enter the German market with that product at that time. However, one year after we went live in France, Germany reassessed their law. And the initiator was probably that there was no technology out there that can do in-ovo sexing before day seven. There was literally no solution. So the German state decided to initiate a study, they funded a study to analyze the pain perception of the developing embryos, and that study resulted in that the pain perception starts on day 13 the earliest. Based on those scientific findings and the fact that there's no solution available that works before day seven, they revised the law. The new law now states that in-ovo sexing has to be done before day 13, which allowed us as a consequence to enter the German market as well.
Greg Schonefeld:
And I understand you guys have gone beyond that. So France, Germany, where else is your product already in place and working?
Jennifer Volz:
Yeah, so we also have machines in the Netherlands. The Dutch market is importing a lot of chicks to the German market. Chicks, sometimes even eggs. So they also have to follow some of the German laws. Very exciting was also Switzerland where the whole industry got together and decided that they want to stop the male chick culling. No legislation involved, just the industry saying we want to make this change and we want to produce eggs more ethically. So we managed to capture the Swiss market. And then our latest installation was in Norway. Right now, we are also preparing for two installations in the U.S. and we are really excited to share the news soon.
Greg Schonefeld:
In those countries where you've already put your product in practice, are most eggs in those countries running through your system?
Jennifer Volz:
I don't know the exact market share also because not all the data is publicly available, but what I can say is that we have in-ovo sexed more than 150 million eggs already. In Switzerland, I can tell you for sure it's 100% of the market because there's two hatcheries and we are installed in both of those facilities.
Greg Schonefeld:
Because in Germany today, I mean your options are raise male chicks or do some kind of in-ovo sexing, right?
Jennifer Volz:
That's the case. The hatcheries can choose between two products to sell to their customers. Either it's a female that was in-ovo sexed, or it's a female where the male brother was reared. The German law officer see certain rules how long the male has to be reared and how heavy it has to be at slaughter. And that was common practice at the beginning when the law was introduced, but over the last years, this was reduced significantly because it's not cost-effective. It also turns out that it's not sustainable because the male layers require a lot more feed than commercial broilers, and the related costs are also significantly higher than the in-ovo sexing technologies.
Greg Schonefeld:
And what are the costs in in-ovo sexing today or in your product specifically?
Jennifer Volz:
If consumers are willing to pay 1 to 2 cents more per table egg in the supermarket, the male chick culling can be solved. The technology exists, it's proven, it's accurate, it can be implemented in small hatcheries, large hatcheries. So with 1 to 2 cents per egg, the problem can be solved.
Greg Schonefeld:
And for this to get put in place, you just need to be able to install your equipment into these hatcheries. Is that more or less what it takes to put this in place?
Jennifer Volz:
Yeah, that's correct.
Greg Schonefeld:
That's it? Okay. And how hard is that to do?
Jennifer Volz:
It's not that difficult. The installation process for our machines takes eight to 12 weeks. It depends on the size of the installation, but if it's a full eight module setup, then 12 weeks, we go in, we bring in the equipment, we install the MRI systems, all the automation. We do quality assurance, we train the personnel, commission the equipment, and after 12 weeks the machines are up and running.
Greg Schonefeld:
So I guess given you've already had the success in Europe, what are your plans in expanding to the U.S. potentially?
Jennifer Volz:
In January 2024, we came to the IPPE show. That was our first step into the U.S. market and we were just trying to scout the market. We were really amazed that big industry players approached us to understand more what we can offer regarding in-ovo sexing. When we went to the conference, we were under the impression that fertilization status detection is a product that's relevant for the U.S. market. But of course, we had those conversations and already in the summer of 2024, we started with the preparations for our entry to the U.S. market. There's of course a lot of paperwork that needs to be done. We had to decide where to open up our office. Now we have our office here in Houston, Texas. Right now, we have 10 employees here on site field engineers. We have technical customer support here in the U.S., basically building up our operations in the U.S. market. And we are currently partnered up with two players in the U.S. market to bring in-ovo sexing also to the U.S.
Greg Schonefeld:
I mean, it sounds like at the conference you got positive feedback. In general, are there other signs you've seen that says the U.S. is ready for this in-ovo sexing in general and ready for Orbem's product?
Jennifer Volz:
More and more people and stakeholders are talking about it. Some activities are kind of happening behind the curtain and only if you pay attention to it, you really see them. But just to name some examples, NestFresh put in-ovo sexed eggs on the retail shelves this summer. The NestFresh eggs are on the supermarket shelves and can be bought. Walmart has updated their animal welfare policy related to in-ovo sexing, asking their suppliers to look into the topic. Also very exciting, the United Egg producers have released a standard for in-ovo sexing in order to provide some clarity for the U.S. egg producers, what requirements need to be fulfilled in order to put a label of in-ovo sexing or more ethically produced eggs on their packaging.
Greg Schonefeld:
So those sound like some big movements. To take it to the next steps and get it really maybe one day nationwide like you see in Germany and France, what do you think needs to happen there?
Jennifer Volz:
Nationwide in the U.S. is I guess difficult, just because of the sheer size of the market, but it's already happening. Some of the hatcheries in the U.S. are already equipped with machines for in-ovo sexing. They are ready to be used. If you're an egg producer, just go to your hatchery and order an in-ovo sexed flock. It's that easy. Of course, the price is going to change for the chicks, but besides that, it's the same product and the same hen that you've been raising before.
Greg Schonefeld:
Does it start with the retailers or does it start with the producers wanting to purchase it? I mean, it sounds like the hatcheries already have it available. You just said that if a producer wants in-ovo sexed eggs, they're available. I guess what steps need to happen for that to become, let's say common practice?
Jennifer Volz:
I think it's basically all of what you just described. Hatchery, producer and retailer need to sit together and find an agreement how this can be set up regarding the commercials. The technology is there. I think everyone we've been talking to in the U.S. wants to stop the culling of baby chicks. Nobody wants to do it. Once the commercials are evened out, there's no reason why in-ovo sexing shouldn't be launched on a larger scale.
Greg Schonefeld:
I guess if you're in business development, who do you need to convince today? Is it the hatchery? Is it the producer? Is it something beyond that? I guess who do you need to convince and what's your pitch?
Jennifer Volz:
Our partners, of course, are the hatcheries. That's where we are installing, that's users that we are interacting with on a daily basis. So for us, that's the most important stakeholder. On the other hand, most of all Orbem being new in the U.S. market, we want to understand the industry. We know that every country has its own uniquenesses. In Europe, you have a lot of small countries. In the U.S., you have this big market, but it's definitely thinking differently to what we're used to. So right now, being new in the U.S., we want to understand the market. We're talking to everyone who wants to talk to us, to producers, to retail, to hatcheries, associations, to understand them, and at the same time also share our knowledge with them.
Greg Schonefeld:
So we're talking about the implementation here. You had an interesting comment in the pre-interview about cage-free implementation in the U.S. Can you speak some to that?
Jennifer Volz:
A lot of people compare the introduction of in-ovo sexing with the introduction of cage-free, because yeah, it's both initiatives around the topic of animal welfare. However, a key difference is that the implementation of cage-free was a very intensive egg for egg producers. They had to rebuild their farms and invest heavily into new equipment. However, with in-ovo sexing, it's only 10, 15 facilities across the country that actually need to implement this technology. If you're thinking about the huge hatcheries in the U.S. that produce 40 million females per year, if we just install our equipment in three facilities of that size, you're already capturing half of the U.S. market. So the implementation will be much faster.
I'm of course not an expert in the differences between cage and cage-free, but of course, taking care of a completely new way of producing eggs over the lifetime of a hen is much more complicated than one step that's happening fully automated throughout the incubation process. Once the incubation process is slightly adjusted and the new workflow is being introduced in the hatchery, the impact for the rest of the hatchery is only positive. Suddenly the chicks don't need to be handled anymore. Of course, in the U.S., the females are still getting de-beaked and they're getting vaccinated, so there is still some chick handling steps after hatching. But not putting the chicks through the strain of manual sorting is also having a positive impact when it comes to animal welfare and also to chick mortality. So the process downstream after noble sexing also get improved by introducing this technology.
Greg Schonefeld:
Do you see yourself as like a ag tech company, an MRI company? I guess, how does Orbem kind of see itself?
Jennifer Volz:
Does the ag stand for egg or agriculture?
Greg Schonefeld:
Agriculture, yeah. I got to be careful with that because the Midwesterners, they say egg. But yeah, for agriculture.
Jennifer Volz:
Okay. We see ourselves as a deep tech company. We industrialize MRI with artificial intelligence. But if you have a look at our website, we also want to go one step beyond that at some point and even scan humans. Really, the sky is the limit. And we make MRI so much more affordable by automating it and by making it faster that we see it being applied to all kinds of different samples. Eggs are the starting point and we're really proud of the impact that we can have within that industry. But we are already imagining and testing other applications within fresh produce, within plants, and in the future also humans.
Greg Schonefeld:
We had Kipster on as a guest and they are looking at the in-ovo sexing, but one day they would dream of maybe raising the males. I guess we've heard the possibility that maybe genetic modification where all the eggs would be female and that'd be another way to solve the problem?
Jennifer Volz:
Other solutions to the problem of male chick culling are heavily being researched already for years or decades. I think that's first and foremost a good thing for us because it shows that the problem is big enough to be worthwhile to look into. All those research groups that you can find that have a solution for an in-ovo sexing before incubation by genetic modifications and so on, they're making progress, some faster than others. And we are of course having a close eye at them. At the same time, we also know that it takes a lot of time and a lot of effort to bring an idea from the lab bench into an industrial application.
But in general, we as a company see a lot of other possibilities, a lot of other opportunities in the poultry industry. For example, we launched a product at the Genoscale for fertilization detection that can sort out unfertilized eggs before incubation. And it's not available on the U.S. market yet, we are using Europe kind of as our testbed to develop the product until it's more mature. But in a few months, we will also be able to offer that product to the U.S.
Greg Schonefeld:
I always find it really interesting to talk to people from more of a pure science background who are working on innovations that could impact the egg industry. It really speaks to something that we've brought up so many times that people tend to think of agriculture as an old, stagnant industry, but Orbem is just one of so many different companies using their tech to improve efficiency and make us better at producing food. If their claims are true and Orbem's tech can essentially end the issue of male chick culling for 1 to 2 cents an egg, this could be something that really leads to positive change for the industry. And to Jennifer's point, because it happens at the hatchery level, that change wouldn't necessarily lead to headaches for downstream producers.
I think it's interesting to compare in-ovo sexing to cage-free in terms of animal welfare impact on one hand, and costs and difficulty of implementation on the other. At the end of the day, it's going to be regulation and consumer demand that drive the adoption of these new farming practices, and I'll be fascinated to see if that demand materializes over the next few years.
So with all that being said, I just needed one more scientific insight out of Jennifer. Jennifer, how do you prefer your eggs?
Jennifer Volz:
Well, my grandma is from India and she introduced me to this amazing Indian omelet, which is very simple, just eggs and a bit of chopped fresh chili. And that's delicious.
Greg Schonefeld:
If you enjoyed this episode, please share it with a colleague or friend. Word of mouth really helps us to grow the show. And to make sure you don't miss an episode, follow us on Spotify or Apple Podcasts. Until next time, I'm Greg Schonefeld and we'll talk to you soon.