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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.
Ingmar Middelbos:
If you think about an egg, an egg is amazing. Right? It's the only protein source that if you leave it in the right conditions, it will grow an entire new life, and it's the only animal-based protein source that can do that.
Greg Schonefeld:
I'm Greg Schonefeld, and this is Eggheads. The reality is that not all the eggs we produce make it into the supermarket. Some eggs might have a strange shape, or rough shells. Those get sorted out. In hatcheries, some eggs are infertile. Those have to be sorted out as well. And then in breaker operations, what happens to all those broken yolks or all that residual liquid left in shells?
Well, that's where today's guest comes in.
Ingmar Middelbos:
My name is Ingmar Middelbos. I'm the global R&D director for animal nutrition at Symrise Pet Food.
Greg Schonefeld:
But before Ingmar made his way into pet food, he was a farm kid through and through.
Ingmar Middelbos:
I'm originally from Holland in Europe, and I grew up working on farms from neighbors, and family. And I was always drawn to that.
Greg Schonefeld:
And so, Ingmar decided to study animal science, and it was that decision that would eventually lead him to the American Midwest, and the world of pet food.
Ingmar Middelbos:
I ended up at the University of Illinois at Urbana-Champaign, and did a master's and PhD there in [inaudible 00:01:28] animal nutrition. So, specifically focusing on dogs and cats. And that's how I got exposed to the pet food industry originally, and I've been in it ever since. So, well over 20 years now.
Greg Schonefeld:
Some people might be surprised to hear that a lot of the eggs we deem to be unfit for human consumption end up feeding our pets, but as it turns out, this is nothing new.
Ingmar Middelbos:
Early '70s, the original Egg Inspection Act was put in place, and that forced, if you will, the industry to have some side tools that they could not use for human consumption. And at the time, a gentleman named Bill Darr saw an opportunity, and said, "Hey. It's still a perfectly good egg. We can use it for applications in animal feed, or pet food."
Greg Schonefeld:
In 2014, Bill Darr's company American Dehydrated Foods merged with another player in the inedible egg space to form IsoNova Technologies. That's where Ingmar went to work in 2015, and four years later, IsoNova was acquired by Symrise.
Ingmar Middelbos:
So, it's been six years with Symrise now, and I'd say we're fully entrenched in the inedible egg business ever since.
Greg Schonefeld:
Today, we're taking you inside that inedible egg business, the scale of it, how it works, and other potential future applications for inedible egg product. It's an underappreciated, but fascinating part of the egg industry, and in this episode, we're giving it some love.
If we just start simply, what is a non-edible egg product?
Ingmar Middelbos:
Yeah. It's a good question. It really starts way back in the early '70s with the Egg Inspection Act that was put in place back then. It's undergone changes and updates over the years. It's always been with the focus of food safety.
And in that act, it was defined, "What makes an egg edible or inedible?" For the most part, when we think about an edible egg, we think about the egg you buy in a supermarket, but those are just the eggs that make it through the selection process. Not every egg that is laid by a hen, ultimately, ends up in the supermarket. They might be dirty, they might be cracked, they might have an off shape, or a rough shell, or no shell at all. So, those eggs are not fit to go into the supermarket. So, those might go into the inedible egg stream.
But it's not the only way to get an inedible egg. There's a huge industry generating the eggs that, ultimately, produce broilers, and grow our meat chickens. But if you think about a chicken, a chicken lays eggs, but only about, let's say, 80% or so of them are actually fertile. So, the ones that are not fertile you can actually select them out. We do that by shining a light through it during the incubation process, and the eggs that are not fertile are selected out. Those can't go into the food supply. They have to be used somewhere else, and that also goes into the inedible egg part of the industry.
And then there's a last stream there as well, if you think about egg processing, egg breaking plants, they break eggs either to separate whites and yolks, or sometimes just to create whole egg liquid. There's eggs that don't make the grade there, or they have a broken yolk, those eggs are also captured and considered not edible, and the leftover liquid that remains in the shell after breaking it gets spun out using a centrifuge. And it's all considered not food grade. So, that's the stuff that, ultimately, ends up in the inedible egg supply.
Greg Schonefeld:
What does your geographic reach look like?
Ingmar Middelbos:
Yeah. So, well, there's two ways to answer that. There's geographic reach in the U.S., and there's geographic on North America, I'd say, and there's geographic reach globally, because when we ADF and IsoNova, it was all focused in North America, but since we're part of Symrise and Symrise is a global organization, we've expanded our model to Europe, and now to China.
So, in that sense, our geography is global I'd say, but within the U.S., it's if you were to overlay a map of where we are with a map of where the poultry industry is, layers and broilers, you would get a pretty good fit in terms of where the highest concentrations of burners are raised, you'll find our locations and in the areas where there's a layers, you'll also find our location.
So, it's an overlaying map, essentially, where the poultry industry is in the U.S. And once you get, let's say, to about Kansas, or so, then things thin out really quickly, because there's just not a whole lot between there and the Rocky Mountains, and you get past the Rockies, and that's where you didn't see, again, some pockets of hatcheries and laying farms.
But for us that is an area where we don't really play. The west coast is not an area where we really work our system, because it's really remote when you compare the rest of the industry being mostly in the Midwest and in the southeast.
Greg Schonefeld:
What are the applications for this? I guess it's, ultimately, ending up in pet food, that's what you guys are doing.
Ingmar Middelbos:
Yeah. Pet food is I would say the prime. Right? But it's not the only one. So, if you look at pet food as a whole with why this egg can end up in pet food. Right? Why would it go in pet food, and not to some other application? The reasons are several, but if you think about it, pet food is nutrition but coupled with marketing. Right? It's a B to C business.
And when you think about consumers, consumers like to understand, particularly, in today's environment, they like to understand what it is that they're buying for their pet, and they like to feed their pets like they feed themselves. And if you look at a pet food ingredient label, you'll see things like chicken, but also chicken meal and some other terms that a consumer might not resonate with.
But an egg, everybody knows what an egg is. Right? I had an egg for breakfast this morning. I'd like for my daughter and my cat to also have egg as part of their diet.
So, aside from the nutritional component, there's also a marketing angle for them to, basically, say, "Look at my product being better than the next guy's product" by having these ingredients that are in there, that you know, that you know what they are, and you trust them.
Greg Schonefeld:
That's an interesting note, I guess, because first of all, it actually is high-quality protein, but then second of all, if you just put animal products, or you start listing whatever parts, it doesn't have the same effect and feeling in the humans who actually buy the food as an egg, which sounds like, "Okay. Yeah. That's something I'd feed myself, and I'd gladly feed my pet that I love so much as well."
Ingmar Middelbos:
That's actually right. And in that context, if you think about an egg, an egg is amazing. Right? It's the only protein source that if you leave it in the right conditions, it will grow an entire new life. And it's the only animal-based protein source that can do that.
And it's also an area actually that some other industries are rediscovering. As I mentioned, pet food is the main [inaudible 00:08:05] I would say. But we're also helping the feed industry, rediscovering what egg protein is. When you talk to folks in the feed industry it's like, "Yeah. Yeah. We know about eggs. We know it's a good protein source, but you don't really use it all that much, because it's not so available."
And we're helping them rediscover some of those aspects, and helping them address some of those, I'd say, misunderstandings to really drive consumption of egg products, not only in pet food, but also in animal feed, because it is such a good protein source, and, particularly, in young animal feeds, this is where I can really make a difference in giving an animal a good starting life, or not.
So, we're working on that, and it's fun to work in that area again. Also, a little bit scary, because if you think about pet food, it's like a rounding error in the overall animal feed production globally. I think the last [inaudible 00:08:57] report said something, like, 1.4 billion tons of feed produced globally, pet food is just a very, very small sliver.
So, it's a bit scary to think of all these feed guys suddenly want to use egg. We might be in a situation where it might be more than we bargained for, but it's a challenge that we'd love to have.
Greg Schonefeld:
Yeah. You have to be careful what you wish for.
Ingmar Middelbos:
Exactly.
Greg Schonefeld:
But that's interesting. And what do you think keeps them from doing it today? Is it not knowing about it? Is it price? Or what is it?
Ingmar Middelbos:
Yeah. It's a little bit of both. It's not knowing about it or knowing about it, but saying it's not so available. It's also a matter of what other ingredients are available. Right? So, if you think about a baby pig diet, a phase one diet for pigs, a key ingredient that's used there is blood plasma, and blood plasma works very, very well, but blood plasma is also rather scarce at the moment, and rather expensive.
So, people look for alternatives, and it could be things like fish meal, or maybe just switching more to a plant-based diet. But you want to give those young animals, especially, a good start. So, that's why we're trying to offer them the alternative like, "Hey. Look, egg is a very cost-effective way of doing that. It is available, and, oh, by the way, we are helping to generate an entirely new data set around the effects of egg in these young animal diets to show you that it will work."
Now there's a huge difference between pet food and animal feed, because in pet food, as I mentioned, it's nutrition, yes, but also marketing. Right? On the ag side of things, it's not like that at all. Numbers don't lie. Right?
So, for us, it's really about setting the foundation of what do we need to show everybody, so, that egg becomes back on the radar, but then it's always ... You always get into the situation, "Well, I'll believe it when I see it." So, people want to make sure that it works for their system, under their conditions, and that they see the results.
So, it's a very different way of approaching a channel, but for us, and, particularly, for myself, I think it's a very interesting challenge to take on.
Greg Schonefeld:
So, now you've got all these different hatcheries, all these different egg farms where you can find this inedible product. What is that process like for how the products, essentially, are going to be waste, but Symrise can come in and collect it, and turn it into something useful?
Ingmar Middelbos:
It's quite a complex story, if you think about it from a logistics standpoint, because you got to both be fast, and you got to be close, but you also got to be in many different places.
So, in order to collect all that, you have to have a pretty elaborate logistics network to make it all happen. Preferably, you pick up sites every day, because if you let it sit too long, it won't work, but it's exactly as you describe. It's about going by all these locations picking the eggs up, and that happens in various ways, some of them already come in things like tanker trucks, others we have to collect and still process, and separate liquid from the shell.
So, it depends a bit on the site, but, ultimately, the major steps that happen in the process is pick up, separating from the shell, the liquid, separating the shell and the liquid, and then processing those streams further into the final product.
And in the way we process it in general is the liquid is not very ... It doesn't keep very well. So, we convert it all to dry powder. So, you give it a shelf life that it's very stable, in powder form, which means you can store it easily, you don't have to ship water to your customer every day, because water is expensive to ship, but, most importantly, it gives you a product that is shelf-stable, it's easy to handle, and it's very effective to work with rather than just dealing with the relative mess that liquid egg can be. It's very sticky-
Greg Schonefeld:
Yeah.
Ingmar Middelbos:
... it gets everything that it touches dirty, and it's very hard to clean off. So, in a way, it's, like, let us be the middle man, do the hard work, and then our customers can enjoy the ease of use of the egg, and not deal with all the sticky mess that comes with it, the processing of the eggs themselves.
Greg Schonefeld:
So, essentially, producers, hatcheries, breaker operations, they're creating this stream of product that still has nutritional value, but it isn't fit for human consumption. And then instead of it rotting away in the landfill, someone like Symrise comes in and gives it a new life. It seems like a good deal for everyone.
But I also know that there can be a lot of ups and downs in the poultry business, and I wondered if Symrise ever feels that volatility on the supply side, and how they deal with it.
Ingmar Middelbos:
Yeah. So, it is fairly predictable over time, but over a longer period. From day-to-day, it might fluctuate, but the reason it's relatively constant over time is because fertility rates on hatchery eggs, you know roughly what those are, you know roughly what the population is of laying hens, you know roughly what the population is of broiler/breeder parent stocks.
So, there is some seasonality to egg use, maybe not production, but egg use for sure. Times around Easter are heavy, periods for egg right before the fall when baking season starts, then that's when eggs are in higher demand. So, you do see that where you get some fluctuations, but, again, over the long period, it's going to be relatively constant.
Greg Schonefeld:
So, in higher demand times, fewer eggs would, typically, make it to you.
Ingmar Middelbos:
From the grading channel, yes.
Greg Schonefeld:
Yeah.
Ingmar Middelbos:
Because people like to sell a lot of eggs, and, typically, means less grading eggs that come to our channel. And it's also a big function of what food and egg prices do. Right? If food grade egg prices are low, the grading might be more strict, because there is no benefit to sending more eggs to the supermarket. But if eggs are tight, the grading might also be a bit looser. So, you get a better stream to the supermarket. It means less goes into the inedibles channel, but it's all a yin and yang that, ultimately, in the long-term, it evens out.
Greg Schonefeld:
Sure. And when you're picking these up, I guess if we're talking about an egg producer, or I guess even a hatchery as well, typically, their alternative would be, basically, waste, or they've got to take the trouble to dispose of it. And so, in a way, you're taking that burden off their hands. I guess I don't know how much you can share about what your deal looks like. Is it you're taking that burden off the hand or maybe you're paying a little something for it? But I would imagine that it doesn't have near the value as, obviously, a marketable egg to people.
Ingmar Middelbos:
So, the deals can vary by organization. So, it's hard to pinpoint exactly what it looks like, but the biggest thing to keep in mind is that, ultimately, we're trying to get rid of a headache for the producer. So, they don't have to deal with the stuff, because landfill is always an option, but it's not a very attractive one. It, frankly, would be a shame if it were all to go to landfill, because there's still a lot of good material in there that you can use for useful purposes, and actually create a circular type of agriculture out of it, especially, if it goes into animal feed.
But, yeah. The main thing that we try to do is, basically, say to a producer of eggs or whatever kind they may be, it's like, "Don't worry about [inaudible 00:16:04] you create. We will take those off your hands. You don't have to lose any second of sleep over it." That's, ultimately, what we try to deliver to these suppliers.
Greg Schonefeld:
Yeah. And I would imagine, if you're picking up product daily, or weekly, the distribution alone carries cost, and if the producer's got to pay that just to put it to waste, you're able to make that work by upcycling the product.
Ingmar Middelbos:
That's a good way to put it. It's, effectively, upcycling material that would otherwise go to waste. We don't like to say it's a waste term, because it has a very negative connotation with it, because, again, we're recovering materials that nutritionally speaking, they would be fit for a human. It's just that the rules are such that they are not fit for human consumption.
So, there's nothing wrong with it. So, we should be doing something with it, because as a society, we can only invest resources in food production once. And we should make use of them as best we can. Meaning, nothing goes to waste. Right?
And that's why industries like ours exist, even though, most consumers have no idea about what we do, or, frankly, what the rendering industry does, because it's the same idea is you create something of value out of something that would otherwise be considered a byproduct, or in the negative term, waste.
Greg Schonefeld:
And then I guess in terms of ... I think you said in the pre-interview there's something, like, 90 billion eggs produced a year, and that's just in the egg market, not to mention what you're dealing with on the hatchery side that includes broilers.
Ingmar Middelbos:
Definitely. Yeah. And a small number of 90 billion is still a big number. Right?
Greg Schonefeld:
Yeah.
Ingmar Middelbos:
Or a small percentage of 90 billion.
Greg Schonefeld:
When you're sourcing egg and broiler is it about a 50/50 thing? Can you say?
Ingmar Middelbos:
Yeah. So, because in the broiler industry you do have that large gap between how many eggs you have, and how many are actually fertile, it's a fairly large gap. It's a much bigger gap than you would get out of a grading situation. Grading eggs are, typically ... Well, I'm going to probably watch my numbers here, but they are not 20% in terms of what gets graded out.
If you have 1000 eggs that go to the hatchery, and 1000 eggs that can go to supermarket, you're going to get a lot more eggs from that hatchery stream just by virtue of them not being fertile.
So, from there, you can probably speculate as to how that, ultimately, breaks out in terms of where the volumes actually come from.
Greg Schonefeld:
And then, of course, given their relationships with people throughout the poultry business and its massive impacts on the supply chain, I had to ask Ingmar about HPAI.
Ingmar Middelbos:
It's always a risk, and when it happens, it's, of course, first a pain for the producer themselves, because, ultimately, you don't want to see anybody get hit with AI, but, yeah, for us, it also means we would be down supply.
There is a bit of, let's say, a difference between where AI is hitting. Right? It's, like, the layer industry tends to be a lot more sensitive to it, because the birds are a lot more concentrated in one site. So, you are talking about, "Hey. One site gets hit," that's a couple million birds right there. And that's a huge problem.
On the broiler side, just the fact alone that it's more located towards the south of the U.S., the climate's different. We know that the current, let's say, form of AI seems to be less sensitive to temperature. It used to be that, "Hey. AI was a winter problem, and it seems to get warmer. In April, May, it goes away." And then we're way past that at the moment.
But, still, broilers, operations, in general, have a couple advantages over layers. One, broiler cycles are very short whereas layer cycles are very long. So, the birds themselves have less chance of being exposed to AI. And the second part of it is that the complexes where broilers are grown are much smaller in terms of head counts than layers are.
So, if there is an AI event, it's always hold onto your seat when it's somewhere up in the upper Midwest, because that's where all the layers are. If someone gets hit, it's going to be a huge hit. If it's somewhere in the south or southeast, yeah, it'll damage, but for the industry as a whole, it's a lot less damaging, I would say, than when layers get hit up in the upper Midwest.
Greg Schonefeld:
Yeah. No. It makes sense. But you guys, I guess the way you source, you end up spread around. And so, something like that definitely is a hit, but I guess the farm when they get hit, they're losing their entire operation and you guys have different places to source from, basically.
Ingmar Middelbos:
Yeah. And that's part of the business is to diversify your supply chain, which you try as best you can. There's always restrictions to what you can and cannot do, but you try to diversify as much as possible to hedge against those types of events.
With us having the intermediary step by processing a lot of volume, and making it into a shelf-stable product, it offers another hedge to say, "Look, we're not ..." Depending on what happens ... Truly today in the industry, we also have ... You have stocks where you can hedge to some extent against those things, but besides the diversified supply, that's another lever we have to, essentially, make sure that we don't run out of eggs, so to speak.
Greg Schonefeld:
As you see technology improve, maybe in the egg industry when it comes to collection or processing or in the broiler industry, I don't know if fertilization rates could increase, and those kinds of things, could technology advancement in both eggs and broilers impact future supply for Symrise?
Ingmar Middelbos:
There's always that chance that that might happen. So, if you think about fertilization rate of eggs, yeah, it is what it is. If there's improvements, it's going to be very incremental and everybody would like it to be 100%. But it's just not that way, and the effort it would take to get there, I'm not sure if it has a return on investment on it in terms of working the genetics, or that side of it.
When it comes to processing technology, it definitely is something that we always watch out for, because, as you mentioned, the technology gets better and better. Let's say in a breaking operation, there's a chance where technology might reduce the amount of available liquid, if there's truly a breakthrough advancement. So, that's always something that we monitor for.
In grading, it's the same situation as with the fertility rates. Right? There's always going to be some fraction ... Even the best laying hen can sometimes have an off-day, so to speak, and produce an egg that's either the wrong shape, or has a rough shell. That is to say, that most typically you see chickens once they produce one egg that's not quite conformed, you usually see more. So, it's usually not a one-off thing.
But even dairy, you're going to have some sort of ... Not to put a finer point on it, some kind of breaking rate in terms of how you grade eggs, because there's always going to be dirties, there's always going to be cracked ones, there's always going to be odd shaped, or eggs without a shell.
Greg Schonefeld:
So, I guess what I'm hearing is no matter what technology does, there's still a biology component here, the chicken is a chicken, and there's a process on that side of things too.
Ingmar Middelbos:
Yeah. No. That's definitely true. We can improve biology, but even there you have to look at the return on investment. Right? Is it worth our time and money in order to try and get there? Or is it okay to have a side stream that we can deal with and we have ways of processing? That, ultimately, doesn't ... At least, the food and producer side has them losing a lot of sleep over it.
Greg Schonefeld:
Yeah. And so, as Symrise looks to the future, what are the keys? Is it gaining more relationships where you source this inedible egg product? Is it finding more use cases for it? Like, you talked about earlier. What are your main objectives that Symrise is looking to accomplish going forward?
Ingmar Middelbos:
Yeah. That's a good question. So, there's probably three main things. You mentioned them actually. One of them is proper shed wood suppliers. That's a key one. And on that side, you have to stay on top of it. Now the good thing is that the industry as a whole is not very big, relative to some other industries. So, everybody knows everybody.
As far as different use cases, that we always look for. So, if you think about an egg, there's a lot of interesting stuff, biologically speaking, in an egg. Right? And we can consume an egg as an egg, but you can also take a look at it, and say, "Okay. Are there things in eggs that we can take out?" And put into different areas of the feed industry, or somewhere else that can actually provide a value there for a producer, or for whatever process they may want to use it in. So, that's always an area that we look for for us to create better use cases.
Greg Schonefeld:
Is there any push to source synthetic alternatives? I don't know if egg climates could change. We saw the higher prices this year. Does that ever make you guys think, "Well, maybe we need to find a replacement"?
Ingmar Middelbos:
Yeah. It's a fair question honestly. And in a way, there's no better cure for high prices than high prices. Right? Because it fosters an environment of like, "Hey. We got to do something different."
And there are companies out there that are working on ... I won't call them synthetic, but on lab-grown egg white proteins. Right? So, if you know what you want to make, you can make it. So, the first part of where that probably is going to have an influence, if it's going to have an influence, is going to be on the actual producers of eggs today. Right? Because that'll be the first area where you see the impact, because if egg consumption goes down, they're the first ones to see it.
Ultimately, long-term, yes, it would also impact our ability to source eggs. That [inaudible 00:25:25] a bit different than the food industry is that, for us, biotechnology is still very expensive. That's true for food, and it's true for pet food. And for pet food and animal feed, we're in a very different cost category than even human food is.
So, to answer your question, yeah, there's absolutely ... There's people working on it. So, I'm sure there'll be some alternatives on the market at some point. Whether they stay niche or whether they go mainstream, we'll have to see.
Greg Schonefeld:
I really enjoyed speaking with Ingmar, and getting a glimpse into this niche part of the poultry ecosystem. As he said, no operation sets out to produce an inedible product, but every process has its inefficiencies, and I find it heartening to know that with all the effort and resources that go into producing these eggs, that they're still being put to good use.
I thought it was really cool hearing Ingmar talk about all the differences between the pet food, and animal feed markets. And I'll be interested to see if Symrise can really make the economics work, and convince farmers that egg protein is the way to go for their livestock. And then on top of that, it'll be fascinating to see how tech advancements impact the amount of available, inedible eggs, and whether other alternatives could come into play in that market.
It's, certainly, a ton of food for thought, but there's one more aspect of Ingmar's relationship with the industry that we haven't covered.
I do have one last question for you, Ingmar. How do you prefer your eggs?
Ingmar Middelbos:
Ooh, over-medium. I like a bit of a soft yolk.
Greg Schonefeld:
Make sure you follow Eggheads on Spotify or Apple Podcasts, and be sure to leave us a review. You can connect with us on Instagram and LinkedIn too. If you want to be a guest, or have topic ideas, please send us a message. Until next time, I'm Greg Shonefeld, and we'll talk to you soon.