Regulating the egg industry: Lessons from South Australia

The egg industry in Australia is characterised by markets in which both price and output are regulated by state marketing boards. With prices set on the basis of estimates of average costs, together with a guaranteed market for output, producers enjoy monopoly rents. These rents are reflected in the price paid for (transferable) hen quotas sold on the open market. Because the egg industry is becoming concentrated into fewer production units, the benefits of regulation are increasingly accruing to larger producers. This, together with the implication of imposing average cost pricing on consumers, suggests scope for a change in government policy towards egg industry deregulation. These issues are discussed with specific reference to the egg market in South Australia.