Since 2025, the layer hen farming industry has experienced deep losses, leading to a consensus that small and medium-sized retail breeders are accelerating their exit. In contrast, layer hen capacity actually increased in the first quarter of 2026. By March, the inventory of egg-laying hens in major producing regions exceeded 1.354 billion, a year-on-year increase of nearly 3%, remaining at a high level for the past five years. This contradiction stems from the accelerated scaling process in layer farming: farms with over 10,000 hens now account for more than 60% of the total, and the capacity expansion of large breeding enterprises is offsetting the exit of small and medium-sized breeders.
The scaling trend in the layer farming industry has continued to accelerate in recent years. By the end of 2025, farms with over 10,000 hens accounted for more than 60% of the total, an increase of over 15% in the past five years. The number of large-scale farms with over 100,000 hens grew by more than 10% year-on-year, and there are now over 50 super-large farms with millions of hens. While industry-wide losses did lead to the exit of many small and medium-sized breeders—with the number of layer farmers decreasing by nearly 10% in 2025, and small breeders with fewer than 2,000 hens seeing an exit rate of over 15%—the capacity gap left by their departure did not result in a decline in total inventory.
Structurally, the exit of small and medium-sized breeders and the expansion of large-scale operations are two sides of the same process: the former is reflected in a reduction in the number of farms, while the latter is seen in the enlargement of individual farm sizes. Combined, these factors have kept the total layer hen inventory high rather than leading to a significant decline. The market's expectation that losses would force capacity reduction has not materialized, primarily due to a confusion between "retail breeder exit" and "industry-wide capacity reduction." While the exit of small breeders did reduce some capacity, the expansion by large-scale enterprises has filled this gap, even resulting in a net increase. As of March 2026, the inventory of egg-laying hens in major producing regions reached 1.354 billion, a year-on-year increase of nearly 3%, remaining at a high level for the past five years. True industry-wide capacity reduction will only occur when large enterprises begin to scale back. Currently, leading companies are still in an expansion cycle, meaning the high-capacity situation is unlikely to reverse in the short term.
The scaling trend in the layer farming industry is expected to continue, as it offers significant advantages in cost control. During periods of industry losses, large-scale farms benefit from a feed cost advantage of 0.05–0.10 yuan per kilogram, giving them far greater risk resilience than small and medium-sized breeders. This is the fundamental reason why large enterprises expand against the trend while small breeders exit. Other factors include policy-driven increases in compliance costs related to environmental protection, disease prevention, and land use, which further burden small breeders. Economically, as industry profits narrow, cost advantages become a core competitive edge, making economies of scale increasingly important. Technologically, the adoption of smart and digital farming technologies requires a certain scale threshold. It is projected that within the next three years, farms with over 10,000 hens will account for more than 70% of the total, and large-scale farms with over 100,000 hens will become the dominant force in the industry.
The current reality of the layer farming industry is one of rapidly increasing scale and sustained high capacity. The accelerated exit of small and medium-sized breeders has not led to the expected capacity reduction because the expansion of large-scale enterprises has filled the gap left by their departure, even resulting in a net increase. The core drivers of this trend are the cost advantages of large-scale farms and the strategic expansion logic of leading enterprises. During industry downturns, large farms not only survive but also expand against the trend to capture market share, thanks to their feed cost advantage of 0.05–0.10 yuan per kilogram. This suggests that the perception of "capacity decline" is largely an illusion—true capacity reduction will only begin when leading enterprises start to scale back. Capacity is expected to remain high in the first half of 2026, with a potential substantive decline in the second half, though this is more likely to be a "high-level adjustment" rather than a "deep reduction." For stakeholders in the industry chain, understanding this structural shift holds greater strategic significance than focusing solely on short-term fluctuations in egg prices.
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