What In-Ovo Sexing Teaches Us About Innovation
The history of in-ovo sexing is a perfect case study in how technology can solve big problems in farm animal welfare, without being overly burdensome to producers.
We’ve been talking about technological innovation in animal agriculture in the abstract, but to make things more concrete, let’s look at a major technological change that’s currently happening in the egg industry: in-ovo sexing. From How to Be a Techno-Optimist for Animals:
One of the consequences of industrialization of the poultry sector is that the breeds of chicken we use for meat and eggs are different. “Broiler” chickens are optimized to quickly and efficiently convert feed to meat. “Layer” chickens are optimized to lay eggs as efficiently as possible. This division of labor is why chicken meat and eggs are so affordable today. However, one unintended consequence is that male chicks of the layer breed serve no economic purpose and are therefore killed immediately after hatching. In a practice that’s extremely unpopular among consumers that know about it, 6 billion day-old male chicks are killed each year in the global egg industry, usually via maceration (they are cut into pieces alive).
In-ovo sexing allows egg producers to use advanced biotechnology to identify which eggs will hatch male and which will hatch female. Male eggs can be removed and destroyed before they can feel pain, leaving only females to hatch. This technology is now widely available in Europe, and because of Innovate Animal Ag’s work, will come to the US later this year.
The history of the development and initial rollout of in-ovo sexing, as well as its future prospects for the broader market, is a perfect case study in how technology can solve big problems in farm animal welfare, without being overly burdensome to producers.
A brief history of looking inside eggs
The story of in-ovo sexing started in 2013, when a judge in the German state of North Rhine-Westphalia ruled that male chick culling violated state animal cruelty laws. Two hatcheries in the region appealed this ruling, and a case started making its way through the German court system. At the time, there were a number of academic initiatives around in-ovo sexing, but nothing was ready for the market. It was unclear at that point whether the best solution to male chick culling would be in-ovo sexing, or creating new breeds of chickens that could be used for both eggs and meat.
As the German case developed, multiple companies started devoting serious effort to developing commercially viable in-ovo sexing technology. The challenges were scalability and cost: in order to supply the hundreds of millions of hens needed each year in Europe, the technology had to be high throughput and cost as little as possible.
Research was centered in Europe, but a number of labs around the world were also looking for solutions. Notably, in 2016 the US company Vital Farms heavily invested in developing the technology in an attempt to establish their brand as a global leader in high-welfare egg farming. The resulting company, Ovabrite, unfortunately didn’t succeed.
On the bright side, some initial commercial success began in 2018. The first to successfully commercialize in-ovo sexing technology was a German company called Seleggt, later renamed Respeggt. Their technology involves taking a small fluid sample from the fertilized egg during its development and using PCR to detect whether there are male or female sex chromosomes.
The following year, another German company, Agri Advanced Technologies, commercialized a second technology in France that uses hyperspectral imaging to detect the feather color of the developing embryo. This technology only works for brown layers (brown layers lay brown eggs, white layers lay white eggs), because they have different feather colors depending on their sex.
Also in 2019, the aforementioned German court case was finally resolved by Germany’s Federal Administrative Court. They ruled that chick culling did, in fact, violate the country’s animal cruelty law, which requires “reasonable cause” to end an animal’s life. However, on practical grounds, the court ruled that male chick culling could continue until alternative methods of sex determination became possible. The permissibility of chick culling was therefore tied to the feasibility of in-ovo sexing.
Even though in-ovo sexing technically existed at this point, it was still rudimentary, and wasn’t available at scale. However, over the next few years, the technology continued to develop, and new players entered the market. Eventually, in 2021, the German Agricultural Minister decided the time was right to propose a bill banning the practice, which was then passed by the German parliament. On Jan 1, 2022, Germany’s ban on male chick culling officially took effect. France and Italy soon followed with their own legislation.
Initially, these bans had a chaotic effect on the market. At the time, many doubted that in-ovo sexing technology was actually ready, and Germany government’s received a lot of criticism for its haste. Indeed, after the ban took effect, there were reports of smaller hatcheries in Germany closing down and of male chicks that could not be euthanized being shipped to other countries to be raised for meat, negatively impacting local markets.
However, as often happens when commercial incentives are pointed in the right direction, technology caught up. According to the German supply-chain certifier KAT, in-ovo sexing initially accounted for a very small percentage of the eggs produced in Germany, with most producers deciding to instead rear the males for meat. However, by 2024, economic forces catapulted in-ovo sexing to 70% of the eggs produced in Germany. Sentiment on the technology was changing, and people started to assume that in-ovo sexing would become the default solution for avoiding chick culling in the future.
Over the course of 2024, adoption started to be driven by the market, rather than by regulation. Producers in Norway, the United States, and Sweden, voluntarily decided to adopt in-ovo sexing, despite chick culling remaining legal in those countries. These producers decided that adopting the technology was simply in the best interest of their customers.
There’s sometimes a narrative that in-ovo sexing was “caused” by regulation. However, looking back on the history of the technology, the situation is more complicated. Though a German state court first ruled against chick culling in 2013, it was not clear at that point whether the ruling would survive appeal. The first two in-ovo sexing technologies were commercialized before the case resolved federally in 2019. I don’t know to what extent this court cases influenced the two companies’ understanding of the market opportunity of in-ovo sexing. However, once the case did resolve, the market opportunity became much clearer.
I think a better interpretation of the history is that the technology emerged on its own, but the chick culling bans in Germany and France created much stronger commercial incentives to improve the technology. The resulting improvements then allowed the technology to start competing in the market on its own merits, which is why in-ovo sexing is now coming to the US.
The future of in-ovo sexing
Currently, in-ovo sexing is more expensive than the conventional method of paying humans to sex each chick by hand. A live-sexed day-old chick might cost around $0.75, only part of which represents the cost of manual sexing. In-ovo sexing adds an additional $1-3 per chick, which is admittedly significant.
That said, a cost increase of a few dollars per chick results in a fairly minimal cost per egg on the shelf. A typical layer hen lays around 350 eggs over the course of its life, which means that the total added cost per egg on the shelf is less than a cent. In the near term, companies that have welfare conscious consumers can pass this cost on, or even charge a premium for a more humane product.
Less welfare-conscious egg consumers are notoriously price sensitive, meaning any small cost increase might prevent in-ovo sexing from reaching the broader market. Fortunately, in-ovo sexing has already become cheaper since it became available 6 years ago, and it will likely continue to decrease in cost as companies refine the technology and achieve larger scales. Additionally, once male eggs can be removed, other beneficial practices such as on-farm hatching and in-ovo vaccination could yield further productivity increases (as well as additional welfare benefits) that help defray the cost of in-ovo sexing. Furthermore, lifetime productivity of hens has been increasing over time, and since in-ovo sexing represents a one-time cost per hen, this decreases the effective cost per egg on the shelf. In the long term future, it’s reasonable to expect that in-ovo sexing will be cost competitive with manual sexing because, fundamentally, it’s an automation technology that replaces skilled laborers with machines.
It can be tempting to think of in-ovo sexing as “the next cage-free” since they are both welfare benefits that can be advertised to the end consumer. However, there are important structural differences that set these practices apart. In-ovo sexing is implemented at hatcheries, of which there are only around 35 in the US, but cage-free production happens on the egg farm, which number in the thousands in the US alone. Each hatchery therefore supplies many farms. Given the upstream positioning of in-ovo sexing in the supply chain, it is cheaper both in terms of up-front investment and marginal cost. Some estimates peg the total capital cost of converting the entire US egg supply to cage-free at $12B, after which eggs would be around a dollar more expensive per dozen. In-ovo sexing, on the other hand, costs around $3 million per machine. So, even if every hatchery in the US installed five machines (a conservative figure), the total capital costs to convert the industry would still only be only $525M.
For these reasons, I predict that the US will adopt in-ovo sexing at a much faster pace than cage-free. And although government bans played a role in creating the initial commercial incentives for in-ovo sexing, the technology is good enough now that they will not be needed to drive adoption in the US.
How social good technology happens
The commercial advantages that in-ovo sexing will have over cage-free illustrate how technology can be a powerful driver of change. Cage-free might get marginally cheaper over time, but it will always be more expensive than conventional production. But in-ovo sexing is a technology, meaning that it can more naturally improve, come down in cost, and gain further market share.
This is a common pattern. When a new technology is first developed, it’s often crude, expensive, and relatively ineffective. But, if the technology is solving a big enough problem, there are still people who are excited to pay for the crude version. These people are known as early adopters. As the technology becomes cheaper, wider markets open up, allowing the technology to further develop and decrease in cost. This is called “moving down the cost curve.” Eventually, if the technology can become cheaper than the alternative, it becomes the default.
Social good technologies like in-ovo sexing often (but not always) follow a version of this pattern where the early adopters are just people who care deeply about the social good the technology provides. Then, as the technology comes down in cost, people who care successively less about the issue are brought in.
Tesla has become the canonical example of this pattern–they started out with luxury vehicles, sold to wealthy environmentalists, then used this to fund further cost reduction efforts. They have since released successively cheaper models with the eventual goal of creating a mass market electric vehicle that even climate deniers would drive.
The egg market is well-structured for this type of technological deployment. There’s a natural tiering system where conventional, cage-free, free-range, and pasture-raised labels identify eggs that are successively more expensive and higher welfare. The first companies to adopt in-ovo sexing in the US are already producing eggs at the top of this tiered system, and their customers are demonstrably willing to pay for higher welfare. As in-ovo sexing comes down the cost curve, it will have many natural stepping stones of successively cheaper and larger markets. In the future, just as computers or solar panels went from niche to commonplace, in-ovo sexing will be the default, and male chick culling will become a relic of the past.