Avian influenza at heart of shell-shocking egg price increases
Egg prices reached record highs in December 2022 and have now surpassed $5 per dozen in supermarkets across the region.
Shoppers are finding it a bit painful to purchase a dozen eggs from the local supermarket with prices reaching above $5 in the region.
"What's driving this increase?" and "When will it end?" are questions many consumers are asking right now.
For perspective, on Tuesday, Jan. 17, Cashwise in Fargo had Eggland's Best large eggs priced at $5.19 a dozen, while Clearly Organic cage free large eggs were less at $4.79 a dozen. Mitchell, South Dakota, stores had eggs ranging from $2.99 to $6.32.
In California, the priciest market, shoppers were shelling out an average of $7.37 for a dozen Grade A large eggs, roughly three times the cost from a year earlier, according to the The Washington Post .
According to the U.S. Bureau of Labor, in December, the Consumer Price Index for eggs rose from $1.79 per dozen in December 2021 to $4.25 per dozen in December 2022.
While supply chain issues, feed prices, inflation and demand issues all come to roost in this market, it's avian influenza that has had the biggest impact on the egg prices, according to University of Minnesota Extension educator Abby Schuft in Willmar, Minnesota. Schuft focuses on poultry.
"Since September of last year there has been 12.8 million layer hens euthanized because of avian influenza, which means there is almost equally as many eggs every day no longer in the market," Schuft said.
Those layer operations hit early in 2022 have recovered, but the near 13 million missing now might not rejoin the ranks until this spring.
It's a four- to six-month timeframe where birds cannot be back in a facility that's had an influenza outbreak as regulated by the USDA. So it's not always a quick process to build up the supply again.
"If you remove 13 million eggs out of the production system at one time it's gong to create some hiccups, speed bumps," she added.
American Egg Board CEO Emily Metz said farmers have been doing a bang-up job keeping supplies strong despite all of those speed bumps. She said that the recovery from bird flu is far faster than the last major outbreak that occurred in 2015. She reminds consumers that this isn't brought on by the farmer.
"This is a highly volatile, highly unusual situation," Metz said. "Farmers don't set the price of their own product. The price of eggs is set on the commodity market, just like grain, just like a whole host of products."
Metz explained that the market reflects the high demand for eggs and farmers are responding to any shortages. If farmers are seeing higher prices for eggs now, it is only offsetting the investments they have had to make to protect their flocks against the avian influenza and make sure that eggs remain available, even at a higher cost, Metz explained.
Schuft says there's enough eggs out there, but retailers are limited by contracts. That was seen in April 2022, when the regions' Walmarts were emptied of eggs. Other supermarkets had plenty. Schuft said that in that instance one of Walmart's main egg producers was hit by the avian influenza.
The egg price hikes don't hit all egg producers quite the same, but all are feeling it at least indirectly.
Jason Amundsen, owner and farmer at Locally Laid Egg Company, a specialty egg producer in Wrenshall, Minnesota, just southwest of Duluth, said the egg business is tricky in that supply almost never meets demand.
“And you have no way of predicting it,” Amundsen said Tuesday, Jan. 17. Locally Laid distributes eggs across Minnesota, Wisconsin and the Dakotas.
The specialty egg business is different from the more common commodity eggs at your local supermarket or gas station. While commodity eggs have ranged from $1.50 to $5.49 recently, the specialty egg prices are typically higher in price and fluctuate very little. They are, however, indirectly impacted by the recent commodity egg price increases. As the price of commodity eggs matches or surpasses specialty egg prices, or if those eggs are non-existent, consumers scoop up those specialty eggs.
Amundsen explained that the egg business is very cyclical in that every 14 months or so, a new batch of hens comes in to replace the other chickens, whose egg quality has started to diminish. He explains that for all egg laying operations, there is the typical 5-7 week period where egg production drops off between groups of new and older hens.
Amundsen pointed to several reasons he believes egg prices are going fowl right now including an increase in grain prices. That was apparent in the summer of 2022, when grain prices were 50% higher than that time in 2021, Amundsen said.
Some of the main feed grain prices, like corn, have increased from about $6 a bushel last January to about $6.75 a bushel now. Soybeans were about the same price this time last year, according to the USDA. Wheat has dropped in price.
Chicken supply is the main culprit egged on by the devastating avian influenza outbreak. The USDA shows that nearly $58 million birds in the U.S. have been affected in the last year. That includes the country's biggest egg producer, Iowa, which has seen over 15 million birds affected. Minnesota, in total, had about 4.2 million birds affected. South Dakota had nearly 4 million affected birds.
As the demand for new birds ripples through the system the demand for pullets, or young chickens, skyrockets.
“We are getting not quite half of (the pullets) we asked for,” Amundsen said.
So while Locally Laid has six farms producing, and a planned addition, he believes they’ll either struggle to have enough eggs or have an abundance.
“Either way you are wrong,” Amundsen lamented.
As the cycle continues, Amundsen believes the prices will come down for eggs, though they’ll continue to work to keep prices as steady as they can.
“Our goal is no drama,” he said.
Egg prices may soon lower as indicated in the USDA’s Midwest Regional Eggs report on Friday, Jan. 13. It reported that delivered prices were 75 cents lower for large and extra large and 65 cents lower for medium eggs. Prices delivered to store for extra large eggs were mostly $4.66 to $4.68 last week.
Metz said that egg producers are working in a new normal. What that might mean for egg prices is unclear. While it's a big jump, Metz, said it remains a value.
"Consumers really value eggs, and they recognize that it's the most affordable protein they can feed their family," she said.
Supply could again become overly abundant and reverse prices before long, but everything else must follow suit as well. Labor, transportation, more highly pathogenic diseases and war continue to bring unknowns to the table. Schuft said one thing is certain:"The hens are not on strike."