Avian influenza is sending egg prices higher

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Farm and Dairy file photo.

SALEM, Ohio —The full extent of damages from the current strand of avian influenza is far from over, but there are some clear signs that it’s impact will be significant, especially for the egg market.

The U.S. Department of Agriculture has been tallying the impact to poultry producers, which, as of June 15, stood at 222 detections and more than 47 million birds affected.

So far, Ohio and Pennsylvania have not had any positive detections, but even if both states are fortunate enough to go without an outbreak, they’ll still feel some of the impact.

In the grocery store, consumers are already seeing higher prices for eggs, and that trend will likely continue.

The U.S. Bureau of Labor Statistics released data in April that showed a dozen large eggs averaged $2.07, but prices have risen considerably since then, with some individual markets now topping $3 a dozen.

According to the U.S. Department of Agriculture’s Agricultural Marketing Service, wholesale prices for a dozen eggs are 3 to 22.5 cents higher, which means those cost increases will further drive up prices in stores.

Lower supplies

The latest USDA World Ag Supply and Demand report, released June 10, shows a decrease in turkey production and exports for 2015 and 2016, lower egg production for both years, and lower broiler exports for 2015.

Egg production through June 2015 was projected at 7,994 million dozen, a decrease from May 2015, which was projected at 8,323 million dozen.

Chris Hurt, an ag economist with Purdue University, said the U.S. egg supply has already declined about 4 percent, as a result of bird flu.

He said a 1 percent drop in egg supply usually corresponds with a 5 percent increase in price.

“Egg prices are very sensitive to supplies,” Hurt said.

Carl Zulauf, an ag economist with Ohio State’s College of Food, Agricultural and Environmental Sciences, said he’s seen some models that suggest a 1 percent decline in egg supply could lead to as much as a 10 percent increase in prices.

“This is going to have a really significant impact on egg prices,” he said.

On the flip side, consumers might actually see a decrease in poultry meat prices — because of bans on U.S. exports.

Chicken exports have dropped about 5 percent this year, Hurt said, and turkey exports are down even more, dropping 14 percent.

But as Hurt pointed out, the average U.S. consumer consumes about 88 pounds of chicken, compared to just 16 pounds of turkey in a year.

He said total poultry availability should be up about 1 percent, which means poultry meat prices could drop slightly from an increase in supply, but not likely enough to cause much competition for other meats like pork and beef.

Sticking with eggs

Even as egg prices rise, it’s doubtful consumers will turn to other proteins — partly because eggs and poultry will still be cheaper, and also because an egg is unique among food items.

“Egg consumption is unique to egg consumption,” Zulauf said.” I don’t really think that people look at a hamburger as a substitute for eggs.”

But Zulauf said egg prices could affect consumption of other meats that are often eaten in combination with eggs — like sausage and bacon.

World markets

One of the biggest challenges will be keeping and regaining world markets. Although the current strain of bird flu has not shown to affect humans, foreign countries have already imposed a host of bans, that range from banning all U.S. poultry, to select regions of the U.S., and for various periods of time.

Trade restrictions, Hurt said, are “quick to go on and slow to come off.”

Getting closer

If a particular farm or region can ward off the disease, as Ohio and Pennsylvania have done, their producers could reap the benefits of favorable market conditions. But the disease has been reported as close as southern Michigan, where it was found in a wild Canada goose.

Pennsylvania last dealt with Highly Pathogenic Avian Influenza (HPAI) in the mid-1980s, when 17 million birds died and the economy suffered a $65 million loss.

According to Pennsylvania Agriculture Secretary Russell Redding, the state has more than 11,000 flocks worth more than $1 billion in sales, billions more in related economic activity and wages, and more than 53,000 jobs tied to the poultry industry.

“This threat represents the likes of which the poultry industry has never seen,” Redding said in a released statement. “The economic threat of HPAI in Pennsylvania is so great that we in state government cannot afford to get this wrong.”

Since the 1980s outbreak, Pennsylvania has had an extensive surveillance program for avian influenza. The state’s diagnostic laboratory tests approximately 250,000 samples each year.

However, state officials are concerned that some small-scale poultry farms are not participating.

The disease can affect a farm of any size, including wild fowl.

They key to preventing the disease is good biosecurity management, and limiting exposure to and from facilities.

More about the bird flu:

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