Thursday, May 28, 2015 12:15:14 AM
The egg. It's incredible. It's edible...and it's getting more expensive.
Because of a bird flu outbreak, wholesale prices for eggs have risen to over $2.00 a dozen, up a whopping 71% since late April. Retail prices haven't risen nearly as fast -- up 17% in the past month according to The Guardian...but grocers can only hold off passing on the price increase to consumers for so long.
The avian flu has forced American farmers in 16 states to kill 40 million birds so far, the vast majority of them egg-laying hens. More than 10% of the entire U.S. egg supply has already been affected by the outbreak, according to The Washington Post, with Iowa farms particularly hard hit.
The impact of this bird flu outbreak goes far beyond your breakfast table. The price of liquid, dried and frozen eggs used by food manufacturers has risen nearly 30% in the past month. And a potential shortage of these so-called breaker eggs is forcing corporations like McDonald's, Unilever, Panera and General Mills to scramble to find alternative suppliers and substitute ingredients.
If the bird flu does lead to shortages, expect to pay more for all kinds of egg-rich products like mayonnaise, baked goods and ice cream in the weeks and months ahead. And this Thanksgiving could be more expensive too. Hormel Foods says its Jennie O Turkeys might be in short supply because of the avian flu outbreak, which has forced farmers to euthanize over 3.3 million turkeys in Minnesota, which produces nearly 20% of America's turkey flock.
"The U.S. market -- suppliers [and] buyers -- are most certainly very nervous about the evolution of this unprecedented problem," says Andrew Rosenzweig, international sales manager at OvoMarket Espana, an egg exporting company that represents Spanish egg farms. "Given that the influenza has also affected breeding farms...the production forecast is disconcerting. A hen does not start laying eggs until it’s [about] 20 weeks old, but the big question is how long will it take for the USA to replace the layers that have been lost?"
Just how 'unprecedented' is this problem? The Egg Industry Center, which closely follows the egg market, says "a large fluctuation such as the loss of millions of laying hens was never considered in the design of the [pricing] model that is currently in use." A 100-year flood, in other words.
The U.S. only exports about 5% of the eggs produced here, The NYT reports, but the American bird flu epidemic is already having global implications.
European egg processors are "in full production to take up the U.S.’s global slack," Rosenzweig says, noting his firm has received inquiries about eggs from Mexico and asked whether OvoMarket can serve clients in Hong Kong.
The good news is the current avian flu outbreak has been contained to just birds so far...but there's still a public health risk, even if it doesn't spread to humans: Eggs are also used to make vaccines for diseases such as measles, mumps and rubella. Eggs are also used to make vaccines for diseases like influenza...meaning this coming flu season could be one for the birds.
Aaron Task is Editor-at-Large of Yahoo Finance. You can follow him on Twitter at @aarontask or email him at atask@yahoo-inc.com.
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