Avian influenza impacts 37.5M birds in commercial and backyard flocks

Dive Brief:

• The highly pathogenic avian influenza epidemic has impacted more than 37.5 million birds in 291 commercial and backyard flocks as of Monday, according to the USDA. 
• The largest number of cases has been reported in Iowa, where 15 commercial flocks and four backyard ones —  adding up to 13.3 million birds — have been affected. 
• The outbreak is having its deepest impact on egg laying hens and turkeys, Bloomberg reported. The illness is highly contagious, and many birds who are infected or exposed are required to be culled.

Dive Insight:

Already, egg prices are skyrocketing because of the outbreak. According to USDA’s weekly Egg Markets Overview, on May 6 the average advertised retail price of a dozen large white shell eggs was almost $2.62 a dozen. The prices for eggs now rival those two years ago at the beginning of the COVID-19 pandemic, when increased demand sent market prices through the roof — and fueled legal action against some egg producers for sharply higher prices. 

While the industry has struggled to come back from the volatility of the pandemic’s early lockdowns, it’s been working toward meeting the new specific demands of the marketplace. A March CoBank analysis found transitions to cage-free eggs that have been mandated by states such as California and restaurant chains including McDonald’s have resulted in the nation’s total egg laying population decreasing. Avian influenza notwithstanding, according to USDA, there were 305 million hens laying table eggs in March 2022, down from 341 million in March 2019.

After the 2015 avian influenza outbreak — which impacted about 10% of the total U.S. egg laying flock, according to The Wall Street Journal — food manufacturers worked to quickly find substitutes. Ingredient manufacturers including Ingredion, Glanbia and many others put forward starch and protein ingredients that could mimic the flavor and binding properties of eggs.

Because such a severe outbreak occurred so recently and many manufacturers had to learn how to deal with an ingredient shortage, the biggest impact of this current outbreak in the food industry may be in the shell egg market itself.

In recent earnings calls, most CPG company leaders that don’t specifically deal with eggs haven’t commented about the outbreak. Many big egg producers have said the impacts of the outbreak have been negligible so far. In a statement reported in Mississippi news media, Cal-Maine Foods Chief Financial Officer and Vice President Max Bowman said in early April that the outbreak had at that point impacted about 6% of the national egg laying flock and noted the price jumps in the previous weeks.

Vital Farms, CEO Russell Diez-Canseco said on the company’s earnings call last week that it had seen no impacts from this outbreak. The last one, he said, helped create more business for the pasture-raised egg company as grocery store shelves became empty. Diez-Canseco said Vital Farms’ expansion of its Egg Central Station, which doubles the company’s processing capacity, just completed and the company is ready to fill more shelves again.

Post Holdings, which is a leader in eggs and other breakfast items for foodservice through its Michael Foods division, also recently said the outbreak hadn’t impacted it. On Post’s earnings call last week, CEO Robert Vitale said the outbreak spurred the company to switch much of its egg procurement to buying from suppliers on an immediate basis instead of long-term contracts.

For now, eggs are getting to be in shorter supply at the consumer level. However, today’s consumers have something they didn’t in 2015: egg alternatives. Consumers can buy a ready supply of Eat Just’s plant-based Just Egg, and other players like Hodo are just coming on the market with their substitutes. This outbreak may help the fast-growing plant-based segment take an even larger piece of egg market share — and like some of the ingredient companies that gave CPG makers the tools to permanently reformulate without eggs, the egg alternatives may win over new fans in this outbreak.