Avian influenza, Ukraine war push egg prices higher worldwide

Reuters – Severe outbreaks of avian influenza (AI) in the U.S. and France are tightening global egg supplies and raising prices as the war in Ukraine disrupts shipments to Europe and the Middle East.

Higher prices are particularly painful for consumers who rely on eggs as a low-cost source of protein and substitute for more expensive meat. 

As of April 14, AI had wiped out more than 19 million egg-laying chickens on commercial U.S. farms this year in the worst outbreak since 2015, eliminating about six per cent of the country’s flock, according to Reuters calculations of federal and state government data. France, meanwhile, is suffering its worst outbreak ever in which about eight per cent of egg-laying hens have been culled. 

Why it matters: Countries that import a large volume of eggs will be most affected by egg price increases due to global shortages. 

The deadly virus and war are the latest challenges for egg suppliers also grappling with labour shortages and high costs for energy and grain used for animal feed.

Higher egg prices eat into profits for bakeries and food companies grappling with increased costs for flour and other goods. World food prices jumped nearly 13 per cent in March to a new record high as the war in Ukraine, a major exporter of wheat and corn, pushed up grain prices, the U.N. food agency said.  

Egg prices are expected to stay elevated as it will take months to resume operations on infected farms. Infections also hamper work at facilities that process shell eggs into products like dried eggs and liquid eggs used in food items such as cake and pancake mixes and egg sandwiches.

“The product industry is in a general panic,” said Marcus Rust, chief executive of Rose Acre Farms, the second-largest U.S. egg producer. The company lost about 1.5 million egg-laying chickens at an Iowa farm infected with AI, which also sidelined a processing plant, he said.

Everybody is running short

Iowa, the top U.S. egg-producing state, has suffered badly with the culling of two flocks that each contained more than five million laying chickens. The sheer size of such poultry operations accelerated the impact on the U.S. food industry, compared to Europe where farms are smaller.

Wholesale prices for large eggs in the U.S. Midwest topped $3 per dozen in March and reached the second-highest level ever, up nearly 200 per cent from a year earlier on the spot market, data firm Urner Barry said. Prices remained below the record of $3.09 per dozen set at the beginning of the COVID-19 pandemic. Egg products like liquid whole eggs are at record highs, though, Urner Barry said. 

In France, wholesale shell egg prices have climbed 69 per cent from last year, French farm office France AgriMer said. As a result, consumers could see higher prices for food products made with eggs.

The U.S. increased egg imports from countries including France, Italy and Spain to boost supplies after its worst-ever outbreak of bird flu in 2015, according to U.S. government data. Imports are a less viable option now because of outbreaks in Europe, analysts said.

“It is very much turning into a global issue in terms of the overall shortage,” said Karyn Rispoli, Urner Barry egg market reporter. “Unfortunately now everybody is running short on supply.”

Effect of war

Ukraine produced 14.1 billion eggs in 2021, data from Ukraine’s state statistics service shows. A year earlier, production reached 16.2 billion eggs, more than the 15.7 billion produced in France, the EU’s largest egg producer, according to French egg industry group CNPO.

Ukraine has in recent years been the EU’s main egg supplier, accounting for about half of the imports, ahead of the U.S. 

Middle Eastern countries that bought Ukrainian eggs before the war are attempting to find replacement supplies in Europe, said Loic Coulombel, CNPO vice president.

“There is a bird flu problem in France but also throughout Europe,” he said. “The is no other European country that would have a large volume to compensate for the shortfall.”

French food manufacturers will likely reduce output of some processed goods or adjust their recipes to cope with high egg prices, said Coulombel, who produces about one million eggs in France’s Brittany and Normandy regions. 

In Green Bay, Wisconsin, Liz Rehberg, owner of cake and pastry shop The Bakery, said the price for 15 dozen eggs climbed to $45 from $26 in recent weeks. She is considering whether to raise prices or reduce the sizes of her baked goods.

“You’re just ordering it because you need eggs,” Rehberg said. “Then you look at the price and you go, ‘Oh my God.’”