Egg supplies decreasing at ‘alarming rate’ due to avian flu, warn bakers

25-May-2015 - Last updated on 26-May-2015 at 15:03 GMT

Analyst: 'This is perhaps the largest short-term change the US egg market has ever experienced'

Bakers and other big users of eggs could face major supply shortages if the government does not act quickly to allow temporary imports from more egg-producing countries, claims the American Bakers Association (ABA), which says “25% of industrial egg product production, including liquid, frozen, and powdered eggs, is now offline due to avian influenza”.

In a note to members published on May 21, ABA president & CEO Robb Mackie said egg supplies were “decreasing at an alarming rate”, and that “USDA must act now to ensure that bakers can access necessary supplies to maintain current production.

“We strongly urge the USDA and other responsible agencies to act quickly to allow temporary imports from countries that can help fill urgent demand needs while maintaining adequate food safety standards.”

Bakers have had contracts terminated

Cory Martin, ABA director of government relations, told FoodNavigator-USA on Friday (May 22): "Prices have gone up by almost 240% in the last month, and it doesn't look likely to moderate anytime soon. We expect that the flu will continue to spread until temps in the affected region can stay above 80 degrees for a sustained period of time. Until the spread of the flu stops, prices may continue to climb as more egg laying hens are affected by the flu."

He added:"This would be easy to manage if it were just about higher prices. Bakers have had contracts terminated and are scrambling to find additional suppliers who are willing and able to fulfill orders...Receiving enough egg product to continue production is a very real concern for some bakers."

Wholesale price of breaker eggs rose 238% in a month, liquid whole egg price up 189%

Rick Brown, SVP at Urner Barry, which tracks egg industry data, told FoodNavigator-USA: "The [wholesale] price of 12 breaker eggs [shell eggs designated for breaking to produce egg products] rose 238% from April 22 to May 22; liquid whole egg prices rose 189% and egg whites rose 162%, which speaks volumes to what is happening here.

"Around 30-31 million egg layers have been affected already [out of around 100m that typically produce eggs for egg products; there are about 303m layers in total in the US]."

He added: "It's not just the case that prices are going up, bakers and foodservice companies we've talked to are really struggling to get egg products now. A lot of companies are buying shell eggs and breaking them to keep their plants running."

Meanwhile, firms offering egg replacement products have been quick to cash in, with Ingredion issuing a press release observing that as "egg demand outstrips supply and as prices continue to rise, egg replacement is now at the forefront of food manufacturers’ minds".

However, switching is not a simple exercise for many companies, especially in the packaged food arena where labels need changing, and recipes and processes need adjusting, said Brown.

"This is coming at a time when eggs have been going through a bit of a renaissance, and people don't want to change if they can help it."

Analyst: This is perhaps the largest short-term change the US egg market has ever experienced

According to a May 8 report by Maro Ibarburu, associate scientist and business analyst at Iowa State University, “The US egg industry has experienced a flock reduction due to avian influenza that has reached historic magnitudes... This is perhaps the largest short-term change the U.S. egg market has ever experienced.”

While wholesale egg prices have gone up significantly in recent weeks, however, it is hard to predict long-term market impacts, which will depend on the answers to questions such as:

How long will it take for affected facilities to re-start production?
Once they start, how long until they can reach full capacity?
How long will it be before closed exports markets open back up?

On the plus side, said John Howeth, Senior Vice President, Foodservice & Egg Product Marketing at the American Egg Board, the worst may be over: "What I can tell you, though, is as things stand, we’ve had just one outbreak in the last several days. We hope this is an indication that the worst of the outbreak is behind us."

ABA: Currently, only Canada has access to the US market

H5N2, which has been sweeping across the nation, has affected chicken and turkey farmers in multiple states. To date, millions of egg laying hens have been euthanized, which has led to a dramatic decrease of eggs and egg products in the US, the ABA's Martin told FoodNavigator-USA.

"Right now, only Canada can export into the U.S., but this is because they are the only ones who have gone through the process of approving their country's food safety regime as it pertains to egg products. The Netherlands allowed their equivalency to expire, mainly due to the fact that the U.S. is not a destination market for egg products.

"We've typically produced more than enough to meet domestic demand while exporting about 5% of the overall supply. But the flu has changed this dramatically, and bakers are in desperate need of additional supplies or they face dire consequences. The good news is that the Netherlands may soon be approved for export into the U.S., and there is a list of about 30 countries who have been approved by the USDA Food Safety & Inspection Service for other food products who could possibly be on a short list to help ease supply demands through additional exports."

He added: "It's conceivable that these countries could be approved via an expedited process, but it's unclear at this point how amenable the U.S. Government is to this idea. Countries that are being looked at first by egg product users who may be able to address supply concerns are Mexico, Brazil and Japan. But, the approval process can take years, so these countries are not close to being able to export egg products to the U.S., even if under an expedited process."

If avian flu is detected at an egg production facility, all of the hens are euthanized, while eggs at the location are destroyed. A decontamination process then follows, which can take between 60 and 120 days.