’15 bird flu re­cov­ery leads to over­sup­ply of eggs, lower prices

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - NATHAN OWENS ARKANSAS DEMO­CRAT-GAZETTE

An over­sup­ply of eggs na­tion­wide has driven prices to lev­els not seen in 10 years, with some re­tail­ers in Arkansas of­fer­ing a car­ton of a dozen eggs for less than a dol­lar.

An­a­lysts are point­ing to the avian “bird flu” epi­demic in 2015, which wiped out mil­lions of chick­ens and tur­keys na­tion­wide, for the sharp turn­around in the egg mar­ket. While large food com­pa­nies are rid­ing this sea­son out with hopes for a mar­ket price re­bound and in­creased 2018 ex­ports, smaller farms aren’t as for­tu­nate.

Kim Kapity, owner and sole op­er­a­tor of Sy­camore Val­ley Farm in Lin­coln, said her poul­try farm was not af­fected by the bird flu epi­demic in 2015. She did, how­ever, reap the ben­e­fits of selling a dozen eggs at a cou­ple dol­lars more than the U.S. mar­ket’s av­er­age that year.

At farm­ers’ mar­kets, Kapity said, “it was ac­tu­ally the first time I had been told my eggs were cheap. That was in­ter­est­ing.”

Kapity’s egg prices are now nearly five times the re­tail price at most gro­cery stores.

The dilemma Kapity and many other small poul­try farm­ers face is re­lated to a re­bound in the sup­ply of eggs spawned by the bird flu out­break.

A re­ported 35 mil­lion layer hens and tur­keys, or roughly 12 per­cent of the na­tional in­ven­tory, were de­stroyed be­cause of the highly con­ta­gious avian flu. It was the worst food-re­lated out­break in U.S.

his­tory, nearly three times the size of the pre­vi­ous worst out­break in 1983.

Av­er­age egg prices in 2015 jumped from nearly $2 to $3 per dozen as pro­duc­tion rates dropped by about 1.2 bil­lion eggs, ac­cord­ing to the U.S. De­part­ment of Agri­cul­ture.

In re­sponse, farm­ers na­tion­wide quickly re­stocked their lost flocks. Af­ter two years, pro­duc­tion has sur­passed lev­els be­fore the 2015 bird flu out­break.

“Now that we’ve got pro­duc­tion back a few more mil­lion than in 2014, we’re out­pro­duc­ing what we’re eat­ing,” said Bruce Ten­cleve, Arkansas Farm Bureau com­mod­ity and

reg­u­la­tory af­fairs poul­try divi­sion co­or­di­na­tor.

Con­sumers have been reap­ing ben­e­fits this year with prices rang­ing from 65 cents to 72 cents per dozen, Ten­cleve said. Some Wal-Mart stores have been selling eggs as low as 48 cents for a dozen large Best Choice eggs.

Cur­rently, egg pro­duc­tion costs are higher than re­tail prices, neg­a­tively af­fect­ing large and small egg pro­duc­ers, said Hong­wei Xin, di­rec­tor of the Egg In­dus­try Cen­ter at Iowa State Uni­ver­sity.

“It’s about $1.10 for the cost of pro­duc­tion, so the in­dus­try is los­ing money — large or small,” Xin said. “It’s rather un­for­tu­nate, but hope­fully prices will come back.”

Com­pa­nies that don’t solely rely on egg pro­duc­tion for

in­come can af­ford sea­sons of loss.

Larger food com­pa­nies are “play­ing with house money, so to speak, and can ride it out,” Ten­cleve said. “The forecast for 2018 is that ex­ports are go­ing to go up. So [ide­ally] com­pa­nies will make it all up in 2018.”

Egg ex­port fore­casts show a 6 per­cent in­crease for 2018, com­pared to last year, ac­cord­ing to a USDA re­port re­leased June 15.

Small farms are a dif­fer­ent an­i­mal. They “can’t ride those peaks and val­leys” the same way large com­pa­nies can, Ten­cleve said.

Some farm­ers could be locked into a con­tract with gro­cers to help weather the low sea­sons, he said.

How­ever, farm­ers such as Kapity don’t sell eggs in gro­cery stores and solely rely on di­rect-to-con­sumer mar­kets for their pri­mary in­come.

With record-low su­per­mar­ket egg prices, con­stant mort­gage bills and steadily in­creas­ing poul­try feed prices, Kapity said she hasn’t been turn­ing a sus­tain­able profit. Re­cently, she has taken a job at an­other farm to help pay bills.

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