Retail prices of eggs have begun to ease says USDA
According to a recent USDA report, retail prices of eggs have “begun to ease,” but consumers are still seeing a historically high spike in cost given an outbreak of avian flu.
The following Cornell University agricultural economists weigh in on what we could expect to see in terms of egg pricing in 2023 and factors that may play a role in cost.
Wendong Zhang is an agricultural economist and assistant professor of applied economics and policy. He says we can expect to see a decrease in egg prices this year but how soon will depend on how quickly producers can recuperate flocks and whether the avian flu continues to cause disruption.
Zhang says: “The egg prices might be easing off somewhat in 2023, off the 2022 historically high prices. Egg demand remains high because they are staple foods that have inelastic demand regardless of prices. In addition, eggs are a relatively cheaper protein compared to other much higher-priced meat options, which also showed higher prices.
“USDA is forecasting an increase in production, but the progress will depend on how quickly producers can recuperate their flocks and whether avian flu causes another disruption. The cost of financing for producers is higher due to interest rates. How quickly the federal and state level disaster relief payments are allocated to producers will also affect the rebuilding speed.
“Another factor is the possible new variant of the flu and the effectiveness and timing of the vaccine, which will need two shots and takes some time to achieve full effectiveness. The worrying sign is that Europe has been dealing with this for two years and the warm summers did not kill it.
“The shrink in domestic U.S. production will lead to a 30% decline in U.S. egg exports, and a 90% increase in egg imports. But eggs imported are less than .05% of the total domestic production, so not very significant. The price reprieve will have to rely on U.S. producers.”
Egg prices affected by feed costs and energy costs
Andrew Novaković is a professor emeritus of agricultural economics and an agriculture and food policy expert. He says while prices are likely to decrease, we won’t see them go back to previous lows given the ongoing challenges of feed costs, energy costs and general inflationary factors.
Novaković says: “While it is difficult to accurately predict outcomes, there are some signs that the industry is on the downside of this event. We should see some reduction in prices in 2023, but analysts do not expect prices to become anywhere near what they were before. Some of this is due to the ongoing challenges of feed costs, energy costs and general inflationary factors.
“The popularity of poultry and eggs, combined with the fact many of us find it hard to imagine substitutes for eggs in our breakfast sandwiches or similarly for those chicken nuggets that our children enjoy, has made it difficult to deal with rising prices for poultry and eggs.
“Supply chain disruptions since the beginning of the pandemic, rising grain prices since the disruption to grain production in the major producing country of Ukraine, rising energy prices associated with that same event, and the more general inflationary pressures under current U.S. monetary policy have all contributed to the rise in poultry and egg prices. One unique factor that many analysts would say trumps all the rest is the recent U.S. outbreak of avian flu.
“Avian flu, like the flu for humans, is nothing new and tends to rise and fall around the world. The current flu hit the U.S. poultry industry, and hit it hard, beginning in 2021. This particular episode has proved more durable and widespread than previous episodes of avian flu in the U.S., including the previous occurrence in 2014-15. Once the flu infects a flock, the only effective means to control it from spreading is to destroy the entire flock. Although chickens reproduce fairly quickly compared to other animals, it still takes time to disinfect a housing facility and bring in a new flock. Of course, the availability of chicks is also impacted by the loss of breeding flocks.
“Another element is the growing demand for changes to housing conditions for poultry, either through state laws or consumer demand. Changes to cage sizes, that are intended to allow caged birds more freedom of movement, are not a factor in disease control, but production systems that put birds outside of controlled housing, often described as pasture-based or, sometimes, cage-free do make it much more difficult to control infection from wild birds. The degree to which this has been an important factor in the current outbreak is subject to speculation, but it is widely held in the industry that the added costs of converting to alternative production systems has complicated the recovering and repopulating of flocks. Alternatively, proponents of small-scale, backyard flocks believe that the greater variety in breeds used in those systems increase the genetic diversity of the flock and improve disease resistance. The extent to which this might be true has not yet been well-established.”