Is the egg market about to crack? An Auburn poultry expert weighs in
Many people have heard the children’s rhyme about Humpty Dumpty, the large egg who had a “great fall” from a wall and cracked his shell. If Humpty Dumpty were real, that crack would be costly in today’s market. At the height of the egg market, that egg would have cost 140% more on average than one year ago ($1.80 per dozen then versus $4.25 per dozen). Both literally and figuratively, that’s not chicken feed.
The low supply of eggs, combined with the higher prices is not the result of a feed company or egg company conspiracy. The steep increase in egg prices is simply economic supply and demand, working as expected, according to Dennis Brothers, an Alabama Cooperative Extension System associate professor. The main culprit in this story is Highly Pathogenic Avian Influenza, or HPAI.
Brothers specializes in farm and agribusiness management, specifically poultry. He has conducted research on the commercial poultry industry since the COVID-19 pandemic began to influence the national market.
What kind of effect does HPAI have on the egg market?
HPAI is a wild fowl influenza virus that is easily spread to domestic fowl, with 100% mortality as the result. Even though HPAI has been a hot topic in the poultry industry for over a year now, it has been around for longer than 2022. However, HPAI was typically a seasonal concern with a limited range and impact. In 2022, the virus seemed to overcome its seasonality and expanded its impact and range in the United States and North America. The USDA Animal and Plant Health Inspection Service estimates the loss of over 58 million U.S. domestic fowl to the virus in 2022. Most of these losses are due to the mandated total depopulation of any infected flock as the only containment measure available to prevent the spread of the disease. Of those bird losses, it is estimated that 43 million were table egg laying hens. This brought an approximately 29% lower table egg inventory for 2022. The losses have continued into 2023.
What are poultry producers doing to help this issue?
However, this process can only serve as a limited stopgap for lost production and cannot replace all the eggs losses. The bottom line for the egg industry is simply that dead hens lay no eggs. Since it takes a chicken approximately 22 weeks from hatch to laying the first egg, the hen losses won’t be quickly replenished in the field. It’s going to take some time before sufficient hens are back in full production.
How have market conditions impacted egg demand?
On the demand side, the United States has been on an egg-consuming tear for several years. Demand for eggs has gone up since 2009. The industry had a slight downturn during and after the early COVID-19 era, but as people began cooking more at home, they also needed more eggs. As people started eating out again — often at sit-down restaurants — more eggs were used. High demand was then met by the sudden low supply in 2022. Low supply meeting high demand leads to higher prices as more buyers compete for a diminished resource.
On the production cost, egg producers have had to contend with inflationary increases in all areas of production. Corn and other feed ingredients have been at sustained high price levels for a couple of years now, labor has been short and the current increases in fuel and transportation prices have only compounded the problem of producing eggs at a profit for the farmer.
What will happen to egg prices going forward?
While the future is hard to predict, a few things could reasonably be expected. In the short term, egg prices are starting to decline and may reach a reasonable level soon. As egg producers aggressively molt and repopulate their birds as fast as possible, the lower post-holiday demand period may help keep prices down. However, we are quickly approaching the Easter season with historically the highest demand for eggs all year. That increase in demand on the not-so-fully replenished hen numbers may push prices back up for a short period. Long-term, many of the table egg producing farms suffering HPAI losses are family operations with aging owners. Some of these farms may not be repopulated. Others may change ownership and/or shrink in size.
For some farms, expansion is the goal, however, increasing interest rates and increasing calls for “cage-free” egg production — which cost more to build and yields fewer eggs — may be barriers to further expansion regardless of egg prices. As consumers have responded to the high prices by substitution, particularly in the powder egg market, there may in fact be an over-supply of eggs by the early fall leading to a significant price decrease. There is also a possibility that HPAI vaccines may be on the horizon as well, helping decrease that risk. All of these factors contribute to an uncertain future for egg supplies and egg prices.
To arrange an interview with our experts, contact Preston Sparks, director of university communications services, at firstname.lastname@example.org.
Auburn University is a nationally ranked land grant institution recognized for its commitment to world-class scholarship, interdisciplinary research with an elite, top-tier Carnegie R1 classification, life-changing outreach with Carnegie’s Community Engagement designation and an undergraduate education experience second to none. Auburn is home to more than 30,000 students, and its faculty and research partners collaborate to develop and deliver meaningful scholarship, science and technology-based advancements that meet pressing regional, national and global needs. Auburn’s commitment to active student engagement, professional success and public/private partnership drives a growing reputation for outreach and extension that delivers broad economic, health and societal impact.