The U.S egg industry is struggling to adapt to two major disruptive forces: a mandated change in how hens are treated, and a wave of bird flu.
Highly pathogenic avian influenza (HPAI) has killed about 11 million laying hens so far this year. This and other factors have reduced the U.S. laying herd by 5%, to 322 million. It’s the biggest outbreak of HPAI since 2015, when a wave of infections killed 36 million layers. A report from CoBank predicts that prices are on a path to rise $1 or more a dozen before Easter, when demand typically spikes. Prices already have gone up about 52% since early February, when the first cases of HPAI were confirmed in a turkey flock in Indiana.
“With supplies potentially spiraling, and stress on conversion to more expensive cage-free-type eggs, consumers appear likely to bear at least a portion of the brunt of higher prices for eggs tendered in 2022, at a time when they are actively seeking low-priced protein items as they grapple with overall inflation,” the report says.
The egg industry is dealing with HPAI on top of having to build bigger cages for their hens.
A law in California that took effect at the beginning of this year mandates a minimum size for cages. In addition, trade customers like McDonald’s Corp. have been demanding this for years.
Cal-Maine Foods, the largest U.S. egg producer, said recently that it will invest $82 million in larger cages in two of its facilities. It was the latest in expenditures for bigger cages that have totaled $625 million since 2008, according to the Wall Street Journal.
Cal-Maine’s sales for the quarter ending in February were $477.5 million, a 33% rise over the same quarter last year. Earnings for the quarter were $39.5 million, nearly triple last year’s. Company executives attributed the increases to higher egg prices.
