April 18, 2022


Egg prices rising due to bird flu and Russia's invasion into Ukraine



As Russia's invasion into Ukraine affects grain exports to Europe and the Middle East, severe outbreaks of avian flu in the United States and France are also limiting global egg supply and hiking costs for the food staple, Reuters reported.


Consumers who rely on eggs as a low-cost source of protein and a replacement for more costly meat are more affected. In the US and Europe, demand for eggs spikes around the Easter and Passover holidays.


According to Reuters' assessments of federal and state government statistics, bird flu has killed more than 19 million egg-laying hens on commercial US farms this year, the largest outbreak since 2015, wiping out roughly 6% of the country's flock. Meanwhile, France is facing its biggest bird flu outbreak ever, with almost 8% of egg-laying hens being killed.


Entire flocks of chickens are killed when they become infected by bird flu to stop the spread of the virus.


The deadly virus and the Ukraine conflict are the newest issues for egg producers, who are already dealing with labour shortages and rising energy and livestock feed costs.


Higher egg prices cut into bakeries' and food industries' revenues, which are already struggling to keep up with rising wheat and other commodity costs. According to the United Nations Food and Agriculture Organisation, world food prices rose about 13% in March to a new record high, as the conflict in Ukraine, a key supplier of wheat and maize, pushed up grain prices.


Producers predict egg costs to remain high for some time since bird flu affected farms will take months to reopen. Work at facilities that turn shell eggs into goods like dry eggs and liquid eggs used in culinary items like cake and pancake mixes and egg sandwiches are also hampered by infections.


Marcus Rust, CEO of Rose Acre Farms, the second-largest egg producer in the US, said the product industry is in a general panic, adding that the company lost around 1.5 million egg-laying birds at a bird flu-infected Iowa farm, which also shut down a processing unit.


With the culling of two flocks containing more than 5 million laying hens, Iowa, the top egg-producing state in the US, has suffered greatly. Nebraska state said on Wednesday that it will cull a flock of over 1.7 million laying hens. In comparison to Europe, where farms are smaller, the impact on the US food sector was expedited by the sheer size of major chicken firms.


According to data provider Urner Barry, wholesale prices for large eggs in the United States Midwest hit US$3 per dozen in March, the second-highest amount ever, up roughly 200% from a year earlier on the spot market. Prices stayed below the all-time high of US$3.09 per dozen achieved at the start of the COVID-19 pandemic. However, egg products such as liquid whole eggs are at all-time highs, according to Urner Barry.


Wholesale shell egg prices in France have increased by 69% year over year, according to the French farm office FranceAgriMer. As a result, customers may see an increase in the price of egg-based foods.


Jean-Philippe Puig, CEO of French agri-food business Avril, which owns sauce producer Lesieur, said it is tough when you make mayonnaise and egg costs rise. He said they need to approach supermarkets and persuade them to accept a price increase.


According to US official statistics, during the country's worst-ever avian flu outbreak in 2015, the US increased egg imports from nations such as France, Italy, and Spain to improve supply. Because of the outbreaks in Europe, analysts believe that imports are no longer a realistic alternative.


The emergence of war, not only virus outbreaks, is affecting Middle East buyers' supply chains.


Santosh Kumar, an egg importer for Farzana Trading in the UAE, said he hasn't heard of any shipments from Ukraine entering the UAE in the last two weeks. Farzana is importing eggs from Turkey.


According to figures from Ukraine's federal statistics department, the country produced 14.1 billion eggs in 2021. According to the French egg industry association CNPO, output reached 16.2 billion eggs a year ago, above the 15.7 billion produced in France, the EU's top egg producer.


In recent years, Ukraine has surpassed the US as the EU's primary egg producer, accounting for almost half of all imports.


Middle Eastern nations who bought Ukrainian eggs before the conflict are looking for replacements in Europe, according to CNPO vice president Loic Coulombel.


He said bird flu is an issue in France, but it's also a problem throughout Europe as there are no other European countries with the volume to make up for the gap.


Coulombel said to cope with high egg prices, French food manufacturers will likely reduce output of some processed goods or change their recipes. The CNPO produces about 1 million eggs in the Brittany and Normandy regions of France.


Liz Rehberg, owner of The Bakery in Green Bay, Wisconsin state, US, said the price of 15 dozen eggs had risen from US$26 to US$45 in recent weeks. She's debating whether or not to raise her rates or lower the size of her baked goodies.


-      Reuters

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