The following is a summary of various issues involved in this country dealing with the spread of HPAI/bird flu, and how to deal with rising egg prices.
First we discuss a USDA report released today on the egg market.
We also include an update on the National Chicken Council (NCC) petitioning the FDA to lift a regulation preventing broiler industry eggs from entering the food supply, arguing the move could ease record-high egg prices caused by the bird flu outbreak. The 2009 rule forces broiler producers to discard surplus hatching eggs instead of selling them to processors, despite government risk assessments affirming their safety. If granted, the request would allow nearly 400 million eggs annually to be used in processed foods like bread, pasta, and mayonnaise, alleviating strain on table egg supplies. As we have noted before, NCC previously sought relief under the Biden administration in 2023 but was denied. Now, with egg prices soaring, the organization is urging swift action from the Trump administration.
Market Conditions
Negotiated wholesale prices for graded loose eggs are firm to higher with a higher undertone. Demand for retail is moderate to good, while food service interest is lower. Offerings are very light to light, with little chance of improvement due to ongoing highly pathogenic avian influenza (HPAI) impacts on productive flocks.
Price Trends
- National trading: White Large shell eggs increased $0.33 to $8.07 per dozen
- New York market: Large cartoned shell eggs rose $0.24 to $8.47 per dozen
- Midwest region: Large white shell eggs increased $0.28 to $8.09 per dozen
- California benchmark: Large shell eggs rose $0.05 to $9.22 per dozen
Supply and Demand
Shell egg demand has increased over the past week, with marketers struggling to cover needs due to reduced supplies from HPAI outbreaks. Spot market bids routinely outpace offers, often by a factor of ten, with prices setting daily records. Shell egg shortages are now impacting most major markets.
Inventory and Production
- Overall shell egg inventory declined 2%
- Large class shell eggs inventory down just over 1%
- Cage-free egg stocks decreased 3.5%
- Breaking stock inventory gained 2%
- Total estimated table egg production unchanged from last week and last year
Breaking and Processing
Breaking schedules are generally reduced, running 3% below year-ago levels. The volume of eggs processed last week decreased just under 1%. Production of whole egg was up nearly 3%, while egg components (whites and yolks) continue to decline.
Frozen Egg Storage
December monthly volume of frozen eggs in storage declined 7% from November, 38% below the December 2023 level. This is the lowest level of egg products stocks recorded in the last 10 years.
Regarding NCC’s petition to FDA:
· Consumer safety vs potential economic benefits: The FDA determined that allowing the use of surplus broiler eggs would not maintain the same level of public health protection as the current egg safety rule. The agency prioritizes consumer safety over potential economic benefits.
· Refrigeration requirements: The 2009 rule requires all eggs entering the food supply to be kept at 45°F within 36 hours of being laid. Broiler eggs are typically stored at 65°F, which is incompatible with this requirement.
· Different risk profiles: While the NCC argues that pasteurized surplus broiler eggs present a different risk profile than raw table eggs, the FDA has not been convinced by this argument.
· Regulatory jurisdiction: The FDA has authority over shell eggs under the Federal Food, Drug, and Cosmetic Act, while USDA’s Food Safety and Inspection Service (FSIS) regulates egg products. This division of responsibilities complicates the decision-making process.
· Previous rejections: The FDA has consistently denied similar petitions in the past, including one in June 2023. This suggests a long-standing policy position that is unlikely to change without significant new evidence or circumstances.
What MAY happen
· USDA officials and analysts clearly understand the issue, but they are dealing with a topic that involves short- and long-term issues, FDA and White House officials. Also, throw in politics, with Democrats asking almost daily what the White House is doing about high egg prices.
· Initial bottom line: A whole-of-government approach is evident on this issue via the Trump administration. That was not the approach on this topic during the Biden administration, even though various steps were taken by USDA Secretary Tom Vilsack. They just came too late or were not aggressive enough, sources conclude. Industry contacts say the failure of former President Biden’s team to deal with the spread of HPAI means both a short and long-term approach is now needed. There is only so much that can be done in the short run to lower egg prices. That topic should have been dealt with via more effective HPAI policy a few years ago, contacts advise. It was not.
· The push is on for a multi-focus, all-inclusive approach including:
o An increased focus on biosecurity but with funding to help the industry accomplish that because of indemnity and other issues.
o Finding different modes of administering medications, such as via water, feed and aerosols. But those methods are not yet available. Thus the need for expanded research funding on this topic.
o Coming up with a trade strategy that could involve regionalization (trading with states outside impacted areas), but that has to be negotiated with trading partners and that takes time. Also, industry officials are very hesitant about trade issues. A regionalization approach could be taken but only after more vaccines are available. However, there are already regionalization agreements in place with some countries on bird flu. But what would any vaccination effort due to those regionalization agreements.
o Increasing imports of eggs, but this could be limited and presents some quality issues and food safety issues (testing, etc.). But egg exporting countries are increasingly looking at the U.S. market due to prices and wanting to boost exports.
o Any discussion of an embargo on U.S. egg exports should be moot. Reason: embargoes do not work. Example: The Carter grain embargo against the then Soviet Union.
· Several problems exist regarding vaccines, including the trade angle previously discussed, and the fact that their effectiveness timeline wears off. Also, HPAI is multifaceted with different mutations causing vaccine-related issues.
· As for FDA, if they are convinced somehow to temper the current FDA safety rule, concerns still exist regarding increased threats of salmonella. If the NCC petition would somehow be approved in some way, increased testing for salmonella is just one requirement. Any cost-benefit analysis is difficult at best to do on this topic. Of note: It will be curious to see what HHS Secretary RFK Jr. says about this and other HPAI issues, especially the use of vaccines.
· Risks: If a change in the major depopulation strategy is implemented, the concern is that if it does not work, an explosive increase in HPAI cases could follow.
· Upshot: Limited avenues are available in the short run regarding bringing down egg prices, and containing HPAI. As previously mentioned, the reason for that in part is this topic was not taken as seriously as it should have been during the Biden administration where no such all-of-government approach was taken. A likely game plan will or should be to lay the groundwork to deal with HPAI in the long run so it does not surface again years from now. But this will take time to unfold. Regarding egg prices, any effort to stop U.S. egg exports will likely be rejected. That means increase supply via imports and eventually more U.S. egg production, and/or reduce demand via higher prices.