Avian Flu Causes Egg Prices to Reach All-Time Highs

Egg prices have reached record highs this year, due to an outbreak of avian influenza that has killed tens of millions of chickens and turkeys across nearly all 50 states. This devastating disease has caused a major shortage of eggs, driving up prices for consumers.

Wholesale prices of Midwest large eggs hit a record $5.36 a dozen in December, according to the research firm Urner Barry. This is a significant increase from the prices seen in previous years. Retail egg prices have increased more than any other supermarket item so far this year, climbing more than 30% from January to early December compared with the same period a year earlier, and outpacing overall food and beverage prices, according to the data firm Information Resources Inc. This trend is likely to continue into the future, as the demand for eggs continues to rise.

Eggs are a staple product for supermarkets, and most consumers pick them up on trips to the grocery store, along with milk and butter. To keep store traffic high, grocers said they have been sacrificing some profits on eggs to keep prices competitive for consumers. Some suppliers are projecting potential relief in price by February or March, but cold weather could hamper production in the near term, executives said.

According to Dan O'Neill, director of center store and perishables at Angelo Caputo's Fresh Markets, the chain is trying to keep eggs relatively accessible. The Fresh Markets chain consists of eight stores located in Illinois.

Angelo Caputo's recently bought extra-large eggs for $5.09 a dozen, up from $1.30 at the start of the year, according to Mr. O'Neill. The grocer has been selling eggs for slightly above cost for months, as wholesale prices have increased, he said.

Grocery prices have increased this year due to higher costs of labor, ingredients and logistics, according to companies. This has helped supermarkets generate higher sales and profits. Egg prices have also increased due to these factors. Some supermarkets are selling more organic eggs, which can be less expensive than conventional varieties. However, suppliers say that consumer demand has remained steady despite higher prices.

Cases of highly pathogenic avian influenza have led to the deaths of millions of birds this year, making it the deadliest outbreak in U.S. history, according to Agriculture Department data. To help limit the outbreak’s spread, entire poultry flocks are destroyed after an infection is confirmed.

More than 40 million egg-laying chickens have died in the current outbreak, according to the USDA. This has caused the total supply of egg-laying chickens to fall by more than 5%, to about 308 million.

Despite a tight egg supply and high prices, shortages are still a long way off, said Emily Metz, chief executive of the American Egg Board. Egg supplies have been more stable this year compared with the previous major U.S. avian-influenza outbreak, in 2015, she said, as the time it takes for farms to recover from an outbreak has shrunk to roughly three months from six to nine months.

The current outbreak of avian influenza has largely been attributed to wild birds spreading the virus to farms as they migrate across the country, agriculture-industry officials have said. While the 2015 outbreak ended in June, cases this year continued to pop up throughout the fall.

Food-industry officials said they are concerned that the current outbreak of foodborne illness could continue. "There's definitely a lot of cause for concern," said Karyn Rispoli, who sets egg prices at Urner Barry.

Wholesale egg prices have been rising for nine consecutive weeks, according to Urner Barry. Strong demand has driven prices higher in recent months as people bake more and eat warmer breakfasts during cooler weather. However, some consumers are starting to buy less eggs as prices continue to rise.

Steve Schwartz, director of sales and marketing at Morton Williams Supermarkets in New York, said that egg prices have been rising steadily in recent weeks.

Grocery executives said that there are not many substitutes for eggs. Specialty eggs, such as organic eggs, can be about $1 cheaper per dozen, but there are only a limited number of brands of eggs available for operators to secure.

Max Bowman, chief financial officer of the largest U.S. egg producer, Cal-Maine Foods Inc., said at a November investor conference that some of the replacement products for eggs are just as rare or expensive.

KeHE Distributors is looking to secure a wider variety of egg brands, as well as plant-based egg alternatives, said Jennifer Onoja, a senior category manager of dairy, nondairy and refrigerated beverages at the grocery distributor. Eggs have cost the company 20% to 50% more this year.

"These are essential categories of food that you should always have in your refrigerator," she said.

After the major outbreak in 2015, the USDA upgraded its virus testing and detection systems, training and equipment. Some farmers invested in new biosecurity systems for their barns meant to disinfect anyone who walks into the tightly sealed poultry houses. Despite the changes, farmers and USDA officials have struggled to halt this year’s outbreak.

Ms. Metz of the American Egg Board has said that all signs are pointing to the fact that the industry will have to deal with this issue. She added that they are continuing to manage it and improve in how they deal with it.