Avian Flu Sends Egg Prices Flying in Centre County and Beyond

There’s an avian flu outbreak that’s killing and infecting egg-laying chickens across the Midwest and West Coast, and even residents all the way in Centre County are seeing egg prices fluctuate.

The highly pathogenic strain of the avian flu called H5N2, which first emerged in wild and commercial flocks in the U.S. in early 2015, has crippled the egg industry on a national scale.

Livestock, poultry and dairy analyst Shayle Shagam at the U.S. Department of Agriculture said, “Eggs can be moved around the country, so there’s not a truly local market.”

The strain is fatal to both chickens and turkeys, and as of June 17, across 15 state more than 48 million birds have died or been killed to prevent the virus from spreading, according to the USDA.

The result ― egg production this year will be down about five percent from 2014, a decrease of 334 million dozen eggs, according to USDA predictions. That’s quite a bit considering as a whole American’s consume more than seven billion eggs a year.

The subsequent peaks in egg prices are partly due to less production from states like Iowa, which has been the most impacted state and also the state the produces more eggs than any other.

Iowa’s governor announced a state of emergency when dense outbreaks first exploded across the state. According to the state officials, over 30 million birds have been euthanized so far.

While egg production has hit a slippery slope in states like Iowa, Shagam said areas of the country where outbreaks have not occurred are stepping in to fill those gaps. But the operations that are redirecting some of their egg supply to areas where there is a shortage puts pressure on their usual demand and within the states that they generally supply eggs to.

Shagam went on to explain that prices also skyrocketed around mid-May and June because restaurants and other food companies that rely on liquid or “breaking” eggs for certain food products began switching to shelled eggs.

Generally, “breaking” eggs sell for 50 or 60 cents less than shelled eggs. But, as the price between “breaking” and shelled eggs closed in at around 7 cents because of the avian flu, it became worthwhile for these businesses to buy shelled eggs. 

“Normally these are eggs that you and I would be using, say for eggs and bacon, but a lot of them are being diverted to the breaking egg market,” Shagam said. “This caused a huge run up in shelled egg prices.”

Another big question for Centre County residents is what’s in store for egg prices for the rest of 2015 and into 2016.

By mid-May, the cost for a dozen wholesale large eggs based on prices in the New York region reached $2.49. It made it’s way back down to $1.89, but by July 13 the price had made its way back to $1.94.

“We’ve been going through a series of peaks and valleys,” Shagam said.

The USDA also predicts table egg production for 2016 to be 7.0 billion dozen, an increase of 2.0 percent over the 2015 forecast.

As the avian flu picked up speed across the Western portion of the country, operations that were not impacted began to increase their own outputs and eggs were also taken out of cold storage.

Some buyers are also now choosing to step back from the market, which is helping precipitate the more recent decline in prices.

Rita’s ― a Philadelphia-based company with a location at Beaver Avenue in downtown State College ― decided to pull frozen custard, which is made with eggs, from its menu.

The franchise is substituting the custard with soft-serve ice cream at all its 600 locations until there is a steadier supply of eggs, according to Rita’s website.

The switch has not impacted sales at the Rita’s in State College, said the store manager Rich Shore.

 “We haven’t had any complaints,” Shore said. “Locally the people really like the soft-serve.

Sysco Corp, which is the largest U.S. food distributor, in May also said that it would encourage customers to create alternative menu items when the avian flu began limit its supply of eggs and chickens, according to Reuters.

Despite the pressure from the market, many restaurants in State College said they are not feeling a sense of urgency to change their menu items or prices.

“We’ve just been absorbing the costs. We will wait to reevaluate in the fall,” said Mike Desmond who is a partner at Hotel State College & Co. The company owns both the Corner Room and the Allen Street Grill.

The USDA does predict that the number of avian influenza cases will decrease during the summer due to the warmer weather, but official have said the virus could return full force in the fall.

Pat Daugherty, the owner of the Tavern, said his restaurant has not increased the prices of its chicken dishes, but would do so before taking poultry off the menu.

However, Daugherty doesn’t have as much to worry about as the Corner Room does with its all-daylong omelet service. The USDA said in its June monthly report on the poultry market that the avian flu outbreak has actually resulted in cheaper wholesale chicken prices in the U.S. because many countries have decided to restrict imports of U.S. poultry products in light of the recent outbreaks.

“What this situation has done is increase the amount of broiler products on the domestic market … resulting in placing downward price pressure on a number or boiler products,” according to the release.

This report also said that the avian influenza has mostly reached egg-laying chickens and turkeys and has not yet significantly impacted the production of boiler meat.