Bird Flu Increases ‘Breaker Egg’ Price

Bird Flu Increases ‘Breaker Egg’ Price

Chicago — Joe Greco, who’s been churning out cookies and cakes for 27 years, usually uses about 600 pounds of liquid eggs a week at his bakery near Chicago. Now, his freezer has seven times that amount because Greco worries that record prices are about to go even higher.

The cost of “breaker eggs” — those cracked and sold in liquid form for use by wholesale bakers and restaurants such as McDonald’s — have more than doubled in the past three weeks. The culprit behind the surge: the worst-ever American outbreak of the bird flu virus.

More than 33.5 million chickens, turkeys and other birds have been affected. Iowa, the top U.S. egg producer, was hardest hit, losing 40 percent of its laying hens. The disease prompted the government to forecast the first annual drop in egg production since 2008. Greco is concerned his 4,200-pound stash of liquid eggs won’t protect him from higher costs, and that he’ll have to start buying eggs still in shells to crack by hand.

“As soon as I heard about the bird flu, I knew this was going to happen,” said Greco, 47, who owns Palermo Bakery in Norridge, Ill., near Chicago’s O’Hare Airport. He’s been racing to buy extra supplies over the past month and saw prices for the pails of liquid eggs he buys jump 28 percent last week. “After the Fourth of July, there might be another nightmare, so I’m still shopping around to see if there are better prices.”

Highly pathogenic avian influenza spread rapidly through parts of the Midwest in the past two months, and Iowa lost about 23 million hens. Post Holdings has warned that bird flu will hurt fiscal 2015 earnings at its food-service unit, while countries in the Middle East and Asia have restricted shipments of U.S. poultry.

The U.S. Department of Agriculture last week said that domestic egg production will drop this year, reversing an April forecast for an increase. Bird flu will also limit turkey supplies, though they’re still expected to climb from 2014. Total annual poultry and egg output is valued at about $48 billion.

Prices for wholesale breaker-eggs reached $1.23 a dozen last Wednesday, the highest ever, according to commodity researcher Urner Barry. The highly concentrated industry in Iowa increases the chances of greater supply impact, said David Swenson, a regional economist at Iowa State University in Ames. About 1 percent of the state’s farms account for 97 percent of egg capacity, he estimated.

A third of all eggs in the U.S. are broken for the liquid products, and about 23 percent of that supply has been destroyed by bird flu, according to Urner Barry, which has been tracking the industry since 1858. The liquid eggs are a staple in industrial food production for everything from imitation crab meat to ice cream.

“It’s more complicated than just the grocery store and the dairy counter,” Iowa State’s Swenson said in a telephone interview. Higher costs will “find their way more widely downstream into large industrial users,” he said.

Author: Lydia Mulvany Bloomberg News

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