Dive Brief:
- The U.S. egg supply has bounced back after months of high prices due to the loss of millions of laying hens during the bird flu outbreak — about one-tenth of the country's total flock, according to Chicago Tribune. After taking precautions, such as building fences to keep sick birds out, and receiving clearances, farmers began repopulating hens and have since ended the egg shortage.
- U.S. egg prices have fallen 75% since hitting a record high in August, in some cases being lower than when the bird flu epidemic began.
- While many farmers have recovered much or all production capacity, demand has not bounced back to keep up with supply, meaning the U.S. could see an egg oversupply in the future. Countries that banned imports of U.S. eggs have been slow to start purchasing them again. USDA predicts that 2016 egg exports will be the lowest since 2012 (shipments sank 34% in the first quarter).
Dive Insight:
Domestic demand has also waned. After the start of the bird flu, demand for eggs from the food ingredient industry fell 25%. Manufacturers began reformulating recipes to use no eggs or egg substitutes, such as the plant-based alternative from Hampton Creek or algae-based powder from TerraVia (Solazyme).
Business may be returning, but two years from now, sales could still be 15% less than since before the outbreak, Jonathan Spurway, vice president of marketing at Rembrandt Enterprises Inc., told Chicago Tribune. Even though eggs have returned and prices have fallen dramatically, several manufacturers still haven't switched back to traditional eggs after beginning to use the alternatives.
After farmers began recovering their flocks, speculation rose that the bird flu could return in the fall after summer's hot temperatures gave farmers relief from the disease. But that resurgence never came. In 2016, there has been only one reported case on a commercial turkey farm in Indiana, which resulted in the destruction of a 62,000-bird flock and more than 300,000 birds from 10 other poultry farms in the area.
Last year, most of the bird flu cases were detected in April and May. With May being nearly halfway over, it seems farmers — and manufacturers — may have gotten away unscathed this year. But manufacturers that also produce eggs, such as Post and its Michael Foods business, haven't fully recovered, with egg volumes down 15.9% and egg sales dipping 2.8% in the most recent quarter.
But the question now is whether manufacturers that have switched to egg alternatives will switch back. Many consumers are pushing for plant-based diets, and many egg alternatives are plant-based and compliant with the vegan diet. To appeal to those consumers, manufacturers may not return to using the more volatile breaker eggs, even if the price is right (for now).