- Michael Foods Egg Products Co., a subsidiary of Post Holdings Inc., has filed a lawsuit against Hawkeye Pride Egg Farms, a division of Iowa egg farms owner Center Fresh Group. Hawkeye Pride allegedly breached a January 2014 contract due to the effects of the bird flu virus that has run rampant throughout the state, which has disrupted Michael Foods' egg supply.
- Michael Foods' chief products include extended shelf-life liquid and precooked egg products and eggs that are used in food ingredients. "Hawkeye's breach of the contract will cause Michael to suffer substantial harm. Under the present circumstances, such harm will be irreparable," according to the lawsuit.
- "Court documents say details of the contract are confidential but that losses exceed $75,000, the threshold a case must meet to be filed in federal court. Michael Foods seeks a court order stopping Hawkeye from breaching the contract, a judgment against the egg supplier and damages 'in an amount sufficient enough to compensate Michael for Hawkeye's breach,'" according to the Associated Press.
The bird flu has affected about 48 million birds nationwide, start to take hold for food companies whose egg supplies have been threatened, if not significantly harmed. In dealing with the situation that eventually led to this lawsuit, "Post said Michael Foods would discontinue certain product lines and take 'appropriate pricing actions' due to the reduced egg supply and higher operating costs," St. Louis Post-Dispatch reported last month. As a result, Post declared "force majeure" for Michael Foods' egg business, releasing the egg supplier from its commitment due to the current unanticipated events.
Egg supplies are disappearing, and prices are soaring for food manufacturers that use eggs, particularly liquid or breaker eggs, in their products. Post, however, did see some slightly positive news earlier this week, as it is now losing 10% less of its egg supply.
As many egg farms across the Midwest were affected, particularly in Iowa, it would not be surprising if many more egg supply contracts are breached by both egg farms and the egg product suppliers that have contracts with food manufacturers that need those ingredients.