Bird flu exacerbates Iowa egg industry’s economic pains
As a deadly bird flu spreads across commercial and backyard flocks, many are worried about the economic toll the virus will have on Iowa and its egg layers.
Some 24 million birds in poultry and turkey flocks across the country have been culled due to the virus’ most recent outbreak. With Iowa leading the nation in egg production, the depopulation of its flocks is hurting its already pared-back egg production industry.
In 2015, an outbreak of the same virus took a $1.2 billion toll on Iowa and resulted in the loss of more than 8,000 jobs, according to a report commissioned by the Iowa Farm Bureau Federation. State Secretary of Agriculture Mike Naig said he’s concerned about seeing a repeat of that economic disruption.
“It is an economically devastating experience for producers,” he said during a visit to Morningside University in Sioux City on Friday.
Naig said the United States Department of Agriculture does pay indemnification for the birds – assisting with disposal and disinfecting costs. But, he said that support alone isn’t enough to remedy the loss of flocks.
“It will be some time before producers can then restock and get back into business,” Naig said.
Last week, The Storm Lake Times reported that Rembrandt Enterprises, one of the nation’s leading egg producers, laid off more than 200 workers at its Spirit Lake facility. The northwest Iowa producer lost its flock of more than 5 million chickens to the virus in March.
Rembrandt Enterprises did not respond to a request for comment.
Flock losses caused by the virus are piling on an industry already struggling to recover from the pandemic, said Brian Earnest, an economist with CoBank, which is part of the Farm Credit System.
He said the nation already saw a significant decrease in production due to the pandemic. The industry lost about 20 million egg layers in just two years, according to Earnest’s data analysis. He said the bird flu is just further depleting production.
“If we continue to see these flock depopulations – especially at the rates we've been seeing – that continues to put pressure on availability even into this fall,” Earnest said.
The limited supply is pushing up costs, alongside higher feed costs and supply chain disruptions. The price of wholesale eggs rose to $3 a dozen last month for only the second time in its history, according to Urner Barry, an organization that analyzes market prices
As of Monday, the retail price for Grade A white eggs sits at $2.80 to $2.90 per dozen – far above its average of $0.70 to $1.10 per dozen, according to the USDA.
Earnest said the prices are likely to fall some as Easter passes and into the summer when egg demand typically decreases. But, he said the tight supply will likely prevent the price from falling to $0.70 and remaining low.
“We'll probably see a lot more volatility in the spot market as we've got this tight supply situation relative to typical long term demand,” he said.
“It is an economically devastating experience for producers.”
Naig said that the best way to combat inflation is to continue to reply swiftly to outbreaks. He said he believes the state’s improved biosecurity measures can help Iowa avoid the same economic losses from 2015.
“There's food price inflation for a lot of reasons, but we don't want to add on top of that shortages because of high path,” Naig said.