Egg prices are coming back down to Earth, at least on the wholesale side of the supply chain.
Prices in the consumer market are still high and rising — up 70% over the previous year — but there’s optimism among some egg producers that the industry has recovered from a nationwide battle with avian flu. That, combined with reduced post-holiday demand, could be lowering the wholesale price, said Sam Krouse, co-CEO of Indiana-based MPS Egg Farms.
“Eggs are a pure commodity, and they’re driven almost entirely by supply and demand,” Krouse said in an interview with Marketplace’s Sabri Ben-Achour for our ongoing Economic Pulse series. “Egg producers have been repopulating flocks all throughout bird flu and been able to increase supply so that we can keep eggs coming, and the two of those in combination have served to bring the wholesale price of eggs down.”
The following is an edited transcript of their conversation.
Sabri Ben-Achour: So egg prices have been moving around so much. What’s going on there?
Sam Krouse: You know, the biggest impact on egg prices has been bird flu this year, in addition to a number of other inflationary pressures that egg farmers, like industries all throughout the economy, have been feeling.
Ben-Achour: What’s brought them back down?
Krouse: It’s a combination of factors. Eggs are a pure commodity, and they’re driven almost entirely by supply and demand. So through the holiday season, we saw demand get very high as people were doing more hosting and baking. And since then, demand has softened somewhat as people settle into their more normal routines. At the same time, egg producers have been repopulating flocks all throughout bird flu and been able to increase supply so that we can keep eggs coming, and the two of those in combination have served to bring the wholesale price of eggs down.
Ben-Achour: So far, you have managed to avoid being directly affected by the most recent bird flu outbreak. How did you do that?
Krouse: We have, and we’re extremely thankful for that. It really comes down to our team and the culture of biosecurity that we have at MPS to take care of our birds and make sure we’re staying safe. MPS learned a lot after the 2015 outbreak of bird flu on the ways that we can implement what we call biosecurity, which is, in very short, keeping the outside out and making sure any potential pathogens that are out there aren’t getting exposed to our hens.
Ben-Achour: What do biosecurity measures look like at an egg farm?
Krouse: Biosecurity looks like a lot of different things. It starts as soon as vehicles enter our farms, and we have truck washes that wash and disinfect every vehicle that comes onto the farm. Everybody who comes on the farm then has to enter through a locker room, where they either put on a suit or change into a uniform that just stays on the farm, so that, you know, anything from the outside stays out — and everything that needs to be on the farm with the birds stays in. At the same time, anybody who goes outside and needs to put on new shoe covers to prevent keeping anything outside out. So that’s really the biggest thing.
Ben-Achour: One of the sort of notable things about this current bird flu is how much it affects wild birds and how many different species of birds that can affect. I mean, if some random pigeon lands too close to any of your hens, it could pose a real risk. How do you control things like that?
Krouse: It’s still biosecurity, it really is. And we’re taking the learnings from 2015 even further this year. So your example of the pigeon is a good one. In our taking biosecurity to the next level, we’re going around each house and looking at every single opening, which includes air inlets and ventilation, where we have bird wire that keeps birds out. Well, a lot of that is 2-inch, and we’re going through and saying, “Gosh, can even the smallest sparrow get through?” And we’re actually reducing that to 1 square inch. So we’re trying to take all of our biosecurity to the next level so that we can make sure we keep our hens safe and our customers served.
Ben-Achour: Do you think that these more aggressive outbreaks are going to be just a reality moving forward for the industry?
Krouse: There’s just no way to know. You know, egg farmers are going to continue to be resilient, and we’re going to keep the same good practices to care for our hens and keep our customers served.
Ben-Achour: Eggs are one of those things that people eat them in good times and bad. But I wonder if you have to predict anything about the economy this year in estimating how you do business.
Krouse: Eggs are an extremely resilient food. I think, you know, there aren’t many replacements. And no matter what the price is, they are a great, affordable source of protein for people. You know, it’s hard to find a source of protein that is more cost-effective pound for pound than eggs. So, eggs have been remarkably economically resilient and had good demand in good economic times and in bad.
Ben-Achour: As you sort of take on these different challenges, what are the conversations you’re having with your customers?
Krouse: It really comes back to our resilience and being able to be responsible in providing our customers everything they need. The challenges that face egg farmers now and in the future, it includes bird flu. It also includes state laws that are changing to require cage-free in different areas. So the challenges that face MPS and our entire industry require a strong partnership between us and our customers to plan for the future and to be sure we’re ready for whatever challenges come.