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Egg Price, Production Prospects in US

07 January 2015

US - Even ahead of the ban on battery cage eggs in California, pundits were forecasting dramatic increases in egg prices for consumers across the country. What are the prospects for the US egg market in 2015?

The ban on the sale of eggs from battery cages in the state of California goes back to 2008, when there was a vote in favour of Proposition 2 (Prop 2), which aimed to ban the keeping of all animals in cages – not only hens. Supporters said the cramped conditions caused animal suffering and increased the risk of Salmonella contamination.

Two years later, according to the LA Times, then state Governor, Arnold Schwarzenegger, introduced a further bill, under which shell eggs arriving from other states must also comply with Prop 2 by the same deadline – 1 January 2015.

California does not produce enough eggs to meet its requirements and so shell eggs and products come in from other states. Several of these, including Missouri, Alabama, Iowa, Kentucky, Nebraska and Oklahoma, objected to Prop 2 on the grounds that it interfered with production methods outside the state of California but so far, their suit has been dismissed.

One likely result of Prop 2 is an increase in retail egg prices as producers try to recoup the additional costs of providing their birds with more space.

Dan Sumner, an agricultural economist at the University of California Davis told LA Times wholesale prices could rise 10 to 40 per cent this year.

At the beginning of November, wholesale prices for Grade A large eggs in the New York market were in the mid-$1.30’s per dozen, according to the USDA Economic Research Service. In its latest Livestock, Dairy and Poultry Outlook, the Service reported that four weeks later, prices spiked at just under $2.20 per dozen.

The rise in prices may also be attributed to strong demand for eggs for export. The ERS reported in mid-December that egg and egg product shipments in October 2014 stood at 37.7 million dozen, which is more than 20 per cent higher than a year previously.

Figures from the USDA Agricultural Marketing Service for the period January to October 2014, however, show a slight decline in shell eggs exports from the US compared to the corresponding report last year.

The latest AMS egg and egg product export report for December 2014 shows US egg product exports eight per cent higher for the first 10 months of 2014 than the same period the year before. Two products that contributed to this increase were dried yolk (+60 per cent) and liquid/frozen albumen (+47 per cent).

The December 2014 World Agricultural Supply and Demand Estimates (WASDE) report from the World Agricultural Outlook Board indicates the price of eggs in the US at an unusually high level for the fourth quarter of 2014 at between 164 and 167 US cents per dozen, which compares to the estimated annual average of 143 cents.

However, these high prices are not expected to continue. The Board's projections for 2015 are well down on the 2014 figures in the first three quarters of the year.

US egg output is forecast higher in each quarter of 2015 than in the corresponding period of 2014. Interestingly, the Board estimates annual per-capita egg consumption at 260 eggs in 2014 – up from 254 in 2012 and 255 in 2013.

Since the first detection of the highly pathogenic avian flu virus in the US shortly before Christmas, it is possible egg exports will take a hit in future. So far, the virus has not been found in commercial poultry flocks, only in wild birds and backyard flocks in Washington and Oregon.

President and chief executive of the California Grocers Association, Ronald Fong told LA Times about the egg supply situation: "It's sort of a perfect storm."

He did not foresee a significant egg shortage but was unsure about changes in retail prices.

Representing the majority of US egg farmers as president of United Egg Producers, Chad Gregory expressed confidence that the industry will adapt to consumer demands.

With other states such as Oregon, Washington, Michigan and Ohio introducing similar laws to California in the meantime, he called on the federal government to provide uniform guidelines.

ThePoultrySite News Desk

Top image via Shutterstock





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