Economic implications of the Bird Flu

NYU School of Medicine's Dr. Devi Nampiaparampil on the Bird Flu outbreak and its potential economic and market impact.

Is the Bird Flu Outbreak Really Impacting Egg Prices?

By Features FOXBusiness

The U.S. Department of Agriculture  (USDA) says egg prices are down from last year

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However, some reports are forecasting an “eggs-pensive” summer, as fears of high egg prices grow during the worst outbreak of bird flu in U.S. history. While the industry has lost approximately 22 million hens, according to The Egg Industry Center, the impact has yet to hit consumers’ pockets.

“Egg prices are expected to increase seasonally in 2015, but will average below 2014,” said Shayle Shagam, a Livestock, Poultry, and Dairy Analyst for the USDA.

According to a  May 12th report, the USDA forecast egg prices to average $1.23-$1.127 per dozen in the second quarter of 2015, $1.16-$1.24 in the third quarter and $1.33-$1.45 in the fourth quarter.  This compares to prices of $1.35, $1.29 and $1.63 in the second, third, and fourth quarters of 2014, respectively.

Though this crisis could shape up to become the largest short-term change to the U.S. egg market ever experienced, many say only time will tell its true impact.

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“It’s still too early to tell the full impact for consumers,” said Bill Northey, Iowa’s Secretary of Agriculture.

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Iowa is the top U.S. egg producer and has been the hardest hit by the avian flu, losing 40% of its laying hens. The state produces about 15 billion eggs a year.

“Over a third of our layers have been affected by avian influenza.  Clearly this will have some impact on prices, both on the shell eggs you see in the store and on processed eggs, such as liquid and dried, that are an ingredient in other products,” said Northey.

And big food corporations who rely heavily on eggs are already anticipating an increase of cost.

In a statement sent to FOXBusiness.com, Dunkin Donuts (DNKN) said: "We are continuing to closely monitor with our supply chain partners the recent avian influenza outbreak and resulting effects upon the egg supply in the United States. At this stage, it is too early to determine any specific impact upon Dunkin’ Donuts’ product inventory or pricing. Given the current situation, we do anticipate an increase in the cost of eggs due to the shortage. Ultimately, any pricing decisions on products in our restaurants are made by our individual franchisees as they determine what is best for their business.”

But this isn’t the first epidemic to impact our shores. A major epidemic of highly pathogenic avian influenza (HPAI) occurred in the United States in 1983-84. It took more than 2 years to eradicate, at a cost of more than 70 million dollars. Approximately 17 million birds had to be destroyed and it caused a 12% change in egg prices.

Some countries have stopped imports of eggs from the U.S entirely, while other countries have restricted imports from the affected states, but are still importing eggs from states without HPAI.  In 2014, the U.S. exported approximately 5% of the eggs it produced.

“I do think it is important to remind all customers that there has been no human health impact from this disease and eggs, turkey and chicken are safe to eat,” said Northey.

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