Bird Flu in Top U.S. Egg Region Boosts Processed Food Prices

(Bloomberg) -- The prices for processed eggs, which go into everything from salad dressings to cake mix, are soaring to record highs due to bird flu outbreaks in the midwestern U.S.

Avian influenza is spreading in flocks around the country at a pace that could make it the worst outbreak in U.S. history. The virus has already taken out 20 million birds and it’s hitting the market for breaker eggs, mostly produced in states like Iowa. These eggs are processed into liquid or powder form, and go into manufactured foods. The sky-high prices for breaker eggs are going to add to higher production costs for food makers and further stoke inflation that’s already rising the fastest in four decades.

More than half of U.S. farms affected by the bird flu are tied to egg production that goes into further processing, said Karyn Rispoli, egg market reporter at commodity researcher Urner Barry. Many companies have shut down plants to comply with sterilization procedures, and are unable to fulfill orders. 

“There’s simply not enough to go around at this point,” Rispoli said. 

The price of eggs that are cracked and sold in liquid form hit a record high of $2.37 a pound on Wednesday, according to Urner Barry. Those are used by wholesale bakers and restaurants such as McDonald’s Corp. Other products like some types of dried eggs, powdered products that go into pasta and cake mixes, are also at their highest ever prices.

Michael Foods, a Minnesota-based egg producer, detected bird flu in its Nebraska farms with two million egg-laying hens, according to an April 12 release. In March, Rembrandt Enterprises Inc. culled more than five million birds in Buena Vista County, Iowa. 

Meanwhile, the shell egg market remains steady with slowing demand, as retailers already finished their Easter shopping ahead of the religious holiday. But further bird flu spread looms over the market that provides directly to grocery stores. An additional five to ten million infected birds could tighten the whole industry’s supplies more and raise prices, said John Brunnquell, chief executive officer of producer Egg Innovations.

“It could easily occur and that’s why we’re all kinds of on pins and needles,” Brunnquell said. “Because there’s avian influenza incidents in commercial poultry, indicating broilers, turkeys, ducks, happening every day.”

(Updates with additional quote about shell egg market in the last two paragraphs.)

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