The Van Trump Report

How California’s Egg Shortage – and Skyrocketing Prices – Could Spread to Other States

Avian influenza, aka “bird flu,” absolutely ravaged US poultry flocks in 2022 with almost 58 million birds in commercial poultry operations lost to the disease. The losses are now greater than the last major outbreak in 2014-15 that wiped out 50.5 million US poultry birds. Interestingly, California ranked 13th among US states for total number of bird losses at around 707,000. While that’s far fewer than the worst affected states, California nonetheless has the highest egg prices in the country at over $7.00 a dozen, versus an average of $5.40 nationwide.

The nationwide average is almost $4 higher than it was at the beginning of 2022 and is largely due to the ongoing bird flu outbreak. Nearly every US state (47) had at least one confirmed case of HPAI in poultry flocks last year. The worst affected states included Iowa (15.92 million), Colorado (6.26 million), Nebraska (over 5 million), Pennsylvania (4.35 million), and Minnesota (4.2 million).

The nationwide bird flu outbreak is only partially to blame for the crazy high egg prices and empty shelves in California, though. Many poultry industry insiders blame California’s Proposition 12 for the troubles, which they say created a cage-free chicken shortage that has exasperated the crisis. Passed in 2018, the legislation banned the production and sale of meat and eggs raised in cages as of January 1, 2022.

Critics of Prop 12 have long argued that the law would drive up food prices in California. The state doesn’t have nearly enough production capacity to meet demand so it sources as much as half its eggs from out-of-state. However, cage-free eggs only account for about one-third of US production. What’s more, cage-free production has been particularly hard hit by the HPAI outbreak due to higher levels of exposure that are inherent with many free-range and cage-free operations.

Unfortunately, the bird flu danger is ongoing with highly pathogenic avian influenza (HPAI) now considered endemic in wild bird populations that spread the disease as they traverse the globe. Ag economists say the future of egg prices will depend on how well producers are able to contain HPAI outbreaks going forward. Cal-Maine Foods, the largest egg producer in the US, said that it believed the HPAI outbreak will likely affect the US cage-free conversion rate among producers. Most egg producers are working toward shoring up biosecurity, which reduces the amount of capital available to make pricey cage-free conversions.

That means cage-free capacity is unlikely to keep up with the growing demand, which is set to grow exponentially due to legislation enacted by several other states. As of January 1, 2023, laws banning conventional eggs went into effect in Colorado and Washington, which has put even more strain on West Coast demand for cage-free supplies. Other states with pending cage-free egg laws include Arizona, Oregon, Michigan, Nevada, Utah, Massachusetts, and Rhode Island. Most of these sales mandates will be in effect by the beginning of 2025. (Sources: WattAGNet, LATimes, FoodSafetyNews)

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