Retail egg prices up 21% in 2015 Q3Retail egg prices up 21% in 2015 Q3
Egg prices have begun to adjust as industry continues to recover from avian flu.
February 5, 2016
Prices for shell eggs are among the most volatile in the grocery store. While overall grocery store (food-at-home) prices typically do not rise or fall more than 1.5% per quarter, over the last 16 years, shell eggs have posted quarterly price changes ranging from an 11.3% decline in the third quarter of 2004 to a 20.9% increase in the third quarter of 2015.
According to Annemarie Kuhns and David Harvey, agricultural economists with the U.S. Department of Agriculture’s Economic Research Service (ERS), one reason for price swings for retail shell eggs is that they require little processing, and thus, their prices are more closely linked to volatile farm prices for eggs. Additionally, unlike many other retail foods, shell eggs have a limited shelf life; they cannot be frozen or canned.
“If supplies of shell eggs fall or demand rises, there is limited inventory to draw on, and retail prices may rise,” they explained. “Fluctuating consumer demand for shell eggs contributes to prices typically rising at the end of the year for holiday baking and falling again after the Easter holiday.”
While some price fluctuations are expected due to seasonal demand for shell eggs throughout the year, Kuhns and Harvey said there have been some above-average price increases over the past 16 years, mainly due to disease outbreaks that affect poultry or to surges in feed prices.
In 2003 and early 2004, retail shell egg prices rose sharply — up 14.2% in the fourth quarter of 2003 — due to exotic Newcastle disease, which resulted in egg-layer depopulation.
In 2007 and 2008, prices increased more than 9% for three consecutive quarters.
Kuhns and Harvey said it is likely that rising grain prices brought on a decline in egg production as some producers may have switched to lower-cost feed containing less protein.
During the same period, prices for the chief ingredients in feed for egg-laying hens — corn and soybean meal — rose 41 and 42%, respectively. Since rising grain prices affect many retail foods — not just eggs — a corresponding but muted increase was also seen for food consumed at home; in the first three quarters of 2008, grocery store prices rose more than 1.5% each quarter.
The most recent upswing in retail shell egg prices, according to the economists, was largely due to an outbreak of highly pathogenic avian influenza (HPAI), which affected table egg-laying flocks primarily in the Midwest. To contain the outbreak, which ran from late 2014 to June 2015, producers destroyed about 33 million egg layers (roughly 11% of U.S. egg-laying hens).
“As it will take time to replace the lost hens, consumers will continue to see higher prices at the grocery store,” the ERS economists explained.
Retail shell egg prices rose 20.9% in the third quarter of 2015, and egg prices in September 2015 were 36.2% higher than in September 2014. As the industry recovers from the HPAI outbreak, retail egg prices have begun to adjust, falling 3.3% in the fourth quarter of 2015, Kuhns and Harvey said.
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