Beginning May 26, farmers were able to file for aide from the Coronavirus Food Assistance Program (CFAP). At that time egg farmers producing liquid egg for foodservice establishments were excluded because liquid egg and shell egg farmers were combined into a single category as a commodity that did not suffer a 5% or greater price decline from mid-January 2020 to mid-April 2020. Now, the National Association of Egg Farmers (NAEF) and Iowa leaders are urging the U.S. Department of Agriculture to reconsider.
NAEF said commodities are required to have at least a 5% decline in price from mid-January to mid-April for farmers to qualify for CFAP. USDA data for processed (liquid) eggs show that the price was 24.65 cents/lb. in mid-Jan 2020 and 7.71 cents/lb. in mid-April.
The egg market has two distinct markets: shell eggs and egg products. These two distinct types of laying hen farms utilize different processes and equipment to supply their customers. In fact, the shell egg market experienced a short-lived spike, while the liquid egg market fell to a record low. NAEF noted that, for distinction between the various markets for eggs, the following prices were gathered from UDSA data between mid-Jan and mid-April 2020:
- Liquid egg price decreased from 25 cents to 8 cents/lb.
- Dried egg price decreased from $2.15 to $2.02/lb.
- Shell egg price increased from 79 cents to $1.79/doz.
In a letter sent to Agriculture Secretary Sonny Perdue on June 2, U.S. Sens. Chuck Grassley (R., Iowa) and Joni Ernst (R., Iowa), Iowa Gov. Kim Reynolds and Iowa secretary of agriculture Mike Naig asked USDA to include egg producers to CFAP.
With nearly 70% of Iowa’s layer flocks producing for the liquid egg market, the COVID-19 market disruption has proved to be devastating to Iowa’s egg producers, the state leaders said.
“COVID-19 has impacted our Iowa farmers, including our egg producers, whose eggs were destined for the liquid egg market. Because of the massive damage done to this industry as restaurants, schools and other egg-buying businesses have closed over the past few months, we write today in support of their inclusion into the CFAP to keep these producers afloat until the pandemic abates,” the Iowa leaders wrote.
“This 68.7% price decline is significantly greater than the 5% price decline threshold required to qualify for the CFAP program,” NAEF said. Because USDA data are incomplete, other sources can be used to verify the accuracy of this information. Urner-Barry reported a 59% decrease from 27.0 to 11.2 cents/lb. during the same time frame. Both sources support a finding that this commodity has suffered more than a 5% loss in market value.
NAEF also stated that USDA data from the "Weekly Shell Eggs Processed under Federal Inspection" report shows that liquid edible egg production is the lowest it has been since December 2009. The five-week running average of edible liquid egg production by mid-May 2020 was 29% lower than the same period of 2019 and the lowest since January 2004.
The Food & Drug Administration created a temporary pathway to move eggs from the liquid market into the shell egg market; however, this wasn’t applicable to many farmers because: (1) their flocks were ineligible due to a requirement for hen age to be less than 45 weeks, (2) eggs could not be packaged with equipment that was available and (3) retailers were generally not willing to accept alternative egg packaging.
Many customers imposed the force majeure clause in their contracts and stopped taking delivery of egg products. As a result, egg farmers needed to dispose of liquid egg product through unpaid channels, NAEF stated.
While liquid egg can be dried for longer shelf life, dried egg product inventories at the time of the COVID-19 outbreak were close to an all-time high. This, along with limited dryer capacity and increased cost, limited liquid egg supplies being converted into dried egg as a viable option.
NAEF stated that some farmers were able to molt their flocks to temporarily reduce egg production. Flocks molted at the beginning of the COVID-19 outbreak are coming back into full egg production while the market is still low. The national flock size has dropped by almost 6 million layers during April, in addition to the reduction of 10 million laying hens during the first quarter of 2020.
In his weekly newsletter, NAEF president Ken Klippen said on June 3 the association is urging USDA's Farm Service Agency and Agricultural Marketing Service to "help these egg farmers utilize the provisions in CFAP since they too lost more than 5% of their value during COVID19.”
“We are grateful to the Trump Administration and USDA for the relief the CFAP has provided to our crop and livestock producers,” Naig said. “Egg producers should also be included in the program since they have been greatly impacted and play a key role in our food supply and state economy. We must support them throughout these ongoing market disruptions.”
Ernst added, “Iowa's farmers have been doing their part to help our state and nation navigate the effort to defeat COVID-19, and our egg producers are no different. Much of our state's egg production supports our commercial foodservice, and while many restaurants and other facilities have had to close or limit operations throughout this pandemic, our egg industry has seen a drastic drop in demand and as a result some have had to dump product. These hardworking folks need relief and assistance, and that's what we're fighting for and pushing USDA to provide.”