Egg prices spike after millions of chickens die

Consumers can expect to pay more for everything from mayonnaise to pasta, baked goods to ice cream as egg prices soar in reaction to the worst outbreak of avian influenza in U.S. history.

According to statistics from the U.S. Department of Agriculture, as many as 32 million egg-laying hens — roughly 10 percent of the entire U.S. flock — have died since the highly contagious H5N2 strain of avian flu was first detected in December 2014. According to the U.S. Centers for Disease Control and Prevention, the likelihood of human infection from H5N2 is extremely low, but the disease has decimated U.S. poultry populations.

Thus far the outbreak has been largely concentrated in the Midwest. Iowa, the nation's leading egg producing state, has been hit especially hard. There, more than 26 million chickens and turkeys have been destroyed in an attempt to stop the spread of the disease.

"Virtually every egg layer in Sioux County (Iowa) is either dead or dying," said Jim Dean, chief executive of Center Fresh Group.

Center Fresh Group represents some of the nation's largest egg producers. Dean told the Wall Street Journal that three of the four companies he represents have been "completely shut down."

The egg market is divided into two categories; "shell eggs" — whole eggs sold on refrigerated store shelves that most consumers are familiar with, and "breaker eggs" — processed liquid eggs used by industrial food manufacturers.

In Montana, shell egg prices have remained fairly stable. The price of a dozen large eggs at Van's IGA on Friday was $2.49. At 2J's the price for a dozen eggs was $2.15, while certified organic eggs sold for $5.99 a dozen.

"We've seen some moderate increases and decreases, but no sudden jumps," said Jay Schmidt, dairy section manager for Van's in Great Falls. "It's kind of been like the price of gas."

That could change in the weeks ahead.

According to bureau chief Dan Turcotte, head of Montana's Milk and Egg Bureau, egg prices regionally tend to follow trends set in the markets of the Midwest.

"Generally the pricing for eggs is all set by the Chicago Mercantile Exchange," Turcotte said. "So anything that effects that, whether its in the Midwest or on the West Coast is going to be reflected in those prices."

In total, nearly 40 million domestic birds in 16 states have either died or been destroyed due to the avian flu outbreak. The disease has largely bypassed the southeastern U.S., where the bulk of the nation's broiler chickens are raised. The most immediate impact has been a sudden rise in egg prices.

Since April 1 the price of a dozen large Grade A shell eggs in the Midwest has risen 85 percent, from around $1.20 a dozen to $2.20 a dozen. However it's the breaker egg market that is feeling the greatest impact.

In just two months, the price for breaker eggs has more than tripled, from around $0.60 a dozen at the beginning of April to $2.02 a dozen May 21. Price increases in the breaker egg market have averaged more than 5 cents a day, and there is no indication that egg prices will return to pre-avian-flu levels any time soon.

According to a report published by CBS News, the repopulation of hens at scores of egg farms across the Midwest could take years. In the meantime, egg production operations have dialed down at large corporate farms, diminishing the processing capacity of the national egg industry as a whole.

Turkey prices are up as well. Growers in Minnesota and Iowa have reported the loss of as many as 7 million birds, and the price of turkey breast meat at delis in Chicago has risen 10 percent since mid-April.