Egg prices rise due to summer bird flu outbreak

In September the average price of a dozen eggs rose 3 cents from the previous month of August. The price for a carton of eggs ran at around $2.97, a 50.6 percent jump compared to September 2014, reported the Chicago Tribune.

May 2015 represented the lowest egg pricing this year, with a carton ringing in at $1.96 a dozen. Since then U.S. egg prices have seen a 52 percent spike in cost, explained the source.

Bird flu scare influences costs
This is largely credited to an outbreak of avian flu. According to USA Today, in the spring of 2015 over 49 million chickens and turkeys either died or were euthanized by farmers due to the spread of the bird flu.

The primary areas affected were the Pacific Northwest through the Midwest. Unsurprisingly, the death of these birds affected the overall egg supply. The shortage of egg production led to an increase in egg pricing at grocery stores, noted the source.

However, Senior Vice President of Urner Barry Rick Brown believes that relief in pricing is in the near future, according to the Tribune. Brown projected that egg prices will level out by the end of 2015. Brown credits this return to normalcy with farmer's efforts to repopulate the lost birds.

The USDA estimates that it has already spent nearly a half-billion dollars in attempts to rid U.S. farms of the bird flu virus.

The producer price index
The egg industry was not the only market that saw inflammation this year. USA Today pointed out that the producer price index as a whole saw a 0.4 percent increase this June at the height of the bird flu scare.

The index sets out to measure the prices of goods before they reach the consumer market. However, where the index may have seen a decline in pricing, the egg crisis prevented this shift. Record low oil and gasoline prices helped offset the increased food and produce pricing this year. According to the Tribune, the 12 month index remained virtually unchanged through the duration of 2015.

However, USA Today noted that the egg crisis in particular had a surprisingly strong effect on index numbers.

The source explained that generally eggs make up an almost negligible share of the index at large. However, due to the intense pricing spikes since April, the egg market had the ability to raise the index numbers.

"When [eggs are] rising at a 58,000 percent annualized rate, as they have the past two months, the impact is material," said Morgan Stanley Analyst Ted Wieseman to USA Today. Wieseman projected that eggs were responsible for almost one-fifth of the rise in producer prices in June.

Supply chain implications
Whenever there is volatility in produce markets supply chain managers must make sure to make the relevant adjustments to spend management protocol. 

While the dip in pricing does seem to be coming to a close, according to the Tribune, egg prices aren't set to let up until after the holiday season. This will force the egg market to take a hit, considering the holiday season is typically a time for increased egg sales due to a higher demand for baked goods.

Brown told the Tribune that consumers are seeking out egg substitutes in place of whole eggs for their baking needs. He also noted that customers are in no rush to start buying eggs again due to a leftover fear of the bird flu.

For now, suppliers, distributors and farmers will need to sit out the slump and wait for egg sales to make their peak after the year comes to an end.

Share To:

The Strategic Sourceror

Post A Comment:

0 comments so far,add yours