December 2, 2024 4:11 am

The Perfect Storm: How Avian Flu and Holiday Demand Are Scrambling Egg Prices

New York — Over the past two years, a steady increase in egg prices has quietly reshaped grocery budgets, but this year the trend has reached a new peak. A combination of devastating avian flu outbreaks and heightened holiday demand has created a perfect storm, sending egg prices soaring to unprecedented levels.

Eggs, a fundamental ingredient for everything from breakfast dishes to holiday baking, have become a symbol of market volatility. The Consumer Price Index reported a staggering 30.4% increase in egg prices in October compared to the same period last year, highlighting the mounting pressure on consumers as Thanksgiving and Christmas approach. Stew Leonard Jr., CEO of the popular grocery chain Stew Leonard’s, described the situation with concern. “Thanksgiving dinner costs are relatively stable compared to last year, but eggs are a glaring exception. That’s the one spike we’re noticing,” he said, reflecting on the challenges of navigating this unique economic landscape.

Holiday traditions play a significant role in intensifying demand for eggs. Emily Metz, president and CEO of the American Egg Board, explained how the season exacerbates the issue. “Holidays are when retail egg sales peak,” she said. “Baking, cooking, entertaining—these are central to the celebrations, and eggs are indispensable for all of them.”

The supply side of the equation, however, tells a grim story. Since January 2022, avian flu has devastated poultry farms across the United States, leading to the loss of over 108 million birds. Of those, 75 million were egg-laying hens, representing a significant portion of the nation’s production capacity. The American Farm Bureau Federation estimates that this amounts to an 8% reduction in the national egg supply, a loss that has sent shockwaves through the market.

Recent months have only deepened the crisis. October saw renewed outbreaks of avian flu, particularly in key egg-producing states like Oregon, Utah, and Washington. In these areas alone, 2.8 million hens were lost, which translates to a staggering 60 million fewer eggs entering the supply chain. The USDA has already revised its projections for egg production in the early months of 2025, signaling that consumers should brace for elevated prices well into the coming year.

Economist Bernt Nelson of the American Farm Bureau Federation highlighted the volatility of the egg market, pointing to its unique sensitivity to supply shocks. “Egg prices respond sharply to changes in supply and demand,” he said. “This volatility is heightened during periods like this when production is disrupted by something as significant as avian flu.”

Grocers are now facing an unenviable dilemma: how to manage rising wholesale costs without alienating price-conscious customers. The USDA reported that the wholesale price for a dozen large white eggs in New York surged to $4.23 in mid-November, compared to $2.43 during the same time last year—a 54% jump. Retailers like Stew Leonard’s are feeling the squeeze.

“We’re trying to avoid crossing the $4.99 mark for a dozen eggs, even though our suppliers are raising prices,” Leonard Jr. said. “It’s a tightrope act. Expenses across the board are increasing, and our margins are shrinking, but we can’t afford to push our customers away.”

The challenges are similar for other grocers. Morton Williams, a New York City-based chain with 17 locations, saw its wholesale egg costs double within weeks this October. Steve Schwartz, the chain’s director of sales and marketing, expressed frustration with the unpredictability of the market. “Eggs were once the cheapest thing in the store. Now they skyrocket, and even when prices drop, they rarely return to where they were,” he said.

Adding to the complexity is the narrowing price gap between conventional and organic eggs. As regular egg prices rise, organic options are becoming a more attractive alternative for many consumers. Leonard Jr. noted that this trend is particularly pronounced during the holidays, as shoppers look for premium ingredients to elevate their dishes. However, this shift puts additional pressure on the organic egg supply, which wasn’t prepared for such a surge in demand.

Schwartz warned that the ripple effects of high egg prices extend beyond cartons in grocery aisles. Products made with eggs—like mayonnaise, baked goods, and pasta—are likely to see cost increases in the months ahead. “Egg prices don’t exist in a vacuum,” he explained. “When they stay high, everything downstream that relies on them becomes more expensive too.”

Version 2: Cracked Economy: Why Eggs Are Breaking the Bank This Holiday Season

New York — Once considered a budget-friendly grocery item, eggs have transformed into a source of economic anxiety for both consumers and retailers. The combination of a severe avian flu outbreak and the holiday season’s insatiable demand has pushed egg prices to extraordinary heights, leaving industry leaders and shoppers scrambling for solutions.

Egg prices have been climbing steadily since 2022, but the scale of recent increases has been alarming. In October alone, prices were up 30.4% compared to the previous year, according to the Consumer Price Index. With the holidays just around the corner, demand for eggs has skyrocketed as families prepare for seasonal gatherings and festive baking. “Eggs are the one outlier this Thanksgiving,” said Stew Leonard Jr., CEO of Stew Leonard’s grocery chain. “Overall, costs for the holiday meal are stable, but eggs stand out as a sharp increase.”

Holiday traditions often center around food, and eggs are a key ingredient in many seasonal recipes. Emily Metz, president and CEO of the American Egg Board, emphasized their importance. “From baking cookies to preparing large family meals, eggs are integral to holiday celebrations,” she said. “This is the busiest time of year for egg sales.”

Meanwhile, the supply of eggs has taken a severe hit. The avian flu outbreak, which began in January 2022, has killed over 108 million birds across the United States, including 75 million egg-laying hens. This loss has reduced the nation’s egg supply by 8%, creating significant strain on the market.

The situation took another turn for the worse in October, as new outbreaks of avian flu emerged in Oregon, Utah, and Washington. These regions lost 2.8 million hens in a matter of weeks, translating to a loss of 60 million eggs. The USDA has already lowered its production estimates for early 2025, indicating that relief is not on the horizon.

Economist Bernt Nelson from the American Farm Bureau Federation explained the complexities of the market. “Egg prices are uniquely volatile,” he said. “The combination of high demand and supply disruptions creates sharp swings, and this year we’re seeing that in full force.”

Retailers are caught in a challenging position. Wholesale egg prices in New York have risen to $4.23 per dozen in November, compared to $2.43 during the same time last year. This dramatic increase leaves grocers with tough decisions about how to price their products.

Stew Leonard Jr. noted that keeping prices affordable for customers has been a priority, but it’s not without challenges. “I can’t raise egg prices beyond $4.99, even if our suppliers increase their costs,” he said. “We’re walking a fine line between maintaining our margins and keeping our customers happy.”

Other grocers have similar stories. Steve Schwartz, director of sales and marketing at Morton Williams, said that wholesale egg prices doubled in just a few weeks in October. “We’ve gone from $2.16 to $4.28 per dozen in less than a month,” he said. “It’s been a wild ride, and unfortunately, when prices go up, they rarely come back down to where they started.”

Adding to the complexity, the rising cost of conventional eggs has narrowed the price gap with organic and specialty options. Many consumers are now opting for organic eggs, believing they offer better quality, especially for holiday cooking. However, this shift in demand is straining the organic egg supply, which wasn’t prepared for such an influx.

The impact of high egg prices extends beyond grocery store shelves. Products that rely on eggs, from mayonnaise to baked goods, are beginning to see price increases as well. Schwartz warned that the ripple effects could last well into next year. “When egg prices stay high, everything else follows,” he said. “It’s not just about breakfast—it’s about everything eggs touch.”