Egg prices have doubled in a year. How long will it last?
When hens and other poultry were allowed back on the range on 18 April, it marked the end of an extraordinary period for the egg sector.
With 178 confirmed cases of avian influenza since October 2022, and no respite over the summer last year, the whole industry is counting the cost. Some producers have left the sector, the costs too much to bear. But for those left, and who managed to avoid an outbreak or being tied up in a prevention or surveillance zone, their product is commanding a premium.
AI in combination with massive inflationary pressures on feed, labour and energy, have caused prices to surge.
This was laid bare in a new report from Rabobank in April, which showed how global egg prices have reached historic high levels, creating a big impact on egg supply worldwide.
Prices are expected to stay relatively high throughout 2023, especially in markets heavily impacted by avian flu, high costs, and regulatory changes.
Egg prices have reached record-high price levels in many markets. “Rabobank’s global egg price monitor reached a new record in Q1 2023, with the index now peaking above 250, which means prices are 2.5 times higher than the reference year of 2007, and have increased more than 100% since this time last year,” said Nan-Dirk Mulder, senior analyst, animal protein at Rabobank.
The high global egg prices reflect a combination of several supply and demand factors. What makes the current situation unique is that it is a global phenomenon. Many markets – like Europe, Brazil, Mexico, the US, Japan, the Philippines, and New Zealand – are seeing historic highs at the same time.
High feed costs have a big influence on prices. “Feed represents 60% to 70% of a layer farmer’s costs, so any change or uncertainty surrounding feed costs affects egg prices and supply,” said Mulder.
Global feed prices doubled between mid-2020 and mid-2022. Among other influential factors are avian influenza outbreaks, affecting layer numbers, and the global market disruptions due to Covid-19, which impacted operations.
Changing consumer behaviour due to reduced spending power, new regulations introducing production restrictions, and tight supply caused by uncertainty also add to the mix, according to Mulder. In general, egg prices are expected to stay relatively high throughout 2023, with some differences between countries.
Prices will remain high in countries with persistent avian influenza pressure, restrictions on grandparent stock or breeding stock imports, financing challenges such as a large number of farms with limited access to finance or the US dollar, and countries undergoing regulatory changes, like Germany.
Prices are expected to go down in countries and regions with extreme price peaks like the US, Europe, and Japan, but likely not to the sorts of lows we have seen following other crises.
Of course, high prices are not translating into decent returns, and for producers an easing in inflation cannot come too soon.
Birds are now free to range in the UK, and hopes that a vaccine against AI will be approved for use in the next year are growing following successful trials at Wageninen University & Research in the Netherlands. For some producers this will come too late after a bruising year. For others, it may help bring costs down, and in turn ease prices throughout the supply chain. As the report notes however, that is unlikely to be this year.