Cage-free mandates are adding another kink to egg supply chains tangled by successive outbreaks of avian flu, making it difficult for grocers to restock shelves.
The most recent outbreak of bird flu tore through cage-free chicken facilities, ravaging the supply of so-called specialty eggs. That’s bad news for states that now require eggs in stores to come from cage-free chickens and constricting supply to a market that’s still struggling to emerge from the worst global flu outbreak on record.
“You have now multiple states— California, Massachusetts, Colorado—that can’t use caged eggs,” said John Brunnquell, chief executive officer of Egg Innovations, a major free-range egg producer in the United States. Those eggs are still “very, very tight on supply. And that will not be fixed until those specific cage-free farms get their barns refilled.”
Retail egg prices soared last year as millions of birds were culled to slow the flu’s spread. NielsenIQ data shows that the amount of eggs on store shelves collapsed beginning in November and still hasn’t recovered. With prices at historic highs, supply and demand fundamentals have kicked in and will likely restore some balance—wholesale prices for conventional eggs are starting to fall as sticker shock scares off consumers. However, the lower prices will take time to trickle down to retailers and will take even longer to reach the pockets of consumers who are willing to pay more for eggs from humanely raised chickens.
As the price for conventionally farmed eggs skyrocketed last year, consumers bought up cage-free and organic eggs that were suddenly relatively cheap. Retailers buy those eggs at a fixed price, so they could keep prices steady for customers even as the cost of a regular dozen soared. But here’s the rub, says Karyn Rispoli, an egg market reporter at Urner Barry, specialty eggs are more difficult to replace.
“Production levels for these types of eggs are far less than conventional and once those pipelines run dry, they can’t be easily refilled.”
Corn shipments
Union Pacific Corp. and poultry producer Foster Farms said enough corn shipments have been made to replenish feed stocks after delayed trains in recent months caused inventories to drop to critical levels. Millions of chickens at Foster Farms facilities were at risk of going unfed because of the rail delays.
The US Surface Transportation Board, which regulates railroads, had ordered Union Pacific to provide trains loaded with corn on December 30 after the poultry farm warned about running out of feed for its chickens and its customers’ dairy cattle. The farm said it needed to divert supplies away from its customers to feeding its chickens, which kill each other when they go hungry.
Six trains loaded with corn have been delivered since the board’s action, Livingston, California-based Foster Farms said in a statement on Friday.
“Foster Farms’ grain inventories are currently at levels that enable us to meet the nutritional requirements of all flocks in our care, and bird health is not at risk,” the poultry producer said in the statement. “All Foster Farms facilities are operating.”
Foster Farms said in its December request to the regulator that Union Pacific’s delays had been ongoing since February. The Surface Transportation Board had previously issued a service order to Union Pacific in June after Foster Farms complained of a critical shortage of animal feed.
Inclement weather this winter, including snow storms that swept across the Midwest, flood damage in California and rockslides in Nevada, had contributed to the recent disruptions in its service, Union Pacific previously told Bloomberg News.
Union Pacific said in a separate statement that it has worked closely with Foster Farms and the Surface Transportation Board to implement a service plan while voluntarily providing service updates and information “regarding weather challenges severely impacting our network and future deliveries.”
“While we have made incremental progress reducing network congestion and increasing velocity, we are still seeing longer than anticipated recovery due to residual weather impacts,” Union Pacific said in the emailed statement sent on January 14. “We continue to work closely with all of our customers to reduce congestion and improve service.”
Union Pacific, the second-largest railroad in North America, is the only one with direct access to provide service to Foster Farms. The poultry producer has said in federal filings that it’s not viable to truck in corn because of capacity and cost constraints. For every train with 100 cars of corn, it requires 400 trucks to carry the same volume.
“We have a long working relationship with Union Pacific, and it is our hope that more reliable service standards can be maintained, and further disruptions minimized,” Foster Farms said in its statement.