Egg producers scramble to adjust to oversupply


Consumers enjoy cheap egg prices, but at a cost

By Erik Martin - emartin@aimmedianetwork.com



While shoppers are enjoying record-low egg prices at the supermarket, there is a hidden cost for egg producers, who have had to readjust their operations to account for oversupply and less profit.


Advocate photo

DARKE COUNTY — If you like eggs, it’s a buyer’s market.

Shoppers are enjoying record low prices for this popular breakfast staple, with eggs in some locations selling for as low as 49 cents per dozen.

However, while cheap egg prices are a boon for consumers, how does it affect the producers? And how long will these bargain prices last?

According to the 2012 Census, Darke County was the second-largest egg-producing county in the entire United States. The poultry and egg market in Darke County accounted for $201 million dollars in business that year, so it isn’t surprising that plummeting egg prices at the retail level has had a significant impact among producers locally.

Jim Chakeres, executive vice president of Ohio Poultry Association, says egg producers across Ohio and elsewhere are readjusting to avoid overproduction, and in the process, make egg-raising more profitable.

“The market affects all segments. Everyone is taking a hit,” he said. “The market is depressed right now but producers are doing their best to withstand the challenges. The reduction in egg-laying flocks is one of the reactions I’m seeing. Producers are doing everything they can to ride it out.”

But why are prices so low? Chakeres points to supermarkets setting the price, not producers.

“On the retail level, eggs are used as a loss leader, to lure people into grocery stores, where they are encouraged to buy other items,” he said. “The prices themselves, however, may not reflect the eggs’ true price or value. Eggs are not marketed as are the vast majority of other commodities. There are a lot of relationships within the market and they are all subject to supply and demand.”

Statistic bear this out. A July 10 United States Department of Agriculture report shows a range of 64 to 73 cents being paid by retailers per dozen for large, white eggs delivered to warehouses in the Midwest region. Large eggs have a 70- to 78-cent range per dozen upon direct delivery to grocery store doors. Prices paid in other regions are slightly higher.

Chakeres also credits a “bounce back” in the egg supply, which dates from the 2015 Avian flu epidemic in which millions of birds were lost.

“The Avian flu from two years ago had the effect of fewer eggs on the market, and higher prices. As the hens came back into production, the egg prices dropped,” he said.

OSU Darke County Extension Educator Sam Custer notes that the county’s egg producers are indeed scaling back.

“We have an oversupply of eggs currently,” he said. “This is a result of the expansion that took place post-Avian Influenza and the egg prices plus the bakery industry found a byproduct to replace the eggs so they would not be affected by the fluctuation of prices if another Avian Influenza outbreak would take place.”

“The eggs in the grocery selling for $0.49 per dozen cost over $0.60 per dozen off the farm to produce,” he added. “This is variable costs only and does not include building and equipment costs.”

Not only eggs as a whole, but different type of egg offerings are feeling the pinch.

“The cage-free market that consumers have been requesting from farmers, is greatly oversupplied,” said Custer. “It appears that the consumers would still rather buy the cheaper eggs than the more expensive cage-free egg. This is a real problem because our local farmers made the investment for the expensive cage-free systems and are now getting paid less for them than the cage eggs.”

“The result of all of this: Producers are reducing the size of their flocks to try and reduce costs,” Custer said.

The future price of eggs is impossible to predict, said Chakeres.

“We don’t know what the future holds,” he explained. “[These low prices] could be another year or longer. And consumers don’t have an indicator on what the prices will do.”

Chakeres wanted to make clear, though, that the drop in egg prices has not caused producers to alter the methods they use to raise the birds.

“One thing people should be aware of is that the first focus of egg producers is the care of their birds,” he said. “Everyone is still providing the same level of care they always were and remain committed to that.”

http://www.dailyadvocate.com/wp-content/uploads/sites/34/2017/07/web1_Eggs-PRINT.jpgAdvocate photo

While shoppers are enjoying record-low egg prices at the supermarket, there is a hidden cost for egg producers, who have had to readjust their operations to account for oversupply and less profit.
http://www.dailyadvocate.com/wp-content/uploads/sites/34/2017/07/web1_Egg-Carton-PRINT.jpgWhile shoppers are enjoying record-low egg prices at the supermarket, there is a hidden cost for egg producers, who have had to readjust their operations to account for oversupply and less profit. Advocate photo
Consumers enjoy cheap egg prices, but at a cost

By Erik Martin

emartin@aimmedianetwork.com

The writer may be reached at 937-569-4314. Join the conversation and get updates on Facebook search Darke County Sports or Advocate 360. For more features online go to dailyadvocate.com

The writer may be reached at 937-569-4314. Join the conversation and get updates on Facebook search Darke County Sports or Advocate 360. For more features online go to dailyadvocate.com

comments powered by Disqus