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Eggflation Returns with a Vengeance
Avian flu is back and now it's hitting cows too. More than half of California's dairy farms have reported avian flu infections.
Last weekend, I was chatting with the checkout person at my local grocery store when she got a text from her mother. “Do you have eggs?” it read, “because Safeway and Raley’s are out!” I walked over to check the shelves and, sure enough, most were empty.
Eggs quintupled in price in late 2022 due to an outbreak of avian flu (H5N1), which caused millions of chickens to be killed, thereby reducing the supply of eggs. It’s happening again. California wholesale prices are now higher than their 2022 peak (unadjusted for inflation).
So far this month, almost 10 million egg-laying hens have been lost to avian influenza, almost all in California and Iowa. This came on top of the 7 million lost in October and November. Egg production is at its highest at this time of year as people eat more eggs during the holidays.
USDA data on egg production and layer inventory do not yet show this latest outbreak, as the data end in October. However, the data do show why the current price spike is so dramatic: egg production and layer inventory have not recovered from the 2022 outbreak. They’re getting hit again while they’re still down.
The low chicken numbers may be partly due to California’s Proposition 12, which requires animals held in buildings to "be housed in confinement systems that comply with specific standards for freedom of movement, cage-free design, and minimum floor space." This requirement took effect for egg-laying hens on January 1, 2022. Since then, several other states have followed suit.
By raising the cost of producing eggs, cage-free laws reduce the number of eggs sold in the market. Moreover, because chickens in cage-free systems interact more with each other, they are more susceptible to disease. About 40% of laying hens are now in cage-free systems, but 56% of hens lost to avian flu this year have been have been cage free.
It’s no longer just chickens
In the past few months, more than half of California’s dairy farms have reported cows infected with avian flu. As I wrote a couple of months ago this is not a huge concern for the supply of dairy products because pasteurization kills the virus. Almost every product sold in stores is pasteurized. Milk futures prices have declined somewhat in the past two months, but they have not crashed like you would expect if people were avoiding dairy products out of concern. They have also not spiked like they would if supply had been curtailed by the virus.
It is possible to legally buy raw milk (i.e., unpasteurized) products in some states, but doing so at the moment carries the risk of avian flu. The California Department of Food and Agriculture has recalled several raw milk products in the last couple of months after they were found to contain the avian flu virus.
CDC reports that 61 Americans have been infected with avian flu, mostly from cattle or poultry. As far as I know, there have been no cases of human-to-human transmission.
Is it time to be concerned? I don’t know. I’m sure H5N1 won’t mutate into a highly contagious disease that causes a global pandemic. Such a thing could never happen in the 21st century, right? Right?
I made the graphs in this article using this R code.