Egg prices forecast to fall as industry recovers from bird flu

WASHINGTON — Egg prices are expected to plunge this year, providing a reprieve for consumers following the outbreak of bird flu last year.

The Agriculture Department estimated in its April food price report this week that egg prices could fall 9 to 10 percent in 2016, a sharp decrease from its March prediction that called for a more modest drop of 0.5 to 1.5 percent.

“We’ve already started to see at the farm and wholesale level prices decrease,” said Annemarie Kuhns, an economist with USDA's Economic Research Service who helps compile the monthly food price report. Consumers “can expect to see egg prices moderate in 2016 and … toward the end of the year to pay lower prices than they are paying right now.”

Kuhns said egg prices are expected to continue falling as more egg-laying operations decimated by the virus come back online.

The food industry as a whole also is being affected by a strong U.S. dollar, which makes American products more expensive and less desirable for trading partners, as well as lower transportation costs.

Bird flu raising egg prices at restaurants

A year ago, egg prices surged 17.8 percent, well above the average annual increase of 4.9 percent of the past two decades, according to USDA.

“Egg prices are the most volatile retail food category,” Kuhns said.

Nationwide, egg prices already have declined. The Bureau of Labor Statistics, which gathers retail egg prices as part of its market basket in compiling the Consumer Price Index, estimated that a dozen, Grade A large eggs cost $2.08 in March.

They peaked last September at nearly $3 a dozen but have been trending downward since then.

Last year, bird flu destroyed nearly 50 million farm birds. Iowa, the nation’s largest egg producer, lost 31.5 million birds across 18 counties, including about 30 million laying hens and pullets and 1.1 million turkeys.

The virus cost the state’s economy $1.2 billion, according to a study commissioned by the Iowa Farm Bureau Federation.

Hongwei Xin, director of the Egg Industry Center at Iowa State University, said the state is making good progress in recovering from bird flu.

Iowa had 46.5 million egg-laying hens as of mid-March compared with 58.3 million before the outbreak. Producers are adding about 3 million birds each month, but that pace is expected to slow as summer nears.

Nationally, there are 303 million egg-laying hens, down slightly from 308 million before the virus.

"That recovery may not be as prompt," Xin said. "The current egg price is low, so some producers may not be that anxious to get the birds repopulated."

At the Drake Diner in Des Moines, co-owner Shannon Vilmain said the price of a case of 180 eggs has gradually fallen from last June, when they were averaging about $40 a case.

The diner, which goes through nearly 22,000 eggs a month during its peak summer season, is now paying close to $10 a case. That’s below the $16 she had been averaging before the outbreak.

“It’s a big part of our breakfast,” Vilmain said. “The lower the cost for us the better it is, the more money you can spend somewhere else.”

Contact Christopher Doering at cdoering@usatoday.com or reach him at Twitter: @cdoering