The U.S. response to a highly pathogenic avian influenza is driving egg prices to record highs. Still, chicken meat prices remain relatively stable because of a significant difference in how the birds are raised and marketed.
The United States’ top egg-producing states—Iowa, Ohio, and Indiana—have lost more than 62 million birds because of culling since the beginning of the outbreak.
Meanwhile, the average retail price of boneless, skinless, conventionally raised, frozen chicken breast meat, according to the USDA’s Agricultural Marketing Service’s weekly report for Feb. 15 through Feb. 21, was $2.99 per pound. Fresh, boneless, skinless breast meat was slightly more expensive, at $3.09 per pound. Boneless, skinless breast meat is the most popular cut in the U.S. market.
The significant difference in price changes is due to multiple factors, including industry size, disease susceptibility, and market economics.
Layers Versus Broilers
David Anderson, professor and extension specialist focused on livestock and food product marketing at Texas A&M University, told The Epoch Times that a number of farms raising birds to be slaughtered for meat—known as broiler birds—did suffer from HPAI outbreaks. Nevertheless, because of the way broilers are raised and processed, a much smaller number of birds were lost in those outbreaks.
Furthermore, Anderson said, the sheer scale of U.S. broiler production protects it from being decimated by HPAI mitigation. He said there were about 291 million layers in the United States as of Feb. 1. By comparison, Anderson said, about 796 million broilers were slaughtered for food in January.
Additionally, a broiler farm typically has about 200,000 birds on site when a flock is raised to market weight. By comparison, an egg farm can have millions of layer hens in a single complex. Recent data from the USDA’s Animal and Plant Health Inspection Service show that about 3 million birds were affected in a single outbreak in Darke County, Ohio, on Feb. 21.
“So the scale of production is really different,” Anderson said in an email. “So if we lose 300,000 broilers to bird flu, it’s not nearly as big a deal as the loss of an egg farm.”
Moreover, while layer birds can take months to reach productive maturity, a broiler flock typically reaches its market weight within six weeks.
Jada Thompson, associate professor of agricultural economics and agribusiness at the University of Arkansas, told The Epoch Times via email that the price of chicken has risen but that “it’s generally much more moderated” than the rapid increase in egg prices.
Additionally, the disease itself is showing signs of tending to spare broiler operations and punish layer operations.
Elasticity
From a purely economic perspective, Jadrian Wooten, collegiate associate professor at Virginia Tech’s Department of Economics, said the relative stability of chicken meat prices during the HPAI crisis speaks to the elasticity of the U.S. chicken supply.In this sense, Wooten told The Epoch Times, elasticity speaks to the industry’s ability to recover when losing a portion of its supply. If a broiler flock is lost, six weeks of production are lost, too. By comparison, if an egg flock goes, then four to six months of production go along with it.
Wooten said high prices usually command the market to make more products, which in turn drives the price down to an average level. Because of the U.S. egg supply’s inelasticity, this is not happening.
“[The broiler industry’s] ability to respond quickly means that when prices are going up, they’re not going to go up as fast,” Wooten said. “But for hens laying eggs, because they’re not as responsive when prices go up ... the price just keeps going up instead.”
Wooten said the rising price of eggs will test the elasticity of demand, too.
Typically, eggs are considered an inelastic product, meaning people will want and need to buy them no matter how high the price.
Wooten said he thinks eggs will prove their inelasticity because there are no good substitutes for them, especially for those who need them for recipes and other products. For now, Wooten said, the inelasticity of both egg demand and supply will keep driving prices upward.