Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: What are your favorite egg dishes?
Speaker 3: Egg dishes? Yeah, oh, I like fried eggs. I have
Speaker 3: fried eggs every morning sunnyside up, yep. And we make
Speaker 3: a lot of kish so that's good too.
Speaker 4: Today, like everyone else, you know, we're talking about the
Speaker 4: price of eggs.
Speaker 3: I'm Jim Hayes. I work at my farm with my family,
Speaker 3: and it's located in West Fulton, New York. It's upstate
Speaker 3: New York.
Speaker 4: And how many egg laying hens do you have?
Speaker 3: We have right now we have about one hundred and fifty.
Speaker 4: Jim's a small scale farmer on Sapbush Hollow farm. He
Speaker 4: raises chickens for eggs and meat. He also has hogs
Speaker 4: and sheep. He sells locally, not to national grocery stores,
Speaker 4: but like many poultry farmers in the US right now,
Speaker 4: he feels his business is under threat from bird flu.
Speaker 3: Well, we go in and out of the barn, you know,
Speaker 3: we wash our feet and with the disinfectant and try
Speaker 3: to be as calutious as we possibly can. The main
Speaker 3: problem where we might get birds the infected is from
Speaker 3: traveling waterfowl, and in fact, in our area we had
Speaker 3: two identified with bird flu about six or seven miles
Speaker 3: from here last week, so we're pretty concerned.
Speaker 4: Jim's hens are healthy for now, but he knows how
Speaker 4: quickly that could change if.
Speaker 3: The disease gets into your flock. All right, As a
Speaker 3: state vet says, you don't have to worry about treating him.
Speaker 3: You identify it, call him as soon as possible. But yeah,
Speaker 3: I sorry that the majority of the birds will be
Speaker 3: dead within forty eight hours. And if they're not, they
Speaker 3: come in and they will kill all the birds, all right,
Speaker 3: I mean dispose of them.
Speaker 4: The state vet will kill them.
Speaker 3: Yeah, the state will come in and kill them if
Speaker 3: they're not dead already.
Speaker 4: And what would that mean for you if bird came
Speaker 4: to your flock and all your chickens had to be killed.
Speaker 3: It's the poultry is diversified. It wouldn't wipe us out,
Speaker 3: but it would be a significant hit to our operation,
Speaker 3: all right. I would say it would cut our income
Speaker 3: by at least thirty five percent.
Speaker 4: Jim says he's recently raised his egg prices a little bit,
Speaker 4: but if you've been to the grocery store recently, you've
Speaker 4: probably seen eggs with eye popping new markups. And even
Speaker 4: limits on Carton's per customer. Bird flu is having a
Speaker 4: serious effect on the chicken industry, and so in this episode,
Speaker 4: we're turning to Bloomberg's Joe Wisenthal and Tracy Alloway. They're
Speaker 4: the hosts of the odd Locks podcast, and they've recently
Speaker 4: reported out a special series called Beak Capitalism. It's all
Speaker 4: about the poultry supply chain. We'll talk about how this
Speaker 4: latest outbreak of bird flu is rocking the chicken and
Speaker 4: egg markets in the US and what it means for inflation.
Speaker 4: I'm Sarah Holder, and this is the big take from
Speaker 4: Bloomberg News. Joe, Tracy, have you tried to buy eggs recently?
Speaker 4: How did that go?
Speaker 2: You know what, I'm gonna tell you a secret, which
Speaker 2: is I could see this coming months ago, and I
Speaker 2: stocked up on a bunch of eggs, So if anyone
Speaker 2: needs them, I have a whole fridge filled with eggs.
Speaker 1: I feel guilty about buying eggs like these are like
Speaker 1: really hard to get. Or when I go to a
Speaker 1: restaurant and I order an omelet, I'm like, Oh, I
Speaker 1: wonder if they're now losing money on this because they
Speaker 1: haven't updated their menu prices. And stuff like I have
Speaker 1: this like every time I just sort of enjoy an egg,
Speaker 1: it's like, oh, this is I'm really indulging in a
Speaker 1: luxury here.
Speaker 4: The price of pretty much everything at the grocery store
Speaker 4: has gotten more expensive over the last few years. But
Speaker 4: lately the price of eggs has been hitting record highs,
Speaker 4: and Joe and Tracy say bird flu is to blame.
Speaker 4: I don't think.
Speaker 1: There's any other real catalyst for some of the increases
Speaker 1: we've seen, like, you know, fifteen percent jump in January.
Speaker 1: I think over seven dollars as of February seventh average
Speaker 1: for a dozen eggs with seven thirty four. You know,
Speaker 1: obviously when egg prices went up a lot in twenty
Speaker 1: twenty one during the general inflation, you know, there was
Speaker 1: a bird flu, but it was also widespread inflation, and
Speaker 1: the were issues with feed and there were issues with fertilizer.
Speaker 1: This is not really a story of general inflation right now.
Speaker 1: This is relative prices and it's eggs specific. It is
Speaker 1: unambiguously the bird.
Speaker 4: Flu story at a basic level, how do producers set
Speaker 4: the price of eggs?
Speaker 2: So this is interesting. It's actually more complicated than maybe
Speaker 2: you would have thought. There is an egg board. They
Speaker 2: sort of set either baseline prices or wholesale prices the farmers.
Speaker 2: The egg farmers will sell their eggs, they'll agree contracts
Speaker 2: to sell to wholesalers, think about the big grocery stores
Speaker 2: like a Walmart or something like that, and then Walmart
Speaker 2: will decide what the final retail price is going to be. Obviously,
Speaker 2: they want to make a profit over the wholesale price
Speaker 2: that they paid the farmer, and so that's where there's
Speaker 2: a decent amount of discretion. I would say for farmers,
Speaker 2: some of their contracts they might be locked into a
Speaker 2: specific price for a longer period of time, so they
Speaker 2: might not necessarily be able to adjust their prices as
Speaker 2: quickly if there's a shortage. But certainly on the retail side,
Speaker 2: nowadays people can change prices very very quickly in ways
Speaker 2: that maybe twenty years ago you really weren't able to
Speaker 2: do that much.
Speaker 3: Right.
Speaker 4: What about how do producers set the price of chicken?
Speaker 4: Is that a similar process? Is there a chicken board?
Speaker 2: I am not sure if there's a chicken board, But
Speaker 2: what I would say a lot of people have been asking, well,
Speaker 2: if there's all this bird flu and there's an egg shortage.
Speaker 2: Why is there not a chicken shortag? Why aren't we
Speaker 2: seeing the price of meat go up? And the answer
Speaker 2: to that is very simple. It takes a lot longer
Speaker 2: to grow an egg laying hen than it does to
Speaker 2: grow a meat chicken. Meat chickens, if you don't know,
Speaker 2: live very sad and very short lives. They're killed after
Speaker 2: basically a few weeks. They hatch, they eat a lot
Speaker 2: to get big and fat, and then they're killed and
Speaker 2: that takes like a month or a little over a month.
Speaker 2: Egg laying chickens you have to wait for them to mature,
Speaker 2: and that takes something like six months at least, And
Speaker 2: so that's why you're getting this gap. When farmers have
Speaker 2: to destroy chickens because they found bird flu in their flock,
Speaker 2: it takes them half a year to rebuild that egg
Speaker 2: laying flock.
Speaker 4: If a farmer does have to kill all of their
Speaker 4: chickens in accordance with federal rules, they will get some
Speaker 4: compensation for that loss, but as the upstate New York
Speaker 4: poultry farmer Jim Hayes says, that money likely won't replace
Speaker 4: the loss in profits.
Speaker 3: I don't know what it would be, but I assure you. Historically,
Speaker 3: all over the world where they've had to do this,
Speaker 3: none of the farmers has been happy.
Speaker 4: If this government response of killing birds and compensating the
Speaker 4: farmers sounds drastic, it's because bird flu has proven to
Speaker 4: be highly contagious.
Speaker 3: Once it gets in, all right, they come and contact
Speaker 3: each other when they go to feed, all right, they'll
Speaker 3: go to a feeder, peck a little feed, and then
Speaker 3: they'll leave, and then another will go there and they'll leave,
Speaker 3: you know, the disease and it's highly contagious, and it
Speaker 3: transfers very rapidly, and the morbidity mortality rates morbidity and
Speaker 3: mortality are exceedingly high.
Speaker 4: Would that be emotional for you if all your chickens doyn.
Speaker 3: Of course, yeah. Anytime you know, you've got birds, you
Speaker 3: got any animal, all right that dies like that, then
Speaker 3: we try to do our best to put it up
Speaker 3: with it. Like my grandchildren, the two that are operating
Speaker 3: on the farm, all right, once twenty one and one sixteen,
Speaker 3: but they each have a couple of pet chickens, all right,
Speaker 3: and a pet goose, and they would all go, you know,
Speaker 3: so it would be a be significant, all right. It's
Speaker 3: a public health situation, and there is the concern now
Speaker 3: that this flu has jumped to Derek Cows. One person's
Speaker 3: died from it. But as the state that indicated, this
Speaker 3: is a flu which is mutating very rapidly, so we
Speaker 3: don't know what's going to happen. They could jump into
Speaker 3: humans and be a real problem, and that's a concern
Speaker 3: and why they're trying to control it.
Speaker 4: Coming up after the break, Joe and Tracy on what
Speaker 4: bird flu means for the eggs on your plate, whether
Speaker 4: you're cooking them at home or eating out, and what
Speaker 4: if anything, the Trump administration can do to bring soaring
Speaker 4: egg prices back down. I wanted to ask Oddlot's hosts
Speaker 4: Joe Wisenthal and Tracy Alloway about how this disease is
Speaker 4: starting to impact a few very important stakeholders, the people
Speaker 4: and companies who buy eggs.
Speaker 2: Restaurants would be an obvious one, and in fact, we've
Speaker 2: seen some restaurants respond to this. Waffle House famously has
Speaker 2: now instituted a fifty cent surcharge on its egg dishes,
Speaker 2: which is disappointing for me and Joe because we're big
Speaker 2: waffle House fans, But again, you know, the consumer, the
Speaker 2: customer is mostly willing to accept these price hikes because
Speaker 2: we know, we all listen to the news and we
Speaker 2: hear how big a deal Avian flu is.
Speaker 1: I mean, look, the other thing is part of the
Speaker 1: point of price increases is demand destruction, right Like, there
Speaker 1: are obviously going to be people at the margin, unfortunately
Speaker 1: for whom the price hits a point where like, I'm
Speaker 1: going to buy fewer eggs because market it's a balance
Speaker 1: out buyers and sellers, and so part of the you know,
Speaker 1: one of the things that a price increases do is
Speaker 1: decrease the amount of buyers. Now, how many people aren't
Speaker 1: ordering an egg at waffle Houser, aren't ordering an omelet
Speaker 1: or sunnyside up eggs because of the search arge. I
Speaker 1: have no idea, but of course these things will have
Speaker 1: an effect on demand, and we you know, we've talked
Speaker 1: about it, just like people buying fewer eggs right now
Speaker 1: because of the reality of.
Speaker 4: This great eggs are considered an essential but that could
Speaker 4: start to change if it hits a certain threshold.
Speaker 1: Yeah, that's why this is so like such a serious
Speaker 1: existential issue for the econversy. Yeah, I know, I didn't
Speaker 1: mean to eggs stential, but like you know, we're not
Speaker 1: talking about the price of persons here, where it's like.
Speaker 2: A liver, you can live a great shortage of five.
Speaker 1: This is like an essential end product eggs, and also
Speaker 1: an ingredient into all kinds of things.
Speaker 4: One of Donald Trump's promises coming into the White House
Speaker 4: was to lower the price of eggs. It was a
Speaker 4: campaign issue, but the Consumer Price Index shows inflation is
Speaker 4: getting worse in general, and in January, egg prices hit
Speaker 4: another record high. Is there anything the Trump administration can
Speaker 4: do to ease inflation on egg prices? And is he
Speaker 4: doing it?
Speaker 2: So this has been the big talking point basically since
Speaker 2: the pandemic. Inflation went up for a whole bunch of
Speaker 2: reasons that you know, largely were outside of policy makers control.
Speaker 2: So it's a little bit ridiculous to see JD. Vance
Speaker 2: standing in a grocery aisle saying stuff like from day one,
Speaker 2: we're going to lower egg prices, because as we've seen,
Speaker 2: it's not that easy. These are very complicated real world problems.
Speaker 2: They're difficult to solve, and they certainly take time to solve,
Speaker 2: and there's always the risk that bird flu might come back.
Speaker 2: That said, you know, there are some things that could help.
Speaker 2: So there is a bird flu vaccine specifically for birds,
Speaker 2: and some places around the world they use it. The
Speaker 2: reason the US doesn't vaccinate its chickens is because of
Speaker 2: the export market.
Speaker 4: The US exports a lot of chicken meat and products,
Speaker 4: about five point five billion dollars last year, but many
Speaker 4: of our trading partners won't import chickens that have been vaccinated.
Speaker 4: This has put players within the US poultry industry at
Speaker 4: odds with each other. Egg producers tend to be in
Speaker 4: favor of a national vaccine strategy, while meat processors are
Speaker 4: largely opposed.
Speaker 3: Well.
Speaker 4: Other parts of the world have been affected by bird
Speaker 4: flu outbreaks in the past. Do we know what the
Speaker 4: lasting effects of the virus have been on their economies?
Speaker 2: You know what? My favorite example of this is actually
Speaker 2: swine fever in China, and this had a really interesting
Speaker 2: economic effect. So China had a really bad outbreak of
Speaker 2: swine fever. A lot of pigs died, and then the
Speaker 2: government basically said, well, we need you to rebuild all
Speaker 2: your pork supplies because we don't have enough meat. Meat
Speaker 2: is very expensive, and so you saw a bunch of
Speaker 2: new pork companies start up business and basically say we're
Speaker 2: going to do what the government wants us to do,
Speaker 2: and we're going to produce a bunch of pigs. And
Speaker 2: then lo and behold, you had an explosion in pork
Speaker 2: meat in China and suddenly there was too much capacity,
Speaker 2: and so a bunch of these new pork companies ended
Speaker 2: up failing because prices went down. Too many of them failed,
Speaker 2: and then pork got expensive again, and then ever since then,
Speaker 2: this has been going on for years now. You've sort
Speaker 2: of seen this boom bust dynamic in China's swine industry,
Speaker 2: which kind of highlights again these are difficult problems to
Speaker 2: completely eradicate, but also you can be dealing with downstow
Speaker 2: stream effects for many many years. Once the economy is
Speaker 2: disrupted or a particular industry is disrupted in these types
Speaker 2: of ways, it can reverberate for a long time.
Speaker 4: My last question for you too is have we hit
Speaker 4: peak eggflation or could things get worse before they get better.
Speaker 2: Certainly things can get worse before they get better. I
Speaker 2: think the bigger concern is probably can they get better
Speaker 2: for how long? If that makes sense. So, again, the
Speaker 2: pattern that we've seen is we have these outbreaks, people
Speaker 2: kind of get a handle on them, but then maybe
Speaker 2: a year or a couple years later, they come back.
Speaker 2: And that's a big issue for farmers over the long run.
Speaker 2: You know, it's going to make the business not as profitable.
Speaker 2: People might decide, you know, it's not worth it being
Speaker 2: a chicken farmer anymore. And it certainly makes it difficult
Speaker 2: to calibrate how much space they need, how many commercial
Speaker 2: houses for chickens, how much investment they should put into
Speaker 2: the business. So that's really the big difficulty.
Speaker 3: People at Bloomberg would understand this. Normally, high risk business
Speaker 3: has the potential for high return. Agriculture doesn't work that way.
Speaker 3: High risk. You're very high risk business, but the return
Speaker 3: is very low.
Speaker 4: Why do you do it then?
Speaker 2: Because you love it?
Speaker 3: Yeah? Yeah, And as I always tell people to visit,
Speaker 3: you know, if you can't stand up in the middle
Speaker 3: of it today and look around you and enjoy that,
Speaker 3: then you'd better not do it.
Speaker 4: Well, thank you so much.
Speaker 3: Jim, You're welcome. Have a good day.
Speaker 4: This is the Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 4: This episode was produced by Alex Hye and David Fox.
Speaker 4: It was edited by Tracy Samuelson and Millie Mumshi. It
Speaker 4: was fact checked by Adrian A. Tapia and mixed and
Speaker 4: sound designed by Alex Sugia. Our senior producer is Naomi Shaven.
Speaker 4: Our senior editor is Elizabeth Ponso. Our executive producer is
Speaker 4: Nicole beemsterbor Sat Bauman is Bloomberg's head of podcasts. If
Speaker 4: you liked this episode, make sure to subscribe and review
Speaker 4: The Big Take wherever you listen to podcasts. It helps
Speaker 4: people find the show. Thanks for listening. We'll be back
Speaker 4: next week.