Despite the soaring prices and shortages of eggs in the United States, experts suggest that the supply of chicken meat will not be immediately affected by the avian flu. However, if consumers shift to chicken meat as a protein substitute, it could potentially increase demand and consequently impact prices.
Currently, the avian flu virus primarily affects egg-laying hens, with limited impact on meat chickens, as reported by “USA Today.”
Egg-laying hens and meat chickens belong to different farming systems: egg-laying hens are primarily for egg production, with a longer lifespan and typically not entering the meat market after their egg-laying cycle ends; whereas meat chickens are bred specifically for supplying chicken meat, with a shorter growing cycle.
This is because egg-laying hen facilities are large, usually exceeding one million birds, and in the event of an outbreak, the U.S. Department of Agriculture would order the culling of the entire flock, leading to supply shortages. On the other hand, meat chicken farming operations are smaller, with around 10,000 birds, and even if some are affected, it would not create the same impact as the egg industry.
Moreover, the egg-laying cycle is about nine months, and even if the outbreak stops immediately, it would take time for the supply to recover. On the contrary, the growth cycle of meat chickens is only 30 to 60 days, enabling quick replenishment of the market supply, resulting in lesser impact.
“I am not currently concerned about a shortage of chicken meat,” stated agricultural expert Will Strickland, “but this does not mean that unforeseen circumstances won’t arise in the future.”
Although avian flu does not directly affect the supply of chicken meat, consumer behavior could indirectly drive up prices.
Market expert John Clear pointed out that the surge in egg prices might prompt consumers to switch to chicken, tuna, or pork, potentially causing a surge in market demand and price increase. This phenomenon is known as the “protein pingpong effect,” where consumers switch to lower-priced alternatives when the price of certain protein rises.
Additionally, retailers might over-order due to shortages, leading to temporary oversupply, followed by shortages due to changing demand, a phenomenon known as the “bullwhip effect.” Companies need to optimize inventory and resource allocation by predicting customer demand, also known as the long tail effect, similar to the rush for toilet paper during the COVID-19 pandemic.
“With egg prices hitting historic highs, market reactions may be more intense,” Clear remarked.
Although the avian flu virus has been found in cows, experts believe that the supply of beef and dairy products will not be affected.
“Veterinarians and producers are currently not worried about this issue,” said Matt Sutton-Vermeulen, head of the agriculture and food business division at Kearney, a global strategy and management consulting firm. His company collaborates with food supply chain operators and has not identified any risks to beef or dairy product supply from avian flu.
Clear predicts that the impact of rising egg prices on the restaurant industry will be more enduring than on supermarkets, as supermarkets can adjust to market prices more swiftly, while the restaurant industry is constrained by long-term contracts and slower price adjustments. Suppliers are more likely to sell eggs to supermarkets willing to pay higher prices.
“Restaurants cannot change menu prices daily,” Clear noted. “Many establishments may, like Waffle House, consider imposing surcharges on egg-containing products.”