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State egg supplies limited by avian flu, cage-free rule

Ching Lee

Ag Alert

Even with eggs in short supply nationwide and prices climbing to new heights, it has not been enough to keep a 100-year-old egg farm from going out of business.

John Lewis Jr., president of Farmer John Egg Farm in Bakersfield, confirmed that the family operation will close its doors by the end of the month. The move comes as commercial poultry farms across the country have been pummeled by avian influenza, which has led to bird losses topping 57 million and shoppers facing sticker shock on eggs.

But Lewis said the family isn’t calling it quits because of impacts from avian influenza. He said they’re pulling out because they can’t afford the cost of going cage-free, now required by state law. Retrofitting the farm, he said, would cost $4 million to $5 million, and “we didn’t have the money.”

“They’re telling me to clear out my desk,” Lewis said. “I’m very disappointed because I have a lot of employees. They’re working to the end, and then I guess unemployment and looking for a new job.”

At 75, Lewis has been in the egg business for 50 years and would “still rather be a farmer…rather be out there in the chicken coop.” The farm once maintained 300,000 egg layers but stopped production last year when Proposition 12, the cage-free mandate, went into effect. Its facilities have since sat idle as the farm changed its business from producing eggs to strictly selling eggs from other farms.

As a distributor, Lewis said he has been short on eggs “all the time,” as avian influenza ravaged U.S. egg farms, leaving him unable to get the egg sizes he wants and enough eggs to supply his customers. As the shortage got worse, he said he was paying $6 a dozen and selling them for $7, which “doesn’t cover the margin.” He said he expects California will remain short on eggs until all major U.S. egg farms go cage-free and can sell their eggs in the state.

“It takes a lot of money to convert to cage free – millions and millions of dollars – and it cannot be done overnight,” he said.

Debbie Murdock, who heads the Pacific Egg and Poultry Association, said even without avian influenza, the Golden State already doesn’t produce enough eggs to feed its population and relies on out-of-state eggs to fill the gap. No commercial egg-laying hens in California so far have been affected by avian influenza.

Murdock noted all proteins have increased in price due to infrastructure issues. Now add to that the rising cost of fuel, packaging materials, chicken feed, labor and other inflationary pressures.

“(It’s) the perfect storm,” she said. “To top it off, people eat a lot of eggs – a great protein.”

Though avian influenza is a main reason for the recent egg shortage, Marty Zaritsky, a San Bernardino egg farmer and supplier, said some production issues can be traced to the start of the pandemic in 2020. When egg sales to restaurants and other food services dried up, hatcheries and farms reduced production. Those numbers remain below pre-COVID levels, he said. Then came avian influenza and producers losing their flocks.

“I work with producers all over the country, and a lot of them have not been repopulated,” he said, adding he thinks eggs will remain in short supply into the summer or beyond if another bout of avian influenza pops up this spring.

But he noted wholesale egg prices have already come down from their peaks during the holidays, when demand is usually highest. He said he expects shoppers will begin to see lower prices within the next two to three weeks.

On the production side, Zaritsky said all his barns are filled and producing at capacity. He said there’s a limit to the number of birds he can house due to state law.

Proposition 2, which passed in 2008, mandated more room for hens to extend their wings, stand up, lie down and turn around. Proposition 12, which voters approved in 2018, phased out caged housing systems altogether.

Proposition 12 also requires producers from other states to not use cages if they want to sell their eggs in California. Since its passage, eight other states have enacted laws that ban cages for egg-laying hens, including Nevada, Utah, Colorado, Michigan, Washington, Oregon, Massachusetts and Rhode Island.

Because of the state law, San Diego County egg farmer Frank Hilliker said he’s producing about half the eggs he used to. He’s also at full capacity, though he’s using only three of his five barns. The other two still need to be rebuilt to be compliant. He estimated it will cost about $700,000 to $800,000 and said, “I just don’t have that right now.”

In addition to producing fewer eggs, Hilliker said supply-chain problems and inflation have driven his production costs higher. His feed bill, for example, is now more than double. As a supplier, Hilliker said he hasn’t had problems sourcing eggs from other farms, but he’s paying a much higher price and is passing those increased costs to his customers.

“It hurts disadvantaged communities the most because they are the largest eaters of eggs, and the reason why: It’s the most inexpensive source of protein,” he said.

For Sonoma County egg farmer Tiffany Holbrook, who raises her chickens on pasture, production this time of year already is slower because hens “naturally take a break laying eggs during the winter.”

Unlike farms with indoor flocks that are exposed to special lighting to help production, she has to carry more hens if she wants to keep her production up. But with the higher cost of feed, she said she downsized her flock last fall, phasing out her older birds in October rather than waiting until this spring.

Holbrook sells most of her eggs directly to consumers from her farm and to restaurants. With the nationwide egg shortage and surge in prices, she said she has been fielding a high volume of calls and emails from people asking, “What’s going on?” In addition to the impacts of avian influenza, Holbrook pointed out that some California producers continue to struggle to obtain feed due to the drought.

“If you can’t feed your chickens enough, they don’t lay eggs,” she said. “They need those calories so they can survive, but their production’s going to drop.”

The egg shortage has proved a boon for her business. Whereas she used to sell out multiple days a week, she’s now selling out every day. But she acknowledged concerns about avian influenza remain high because her birds are outdoors on pasture, where they can come into contact with wild birds that might carry the virus.

Though she practices “strict biosecurity year-round,” she said, “I’m always kind of paranoid,” noting many wild birds use her pasture and the farm’s seasonal pond.

“It’s nerve-wracking,” Holbrook said. “We do what we can. We chase the birds off when we can, but for the most part, we just have to hope we get lucky.”

Ching Lee is an assistant editor of Ag Alert. She may be contacted at [email protected].

Permission to use this article was granted by the California Farm Bureau Federation.

 

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