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The U.S. Egg Shortage

by Scott Horsley

With egg prices in the United States at record highs, the U.S. Department of Agriculture is now exploring the ways other countries produce eggs for potential solutions. The department may not have to look far: Just over the border, eggs remain plentiful and affordable in Canada.

"We have not had any shortage of eggs," says Mike von Massow, a food economist at the University of Guelph, in Ontario. "We can choose from 14 different types of eggs."

That's a stark contrast with the U.S., where avian flu and efforts to contain it have wiped out tens of millions of egg-laying chickens, forcing some supermarkets to limit egg purchases and driving restaurant chains like Denny's and Waffle House to add a surcharge on egg dishes.

Meanwhile, shoppers just north of the border have plenty of eggs to go with their Canadian bacon.

"I get calls from reporters here in Canada and they say, 'We're hearing all this about eggs,'" von Massow says. "And I say, 'Well, that's in the U.S. It's not happening here.'"

Patrick T. Fallon/Getty Images

Why Canada is different

Canadian chickens can catch avian flu, just like their American cousins. But the impact on Canada's egg supply has so far been limited.

Von Massow suggests a number of explanations for that. It gets colder in Canada, so barns are more tightly sealed, which helps keep flu virus carried by wild birds out. Canada also has fewer free-range chickens, which are more susceptible to getting infected.

But perhaps the biggest difference is that egg farms in Canada are much smaller, so when one farm does suffer a flu outbreak, the effects are less far-reaching. The typical egg farm in Canada has about 25,000 laying hens, whereas many farms in the U.S. have well over a million. In effect, American farmers have put a lot more of their eggs in a relatively small number of baskets.

"If individual farms represent a larger proportion of production, then when an individual farm is affected, you're taking more of that supply, right?" von Massow says.

The rise of agribusiness

American egg farms weren't always so big. The typical farm in the U.S. has quadrupled in size since the late 1990s, according to a paper co-authored by poultry economist Jada Thompson at the University of Arkansas. That's partly because competitive pressure in the U.S. to produce cheap food encourages farmers to make it up with volume.

"These companies aren't making tons of money per egg," Thompson says. "They're selling a lot of eggs."

Many farms in the U.S. rely on automated equipment that requires a large number of birds to operate efficiently. Most of the time, that industrialized agricultural model delivers cost savings for consumers. Eggs are typically cheaper in the U.S. than they are in Canada.

"The benefits have been affordable eggs at lower prices," Thompson says.

But there are also trade-offs, as the avian flu outbreak has highlighted.

"If a disease gets in the house, now you have a much larger population that's impacted," Thompson says.

Gianrigo Marletta/Getty Images

When avian flu is discovered on an egg farm, all the chickens on the farm are killed to limit the spread. More than 40 commercial egg farms suffered flu outbreaks in January and February alone, with a loss of more than 28 million chickens, according to USDA figures analyzed by the Wells Fargo Agri-Food Institute. That's about 9% of the country's commercial egg-laying flock wiped out in just two months.

It takes at least six months for newborn chicks to replace those laying hens. In the meantime, the U.S. egg supply will remain under pressure. While wholesale egg prices have fallen in recent weeks, Easter is around the corner, and the holiday typically brings a seasonal jump in egg demand.

"Less incentive to grow"

Large-scale egg farms aren't the only choke points in the highly concentrated U.S. food supply. Recent years have shown how the closure of a few big slaughterhouses or a single baby formula factory can trigger price spikes and empty store shelves around the country.

So, what has kept Canadian egg farmers relatively small? Von Massow points to Canada's supply management system, which guarantees even small farmers enough income to stay in business.

"There is less incentive to grow because I can make money at this size," he says. "There's still an incentive to be efficient. But there's not a requirement to get as big."

To keep its small farms viable, Canada also restricts imports of farm products like eggs and dairy from the U.S., which is one source of friction in the current trade war.

Despite the trade war, the U.S. government has one potential solution to help meet demand and keep egg prices from climbing even higher: temporarily increasing egg imports.

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This is why Canada has plenty of eggs — and the U.S. doesn't

The U.S. Egg Shortage

Why Canada is different

The rise of agribusiness

"Less incentive to grow"

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