Expect to pay less for eggs, pork and beef this year
WASHINGTON — Consumers can expect to get a break at the grocery store this year — courtesy of lower egg and pork prices.
Egg prices are expected to decline 18.5 percent this year, according to the U.S. Agriculture Department, a sharp change from a year ago when bird flu prompted costs to surge almost 18 percent.
Iowa, the nation’s largest egg producer, lost 31.5 million birds to bird flu across 18 counties, including about 30 million laying hens and pullets and 1.1 million turkeys. The virus ultimately destroyed nearly 50 million farm birds nationwide.
Brian Moscogiuri, an egg industry analyst with the commodity market research firm Urner Barry, said even though most of the birds lost during the outbreak have been replenished, there are still challenges.
“The industry has largely recovered,” Moscogiuri said. “But even with low prices there are just not as many channels as there were prior to avian influenza.”
Egg exports have yet to recover. And some food manufacturers and restaurants that switched to egg substitutes or found ways to stretch what they do use haven't increased their consumption.
Wholesale egg prices in the Midwest started the year at $1.11 a dozen, but have dropped to 66 cents. Prices are on track to average less than a dollar this year for the first time since 2006, according to Urner Barry.
Dermot Hayes, an economist at Iowa State University, said the egg industry has run into a problem common among many other commodities — producing too much in the face of high prices. Operations not affected by bird flu boosted their production, but as farms hurt by influenza came back online the result was an oversupply of eggs.
“We may have over-responded a little bit too much,” Hayes said. “We restocked the buildings, and that is causing overproduction.”
Nationwide, food prices are forecast to increase 1.5 percent, well below the 20-year average increase of 2.6 percent, according to the USDA.
Meat prices are playing a key role to help to keep food inflation in check.
Costs for beef and veal are expected to drop 5 percent, as the industry grapples with too much supply and reduced demand. Pork prices are expected to drop 2.5 percent in 2016.
Much like eggs, the pork industry has largely recovered from its own illness outbreak — porcine epidemic diarrhea (PED) virus in 2013 and Porcine Deltacoronavirus (PDCoV) in 2014.
Iowa, the nation’s No. 1 pork producer, was the hardest-hit state, with an estimated 2.6 million pigs killed.
David Levin, an agricultural economist with the USDA’s Economic Research Service, said lower prices could help boost pork exports and reduce domestic supply, “leading to potentially higher prices” later this year and into 2017.
Some producers who made it through the outbreaks unscathed were able to take advantage of the price bump to pay down debt or make improvements to their operations.
Dave Hommel, who raises swine in Grundy County, put money in the bank.
“I’ve never seen so much money come from the sale of one pig,” said Hommel.
But things have changed. Now he’s receiving 35 cents a pound for his hogs, compared with around $1 per pound two years ago.
“There is a fair amount of pain in the livestock industry here in the Midwest,” he said. “Our plan is to hunker down. I don’t know how much longer this will last.”
Consumers paid about $3.80 a pound for pork in August, a decline of 41.5 cents from two years earlier, according to USDA data.
As the industry works to move pork through the supply chain, the consumer could see retailers offering deals this holiday season.
“Consumers are reaping the benefit of the fact that the United States is having a pretty good production year” for pork, beef, corn, and other commodities, said Bill Even, the head of the National Pork Board in Des Moines. “Your Thanksgiving and Christmas meals are going to be very reasonably priced.”
Contact Christopher Doering at cdoering@usatoday.com or reach him at Twitter: @cdoering