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Eggheads is the go-to podcast for egg industry professionals who are interested in leadership and innovation in the egg world. Host Greg Schonefeld explores the evolving world of modern egg farming, from the latest in cage-free innovations and organic certifications to navigating the economics of large-scale production. Whether you're an egg producer, supplier, or involved in poultry genetics, this show provides the insights and expert discussions you need to thrive in the industry. Crack open the science, strategies, and stories behind the egg industry’s biggest challenges and opportunities.
Greg Schonefeld:
Hey, it's Greg Schonefeld. Today we're excited to drop a new series called the Egghead Scramble, where we check back in on pressing topics in the egg world from shifting markets.
Brian Moscogiuri:
It's really hard because you can't flip a switch and have the chickens produce more because your orders got stronger.
Greg Schonefeld:
To pressing concerns of avian influenza in the cattle and egg industries.
Kay Russo:
I've said this repeatedly, and I'm saying it a little bit louder now. The cattle industry has not shown the proper respect for flu virus here.
Greg Schonefeld:
It seems the egg world never stays the same for long, and that's why we're reconnecting with some of our key experts to bring you up to speed on the latest developments because it's not just about understanding where we are, but also where we're headed. And to that, welcome to the Egghead Scramble. Let's start with the little eggonomics, the economy of eggs. And who better to check in with than Brian Moscogiuri, global trade strategist for Eggs Unlimited.
Brian Moscogiuri:
We actually saw the highest August market on record where commodity prices went well over $4 a dozen, and cage free prices went back over $5 a dozen.
Greg Schonefeld:
And as we moved through the summer, the market continued to surprise even seasoned experts like Brian. While many expected the typical seasonal slowdown, a combination of factors particularly AI outbreaks and an unexpected surge in consumer demand, changed everything. Let's hear Brian break down how this all unfolded.
Brian Moscogiuri:
So the back to school season's a popular time where consumers are in the stores and they're buying clothes and technology and supplies and all that kind of stuff, and you kind of have this war between the online grocers and the brick and mortar retailers. And one way to drive people into the stores is hot promotions on commodity items, something they did back in 2018, which drove the markets to record highs at that time. So we kind of saw this promotion kind of shifting around the country in August, and it really created a vacuum for the available supply that was out there that was already shortened by the AI hits through the spring and summer. And it sent markets to record highs for the month of August, and then once that demand kind of started to slow down, we got through that back to school season push, and the consumers started to see the higher prices passed along on the shelf.
Demand really started to drop off. And we've been going through this real major correction. I mean, the market basically got cut in half from the end of August through the end of September. And now as we go into the fall, the baking season, we're going into one of the hottest demand periods of the year, and we're seeing those inventories that had built up in September start to be depleted. The buyers are calling a bottom. They want to restock their coolers at the lows, especially some of these distributors that can take multiple loads a week and can put some product away. Now people are hedging against not only the better fourth quarter demand expectations, but also the potential that AI could potentially disrupt the flock as we go into the fall here, and we expect the migratory birds to be moving south, potentially moving the virus around the country again.
Greg Schonefeld:
Brian painted a clear picture of just how much the late summer AI outbreaks impacted the egg industry. Typically, by July, we've seen AI under control, but this year the bovine strand kept the disease around longer, compounding the losses from the spring by wiping out over 17 million birds. On top of that, seasonal production cycles when flock rotations cause production to be at its lowest collided with an unusually strong back-to-school demand. The result, shortages and record high prices for August.
Brian Moscogiuri:
So as we go into now the holiday baking season, we anticipate there will be promotion around baking, around eggs and other ingredients. As we get into Halloween, as we get into Thanksgiving, Christmas and passover, that is the key item that a lot of the retailers will focus on is the baking period. So we anticipate that there will be more feature activity. Now, the timing of that feature activity could change.
The retailer may look at, "Okay, where is the market? What is my expectation of the market? Should I pinpoint in terms of running these ads?" But the retailers also need to set up these ads weeks if not months in advance because they got to plan their circulars, they got to plan their orders, et cetera. So there's times where the retailer will plan a promotion and then they'll roll out that promotion even as the market kind of goes above what their expectation is. And that's why eggs can be a loss-leader at times, and rightfully so. I mean, we've seen when some of these stores give eggs away at a cheap price and maybe they're taking a loss on them, it drives consumers into the store.
Greg Schonefeld:
As Brian pointed out, these types of promotions tend to have regular occurrence around the holiday season. As such, farmers can take some planning into their own hands, but despite this predictability, what can happen outside the norm?
Brian Moscogiuri:
One thing that I always tell my contacts and my friends is that the best markets are the ones that no one sees coming, and no one prepares for. Inventories are going to be built up ahead in line with that demand. So you kind of have that foresight where you have these eggs factor events like production going down, or someone decides they want to go out at 99 cents on a national ad or something like that that drives demand and changes the complexion of normal demand, that's where you get the markets that go above the seasonal 25, 35% increases from October lows to November, December highs. That's where things really can be shaken up from normal trends.
Greg Schonefeld:
And of course, there's the lingering threat of shakeup from AI.
Brian Moscogiuri:
We've seen AI hit in the fall each of the last two years. There was, I believe one case back in 2022 in September, and then another couple cases I believe impacted farms in October last year. But most of the fall hits have been in November, December, and then rolling into the beginning of January.
Greg Schonefeld:
And as Brian noted, we're still in the early stages of a high risk period with up to 600 million birds migrating across the country in the upcoming months.
Brian Moscogiuri:
Back in 2015, AI hit in the spring, and we didn't see it return in the fall. In 2022 when it broke out in the spring and stopped in the summer, we said, "Okay, it's probably done like it was in 2015." Then it came back in the fall, didn't come back in the spring, came back in the fall again, then it came back in the spring and now we're into the next fall. So there's just some unknowns associated with it, but knock on wood, we can avoid it this fall, the flock could continue to recover, and then we will keep our fingers crossed for the spring of next year. Getting an AI positive is probably the worst thing a farm can hear. I mean, it's tremendously impactful for their business, for their employees, for the timeline of their growth. It changes the trajectory of business for six to eight months from the moment they realize that they have a positive.
So I mean, really all they can do is continue to grow to match their customer's needs and adapt. I mean, we're going into 2025. There's more states that are going to be legislated as cage free states. There's a lot of corporate commitments that were set years ago that 2025 was the deadline. You have the watchdog organizations keeping close eye on who's rolling out and who's getting close to meeting their goals, and then which companies they're going to target for not meeting their goals towards cage free. So there's a lot of different factors coming up here that will make the market interesting, not only through the end of the year, but I think at least through Easter of next year. And then fingers crossed, by the time we get through Easter, if we don't have any more AI issues, production can recover back to normal levels and we will see more normalcy from the markets.
Greg Schonefeld:
Unfortunately, since recording this episode, Brian's caution to keep an eye on AI impacts has become real. Just a week after recording on October 10th, Brian informed me that the industry saw a loss of almost 3 million birds in two states, and he expects egg prices to be significantly higher by the time of our episode release, rising over a dollar in the two weeks since our conversation. Avian influenza has been anything but predictable with outbreaks returning unexpectedly in both the spring and fall of recent years. The impact on farmers is profound, wiping out millions of birds, disrupting businesses for months, and leaving the industry on edge, hoping to avoid yet another wave. But while the economic toll is clear, the public health risk is just as concerning. AI is spread beyond the poultry industry to dairy cattle and humans. What could be next?
Kay Russo:
It changes every day, to be honest. Anytime I'm asked to present, I'm literally changing the slides up to the minute before I present them because it is such a fluid situation.
Greg Schonefeld:
To dive deeper into the virus itself and what's being done to minimize its impacts the industry, we're bringing back Dr. Kay Russo, who's been at the forefront of AI research and containment efforts.
Kay Russo:
We've seen the virus march into different states that have considerable dairy populations and essentially rip through those populations. It's been about six and a half months since the onset of what was identified at least as influenza in dairy cattle. And despite that time, we still don't understand how it is being transmitted between farms and between animals on the same farm.
Greg Schonefeld:
Without fully understanding the transmission pathways of which there may be several, it becomes incredibly challenging to offer effective recommendations to farms on how to prevent the virus from spreading to their operations.
Kay Russo:
California is the top dairy producing state in the United States, and unfortunately is the new hotspot for the virus. They have over a thousand registered grade A dairies, and the virus is moving very rapidly through those dairies. The USDA website indicates that there's just shy of a hundred dairies currently in California of those 1100 or whatever it is exactly that have been identified as being positive for the virus. Now, rumor has it, and I'm kind of finding a lot of the times the rumblings tend to be true, but it looks like there may be up to 500 dairies presently that are infected with the virus in California. As far as the science is concerned, there's a veterinarian that lives local to me here in Colorado. His name is Dr. Jason Lombard, and Dr. Lombard worked for the USDA for I think it was over 20 years.
And he's a cattle guy, and the APHIS, which is part of USDA enlisted his help on this. So he's been running a lot of the epidemiological investigations and in listening to him present, it has become immediately clear to me that we're missing the boat on these operations. If you look at the shedding of the virus by the cows and the milk, which is where the virus is concentrated, the cows are shedding it long before clinical signs appear. And so the opportunity to understand the transmission of the virus is missed. By the time the cows are clinical, we're missing that whole piece in the transmission. And so until we understand that we're going to be left with this virus really moving rapidly, perhaps there's nothing we can do to stop it, but at least then we'll know. And then the question becomes, which is relevant to the egg industry, is how is it moving from the dairy operations to the poultry operations? But again, without understanding transmission pathways, it's hard to stop it.
Greg Schonefeld:
As Kay explained, one of the biggest challenges in containing this virus is how it's spreading before any signs are even visible in the herd. But there's a key tool that's helping researchers track it, milk testing. By screening the bulk tanks on dairy farms, we get a glimpse of where the virus might be present sometimes weeks before clinical signs appear. This insight allows animal health professionals to identify infected farms early. Let's dive into how this testing works and what it's revealing about the virus' spread.
Kay Russo:
We have identified that the virus is most concentrated in the milk of infected cows. These animals, as they're milked on dairies, for those of you that aren't familiar, is they're milked in a milking parlor and that milk goes into a bulk tank, and that bulk tank is then picked up by milk trucks and brought to the processor for pasteurization or further treatment. And so the bulk tank, therefore, has been a very crude tool for us to get a snapshot of whether the virus is present on an operation. Now, a negative bulk tank does not always mean that that operation is virus-free, but it is a way for us to look for it. Some states like the state of Colorado has employed weekly bulk tank testing of all grade A dairies. And what that allowed for was an additional, I believe, 11 farms that were identified as being positive for the virus with that screening.
And so we found some 64 dairies in total, majority reported, and some were found by this bulk tank screening to have this virus. So in screening the bulk tank, the other thing Colorado figured out is the virus is present on these operations for a very long time. And so some operations that were say identified, for instance, between different bulk tank testing, serial testing, weekly testing in Texas and Colorado, some of the operations in Texas that came positive in April were positive four to five months later. And so it tells you that even though the virus is blown through the herd, there's still animals that are getting sick with it and shedding it. So that's one thing it's told us.
The other thing it's told us is that it is in fact a tool to essentially screen an operation crude. However, it is a tool. And what Dr. Lombard, who's that epidemiologist at CSU has found is that the herd tends to start to shed the virus anywhere between 17, 20 days before the herd develops observable clinical signs that we're ascribing to flu infection in cows. And it's at that point, we need to get epidemiologists onto these operations to determine how it's moving. Is it airborne in the parlor? How is it moving from pen to pen? That helps us to start to answer those questions. Perhaps there's no way to stop it once it's on an operation from moving through and spreading from farm to farm, but it gives us a better picture of it. That's where we're at, is trying to really get into these operations a bit earlier to answer some of those questions.
Greg Schonefeld:
So we're starting to learn a little bit more about how this disease behaves in cattle, including potential methods of detection and symptoms that tend to appear. Hopefully, it can lead to some of the action Kay outlines. Another thing we learned from Kay is that this disease, which previously was considered mild, is proving to be much more severe. In California, some farms are seeing up to 10 to 15% of their clinically affected cows die. This has raised concerns, especially in regions hit hardest by heat where the virus seems to be taking a heavier toll.
Kay Russo:
I think this is a social exercise in addition to a disease outbreak. I think looking back at this in a year or two, it'll be really interesting discussion is to how the industry has responded, how the veterinarian's role was in this, how the government responded to this. It's an interesting social experiment as well. But the other thing that some of these operations aren't considering, and I've said this repeatedly and I'm saying a little bit louder now, is the cattle industry has not shown the proper respect for flu virus here. And the only thing consistent about flu viruses is change, mutation and change. And so if the viruses, this particular virus continues to change enough year over year, this could be a persistent problem in our herds where we are seeing it clinically hit them multiple times. And so I think we need to shift that some and show more respect for what these viruses are capable of.
Greg Schonefeld:
So what does this mean for the egg industry?
Kay Russo:
Well, I think it poses existential risk to the poultry industry. I mean, the response does not match the threat here. It doesn't match the threat to the poultry industry. It doesn't match the potential threat to the dairy industry. It doesn't match the potential threat to humans. So let's be prepared, and hopefully it will be mild, but let's prepare for the worst.
Greg Schonefeld:
After talking to Kay, it's clear that this virus isn't going away anytime soon. Without tools like vaccines, we still don't fully understand how to control it over the long term. And as it persists on these farms, it becomes a daily threat, not just to neighboring poultry operations, but to the workers in close contact with these animals. Migratory birds also pose a significant risk. While current testing hasn't shown them carrying the bovine variant, those tests are limited. If the virus spreads through bird populations, it could jeopardize not only poultry, but cattle as well. So what's next? How can the egg industry respond to this growing crisis?
Kay Russo:
I do think the industry needs to put the foot down and say, "Hey, what's a sustainable path forward here?" Because having to depopulate millions of birds year after year in my mind, doesn't seem sustainable. It doesn't seem humane. It doesn't seem sustainable. This is the 21st century. How can we approach this differently, better, more strategically so that we're not having to continue to do this? I think vaccination is going to be a piece of this, and I know that's a dirty word for export, but I think it's something that needs to be considered. Is it going to be the end-all be-all? Probably not. Because as you vaccinate animals, whether it's birds or humans or cows, it exerts pressure on that virus to change. So we have to continue to be agile with those vaccines and update them. But at the end of the day, I think the egg industry needs to get a bit louder and say, "Hey, we need help to figure out a better path here and put pressure where pressure is due to come to that point."
Greg Schonefeld:
Well, that gets us caught up for now, but there's still so much more to uncover. We'll be checking back in with Brian on the latest in eggonomics in the coming months. We'll also stay close to AI developments as we move into the fall. A quick thank you to Brian and Kay for their time and insights. Until next time, this is the Egghead Scramble. Check out more episodes of Eggheads as I speak with experts from all over the egg industry, including some upcoming guests who take us across the globe. New episodes drop every other week. Find Eggheads on Spotify or Apple Podcasts, and connect with us on Instagram and LinkedIn. See you next time.