Avian flu outbreak raises specter of egg shortage

With avian flu devastating a significant portion of the nation’s egg-laying hens, major food companies and restaurant chains are bracing for shortages and scouting the country to find alternative supply sources.

Roughly 87 percent of the birds stricken with the disease are laying hens, according to the U.S. Department of Agriculture, and many of the eggs they lay are turned into ingredients used by food businesses in things like egg patties and baked goods.

So while most food companies say they have enough eggs to meet their short-term needs, corporations like McDonald’s, Panera Bread, Unilever and General Mills are seeking other suppliers and substitute ingredients.

“One of our suppliers has been directly impacted by avian influenza despite their taking appropriate biosecurity precautions,” Lisa McComb, a spokeswoman for McDonald’s, wrote in an e-mail. “We proactively developed contingent supply plans, and we do not anticipate an impact to our ability to supply eggs to our restaurants and serve our customers.”

McDonald’s, which introduced the Egg McMuffin in 1971, still reigns as king of the fast-food breakfast, with roughly one-fifth of the market, according to research by Sanford C. Bernstein & Co. Chain restaurants like Denny’s and IHOP, a unit of DineEquity, also have big breakfast businesses.

“At present, we have not had any issues regarding the availability of eggs for our restaurants, but like the rest of the industry, we continue to monitor this situation closely,” Craig Hoffman, a spokesman for IHOP, said in a statement.

Cargill Kitchen Solutions, a unit of Cargill, the large food and agriculture company that supplies food service and restaurant businesses with egg products, is one of McDonald’s suppliers.

“The A.I. cases have impacted the entire egg industry, including several Cargill Kitchen Solutions egg supplier locations,” the company said in an e-mail, referring to avian influenza.

Post Holdings, which uses eggs in its products and sells processed eggs to others, recently said the flu crisis would slice about $20 million out of its cash flow – and that was before the Agriculture Department confirmed an outbreak among 1.7 million hens at another facility that supplies the company.

And on Thursday, Hampton Creek, a small business that makes plant-based egg substitutes, shipped tens of thousands of pounds of its Just Mix powdered egg substitute to General Mills, which uses egg products in things like its Betty Crocker Angel Food Cake Mix and a variety of refrigerated cookie doughs.

As of Wednesday, 13 companies worried about running short of eggs had contacted Hampton Creek about its egg substitutes.

Some people hoped that decisions by other countries to ban poultry products from the United States because of the flu might mean eggs previously due for export would offset shortages here. But exports account for only about 5 percent of the eggs produced in the United States, according to United Egg Producers, a trade group.

As of Wednesday, the flu is forcing farmers to kill more than 38 million infected birds, 33 million of which are laying hens. Last year, laying hens produced 7.3 billion dozen eggs.

Egg prices in general are moving up, according the USDA’s weekly report, and there were not enough liquid eggs available for purchase in the spot market to cover demand last week.

This story was originally published May 21, 2015 at 5:03 PM with the headline "Avian flu outbreak raises specter of egg shortage."