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A squeeze on eggs is being felt across the industry. (Image: Getty / Treatment: Archi Banal)

BusinessOctober 25, 2022

Are we on the brink of an egg shortage? An egg-splainer

A squeeze on eggs is being felt across the industry. (Image: Getty / Treatment: Archi Banal)

Multiple forces are putting a crunch on egg supplies. An egg-spert (sorry) explains.

This is an excerpt from our weekly business newsletter Stocktake.

Jumbo, free range, organic, in six- or 12-packs, eggs just always seem to be there. I get mine from a local farmers market. Usually, a tray of free range eggs, which costs $15, lasts us about two weeks. Poached, they’re an easy breakfast. Scrambled, a simple lunch. Turned into a vegetable frittata, they’re a cruisy dinner that even the kids enjoy. The shells go great in the compost.

Recently, though, whenever I’ve picked up my egg supplies, the guy running the stall has chewed my ear off about a looming shortage. It’s coming, he warned. There are fewer chickens laying eggs than ever, he said. Grain costs are rising and smaller suppliers are packing up. Eggs are about to become an issue, he reckoned.

When I last went to get my eggs, he wasn’t there. Why? He was sold out. He didn’t have a single egg left to sell.

His predictions seem to be coming true. “It’s been a tough, tough time being in the egg farming industry,” says Michael Brooks. I called the Poultry Industry Association’s executive director to find out what was happening. “My phone battery is about to die,” he warned me, so I fired some quick questions at him, and he was happy to respond.

It turns out there’s a lot happening in the egg industry right now. “It’s a combination of factors,” he says. Everything from Russia’s war on Ukraine to the lack of tourism over the past couple of years, as well as incoming industry regulations, are affecting supplies. Brooks has never seen the industry so pushed. “It’s extraordinary.”

The biggest issue is the lack of chickens. There just aren’t enough around the country laying eggs to keep supplies consistent. “The flock is at a lower level,” admits Brooks. He’s right: I’ve seen charts that show there are far fewer birds laying eggs at the moment. Brooks says during Covid, independent producers found the going too hard. “A lot of those smaller players were [supplying] cafes and farmers markets,” he says. “They’re going out of business because times are really tough.”

Grain prices are also an issue. Chicken feed contributes to 75% of the cost of producing every egg and those prices are higher than ever. While New Zealand doesn’t get its grain from Ukraine, Brooks says a shortage of supplies coming out of the war-torn country affect global feed costs. “It’s just tough in terms of those supply chain costs, the feed costs,” he says.

Another factor is looming industry-wide changes. From the end of the year, when new animal welfare rules come into place, caged chickens are out. That means farmers have been changing their set-ups to comply with the new regulations. “Back in 2012 when the code came out, 84% of laying hens were in the old style cages,” says Brooks. But by January 1, 2023, none will be. “That’s a huge change for the industry … there are lots of costs there as well.”

Some empty egg shelves at Pak’nSave Westgate (Photo: Chris Schulz)

And that means egg prices are rising. According to stats, they’re higher than they’ve ever been. That’s the end result of everything affecting the chicken and egg industry. It’s been happening overseas already, with shortages hitting America, Europe and Australia. “Farmers have got to make a living, they’ve got to pass on those costs, they can’t keep holding prices,” says Brooks.

Another major factor affecting overseas chicken farmers is disease, including avian influenza. “New Zealand doesn’t have that,” he says. “It’s something we guard jealously and it makes us a good place for poultry.”

Brooks won’t be drawn on predictions about when the egg squeeze might end. It’s just too hard to tell. “Predicting an end depends on inflation,” he says. “Ukraine doesn’t look like it has an end in sight. At the moment, I wouldn’t say there’s light at the end of the tunnel … it’s a holding pattern.”

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