Eggs photo by Erol Ahmed on unsplash.com

Consumers are quite aware of higher prices at the grocery store as avian Influenza, or bird flu, continues to disrupt egg production and supply. 

While the spread of bird flu also hit California dairy farms hard, there has been little to no impact on milk prices or consumers so far, according to a new study. 

An update from the Giannini Foundation of Agricultural Economics with the University of California describes the implications of bird flu for egg and milk quantities and prices. The analysis focuses on California, which became a bird flu spot for egg-laying hens and dairy cattle in late 2024, and early 2025. 

The article “Avian Influenza and the Economics of California Eggs and Milk: Some Early Assessments,” focuses on how the disease has affected the price of table eggs, highlights how the current pattern of infections has changed and how it caused declines in California milk production. 

 

Flock troubles

Bird flu has been recurring in flocks of table-egg-laying hens every few years for decades, but the period since 2022 has been unique with almost continuous outbreaks across several states in hundreds of flocks. More than 130 million birds have been infected, most of which have been egg-laying hens. 

The article noted that in Iowa, the most important egg-producing state, has a total of 41 million hens, with about 29 million infected and destroyed since February 2022. 

In the Golden State, bird flu has infected about 10.6 million hens and about 1 million young hens being prepared to enter the egg-laying flock. 

When poultry diseases are found in a flock, the farm must immediately notify authorities. When disease presence is confirmed, the flocks are depopulated, or killed.

Egg-laying flocks are typically active for about a year, from when 20-week-old hens enter the facility to when they are near the end of their cycle.

“The discovery of H5N1 (Bird Flu) cuts short that laying cycle by as much as the full 12 months or by as little as a few weeks if the hens are near the end of their cycle. In any case, infections are costly, usually requiring the destruction of many hens and efforts to eliminate any trace of the virus in the facility,” the article states. 

To encourage participation in disease control policies, the Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture (USDA), provides compensation to poultry egg farmers to cover the loss from premature removal of birds. 

According to the article, USDA has provided $1.3 billion in indemnity and compensation, which included the cost of reconditioning facilities and restocking, to producers for all bird flu-affected operations.

After depopulation, farms immediately prepare to repopulate the facility to house new pullets, or young hens, safely. 

Typically, this happens when the egg facility appears to have a viable future in the business, but economic conditions and the recurrence of bird flu can change those financial calculations. 

In the U.S., over 60 million egg-laying hens have been depopulated since November 2024, with almost 25% of these, about 14 million hens, in California. 

Last November, California lost almost 3.2 million hens, and in December 2024, it lost a further 6.2 million hens to bird flu. 

By the end of last year, because farms had not replaced all the birds lost to the virus, California only housed about 4.35 million egg-laying hens, or 1.5% of the nation’s eggs. 

The article states that California buyers contract to buy from California suppliers when available to minimize transport time and costs. 

In the California market, where access is restricted to only the cage-free segment of supply, egg prices are likely to be higher and more volatile than national prices. 

“We note that retail egg prices have also been volatile, but some retailers have left egg shelves bare, or ration sales among customers directly, rather than raise prices enough to clear the market,” according to the article. ‘

 

Utter uncertainty

As of the end of January 2025, 734 dairy herds have been infected — about 75% of all herds — with about 200 of the early infected herds being released from quarantine.

According to the article, bird flu has been concentrated in the San Joaquin Valley, where herds are large and milk production per cow is high. This means it has likely affected herds producing about 90% of California milk. 

However,  unlike in poultry, bird flu typically causes mild symptoms in cattle, with most individual cows recovering quickly. Reduced milk production is the hardest impact for commercial dairies. 

Cows may be infected for a month, but milk productivity takes two or three months to recover. 

Last year, California showed milk production declines of 6.4% in October, 10.3% in November and 8.4% in December. Infections were not as significant in other major dairy states.

Along with milk production, the disease also impacts herd health expenditures, costs of early culling, calf abortions, higher labor costs for monitoring and more. 

The result, though, has been volatility in egg prices at grocery stores that has not been seen by dairy consumers.

“It is also not clear if the current policy of depopulating infected flocks will get the disease under control nationally as it did in the past. Given the sensitivity of price to production shortfalls, egg prices may continue to bounce up and down,” states the article.