How will bird flu affect retail poultry prices?


With all the killing of poultry by bird flu and euthanizing that will this do to the retail poultry prices?


Avian influenza has continued to spread, particularly in flocks of egg-laying hens. When a farm encounters a case of avian influenza, some birds die and others are euthanized. In the immediate short-run, this translates into a direct reduction in the amount eggs on the market as the supply curve is perfectly inelastic. Consumers are now left to bargain over less quantity. The more inelastic the demand curve (the less price responsive are consumers), the greater the price increase. Demand for eggs is likely much more inelastic (than turkey) because of fewer substitutes. The price impacts are becoming more apparent. The wholesale price of “breaker” eggs—the kind sold in liquid form to restaurants and packaged-food producers—nearly tripled in in May to a record $2.03 a dozen, according to market-research firm Urner Barry. Meanwhile, U.S. prices for wholesale large shell eggs, those sold at the grocery store, have jumped about 85% to $2.20 a dozen in the Midwest. In the longer-run, the industry can adjust by adding new breeding stock, new houses, etc., so the ultimate price effects will dampen over time.

Answered by
  • Associate Professor
Last updated on
March 9, 2018

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