A study commissioned by the Iowa Farm Bureau shows it could take up to three years to see egg prices recover, and thousands of jobs could be lost from the impact of the avian flu outbreak.
Spencer Parkinson is the executive director of Decision Innovation Solutions of Urbandale, which conducted the study. “What we found was that about 8,400, 8,500 jobs would be impacted or lost as a result of the avian influenza outbreak. About $1.2 billion in lower output and about 425-427 million dollars in lower value added,” Parkinson says.
Some 34 million birds on 77 Iowa farms had to be destroyed after contracting the virus. Parkinson says the amount of time it takes to get the operations running again adds to the overall cost. He says they found that a lot of the laying hens would be out of service anywhere from one year to 18 months. The turkey producers have a 30 week turnaround to get back up and operating.
Parkinson says they did separate out the impact on the businesses that provide services to the poultry producers — the veterinarians, trucking companies, processors and lenders for example — that’s included in that $1.2 billion overall total . “As far as the ones that would be not part of just the farms — we’re talking about 2,500 jobs or so. And then as far as output that would be lost, it would be right around $570 million as far as what the indirect and induced impact would be from the outbreak itself,” according to Parkinson.
He says the number of jobs lost is based on the time it takes the operations to get back up and running, and their ability to keep employees from moving on. “In these areas where the outbreak has occurred, the unemployment rate is already lower than the state average — and so there’s plenty of jobs. And in some cases some of these employees that have been trained and retained over the last number of years, they are going to move on to some other work,” Parkinson explains. “So these farms are going to have to find new people.”
He says finding the new people to train and getting them to stay in the jobs once a facility is operating again will be a challenge. Another cost for the egg producers is filling the contracts they had in place when the outbreak hit. Parkinson says it is expensive to find the eggs to fill the orders. He says they are looking at using powdered eggs that go into pancake mixes and other things to fill their orders. “They are honoring their contracts and it’s becoming more difficult and of course those eggs are going to be bought at a premium. So, there’s additional implications in that route too,” Parkinson says.
Turkey producers are in a better situation compared to egg producers. “The reason for that is they are an all-in, all-out system, and it’s easier to recover from that because you are not trying to stagger the ages of your poultry,” Parkinson says. Parkinson says this outbreak had some key factors that have made it different from anything else his company has studied.
“I guess the closest would probably be the PEDV (Porcine Epidemic Diarrhea Virus) outbreak in the hog industry about a year-and-a-half or two ago. The interesting thing about this one though, is how fast it spread,” Parkinson says. “Within a couple of months, the Iowa layer industry lost half the layers — and that is something I have never seen on that scale — an industry losing half of their birds in just two-to-three months.” He says the hog industry’s return from their outbreak should offer some hope to poultry producers.
“We saw that they were able to recover and the price of pork has come down from what it was two or three years ago. And that’s a bright spot with the price of eggs being where they are now. We can expect the price of eggs to be elevated for a period of time, but they will eventually come down,” according to Parkinson. You can see the full report on the Iowa Farm Bureau website.
