Thursday, June 18, 2015

Member in the News: John Newton

Bird flu sends egg prices soaring

June 17, 2015
By owner Peter Bovis' estimate, Wildberry Pancakes and Cafe goes through more than 14,000 eggs a week at its Randolph Street location just north of Millennium Park.

But in the past month or so, Bovis and other restaurateurs have watched the price of this humblest of proteins increase.

A case of 12 dozen eggs ran Bovis between $15 and $20 about a month ago.

Now, Bovis said, he pays $40 to $45 for the same case.

His cooks downtown and at his suburban locations use eggs not just for omelets and scrambles, but as a key ingredient in a variety of other dishes.

He can't do business without them, no matter the cost.

"We're just biting the bullet right now," he said of the price hike. "You can't fake an egg."

Egg prices have soared in the past month, the result of a devastating bird flu outbreak that has laid waste to America's chicken flock in unprecedented numbers.

As a result, Chicago-area restaurants, grocery stores and their patrons have been paying much more for eggs as part of a market swing that analysts say is beyond the norm.

A dozen eggs rose at one point to $2.62 earlier this month, according to Randy Pesciotta, vice president of the egg division at industry analyst group Urner Barry.

Egg prices fluctuate, he said, but not to this extent.

"It takes an act of God," Pesciotta said. "And that's basically what we've experienced here."

The wholesale price of a dozen large Midwest eggs rocketed from just more than a dollar in late April to about $2.40 as of June 10, according to the U.S. Department of Agriculture's weekly shell egg report.

Nationally, a dozen Grade A or better eggs rose from an average of $1.22 for the week of May 15 to $1.95 this week, according to another USDA national egg retail report released Friday.

Restaurant owners interviewed by the Tribune lamented the increased cost but said they see it as a temporary hike they must grit through.

Analysts said this week that egg prices are expected to stabilize, but that above average prices could persist through the rest of the year.

Teresa Zepeda has served up signature chilaquiles and other breakfast items at Tiztal Cafe in Sheridan Park for the past seven years.

While restaurateurs are used to the occasional ingredient price fluctuation, Zepeda said the egg hike of the past month was "the biggest jump I've ever seen, in the product I use most."

She said her egg costs went from about $19 for a case of 180 a few weeks ago to about $42 for the same case this week.

Zepeda said she goes through about eight cases a week.

Still, Zepeda said she has not considered passing on the costs to customers or changing specials with the hopes of saving eggs because she doesn't want to alienate her clientele.

"I don't want my customers to see any difference because of the price," she said.

Debbie Edick, general manager at Glenn's Diner in Ravenswood, said the restaurant's egg costs have gone from $50 to $78 for 30 dozen eggs from March to June.

Edick said the higher costs have been more manageable because the diner's outdoor seating has opened, which means more customers.

Consumers are also seeing higher prices in the grocery aisle.

A dozen large eggs sold for $1.99 in mid-May at Mariano's, according to spokesman James Hyland.

This week, a dozen sells for $2.49.

Hyland said the supermarket hasn't seen any supply shortage but that they have discontinued egg promotions for now.

Checking a dozen large eggs for cracks on Tuesday morning at the Mariano's in Ravenswood, Dominick Manella said the increased cost was not affecting his purchases.

"I need to have breakfast every morning," the 66-year-old retiree said.

While paying more for regular eggs didn't hurt his pocketbook, Manella dismissively waved away the organic eggs one cooler door over.

"Those ones that are $4?" he said. "Come on."

Grocery stores and their customers are more used to shifting prices for commodities like eggs or milk, but restaurants have less flexibility, said John Newton, an agricultural commodity markets professor at the University of Illinois at Urbana-Champaign.

"It's much easier to increase those prices than to see an increase in Egg McMuffin prices," Newton said.

The latest eruption of highly pathogenic bird flu first popped up in December and is poised to "depopulate" 50 million birds, making it the worst outbreak in U.S. history.

Newton, who said he has seen an 18-pack of eggs retailing for $5 in Champaign recently, wrote in the university's "farmdoc daily" that this outbreak dwarfs a 1983 incident that led to the loss of 17 million chickens, turkey and guinea fowl.

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