After a spike in egg demand, Iowa producers seek pandemic assistance

Iowa is on of the nation's top egg producers. (Photo by Iowa Egg Council)

Despite a recent surge in consumer demand for whole eggs, Iowa’s elected leaders are asking the U.S. Department of Agriculture to let egg producers apply for financial assistance through the $19 billion Coronavirus Food Assistance Program.

Retail orders for eggs increased dramatically during the initial spread of COVID-19 in the United States, with the USDA reporting a rapid decline in whole-egg inventories and an accompanying increase in prices on supermarket shelves.

The average wholesale price of Grade A large eggs reached $3.06 per dozen the week of March 29, which was almost 3.5 times the price charged a month earlier. Prices then dropped steadily over the next several weeks.

At the same time, the demand for liquid-egg products — which account for roughly 30 percent of the eggs produced in the United States — plummeted as restaurants and hotels that purchase those products shut their doors as a result of the pandemic.

The result is that while some egg producers around the county have had difficulty meeting the increased demand for their product, others are struggling.

Recently, one Minnesota farm under contract with Cargill had to euthanize more than 60,000 chickens when the food conglomerate — the largest privately held company in America — temporarily shut down its liquidizing plant, and the farm was unable to make the switch to whole-egg sales.

U.S. Sen. Chuck Grassley is a Republican from New Hartford, Iowa.

In a letter sent to USDA Secretary Sonny Perdue, Gov. Kim Reynolds, Iowa Secretary of Agriculture Mike Naig, and U.S. Sens. Chuck Grassley and Joni Ernst, told Perdue the funding assistance for egg producers is needed to keep the companies “afloat until the pandemic abates.”

They wrote: “COVID-19 has impacted our Iowa farmers, including our egg producers, whose eggs were destined for the liquid egg market.” They said the egg industry in Iowa has sustained “massive damage” as as a result of restaurants, schools, and other egg-buying businesses closing down in response to COVID-19.

This “has proved to be devastating to Iowa’s egg producers,” they added.

Iowa is home to over 58 million egg-laying hens and produces about one of every six eggs consumed in the United States each year.

The Coronavirus Food Assistance Program, or CFAP, provides financial assistance to some producers of agricultural commodities who have suffered at least a 5% price decline or sustained losses due to supply-chain disruptions caused by COVID-19.

The program provides one CFAP payment to farmers and ranchers, drawn from two funding sources: the CARES Act, which compensates farmers for losses due to price declines between mid-January and mid-April 2020; and the Commodity Credit Corporation Charter Act, which compensates producers for $6.5 billion in losses attributable to market disruption.

Currently, the eligible commodities include dairy products; non-specialty crops, such as corn, oats and soybeans; livestock, including cattle, hogs, and sheep; along with certain varieties of fruits, vegetables and nuts.

The program specifically excludes eggs and laying hens; rice, flax, peanuts, feed barley, forage crops, tobacco and several other commodities. However, the USDA has said it “may reconsider” the excluded commodities if credible evidence is provided that supports a 5% price decline.

In the letter to Perdue, Iowa’s elected officials point out that the Iowa’s egg producers serve two distinct markets, whole  eggs and liquid-egg products, with the latter experiencing a 68.7% price decline.

“Market disruptions have negatively impacted almost all operations in Iowa, including egg producers,” Grassley said. “The liquid egg market saw a 68 percent price decline as sales to restaurants and hotels dried up during the COVID-19 pandemic.” He called for an “adjustment to the (CFAP) to allow egg producers to qualify” for assistance.

Ernst said Iowa’s “egg industry has seen a drastic drop in demand and as a result some have had to dump product.”

U.S. Undersecretary of Agriculture Bill Northey said last month, “I just know we’ll get” requests for CFAP eligibility from egg producers, adding, “We should — and they should give us some information and we should see if we can make it work or not or if it’s logical.”

The USDA’s Coronavirus Food Assistance Program is accepting financial assistance applications from farmers through Aug. 28. Producers can apply through the Farm Service Agency at their local USDA Service Center.