Ramstad: Bird flu, drought boost prices of eggs and beef, but farm economy remains strong

My grocery store recently taped on the front of the egg case a cartoon chicken with its mouth open and wings spread out like a preacher or a politician.

“We apologize as we are experiencing distribution difficulties with some brands of eggs right now,” the cartoon chicken says. The lowest price inside the case is $5.99 a dozen.

I texted a photo of the cartoon chicken to a friend who replied, “Where do you get such cheap eggs? I routinely pay $7 to $9.” Inside a different store elsewhere in the metro this weekend, I came upon a picked-over selection of eggs with a sign warning they may be in short supply with inflated prices well into spring.

On Wednesday morning, consumer price data for December will be released. It will be the final report card on inflation for the Biden administration and a starting point for President-elect Donald Trump, who promised to lower consumer prices on the campaign trail, but acknowledged reality afterward. Speaking to Time magazine for his “Person of the Year” profile last month, Trump said it’s hard to bring prices down “once they’re up.”

The idea that elected officials can control market forces was silly, but we heard it a lot last year.

For anyone paying attention to the news about bird flu, the spike in egg prices is not surprising. The avian influenza outbreak began in 2022, but flared up several times last year, climaxing with a big spike in new detections last month.

December accounted for 18 million of the 133 million birds in flocks where the deadly flu has been found since its start. For context, the U.S. has about 380 million egg-laying hens.

“Bird flu has reared its ugly head again this year,” said Nathan Hulinsky, a Brainerd-based agricultural economist for the University of Minnesota Extension. The state’s poultry growers have contended with the loss of more than 8 million birds.

Consumer demand during the holiday period was another factor for the jump in egg prices. The U.S. Department of Agriculture’s weekly egg price index peaked late last month at a level five times higher than in September.

Despite the higher price, the department reported last week that demand “remained atypically strong in contrast to past year trends when demand retreated from holiday highs into early January.”

In another part of the grocery store, beef prices also continue to be considerably higher than they were before the coronavirus pandemic in 2020, the point when many humans think their food was last affordable.

Supply and demand forces are again at work. The starting point for understanding beef prices is the number of cows and calves in the country, which at this time last year was the lowest it had been in about 70 years. A new inventory number will come out Jan. 31, and cattle producers are hoping it will signal a bottom or maybe the start of a rebound.

Cattle inventory is cyclical and has been in a phase of accelerating contraction since 2020, partly due to dry weather and drought in places with large pastures like Texas, Colorado and Wyoming.

The livestock farmers and ranchers who buy calves to grow them to maturity are paying twice as much as they did two years ago. The shrinking inventory of calves has a ripple effect as they age and it appears likely meatpacking plants this year will see reduced supply of animals, which means prices in the grocery store are likely to stay elevated.

Elsewhere around the store, sugar prices declined over the past few months to levels last seen two years ago. Cocoa prices remain near historic highs, nearly five times higher than two years ago and the main reason chocolate treats are so much more expensive.

The swings in commodity prices are the main reason I think farmers, and the bankers alongside them, are among the bravest people in the business world.

Farm income reached a record high in the U.S. in 2022, then fell in 2023 and 2024, but remained well above any year during the 2010s.

“The USDA came out and said they would have anticipated 2024 farm income to be lower than it was, but the livestock market really lifted the overall incomes,” Hulinsky said. “Beef prices are high. Milk prices are relatively higher than they were.”

Federal subsidies to farmers plunged over the last four years since peaking in 2020. Only with the last-minute budget reconciliation bill just before Christmas did Congress address some of the weather-related difficulties farmers experienced last year.

Minnesota’s farm year was shaped by wetter-than-average spring and early summer seasons, particularly in the southern part of the state. Some farmers turned to crop insurance to offset the effects of washed-out fields or planting that didn’t get done.

Then, from mid-August into late October, it hardly rained at all. That worked out well for drying out and harvesting crops.

The result: Minnesota’s corn farmers had yields that exceeded the national average and soybean farmers had yields that were slightly below the nation’s.

Prices for both of the big cash crops were well below the high levels seen in 2021 and 2022 though, the main reason for the drop in overall farm income last year.