Egg prices soar while dairy prices remain stable as H5N1 spreads through California
Consumers have faced reduced egg supplies and high egg prices. A recent article by University of California, Davis agricultural economists explore the reasons for reduced egg supplies and high egg prices and assess what producers and consumers can expect now that the bird flu, or H5N1, has spread through poultry farms and California dairies.
The authors find that California egg production in December 2024 was 30% lower than in January 2022, while national production, which is the source of most of California’s retail supply, had declined by much less. California milk production is also decreasing as the virus sweeps through California dairies, but has not driven up consumer prices because of major differences in the relevant markets.
“Despite California producing more than 15% of U.S. milk, H5N1 has had little or no impact on milk prices because the disease has not substantially affected national milk production,” said co-author Daniel Sumner, a Distinguished Professor with the UC Davis Department of Agricultural and Resource Economics. “Most California milk is used for storable, processed products like cheese, milk powders and butter that enter a large global market.”
Avian influenza has been around for decades. But in early 2022 a new outbreak of highly pathogenic avian influenza (H5N1) hit flocks of egg-laying hens across the United States, leading to almost continuous outbreaks across multiple states. These outbreaks, and the subsequent loss of hens due to the disease and the long-standing “depopulation” program intended to eradicate the disease, have led to the loss of more than 60 million U.S. egg-laying hens from 2022 through 2024. In California, the disease led to the destruction of around 10.6 million laying hens, with another 1 million table-egg pullets (young hens about to start laying) also destroyed.
Production decreases coincided with the rising egg prices that jumped in 2022 and again dramatically at the end of 2024, with national wholesale egg prices clearing $5 per dozen and California egg prices rising above $7 per dozen. California’s regulations state that only cage-free eggs may be produced or sold here, raising average prices in normal times and accounting for higher volatility in egg prices for California consumers.
In August 2024, H5N1 was detected in California dairies and spread rapidly. As of late January 2025, nearly 75% of California herds had been infected. In contrast to its high mortality in birds, H5N1 has mostly produced more mild symptoms in dairy herds. Individual cows are typically asymptomatic after around a month, and milk production, which may fall temporarily by 20% or 30%, takes a few more months to recover. Importantly, even in infected herds, a large share of cows shows no loss of milk production. The authors estimate that California milk production fell by 6.4%, 10.3%, and 8.4% in October, November and December 2024, compared to what would have occurred without the disease.
While consumers may not feel the effects of H5N1 through rising dairy prices, affected dairy producers have experienced major losses in net returns, which will continue as their herds recover in 2025.
To learn more about the effects of bird flu on California farmers and consumers, read the full article by Olena Sambucci, Daniel A. Sumner and Erica A. Van Fleet: “Avian Influenza and the Economics of California Eggs and Milk: Some Early Assessments,” ARE Update 28(3): 1–4. UC Giannini Foundation of Agricultural Economics, online at https://giannini.ucop.edu/filer/file/1740696665/21242/.
ARE Update is a bimonthly magazine published by the Giannini Foundation of Agricultural Economics to educate policymakers and agribusiness professionals about new research or analysis of important topics in agricultural and resource economics. Articles are written by Giannini Foundation members, including University of California faculty and Cooperative Extension specialists in agricultural and resource economics, and university graduate students. Learn more about the Giannini Foundation and its publications at https://giannini.ucop.edu/.
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