MIEC Project TF23 Group 3 by Yiling YU

Our Chosen Article

yuyiling29 — 2015-06-30 07:38:49 UTC

How the Bird Flu Cracked the Egg Supply

Article made on 26 June 2015

Brief summary of our article

yuyiling29 — 2015-06-30 07:39:35 UTC

The widespread of bird flu outbreak caused a significant decline in egg supply which in turn affected the prices of the eggs.

The article mentioned about how this affects both the consumers and suppliers (food companies). The bird flu also directly led to unemployment in food companies.

However, a potential vaccine from USDA could counter the virus. It is uncertain how widespread and significant the effects of the flu might be in the coming months(long term), companies are working on the solution so that business interruptions will not occur.

Egg prices in Food industry

tayjinglai — 2015-06-30 07:45:15 UTC

With the widespread of bird flu outbreak, it caused the population of the birds to decrease drastically, resulting in the prices of the egg to increase steeply in the food industry.

The bird flu has reduced the breaker egg supply by about 23%, causing breaker egg prices to increase by 220% to more than $2 per dozen.

The U.S. decided to use one-third of the breaker eggs(Eggs in packaging) to be used as liquid products(Liquid Eggs) and processed foods.

The USDA reported that egg prices are expected to decrease in the third quarter of 2014, and increase again in the fourth quarter for high-demand holiday periods.

Effect on Food Companies

viennang — 2015-06-30 07:46:09 UTC

The widespread of bird flu outbreak has caused job cuts which resulted in a decrease in employment and an increase in unemployment rate.

Sysco Corp announced that the bird flu's effect will limit its egg and egg-laying supply for 18 months.

For some food companies,It is not known if the decrease in supply of eggs will affect financial profits.

With the high prices of the eggs, companies that rely on eggs to maintain production capacity were heavily affected, while some companies had troubles to continue to operate as normal.

For Post Holdings Inc.'s Michael Foods Group, its estimation of 35% of loss was lowered to 25%. But still expects $20million in damages.

Impact of bird flu on suppliers

zamily_jiayi — 2015-06-30 07:54:55 UTC

Companies and egg suppliers have discussed publicly of how the outbreak had disturbed their ingredient supply, production, or prices.

Some companies have a large egg stock, but when that stock runs low, they will have to turn to a diminished egg supply that bears a high price tag, and that could noticeably affect margins going forward.

This will cause the supplier to incurred a higher cost in order to product egg-related product.

Statistics on Supply and Prices of eggs

zamily_jiayi — 2015-06-30 07:58:33 UTC

As of mid-May, the bird flu has reduced the breaker egg supply by about 23% and when when the virus infection rate peaked, breaker egg prices increased by 220% to more than $2 per dozen.

Reference

tayjinglai — 2015-06-30 08:18:13 UTC

By Carolyn Heneghan | June 26, 2015, How the Bird Flu cracked the egg supply. Retrieved from http://www.fooddive.com/news/how-the-bird-flu-cracked-the-egg-supply/401400/ on 30 June 2015

DEMAND AND SUPPLY DECREASE [Print Photo]. Retrieved from http://www.amosweb.com/images/MkSh43c.gif on 18 July 2015

Comments on Ryan Goh (3 July)

gry2 — 2015-07-03 06:40:13 UTC

- Looks good. Topic is well chosen.

- Your group has the points. Now go put it together in the DD&SS analysis. - Can start looking at the income and price elasticity of demand.

yuyiling29 — 2015-07-18 15:18:56 UTC

Supply & Demand Curve

yuyiling29 — 2015-07-18 15:19:29 UTC

From the graph, there is a drop of supply due to the bird flu outbreak and the factor price to maintain the chicken increases, and assuming if egg is a luxury (Breaker egg, liquid eggs), the demand for eggs will also decrease due to a change in preference.

(Assume that both supply and demand decrease at the same value.)