Latest news with #Hillandale
Washington Post
08-04-2025
- Business
- Washington Post
As egg prices soared at the supermarket, so did producer profits
The avian influenza outbreak has had far-reaching consequences: More than 120 million hens have been slaughtered and egg prices have risen to record levels. In his address to Congress, President Donald Trump called the situation 'out of control.' Yet for some corporate egg companies, these are good times. On Tuesday, the nation's largest egg producer, Mississippi-based Cal-Maine, is expected to announce another round of earnings to cap three years of extraordinary profits, which have surged since the avian flu outbreak in 2022. By wiping out millions of laying hens, the avian flu has slowed egg production for many companies. But the outbreak also has driven up prices enough for some companies to recoup losses and, for Cal-Maine, to record substantial profits. Cal-Maine's financial reports show it has been able to more than double its price for a dozen eggs, from about $1.30 a dozen before the outbreak to as high as $3.30 a dozen, while their feed costs to produce an egg have been relatively stable. At the same time, Cal-Maine and other large egg companies have received tens of millions from the USDA, which has been doling out relief payments to help egg companies restock after the virus strikes. Cal-Maine, which produces about 20 percent of the nation's egg supply, has benefited from the government program twice. After the virus led to the slaughter of 1.5 million hens at its facility in Chase, Kansas, the USDA paid Cal-Maine more than $22 million, according to the federal spending website, and outbreak reporting from the Centers for Disease Control and Prevention. Similarly, after the virus led to the slaughter of 1.6 million hens in Farwell, Texas, the USDA set aside another $21 million for the company. As a result, even though the avian flu reduced the ranks of the company's hens by about 4 percent, the USDA payments and higher egg prices sent its profits soaring. Officials with Cal-Maine did not respond to repeated requests for comment. The company isn't even the biggest beneficiary of USDA payments so far. Hillandale, which has operations in Ohio and Pennsylvania, received $53 million, according to the federal figures. Versova, a family of companies with farms in Iowa and Ohio, has been allotted more than $107 million. Those outfits, which are private, do not release profit figures. Neither does Iowa-based Rembrandt Foods, which has received $26 million in payments — when it was owned by billionaire Glen Taylor, according to local news reports at the time. It's unclear whether Taylor, who did not respond to requests for comment, still owns a stake. Versova, Rembrandt Foods and Hillandale did not respond to requests for comment. 'For those companies to be bailed out and then turn around and set exploitative prices, it just adds insult to injury for consumers,' said Thomas Gremillion, director of food policy at the Consumer Federation of America, one of several industry critics decrying government payments to big egg producers. 'Absolutely, it's unfair.' While large egg-producers with multiple far-flung locations like Cal-Maine may thrive during the outbreak, industry analysts said smaller farms stricken with the virus are far more likely to suffer — because while prices may be high, their single location may not be producing any eggs. It can take months, even as long as a year, for smaller farms to restart production after an infection. The USDA payments defray the cost of the birds, but they do not pay for the down time in production. While the USDA payments 'do not come close to covering the financial toll when an egg farm must depopulate its flocks and rebuild its business, in many cases it means the difference between recovering or going out of business,' Emily Metz, president of the American Egg Board, said in statement. 'A larger egg producer with multiple locations is better equipped to survive the loss of a flock than a producer with a single location, but it's important to know that regardless of the size of operations, a bird flu detection is absolutely devastating to any egg farm.' Egg producers are poised to receive even more government relief. In a little-noticed move late last month, U.S. Agriculture Secretary Brooke Rollins announced that compensation for affected egg farms would rise from $7 per lost chicken to almost $17 — a huge increase for farms that count as many as 5 million hens. Earlier this year, Cal-Maine president Sherman Miller said that 'without question, we have recently faced significant challenges within our company and the entire egg industry due to the ongoing outbreaks.' At the time, he was announcing quarterly profits of $219 million, which dwarfed those of pre-flu times. In the year before the outbreak, Cal-Maine's quarterly profits averaged $5 million; over the last four quarters, profits have averaged $138 million. The number of eggs it produced rose less than 10 percent over that time, meaning much of the profit comes from higher egg prices and government relief payments. As reported infections — and henhouse 'depopulations' — have declined since February, consumers have seen a drop in prices. Prices remain higher than before, however, and the uncertain course of the virus means they remain vulnerable to another spike. 'There are no clear-cut answers on how to stop this thing or when it's going to stop,' said Brian Moscogiuri, vice president of Eggs Unlimited, an egg supplier and broker. Moscogiuri noted that the pace of henhouse infections stalled in the spring of 2023. But then it returned. The outbreaks appear to be linked to the migration patterns of wild birds. 'The industry is trying to repopulate as quickly as possible,' he said. The flu outbreaks, which lead to the mass killings of hens, have been blamed for the huge price jumps. Over the fall and winter, for example, more than 50 million laying hens were killed; consumer egg prices nearly doubled, from an average of $3.20 in August to $5.90 in February, according to figures from the Bureau of Labor Statistics. Federal law gives the USDA authority to slaughter birds in facilities where there has been an infection. The disease spreads quickly in poultry facilities and the mortality rate for infected chickens can be as high as 100 percent, according to the CDC. The USDA pays the affected farms, to encourage them to report the outbreak. Early reporting 'allows us to more quickly stop the spread of the virus to nearby farms,' Lyndsay Cole, an assistant director of public affairs at the USDA, said by email. She noted that while the indemnity payments cover the costs of destroyed birds and eggs, they do not cover the losses that come with the disruption of closing down a facility for cleanup. The USDA is still seeking more permanent solutions for the avian flu's effect on the egg industry. Rollins said she was working with billionaire Elon Musk's U.S. DOGE Service to find savings that could be devoted to the effort. 'We will repurpose some of those dollars by investing in long-term solutions to avian flu,' she wrote in a Wall Street Journal op-ed. Sebastien Pouliot, an agricultural economist and former Iowa State University professor who studied egg economics, said it makes sense that some of the large companies with multiple far-flung operations would be making money during the avian flu scare. Even if one of their facilities is temporarily closed by the virus, those losses will be mitigated by the government, and the eggs sold by their remaining facilities will fetch far higher prices. Whether a company benefits from rising egg prices also depends on how much of their production is sold under long-standing contracts at lower prices. Regardless of farm size, said Metz, of the American Egg Board, the payments serve an important purpose. 'First and foremost, food security is national security. When you look at the indemnity [payment] programs, this is national disaster relief,' she said, adding that 'no amount of money can compensate for the emotional toll that this disease exacts on farmers and their employees. Farmers spend their lives raising hens; depopulation is agonizing and traumatic—it runs counter to everything these farmers know and do daily.' While consumer frustration is understandable, she said, egg prices are essentially a product of changes in supply and demand. 'This is an incredibly complex issue,' she said. But 'if you are looking for a bogeyman, it's the bird flu.'
Yahoo
28-03-2025
- Business
- Yahoo
Global Eggs agrees to buy Hillandale Farms for $1.1 billion
By Luciana Magalhaes SAO PAULO (Reuters) -Global Eggs, a company controlled by Brazilian entrepreneur Ricardo Faria, has agreed to buy U.S. egg producer Hillandale Farms for $1.1 billion, Faria told Reuters on Thursday. Global Eggs is based in Luxembourg and also operates Granja Faria in Brazil. Faria said the deal is unrelated to tight U.S. supplies due to bird flu that has driven up egg prices and caused the U.S. to boost imports from Brazil. Often referred to as the 'Egg King,' Faria said he is confident egg consumption will continue increasing globally. 'We are looking at the world, and mainly at the Western world,' he said. The entrepreneur said there was a shift in egg consumption patterns over the past 15 years. Previously, eggs were primarily in demand among lower-income households, but they have become a staple across all social and economic classes, he said. Faria established Global Eggs last year and it made its first overseas acquisition, Spain's Grupo Hevo, in November. He said Hillandale, Hevo and Granja Faria had combined revenue of over $2 billion in 2024. As part of the Hillandale acquisition, the private equity arm of Brazilian investment bank BTG Pactual will invest $300 million in Global Eggs in exchange for an 11% stake in the group, Faria added. Prior to announcing the Hillandale purchase, Global Eggs had plans for an initial public offering in New York, but for now, the company will focus on integrating its latest acquisition and strengthening its brands, Faria said. Sign in to access your portfolio
