May 24, 2017
Citing burdensome supplies and prices below production cost, United Egg Producers (UEP) has requested that the U.S. Department of Agriculture (USDA) carry out a bonus buy for eggs and egg products as soon as possible. In a May 23 letter to Secretary of Agriculture Sonny Perdue, CEO Chad Gregory said the egg industry “is caught in a supply-demand imbalance that is largely a result of profound outside forces that producers cannot completely control.”
Bonus buys are special purchases of agricultural commodities through the Agricultural Marketing Service (AMS). A bonus buy represents quantities above and beyond normal USDA purchases. Last year, UEP successfully argued for the first-ever bonus buy for eggs and egg products. In the latest letter, Gregory said the purchases should be at least $20 million and include both shell eggs and processed egg products.
In his letter, Gregory cited both the transition to more cage-free production – where supply has outstripped customer demand – and the continued loss of some egg product demand to non-egg alternatives in the wake of the supply disruptions of 2015.
UEP documented the low prices, excessive supplies and failure to meet production costs through recent independent statistics from Urner Barry, the Egg Industry Center and two of USDA’s own agencies – AMS and the Economic Research Service.
USDA makes decisions about bonus buys using numerous factors, including relative market conditions and any similar requests from producers of other agricultural products. UEP encouraged Secretary Perdue to reach a decision quickly, in light of the egg industry’s current problems.
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