Egg producers scale back during COVID-19 chaos
The Baers are in the process of cutting back production by at least 30% as a counter-move to falling prices
LAKE PARK, Minn. — A market displacement in the egg market in the wake of the COVID-19 will likely lead to a long-term reduction in production for a family operation in western Minnesota.
Jona Baer, 62, and his wife, Alicia, 55, and all three of their sons are involved in livestock or crop operations totaling of 3,500 acres.
This branch of the Baer family has nearly 450,000 laying hens, producing about 8 million dozens of eggs a year. “It takes one chicken to feed one person,” Jona says.
Now, the Baers are in the process of cutting back production by at least 30% as a counter-move to falling prices.
Eggs since 1965
The Baers' egg business started with Jona’s father, Allan Baer, who left a Hutterite colony and at age 50 started an egg business in 1965. Allan split the livestock companies into six parts among seven sons in 1985. Jona went on his own but remains one of four brothers in the immediate area who are in chicken, hog and farming operations. Associated cropping operations sell grains for the cash market, but some go through three separate feed mills, which usually are associated with the that family’s livestock.
Ephriam, 35, and Nathaniel, 30, work with separate entities associated with Jona, who operates in Baer Egg Co. Inc., at Lake Park. They have six other employees. A daughter, Cassandra Hoard, lives nearby, has worked in the farm but recently took a nurse-practitioner post in Fargo.
About 70% of the Baer eggs are sold “shell” market. They put them in the flats and eventually go to consumers.
About 30% go directly into a “breaking” or “liquid” market. These are used in quick-service food operations, fast food chains, university cafeterias and the like.
When the COVID-19 pandemic hit, there was a decline in shell eggs for restaurants. This was somewhat offset by household use.
“People started to hoard eggs — which is good,” Jona says, adding a bit tongue-in-cheek humor: “We like that. It shot the market up.”
The wholesale market prior to COVID-19 was about 65 cents a dozen. As the coronavirus spread, the wholesale price went up to $1.81 per dozen for the shell market but only for about 12 days.
And 12 days don’t make a year.
The Baers knew there would be repercussions.
Eggs aren’t like grain that can be stored for months, waiting for a market to go up. “These eggs have to be sold within three days of being laid — they really have to be gone,” he says.
Some of the 30% in the liquid market was shifted to the shell market. Of course, that price dropped.
In some national news reports, egg producers were accused of making excessive profits during a price run-up. Jona chuckles at that.
Selling and buying prices are not set by farmers. They’re bought and sold based on figures published by Urner Barry, a New Jersey-based company, created from the data collected from brokers. Jona says he’s been in the egg business much of his life but doesn’t know how it’s done: “Someone who never buys an egg tells me what they should be sold for.”
Even if the Baers had wanted to take advantage of the high egg prices, they don’t have the ability to expand production. They only have so many supplies.
As prices went up, they knew they’d soon crash and set about cutting production.
Birds typically lay eggs for 100 weeks (18 months) before being sent to slaughter to Butterfield Foods of Butterfield, Minn., where over 100,000 birds are typically slaughtered daily for use in soup products.
One of Jona’s flocks went to slaughter three to four months earlier than it would have been scheduled for at the end of its laying efficiency — when it takes more feed to produce the same amount of eggs.
“At the egg markets today, they aren’t paying for half of the feed they’re eating,” he says.
The barn will sit empty until July or August.
On another flock, they cut back protein by using “molting” ration. “We take most of the protein out of the feed and cut the lights back. Normal is 15 hours a light; we cut them to about eight hours of light.” All of this effectively stops egg laying for a period.
Nathaniel also is considering dumping his only flock early to lose less money. “My barn would be empty for eight months,” he says. No profits on that.
If somehow the slaughter option disappeared, the Baers would be forced to euthanize and compost birds. In the 2015 avian flu epidemic, one of Jona’s brothers' flocks had to be destroyed.
Alicia says the public has a limited understanding of the farming and livestock industry in general, and the egg business in particular. “They don’t understand how much stress there is,” she says.
Jeremiah says when he talks to people about his business, their questions stop with the size of his flock. Some think the family’s 450,000 birds sound like a lot, but he notes that is dwarfed by 4 million-bird operations in Iowa and elsewhere.
Looking ahead, the Baers “don’t know where the bottom is” on the egg market.
“It can’t go much lower. If it goes any lower we’ll just … I don’t know what we’ll do with them,” Jona says.
“This too, shall pass,” says Nathaniel. For now, he is in communication with his banker.
He has three children who might like to farm. One fact keeps him optimistic he’ll come out on the other end.
“People gotta eat,” he says.