How supermarkets are driving up the risk of bird flu

A campaign by Australia’s supermarkets to replace caged-hen eggs with higher-priced free-range eggs has dramatically increased the risk of bird flu outbreaks.

Avian influenza outbreaks that started on free range egg farms have cost taxpayers and farmers close to $40 million so far this year.

A decade-long campaign by Australia’s biggest supermarkets to replace caged-hen eggs with more higher-priced free-range lines has dramatically increased the risk of avian influenza outbreaks, costing taxpayers millions and putting producers’ businesses in harm’s way, experts say.

The latest AI outbreaks across 11 poultry farms in Victoria and NSW all started on free-range eggs farms, after hens came in contact with wild birds carrying the virus.

State government veterinarians and clean-up crews were forced to eradicate two million birds, with the total response and compensation costs set to reach $40m. Growers estimate the compensation cost alone will be $20m, at $10 a bird.

Egg producers and veterinarians warn the latest outbreak costs are nothing compared to what Australia faces when the H5N1 form of the virus arrives on our shores. It has hit every other continent on earth and wiped 500 million chickens and other poultry, as well as infecting cattle and 25 other mammals.

Former Egg Farmers Australia director Brian Ahmed said “more free range, means we’re going to have more disease outbreaks, but who’s going to cover the cost”.

Commercial poultry veterinarian Peter Scott said the recent AI outbreaks at Meredith and Terang in Victoria and Hawkesbury in NSW, were the result of free-range layers coming in contact with the Australian strains of the virus from wild birds – particularly wild waterfowl.

“It’s logical that the incidence of avian influenza in Australian poultry will increase as a greater proportion of the industry adopts free-range and transitions out of caged housing,” Dr Scott said.

Mr Ahmed said supermarkets had driven the push to free range over the past decade, “but farmers were taking all the risks”.

As it stands the federal government is about to impose a levy on all egg producers to cover 20 per cent of compensation costs from the latest outbreaks, while taxpayers foot the remaining 80 per cent of the bill.

But Coles and Woolworths ducked for cover when asked if they would contribute financially to the outbreaks costs, given they have led the charge on promoting free-range eggs.

In 2013 both retail giants promised to phase out caged eggs by 2025 and have stacked their shelves with higher-priced free range eggs that deliver high margins and profits.

Of the 31 egg lines on Coles’ shelves, 27 are free range and four cage-free (barn), while at Woolworths 23 of its 27 egg lines are free range.

Both retailers already contribute little in the way of tax to the federal government, with the ATO’s corporate transparency report showing Woolworths and Coles paid about 1 per cent tax on income of $58bn and $44bn respectively in 2021-22.

A Coles spokesman said “we have been supporting our suppliers in their response to these outbreaks, and are working hard to ensure we can continue to keep eggs on the shelves for our customers”.

But just what form of support Coles is offering remains unclear.

Industry sources say the supermarkets have rejected calls from egg producers to raise prices in response to the outbreaks, even in the face of supply shortfalls.

Woolworths refused to say if it was making any financial contribution to the cost of the outbreak, simply stating that “a decade ago, in response to increasing customer demand, we committed to gradually removing caged eggs from our stores”.

Victorian Farmers Federation Egg Group vice-president Tony Nesci said the supermarkets’ argument that they were simply responding to consumer pressure was just “bullshit”.

Mr Nesci said apart from pressure from animal welfare groups, the supermarkets’ key motivation for the shift from cage to free range was profit.

Another egg producer, who supplies a variety of eggs to supermarkets, said their motivation was simply being able to sell free range eggs at a higher price than cheap caged eggs.

“Their margin is the same, about 25 per cent, but they make a whole lot more dollars,” the supermarket supplier, who did not wish to be named, said.

Meanwhile Mr Nesci said caged egg sales were soaring.

“I’ve been selling more eggs at my door than in the 54 years I’ve been in the business,” he said.

Peak body Australian Eggs’ records show farmers produced 6.68 billion eggs in 2022-23, of which 2.84 billion sold in the major supermarkets Coles, Woolworths and Aldi.

About 80 per cent of the 3.84 billion sold outside the three major supermarkets are caged eggs, which are mostly sold through smaller supermarkets, green grocers, delis and direct farm sales.

Mr Scott said that “while the egg industry has high standard of biosecurity, avoiding the incursion of AI from wild birds into free-range layers has significant challenges”.

He said both international and Australian authorities recognised that risk, ordering all free-range birds indoors during outbreaks to stop the risk of the virus spreading from wild birds.

“It’s being driven by retailers in the near term and in the medium term by the new Australian Animal Welfare Standards and Guidelines for Poultry”.

All states and territories have agreed to introducing the new standard to phase out cages by 2036, but have left it to the states to determine how and what they will legislate, which growers say has created enormous uncertainty and stifled investment.

The high risk of free range poultry contracting AI led the Australian Duck Meat Association members to reject free range, with their CEO Greg Parkinson saying “we’ve all been saying we’re staying shedded to prevent these incidents of spill over from wild birds”.