Australia’s modest $3 million export egg business is poised to grow 600 per cent in 2017 as producers scramble to help fill a massive supply gap in South Korea.
Bird flu has wiped out about a third of South Korea’s layer flock – at least 26 million hens – prompting its government to ease the Asian nation’s usually strict barriers to egg imports and look to importing fresh breeding stock.
Korean retailers are currently short of about 180 million eggs (15m dozen) a week.
Although other countries, including New Zealand, Spain and the US’s big egg industry, are also rallying to take advantage of the market opening, the local sector sees the Korean crisis as a chance to highlight Australia’s strong quarantine credentials and product quality.
It could also help boost our longer-term Asian egg export footprint, currently restricted primarily to Singapore, Hong Kong and parts of the Pacific.
Australian Egg Corporation Limited (AECL) estimates up to $20m in exports could go to South Korea this year after import tariffs were recently lifted for at least six months.
“It’s a wonderful opportunity to highlight our natural advantage as a food producer and our strict biosecurity regulations,” said AECL managing director, Rowan McMonnies.
Japan and China are also trying to control the bird flu outbreak which has spread across north eastern Asia for two months.
Japanese authorities have culled hundreds of thousands of birds in at least six separate outbreaks and China is promoting vaccinations, flock health and nutrition regimes.
In Europe a different strain of avian flu has also hit, prompting a crackdown on outdoor poultry activities and forcing free-range birds inside their sheds in 18 countries.
Mr McMonnies said while Australian egg producers were mostly focused on a solidly expanding domestic egg market, new openings in Korea and other Asian countries could become considerable as the increasingly affluent region’s “dining boom” gained momentum.
“Australian exporters are already making interesting food supply inroads into high value markets, including fresh milk flying direct to China and Singapore each week, so there’s plenty of scope for products like eggs joining the `deli’ export boom,” he said.
Eggs are not only an important part of the Korean diet, including a core ingredient in the national dish Bibimbap, there is apparently a preference for brown shell lines, as in Australia.
South Koreans eat about 250 eggs each a year – slightly more than Australians, but less than the British.
After the H5N6 influenza struck Korea in November average retail prices for a 30-egg pack jumped 25pc to about $7.40 – the biggest monthly rise in a decade.
The egg shortage could last at least a year according to the Korean poultry industry, which also predicts up to a two-year rebuilding phase for egg and meat bird flocks in the wake of the country’s second big bird flu outbreak since 2014.
The first shipment of Australian eggs left by air last week and more will be flown or go by sea following the Department of Agriculture Fisheries and Forestry hastily finalising an export agreement with Korea last week.
Queensland-based Sunny Queen Farms, chief executive officer, John O’Hara, said his company was “actively exploring” the costs and supply chain options involved in sending eggs to Korea.
“Exporting is not an easy game – it comes down to making sure we can be profitable and compete with other suppliers like the US – but it’s our intention to help out,” he said.
“We’d look at initially flying product in, then sending eggs in shipping containers, which would be more cost efficient.”
Sunny Queen already flies eggs to Hong Kong and Macau.
Egg Farmers of Australia chief executive officer, John Dunn, said several producers were exploring Korean options, although export values needed to be much better than domestic prices to cover the extra logistic costs involved.
He said despite a 7pc annual rise in Australian egg consumption, egg production margins were tight and the success of any overseas venture depended on returns available and the import protocols and costs involved.
Some “supply squeezes” could eventuate in Australia’s domestic market as suppliers worked through their response to the Korean crisis and other potential export opportunities.
“But producers have commitments with local retailers so they’ll be looking at various ways to balance supplies as well as growing their market,” Mr Dunn said.
The size of the US response to South Korea’s shortage will be a key factor influencing Australian moves.
American eggs are now heading to Seoul en masse after Korea last July lifted a ban on US eggs, which were also at the centre of a massive bird flu outbreak in the Midwest 18 months ago.
After recovering from its own bird cull, the US now has an egg surplus, partly due to international bans on its eggs after its 2015 disease outbreak.
Current US retail prices are near 10-year lows, making Korea and other potential openings in Asia attractive prospects to US exporters.