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Will avian flu inflate food prices?

Avian flu has been confirmed in recent weeks in flocks of turkeys in North Dakota, South Dakota and Minnesota.  Last week an egg laying flock of chickens in Iowa had to be destroyed after contracting the virus.

Eugene Graner is President of Heartland Investor Services.  He says as of right now, no one needs to panic about the food supply being tainted.  Graner says the birds never touch the food supply and there are always reserves to combat any momentary shortage in product.  And Graner says he doesn't expect the flu to become much more widespread.

"What's interesting in that it's being caught right now - trust me - every large henhouse in this country that is over 50,000, you can imagine right now extreme protocol; if anyone comes onto that farm they literally have to bathe themselves in antiseptic and put on specific gear to protect the hens in these houses.  It would be very difficult to watch this spread any farther. Protocols are going to arrest this, and shut this down quickly."

Graner says a lot more birds would need to get sick in order to see any impacts at the grocery store.

"You can receive, you know, 1, 2, 3 percent production loss and not see major movement. It's when you start getting into that 10 percent production loss - so 10 percent of 310 million is 31 million birds - if we lost 31 million birds, oh yeah - then we're going to start seeing price bumps.  We see it in other markets - it seems like 10 percent drop in production equates to a 25 percent price hike.  So if we were to lose 31 million laying hens, then we'd see a 25 percent increase in value of eggs in the supermarket."

The Iowa hen flock contained about 5 million chickens.  Graner says it takes about six months for a hen to reach egg laying age, and that eggs only gestate for 22 days.  He says he expects flocks to be rebuilt without much difficulty.