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(Corrects French industry group name, shows it referred toDutch interest, not farm ministry spokesman)
* Some food companies scout for egg supplies abroad
* About 30 pct of egg supply used by U.S. bakeries impacted
* Dutch, French companies seeking U.S. approval to exporteggs
By P.J. Huffstutter and Bill Berkrot
CHICAGO/NEW YORK, May 22 (Reuters) - As a virulent avianinfluenza outbreak continues to spread across the MidwesternUnited States, some egg-dependent companies are contemplatingdrastic steps - importing eggs from overseas or looking to eggalternatives.
A spokeswoman for Archer Daniels Midland Co saidthat as egg supplies tighten and prices rise, the foodprocessing and commodities company has received numerousinquiries from manufacturers about the plant-based eggsubstitutes it makes.
With a strong dollar bolstering the buying power of U.S.importers, some companies are scouting for egg supplies abroad.
"The U.S. has never imported any significant amount of eggs,because we've always been a very low-cost producer," said TomElam of FarmEcon, an agricultural consulting company. "Now,that's no longer the case."
The United States is grappling with its biggest outbreak ofbird flu on record, which has led to the culling of 40 millionbirds. The virus has been confirmed on commercial farms andbackyard flocks in 16 U.S. states and in Canada.
The highly infectious virus has not crossed over to humansin the United States, as it did in Asia following a 2003outbreak, but transmission to humans is possible, according tothe Centers for Disease Control and Prevention.
An industry group representing U.S. bakers began pushing theU.S. Department of Agriculture and Congress this week to speedup approvals for egg imports.
"We have members whose egg suppliers are already cuttingback how much they'll receive in the next few weeks, whileothers are not getting any," said Cory Martin, vice president ofgovernment relations for the American Bakers Association."They're looking for eggs everywhere. And the problem is, too,there's not enough egg substitute available right now to make upfor the demand."
Still, companies wanting to import eggs may have to look farafield.
"Canada is short on eggs and has been buying heavily fromthe U.S. for the last several years," said Rick Brown, a seniorvice president of Urner Barry, a commodity market analysis firm."Mexico has been dealing with its own outbreaks of avianinfluenza, so they're banned from importing into the U.S. Thelogical place people will be looking now would be Europe."
Avril, a farmer-controlled agri-food group that ownsFrance's largest egg brand, Matines, said it has seen anincrease recently in demand from the United States and elsewherein the Americas and plans to start making shipments to theAmericas in June.
A spokesman for Avril told Reuters on Friday most of itsexports would be heading to Mexico, though he noted thatshipments to the United States were a possibility.
ECONOMIC BITE
Exporting eggs into the United States from Europe will notbe easy. Regulatory differences mean European Union eggproducers must seek an individual license to export andsometimes change procedures to bring safety standards into line.
But it is still an attractive business opportunity.
The French embassy in Washington is helping one French eggcompany start the process to obtain an export certificate, aFrench farm ministry spokesman said.
The Dutch also are positioning themselves as an egg exporterto the United States too, French egg industry group SNIPO said.
"The bird flu epidemic developing in the U.S. means it isnecessary to start discussions as quickly as possible to benefitfrom opportunities in this market," SNIPO said in an emailedstatement, adding that French authorities had not responded asswiftly as their Dutch counterparts.
PRICES SOAR
Meanwhile, companies sticking with egg suppliers closer tohome are facing sharply higher prices as a result of theoutbreak. Nearly 30 percent of U.S. breaker eggs - whichincludes liquid, dried or frozen eggs used by food manufacturers- has disappeared due to the outbreak, according to Martin andfederal data.
The outbreak has led to a sharp uptick in the wholesaleprice of such eggs, from 63 cents a dozen in late April, whenthe first egg-laying flock was reported infected, to $1.83 adozen this week, Brown said.
The wholesale price of "shell eggs," typically sold incartons at grocery stores, has also risen, from $1.19 a dozen inlate April to $2.03 a dozen this week, Brown said.
Nevertheless, some food makers are turning to the moreexpensive shell eggs to supplement supplies, although that meansan additional cost to send the eggs to a breaking facility thatwill crack the shells, Elam said.
Analysts at Goldman Sachs predict consumers will ultimatelyspend an additional $7.5 billion to $8 billion because of theegg supply squeeze.
Nestlé SA - which uses eggs for some of itsDreyer's, Edy's and Häagen-Dazs ice cream products - said it isbraced for shortages and working with suppliers to help protecthens.
Dunkin' Brands Group Inc told Reuters it will leaveit up to franchisees to decide whether to swallow the cost hikesthey're seeing or pass them on to consumers.
A MATTER OF LIFE OR DEATH
For some companies, having an adequate supply of fertilizedeggs can be a matter of life or death. Some vaccine makers,including Merck & Co Inc, maintain their own hen flocksto produce eggs used for incubating vaccines that protectagainst diseases such as measles and mumps.
Merck said it is taking no chances with its chicken flocksas avian influenza continues to spread - security is tightaround the birds, and the health of the hens is continuouslymonitored.
Sanofi Pasteur, the vaccines division of Sanofi, said it toois keeping close tabs on the outbreak - particularly with thestate agriculture department in Pennsylvania, home to some ofits suppliers and the fourth-largest U.S. egg-laying flock. Sofar, no avian influenza cases have been identified there.
"We continue to maintain preventive measures for our eggsupply system, including biosecurity and physical securityprocedures, to provide our suppliers with protection from beingaffected by this or any avian outbreak," the company toldReuters in a statement.
And GlaxoSmithKline Plc told Reuters it isreinforcing biosafety standards at more than 30 Canadianegg-laying farms that are dedicated to producing eggs for thecompany's human flu vaccines.
The company has more egg supplies than it needs for its fluvaccine production in Canada and Germany, a spokeswoman said.
But as the bird flu outbreak spreads in the United States,she added, "we are monitoring the current situation closely andhave alerted all of our supply farms." (Additional reporting by Karl Plume in Chicago, Lisa Baertleinin Los Angeles, Anjali Athavaley in New York, Sybille de LaHamaide in Bazancourt, France, and Gus Trompiz in Paris Editingby Jo Winterbottom, Sue Horton and Matthew Lewis)
