Price transmission and long-term effects of avian influenza on Taiwan's egg market

This study investigates the multifaceted impacts of highly pathogenic avian influenza (HPAI) outbreaks on Taiwan's shell egg market, with particular focus on price dynamics across the farm, wholesale, and retail levels. Taiwan's location along the East Asian-Australasian Flyway, combined with high-density poultry farming and limited on-farm biosecurity, heightens its vulnerability to avian influenza (AI) transmission mediated by migratory waterfowl. Using a multi-threshold nonlinear autoregressive distributed lag (MTNARDL) model and weekly data from 2015 to 2024, we analyze the effects of key factors, including feed costs, egg production rates, and HPAI outbreak scale, on egg prices. Our findings reveal long-run cointegration among these variables, with egg production rates emerging as the most significant determinant of farm-level prices. Even small reductions in production lead to substantial price increases, reflecting the inelastic nature of egg demand. We also identify threshold effects associated with HPAI outbreak severity: minor outbreaks slightly suppress farm prices, whereas large-scale outbreaks significantly raise retail prices, suggesting uneven price transmission across market tiers. Variance decomposition and impulse response function analyses further illustrate the persistent influence of severe outbreaks on retail prices, lasting up to eight weeks. These findings underscore the importance of early detection systems, enhanced biosecurity, and improved supply chain coordination to strengthen market resilience. Nonetheless, underreporting of outbreaks and limited data on low pathogenic AI cases pose ongoing challenges for effective surveillance and response.