High egg prices hitting one small Eastern Iowa business especially hard

TIPTON - While Iowa egg producers rebuild their flocks after the bird flu outbreak one small Eastern Iowa business is struggling with the price of eggs in a big way.

David Gott, owner of David's Famous Custard in Tipton, said the frozen custard recipes the one-year-old company uses contain probably two and a half times the amount of egg yolks as competitors. And that difference is making a difference on his bottom line.

On Thursday, Gott and his workers were making a batch of super ultra-premium Dutch chocolate frozen custard. Their recipe calls for six 30-pound pails of sweetened egg yolks.

Such containers used to cost about $25 apiece, before the bird flu significantly impaired Iowa's egg production. Now, each container is more like liquid gold with a price tag of about $100. Gott figures the egg mixtures he needs have gone up about 350 percent in price since January.

It's gotten to the point where egg price increases alone are eating up 10 percent of his company's gross profit.

'We're new and 10 percent of our profit - poof. When you work on fairly thin margins that might mean 100 percent of your net profit is gone too,” Gott said.

Gott said he saw some of this coming and bought an eight or nine month supply of frozen liquid egg yolks last May. He paid about twice what he was paying earlier in the year.

And suppliers won't let businesses buy and stockpile egg products while there's still a shortage. Officials said it will take several months to rebuild Iowa flocks, as more than 30 million chickens and turkeys had to be euthanized in an effort to contain the outbreak.

Isaac Gott, Gott's son and production manager, said it takes longer to get the egg products as well.

'If you weren't a customer prior, they wouldn't let you order through them and if a customer you couldn't order more than you did in the past so you couldn't stock up,” Isaac Gott said.

Gott said David's Famous Custard has grown quickly in just a year of operation. The six-person company started with six grocery stores stocking their frozen custard. Now they're up to 225 outlets in eight states.

But it's still a small company and Gott figures he'd have trouble passing all his higher costs on to customers.

'When you're brand-new and people don't know about you, they'll pay a premium. But there's a limit to how much premium they will pay,” Gott said.

Gott hopes the egg-laying chicken flocks rebound before high egg prices wreck his business.

The Iowa Department of Agriculture said 77 chicken or turkey producers lost flocks to the avian flu in Iowa. Eighteen have now passed the quarantine period and can start to rebuild.

Agricultural economists still predict one to two years before egg prices return to their previous levels.