High egg prices due to a “collusion scheme” by suppliers, the group claims

Eggs for sale at high prices in New York on January 21, 2023.

Fatih Aktas/Anadolu Agency via Getty Images)

Egg prices have risen to historically high levels in 2022 — and one group claims the trend is due to something more outrageous than simple economics.

Across all types of eggs, consumers saw average prices rise by 60% last year – Among the largest percentage increases of any US good or serviceaccording to the consumer price index, which is a measure of inflation.

Large first-class eggs cost $4.25 a dozen in December, on average — up 138% from $1.79 a year earlier, according to the US Bureau of Labor Statistics. data.

The industry narrative has focused largely on the historic outbreak of avian influenza – which killed tens of millions of laying hens – as well as the outbreak of the disease The main driver of those high prices.

More personal finance:
Tax season begins with a strengthened IRS workforce and new technology
What do you know about applying for unemployment benefits after a layoff?
Common misconceptions can prevent you from getting a perfect credit score

Farm Action, a farmer-led advocacy group, claims the “real culprit” is a “collusive scheme” among major egg producers to fix and manipulate prices, the group said in a letter to the Federal Trade Commission.

Doing so has helped producers “earn a whopping 40% profit,” according to Messageissued Thursday, which asks FTC Chair Lena Khan to investigate possible profiteering and “corrupt play.”

An FTC spokesperson declined to comment due to the agency’s general policy regarding letters, petitions, or complaints from third parties.

However, food economists are skeptical that the investigation could uncover wrongdoing.

“I don’t think we’ve seen anything that makes us think there’s something other than the natural economy going on right now,” said Amy Smith, vice president at Advanced Economic Solutions.

She added, “I think it was just a complete storm of things coming together.”

Economy or “profiteering”?

The United States suffered one of the deadliest bird flu outbreaks in history in 2022.

“Highly pathogenic avian influenza” has killed about 58 million birds in 47 states, according to the US Department of Agriculture. was the previous record he sat In 2015, when 50.5 million birds died.

The disease, which is contagious and fatal, affects many types of birds, including laying hens.

In December, the average number of “layers” was down 5% from the previous year, totaling 374 million birds, according to the USDA. data Published Friday. The data showed that the total production of table eggs decreased by 6.6% during the same period, to 652.2 million.

These industry numbers don’t seem to balance out a double- or triple-digit rise in egg prices last year, Farm Action claims.

Contrary to industry accounts, the increase in the price of eggs was notFate and destiny“- It was just profiteering,” said the group.

For example, Farm Action claimed that earnings for Cal-Maine Foods—the nation’s largest producer of eggs and one of the industry leaders—”grew steadily as egg prices rose each quarter.” And Farm Action reported that the company reported a tenfold increase in its profits for the 26-week period ending November 26, for example.

While other major producers do not report such information publicly, “Cal Maine’s desire to increase its prices — and profit margins — to such unprecedented levels indicates manipulation,” Farm Action writes.

Max Bowman, Cal Maine’s vice president and chief financial officer, denied the allegations and called the U.S. egg market “very competitive and very volatile even under normal circumstances.”

Bowman said in a written statement that the significant impact of avian influenza on chicken supplies was the most prominent driver, while demand for eggs remained strong.

Feed, labour, fuel and packaging expenses have also increased significantly, feed through To higher total production costs, wholesale and retail egg prices eventually. Bowman added that Cal-Maine does not sell eggs directly to consumers and does not set retail prices.

The “compound effect” of avian influenza on egg prices

Charlie Triballo | Afp | Getty Images

Pricing market is really down after the holiday.

Amy Smith

Vice President, Advanced Economic Solutions

Rubio said the dynamic is largely due to the “compounding effect” of demand.

For example, suppose a large supermarket chain has a contract to purchase eggs from a producer at a wholesale price of $1 per dozen. But then this egg supplier suffers from an outbreak of bird flu. All supply from this source is temporarily offline. Therefore, the supermarket chain must then buy the eggs from another supplier—creating a demand for the other supplier’s eggs, which may eventually sell the eggs to the supermarket for $1.05 or more.

Once a farm has an outbreak of influenza, Rubio said, it likely won’t produce eggs again for at least six months.

This dynamic is happening simultaneously across many farms and supermarkets. Bird flu generally wanes in the summer, Rubio said, but the outbreak started again last fall heading into peak demand around the winter break.

Good news ahead?

Easter is usually another period of high seasonal demand for eggs.

FJ Jimenez | moment | Getty Images

Economists said some good news for consumers may be in the future, though.

Rubio said wholesale prices for eggs had fallen to about $3.40 as of Friday, down from a peak of $5.46 for every 12 on Dec. 23. (Rubio said current wholesale prices are still three times their “normal” level.)

On average, it takes about four weeks for wholesale price movements to be reflected in the consumer retail market, Rubio said.

“The pricing market is really down after the holidays,” said Smith of Advanced Economic Solutions.

The Easter weekend is usually another period of seasonal high demand, economists said, meaning prices could remain high into March, assuming the bird flu outbreak does not worsen.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top