Egg prices are skyrocketing, and egg companies are making record profits. What gives?
Back in December 2021, a dozen eggs would have set you back an average of $1.78. For many Americans, that meant breakfast omelets were regularly in rotation.
But fast-forward a year, and that same omelet came with a much higher grocery bill. In those 12 months alone, those 12 eggs jumped to a whopping $4.25 — a staggering increase of 138% nationwide.
So if you’re feeling sticker shock lately when purchasing food, no, you are not imagining it. And certainly, the price spike isn’t limited to eggs; other food commodities, such as beef, are seeing increased prices of as much as 40% to 50% because of inflation and supply-chain shortages.
The egg industry blames the increase on inflation, supply issues and a wave of bird flu that’s killing off millions of chickens.
More than inflation
Some are skeptical about the industry's explanations.
Farmer-led advocacy organization Farm Action — a group “working to take on corporate monopolies in the food system and shift power into the hands of all of us who eat” — believes it's the industry itself that has egg on its face.
And Farm Action co-founder Angela Huffman says the industry’s numbers just don’t add up.
“The dominant egg producers have been blaming a food supply-chain disruption, and they’ve been successful in pushing this narrative out into the public,” Huffman says. “But we found that there’s just not a supply-chain issue that justifies these price hikes.”
According to Cal-Maine Foods — a company responsible for more than a quarter of egg production in the U.S. — there were approximately 6% fewer egg-laying hens on Jan. 1, 2023, than on Jan. 1, 2022. But at the same time, according to the USDA, the laying hens had record production levels. “So it ended up being nearly a wash,” Huffman says.
Cal-Maine reported farm production costs were up 22% during the 13-week period ending on Nov. 26, 2022 compared to the same period in 2021. And yet, instead of suffering losses, egg producers are reporting a tenfold year-over-year increase in gross profits.
According to Wendong Zhang, an agricultural economist at Cornell, the possibility that an egg producer might be benefiting from the price hikes is much more likely if they, like many of the larger companies, haven’t been among those hit by bird flu. If an egg-production facility manages to escape the avian flu outbreak, Zhang surmises that facility “can enjoy much higher prices and potentially the profits.”
But not all farms — nor the hens — have been so lucky.
According to Zhang, if there is just one bird infected among a flock, all the hens must be killed to avoid an even greater spread, a process involving shutting down the ventilation and turning up the heat in sheds (58 million birds have died from the flu just in the past year).
Should a smaller farm have an outbreak, they could conceivably lose the whole operation.
“So there's an equity element to this,” Zhang says.
Advocates allege price-gouging
In an open letter, Farm Action is asking the Federal Trade Commission to “promptly open an investigation into the egg industry, prosecute any violations of the antitrust laws it finds within, and ultimately, get the American people their money back.”
Cal-Maine Foods is one of the distributors called out in Farm Action’s letter. It published a statement responding to allegations of price-gouging, stating that they do not dictate egg prices. Third-party market quotes, they say, are determined by Urner Barry, a publisher that provides market information to the food industry.
In the statement, Cal-Maine Foods’ Vice President Max P. Bowman says, “Urner Barry’s pricing methodologies and processes received third-party assurance that they are aligned with the International Organization of Securities Commission (IOSCO) Principles for Price Reporting Agencies.”
According to Cal-Maine, IOSCO is “the international body that brings together the world’s securities regulators and is recognized as the global standard for the securities sector.”
Cal-Maine also states that “the domestic egg market has always been intensely competitive and highly volatile, even under normal market circumstances.”
But Brandon Kane, general manager for South Wedge’s Abundance Food Co-op — who has been working in the natural foods industry for 20 years — is also dubious. Though the eggs sold at Abundance have not seen as stark an increase in cost — about 30%, a differential due to the co-op’s smaller supply chain — the price hikes have him concerned.
“I know what kind of margins conventional businesses operate with and what manufacturers operate with,” he says, referring to egg suppliers. “And, certainly, there is a ton of speculation that goes on in the industry.”
Kane believes that the recent increase in cost is indeed related to a mix of factors, but, for him, it is consumers’ frustration, followed by suspicion, that is the bigger issue.
“Wouldn’t it be nice if speculation wasn’t part of those factors,” he asks, “and our prices truly reflected crisis and supply, as opposed to that being the narrative that is told to us?”
For Kane, it is the growing consumer mistrust, thanks to the egg industry’s recent record profits, that is making this situation a whole lot more scrambled.