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Soaring Egg Prices increase demands for a Price-Gouging Probe

By 01/25/2023 9:00 AMNo CommentsBy YidInfo Staff

There have been requests for an investigation into potential price gouging after egg prices more than doubled in the previous year.

U.S. Sen. Jack Reed submitted a letter Tuesday asking for the Federal Trade Commission to investigate if producers have unlawfully controlled egg pricing.

The farmer-led advocacy organization Farm Action filed a similar request last week, which said that industry officials “appear to be engaged in a collusive strategy to exploit inflationary conditions and the avian flu pandemic.”

Millions of chickens were killed to stop the spread of the bird flu, and farmers were forced to raise prices due to inflation, which has been blamed for the increase in egg prices.

The size of the whole flock has only decreased by 5% to 6% at any given time from its average level of about 320 million hens, even though roughly 43 million of the 58 million birds killed over the past year to help manage avian flu were egg-laying chickens.

According to the most recent government statistics, the average national retail price for a dozen eggs rose to $4.25 in December from $1.79 a year earlier.

In his letter to the FTC, Rhode Island Democrat Reed wrote, “At a time when food costs are high, and many Americans are struggling to buy their groceries, we must scrutinize the industry’s involvement in sustaining high prices and hold those responsible for their activities accountable for their actions.”

Trade organizations disagree, claiming that commodity markets play a significant role in determining egg prices.

However, experts contend that the bird flu outbreak, rising costs for fuel, feed, labor, and packaging, and the persistently high demand for eggs are to blame for the price hikes.

“Current egg prices reflect several things, most of which are outside the control of an egg farmer,” said Emily Metz, president, and CEO of the American Egg Board trade association.

Jayson Lusk, an agricultural economist at Purdue University, stated, “in my opinion, the basic economics of the situation well explain the price rise.”

He added that because consumer demand for eggs is relatively stable, even small reductions in egg supply can lead to significant price increases.

Both Reed and the Farm Action organization singled out Cal-Maine Foods, the nation’s largest egg producer when it revealed last month that its quarterly sales had increased 110% to $801.7 million thanks to record egg prices, enabling it to make a $198.6 million profit. up from just $1.1 million a year earlier.

The company, which has its headquarters in Ridgeland, Mississippi, claimed that the domestic egg market “has always been intensely competitive and highly volatile even under normal market circumstances,” adding that it “wants to assure its customers we are doing everything we can to maximize production and keep store shelves stocked.”

Cal-Maine bargains with the chain grocery shops, club stores, and wholesalers it sells to establish the pricing it charges its customers.

According to Cal-Maine, their prices in the most recent quarter averaged $2.71 for a dozen.

That’s almost double the $1.37 it was collecting a year ago but still significantly lower than consumers’ pay.



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