Are Egg Producers Inflating Costs?

OMAHA, Neb. — Egg producers blame the chook flu outbreak for driving costs to file highs, however critics consider big firms are profiting from their market dominance to revenue handsomely on the expense of budget-conscious egg patrons.

Advocacy teams, Democratic lawmakers and a Federal Commerce Fee member are calling for a authorities investigation after egg costs spiked to a file common of $4.95 per dozen this month. The Trump administration did unveil a plan this week to fight chook flu, however how a lot that may ease egg costs — a key driver of inflation — stays to be seen.

“Donald Trump promised to decrease meals costs on ‘Day One’, however with egg costs skyrocketing uncontrolled, he fired the employees charged with containing chook flu. Working households want aid now,” Sen. Elizabeth Warren mentioned in an announcement.

The trade, and most consultants, squarely blame chook flu. Greater than 166 million birds have been slaughtered to comprise the virus. Some 30 million egg layers have been worn out simply since January, considerably disrupting egg provides. The Division of Agriculture’s longstanding coverage has been to kill whole flocks anytime the virus is discovered on a farm.

In consequence, the variety of egg layers has dropped nationwide by about 12% from earlier than the outbreak to 292 million birds, in accordance with a Feb. 1 USDA estimate, however one other 11 million egg layers have been killed since then, so it is possible worse. When costs spiked to $4.82 two years in the past and prompted preliminary requires value gouging probes, the flock was above 300 million.

“This has nothing to do with something aside from chook flu. And I feel to counsel anything is a misreading of the information and the truth,” American Egg Board President Emily Metz mentioned.

“Our farmers are within the battle of their lives, interval, full cease. And so they’re doing all the things they’ll to maintain these birds secure,” Metz mentioned. “It is a provide problem. Because of chook flu. Nothing else.”

Farm Motion suspects monopolistic conduct. The group that lobbies on behalf of smaller farmers, customers and rural communities notes that egg manufacturing is barely down about 4% from final yr and a few 7.57 billion desk eggs have been produced final month, but some customers are nonetheless discovering egg cabinets empty at their native grocery shops.

“Dominant egg firms are blaming avian flu for the worth hikes that we’re seeing. However whereas the egg provide has fallen solely barely, these firms earnings have soared,” mentioned Angela Huffman, Farm Motion’s president. The Justice Division acknowledged receiving the group’s letter calling for an investigation however declined to touch upon it.

The truth that a jury dominated in 2023 that main egg producers used numerous means to restrict the home provide of eggs to extend the worth of merchandise in the course of the 2000s solely provides to the doubts about their motives now.

What do the numbers present?

Retail egg costs had usually remained under $2 per dozen for years earlier than this outbreak started. Costs have greater than doubled since then, boosting earnings for egg producers whilst they take care of hovering prices.

A lot of the dominant producers are privately held firms and do not launch their outcomes. However the largest, Cal-Maine Meals, which provides about 20% of the nation’s eggs, is public, and its earnings elevated dramatically. Cal-Maine reported a $219 million revenue in the newest quarter when its eggs offered for a median of $2.74 per dozen, up from simply $1.2 million within the quarter simply earlier than this outbreak started in early 2022 when its eggs have been promoting for $1.37 per dozen.

Sherman Miller, Cal-Maine’s president and CEO, mentioned in reporting the numbers that greater market costs “have continued to rise this fiscal yr as provide ranges of shell eggs have been restricted on account of latest outbreaks of extremely pathogenic avian influenza.”

However he mentioned Cal-Maine additionally offered considerably extra eggs — some 330 million dozens, up from 288 million the yr earlier than — within the quarter as a result of demand is so sturdy and Cal-Maine has made plenty of acquisitions. Cal-Maine additionally suffered few outbreaks on its farms, exterior of a pair services in Kansas and Texas. The Mississippi-based firm did not reply to calls from The Related Press.

What about manufacturing prices?

Economists and analysts say the file egg costs aren’t a certain signal of one thing nefarious, and short-term earnings may solely final till farms get hit. As soon as a flock is slaughtered, it will probably take so long as a yr to scrub a farm and lift new birds to egg-laying age. The USDA pays farmers for each chook killed, but it surely does not cowl all the prices for farmers as they go with out revenue.

“The patron, I feel, will most likely really feel like they’re getting the tough finish of the stick. However I assure you, the farmers which are having to depopulate the barns, they’re having a rougher time,” CoBank analyst Brian Earnest mentioned.

Inflation within the prices of feed and gasoline and labor have contributed to rising egg costs, and farmers have been investing in biosecurity measures to assist hold the virus away. So manufacturing prices additionally seem like at an all-time excessive, in accordance with the U.S. Bureau of Labor Statistics’ producer value index.

“This isn’t a case the place they’re taking the worth as much as gouge the market. It’s the value goes up by means of public sale at wholesale. And so they’re benefiting from greater costs as a result of provides are tight,” College of Arkansas agricultural economist Jada Thompson mentioned.