Egg price hike leads to calls for price gouging

Egg price hike leads to calls for price gouging

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  • January 25, 2023
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With egg prices more than doubling in the past year, there have been calls for an investigation into possible price gouging.

U.S. Senator Jack Reed sent a letter Tuesday asking the Federal Trade Commission to investigate whether egg prices have been improperly manipulated by producers. A farmer-led advocacy group called Farm Action filed a similar motion last week, arguing that there appears to be “a secret scheme between industry leaders to turn inflationary conditions and an avian flu outbreak into an opportunity to make monstrous profits.”

The rise in egg prices has been attributed to the millions of chickens being slaughtered to stem the spread of bird flu and farmers trying to offset inflation that is driving up their costs.

But although about 43 million of the 58 million birds slaughtered last year to fight avian flu were egg-laying hens, the size of the overall flock at any point in time is only 5 to 6% down from the normal size of about 320 million hens.

Smaller egg suppliers have also kept their prices under control, Reed said.

“It’s also worth noting that small producers, facing many of the same market challenges as the largest producers, have managed to keep prices under control,” he wrote.

Huge price jump

The nationwide average retail price for a dozen eggs reached $4.25 in December, up from $1.79 a year earlier, according to the latest government data.

“At a time when food prices are high and many Americans are struggling to afford their groceries, we need to examine the industry’s role in maintaining high prices and hold those responsible accountable for their actions,” said Reed, a Rhode Island Democrat, in his letter to the FTC.

But trade groups say egg prices are largely driven by commodity markets, and experts say the bird flu outbreak — combined with skyrocketing costs of fuel, feed, labor and packaging and continued strong demand for eggs — is the real culprit for the price increases is.

“Current egg prices reflect many factors, most of which are beyond an egg farmer’s control,” said Emily Metz, president and CEO of the trade group American Egg Board.

Purdue University agricultural economist Jayson Lusk said, “In my view, the fundamental economics of the situation explain the price hike well.” He said that small reductions in egg supply can translate into large price increases because consumer demand for eggs isn’t falling much.

Bird flu leads to slaughter of 1.8 million chickens in Nebraska 00:30

The FTC didn’t immediately respond to questions Tuesday about concerns about the egg price gouging, but the agency generally doesn’t comment on outside requests for investigations.

Focus on Cal Maine

The largest U.S. egg producer, Cal-Maine Foods, was singled out by both Reed and the Farm Action group for reporting last month that its quarterly sales rose 110% to $801.7 million against record egg prices increased, which helped it generate $198.6 million in profit. compared to just $1.1 million last year.

The Ridgeland, Mississippi-based company said it “wants to reassure its customers that we are doing everything we can to maximize production and keep shelves stocked” and that the “home egg market, even under normal market conditions, is doing well.” has always been intensely competitive and very volatile. ”

The prices that Cal-Maine charges its customers are determined through negotiation with the grocery chains, club stores and retailers to which it sells. Cal-Maine said its prices averaged $2.71 per dozen last quarter. That’s nearly double the $1.37 it fetched a year earlier, but still much lower than the prices consumers are paying.

Contraband eggs

With US egg prices soaring, some Americans have begun smuggling raw eggs from Mexico to the US

“We’re seeing an increase in people trying to cross eggs from Juarez to El Paso because they’re significantly cheaper in Mexico than in the US,” US Customs and Border Protection spokesman Roger Maier told this week CBS News. “This also occurs more frequently in other locations on the southwest border.”

According to Border Report, an online news site that focuses on immigration issues, the price of a 30-pack of eggs in Ciudad Juárez, Mexico, is $3.40. The number of incidents in which eggs were confiscated at US borders rose more than 100% in the last three months of 2022 compared to the same period last year, the website reported.

Federal law prohibits travelers from bringing certain farm products — including eggs and live chickens and turkeys — into the United States “because they can transmit crop pests and foreign animal diseases,” according to customs regulations. According to the USDA, eggs from Mexico can no longer be imported into the USA since 2012. Boiled eggs are acceptable under USDA guidelines.

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