Scrambling the Price of Eggs
Terry H. Schwadron
May 7, 2024
Probably because of the effect on elections and politics, we keep hearing over and over that while the general economic numbers are good, consumers — voters — continue to feel a pinch from inflation at fuel pumps and at the supermarket.
Of all foods, it is the egg that has come to symbolize the state of the economy — and possibly the vote of many Americans later this year. It’s not international relations, jobs reports, the future of democracy or immigration issues or even abortion that will turn the day, but the price of eggs, according to this line of thinking.
It’s a big oversimplification, of course, especially since egg prices are volatile. But generally, after rising during the pandemic years, the price of eggs dropped, only to be seen as rising in most parts of the country anew.
The biggest reason cited is the prevalence of avian/bird flu which has felled more than 82 million chickens since 2022 (now spread to dairy cows), leading to shortages that have pushed the price from the $2 range to $3, $4, or more. My local Whole Foods has a wall full of eggs of every free-roaming, organic, cage-free variety that seem to invite gourmand tastes that cost yet more.
But, like most things, the story is more complicated than a single strain of spreading chicken illness into how we raise, keep, and feed egg-laying hens (chicken feed is anything but from an expense point of view), how we have encouraged the consolidation of the egg industry into fewer players who control the marketplace, the associated inflationary costs of supply lines and transportation, and, naturally, any role for corporate profit-taking.
Putting the factors together, the lowly egg has become the, er, face of inflation, or as Forbes said in 2023, this egg story, which looks like it ought to be a very minor sideshow, has risen to reflect an important fulcrum in the overall debate on inflation.
Bird Flu and Supply Lines
Over the last few years, there have been a disproportionate number of articles using egg prices to explain inflation and the effective inability of the government — regardless of who is in the White House — to reduce prices set in a market-driven country.
In summary, they repeatedly discuss the impact of bird flu, which has done a lot of damage to egg production, the rising costs of production, labor, and transportation, and periods of demand for eggs even as production was falling. Basically, the story is that fighting against flu raises costs for farmers, even as trends like appealing to cage-free chicken-raising is pushing prices up as well. As Vox News has explained, essentially, it’s pricey to be nicer to chickens, as now required in California and other states.
Supply and demand pushes prices. Marc Dresner, director of integrated communications at the American Egg Board, told one journalist, “It’s not like we have eggs sitting in tankers off the coast of Los Angeles.”
In case you’ve never thought about it, the egg industry is responsible for about $30 billion in economic activity in the country, creating or supporting 112,500 jobs. The chicken industry is more than 13 times bigger. Egg prices, measured as a part of monthly Consumer Price Index, have been up about 4–5% in the last months, down 7% from a year ago, and more than we all paid pre-pandemic. Egg production contributes to high levels of greenhouse gasses carbon dioxide, methane, and nitrous oxide issues. Hens living in close quarters are vulnerable to resulting ammonia levels that can cause respiratory illness.
Bigger Factors in Pricing
Vox News has a new report on how we got here with high egg prices. It concludes that while bird flu is affecting chicken and egg prices (as it did in 2014–2015), the deeper issue is that we have allowed the farming industries to “become brittle thanks to intense market concentration.”
As with much of agriculture, the egg industry is concentrated in a relatively few players. Cal-Maine Foods, for example, controls 20 percent of the market — that make it difficult to absorb and isolate shocks like disease. These big firms keep hundreds of thousands of hens together, and disease can spread quickly. Food & Water Watch says three-quarters of the country’s hundreds of millions of egg-laying hens are in 347 farms, reducing genetic diversity and extending vulnerability to illness.
The open question is whether egg producers also take advantage of these moments and hike prices to maintain profit margins. Per its annual financial report, Cal-Maine’s net profit in 2023 was about $758 million — 471 percent higher than 2022, a year in which the number of eggs sold rose only 6 percent.
Vox noted that last year, several Kraft, General Mills and other food groups were , awarded almost $18 million in damages in a lawsuit alleging that egg producers Cal-Maine and Rose Acre Farms had constrained the supply of eggs in the mid- to late 2000s, artificially bumping prices.
Over decades, the government has declined to enforce antitrust laws against agriculture and has promoted policies to increase the size of industrial farms rather than protect family farms. Recently, the Biden administration has targeted antitrust efforts, and there are bills in Congress, unlikely to advance, to promote examination of price gouging.
The price of eggs may be an over-simplified reflection of inflation frustration. There is a human tendency, after all, to base views about challenging problems on a single, concrete instance, particularly if we have personal experience with it. Egg prices are taken to epitomize the bigger picture, offering clear proof (as they see it) that inflation is real, and wreaking havoc, explains one academic review. Despite the objectively minor contribution of eggs to the consumer’s overall market basket, people can see the price increase of about 10 cents per egg.
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