Are Egg Producers Inflating Costs?
OMAHA, Neb. — Egg producers blame the fowl flu outbreak for driving costs to report highs, however critics consider large corporations are making the most of 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 report common of $4.95 per dozen this month. The Trump administration did unveil a plan this week to fight fowl 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 fowl flu. Working households want reduction now,” Sen. Elizabeth Warren mentioned in an announcement.
The trade, and most specialists, squarely blame fowl 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 total flocks anytime the virus is discovered on a farm.
Because of this, the variety of egg layers has dropped nationwide by about 12% from earlier than the outbreak to 292 million birds, in line with a Feb. 1 USDA estimate, however one other 11 million egg layers have been killed since then, so it is seemingly worse. When costs spiked to $4.82 two years in the past and prompted preliminary requires worth gouging probes, the flock was above 300 million.
“This has nothing to do with something aside from fowl flu. And I believe to counsel the rest is a misreading of the information and the truth,” American Egg Board President Emily Metz mentioned.
“Our farmers are within the combat of their lives, interval, full cease. And so they’re doing every thing they’ll to maintain these birds protected,” Metz mentioned. “It is a provide problem. Attributable to fowl flu. Nothing else.”
Farm Motion suspects monopolistic habits. The group that lobbies on behalf of smaller farmers, customers and rural communities notes that egg manufacturing is just 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 companies are blaming avian flu for the value hikes that we’re seeing. However whereas the egg provide has fallen solely barely, these corporations 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 varied means to restrict the home provide of eggs to extend the value 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 beneath $2 per dozen for years earlier than this outbreak started. Costs have greater than doubled since then, boosting earnings for egg producers at the same time as they take care of hovering prices.
A lot of the dominant producers are privately held corporations 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 increased 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 quite a few acquisitions. Cal-Maine additionally suffered few outbreaks on its farms, outdoors of a pair amenities 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 report egg costs aren’t a positive signal of one thing nefarious, and short-term earnings would possibly solely final till farms get hit. As soon as a flock is slaughtered, it could possibly take so long as a yr to scrub a farm and lift new birds to egg-laying age. The USDA pays farmers for each fowl killed, nevertheless it does not cowl all the prices for farmers as they go with out earnings.
“The buyer, I believe, 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 gas 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 look like at an all-time excessive, in line with the U.S. Bureau of Labor Statistics’ producer worth index.
“This isn’t a case the place they’re taking the value as much as gouge the market. It’s the worth goes up via public sale at wholesale. And so they’re benefiting from increased costs as a result of provides are tight,” College of Arkansas agricultural economist Jada Thompson mentioned.
