Avian flu, the holidays and general inflation are just a few reasons for the skyrocketing price of a dozen eggs over the last year.
At the start of last year, the average price of a dozen was a little over $1.50. A year later, the price had risen to a over $5, according to industry analysts. While those prices have already cooled this year, they are still more than double what they were in 2021.
However, a quick look in your grocery store will confirm that those lower prices have yet to be seen on the shelves.
But here’s the part companies haven’t mentioned: the egg industry is being accused of corporate greed.
“Contrary to industry narratives, the increase in the price of eggs has not been an ‘Act of God’ — it has been simple profiteering,” noted a letter sent to the Federal Trade Commission in late January by Farm Action, a food research and policy think tank. “This pattern of behavior by the dominant firms in the egg industry raises significant concerns about monopoly power and potential antitrust violations in this sector.”
It may seem reasonable that the price of eggs would go up after 53 million chickens died during the worst Avian flu outbreak in history. Inflation has also hit manufacturing hard – with the price of diesel, freight, labor costs, feed and other associated costs going up by about 7.3%, according to the USDA.
Then there are seasonal factors. From Thanksgiving until after New Year is a period of high demand, which can increase prices even more. Consumers understand these things and they understand that those extra costs are almost always passed on to them.
But what you may not know is that while the rest of the country is penny-pinching at the grocery store, some of the country’s largest food manufacturers have made huge profits, some of which are record-breaking.
Cargill, the world’s largest food corporation based out of Minnesota, made record-breaking profits in 2021 and again in 2022. You can add JBS Foods, Tyson Foods and Marfrig to the list – all three of the largest meat manufacturers in the country made record profits as the cost of living spiraled.
Cal-Maine, the largest egg producer and distributor in the country, also saw record profits during its last quarter, according to Securities and Exchange Commission public filings.
But some experts claim the higher prices are merely a phenomenon of the market and not artificially inflated by food manufacturers. “I would say that 99% of what’s happening is market related,” said Bill Lapp, president of Advanced Economic Solutions, a Omaha-based consulting firm specializing in food economics. “Certainly I have no evidence whatsoever that there was anything other than market factors pushing prices higher rather than anything going on within a company.”The Mississippi-based Cal-Maine, which commands a fifth of the egg industry, increased its profits tenfold in the second half of last year compared with the same period a year earlier. Its gross profits increased from around $50 million to $535 million. At the same time, the price of its eggs increased by 150% from January 2022 to this year, according to its own reports.
The company said the price increase was because of the avian flu outbreak and inflation.
The bird flu outbreak affected around 6%-8% of the nation’s egg-laying stock, according to the USDA. However, that blow to the industry was abated because chickens have been laying more eggs – around 1% to 4%, according to the USDA’s research service.
But here’s the thing, Cal-Maine publicly admitted that none of its birds were affected.
“There have been no positive tests for HPAI at any Cal-Maine Foods’ owned or contracted production facility as of December 28, 2022,” noted an internal report.
And while inflation has hit all farming sectors, Cal-Maine told its investors late last year that its total farm production and feed costs were only 22% higher.
So are they to blame for the extreme price of eggs?
“No, because they don’t control the market,” said Lapp. “It’s supply and demand that dictates the price. So it wasn’t an overt effort by the egg producers to raise the prices, just a matter of there weren’t enough eggs.” Lapp explained that if you have 10% fewer eggs in the supply chain, there will 10% less consumption. One way to ration the demand is through higher prices.
This new trend of higher prices and extreme profit is being described as “greedflation” – the idea that companies exploit inflation to create excessive profits, which in turn squeezes consumers and supercharges inflation.
This can be particularly evident in companies with a considerable market share because there isn’t a lot of competition to drive down prices. You only have to look at the oil industry as the most explicit example: $200 billion profit in one year among the five largest companies - Exxon Mobil, BP, Shell, TotalEnergies and Chevron.
President Biden called it “outrageous” during his State of the Union speech.
But it’s not just within the oil industry. Across all of corporate America, profits are up by 35%.
However, some people are fighting back.
In Texas, state officials accused Cal-Maine of charging excessive or exorbitant prices during the Covid-19 pandemic and made misleading statements about egg prices, according to SEC filings. The company is also involved in other civil proceedings related to its prices, including being accused of colluding with other egg manufacturers to fix the price of eggs.
The food advocacy group Food Action recently wrote to the Federal Trade Commission asking it to investigate Cal-Maine and other companies in the egg industry, accusing them of price gouging and collusion, fixing the price of eggs and other unfair practices.
“In the end, what Cal-Maine Foods and the other large egg producers did last year — and seem to be intent on doing again this year — is extort billions of dollars from the pockets of ordinary Americans through what amounts to a tax on a staple we all need: eggs,” noted a letter from Food Action to the FTC. “They did so without any legitimate businessjustification. They did so because there is no ‘reasonable substitute’ for a carton of eggs. They did so because they had power and weren’t afraid to use it.”
Want to fight back?
Food Action is urging people to sign a petition to forward to the FTC and the Department of Justice. You can find that HERE.