Egg prices have jumped about 60% in just one year, and some lawmakers and independent farmers suspect that “price gouging” is at play.
Millions of Americans have felt the effects of overall inflation in recent months. But among all the products and services that are more expensive today, eggs seem to be one of the most notable.
Experts and large producers claim that the rising costs are out of everyone’s hands. With record-high fuel prices taking a toll on the supply chain, it costs more to feed hens. And 43 million laying hens were euthanized in 2022 to curb the spread of the bird flu, so there are far fewer eggs to go around.
Despite the logical explanations, however, people are calling them a bluff. Small, independent suppliers have managed to keep their prices down. And some officials in Congress are alarmed by the massive profit increases reported by large corporations amid the turmoil.
On Tuesday, U.S. Sen. Jack Reed sent a letter to the Federal Trade Commission urging for a thorough investigation into the matter. His letter followed another request by a farmer-led advocacy group named Farm Action.
In a plea to the commission, the group said there “appears to be a collusive scheme among industry leaders to turn inflationary conditions and an avian flu outbreak into an opportunity to extract egregious profits.”
The Country’s Largest Supplier Reported a $1.1 million Profit Increase As Egg Prices Continue to Rise
The most recent government data shows that average egg prices were $1.79 per dozen in December of 2021. One year later, they were $4.25, according to CBS News. And the largest producer in the country, Cal-Maine Foods, reported that its latest quarterly sales jumped 110% to $801.7 million. That gave it a $1.1 million profit increase from the same time in 2021.
“At a time when food prices are high and many Americans are struggling to afford their groceries, we must examine the industry’s role in perpetuating high prices and hold those responsible accountable for their actions,” Reed wrote in the letter.
Cal-Maine, however, claims that the “domestic egg market has always been intensely competitive and highly volatile even under normal market circumstances.” And they assured customers that there is nothing nefarious going on with its recent markups.
The company also explained that its egg prices are a result of negotiations with stores, and they managed to keep their average cost to $2.71 a dozen last quarter, which is nearly double what it was charging last year. However, they have kept their eggs well below the nationwide average.
Several experts agree with Cal-Maine about the justification behind the price jump, including Purdue University agricultural economist Jayson Lusk.
“In my view, the basic economics of the situation well explain the price rise,” he explained. Lusk also explained that even a slight drop in supply can create a major price increase because demand always stays steady.