From Matt Stoller's BIG substack, March 7:
'More hens, less income!' So said the United Egg Producers' economist Donald Bell in 1994. The industry has gotten more consolidated ever since. And avian flu is just the latest excuse to hike prices
This issue is part one of a three-part series on the egg industry. It is written by antitrust lawyer Basel Musharbash, based in part on a report he authored for Farm Action.
Over the past two months, egg prices have become a political football. Journalists are reporting in depth on the industry, egg consolidation has come up in Congressional antitrust hearing, and Donald Trump mentioned a plan to tackle egg prices in the State of the Union speech, putting his Secretary of Agriculture Brooke Rollins on notice that she has to get the price down. Most notably, earlier this week, the Capitol Forum reported the Department of Justice Antitrust Division is now investigating egg markets.
The reason is simple. For most Americans, eggs have always been cheap, and thus a key food staple. And now eggs are expensive, and sometimes in shortage. Over the past year egg prices have increased by 53%— jumping 15% in January alone. As of the beginning of February, egg producers were charging wholesale buyers an average of $5.95 for a dozen eggs, and retailers were charging consumers anywhere between $4 and $9 a dozen — and sometimes even more.
The high prices, and sometimes shortages, are a problem in and of themselves, but they also represent that the American system has gone askew. If we can’t even get a cheap omelet or egg sandwich anymore, what can America do right?
The stated reason for the high price of eggs is something that happens periodically: an avian flu epidemic. Since 2022, outbreaks of bird flu on poultry farms have led to the culling of over 115 million egg-laying hens. This epidemic, according to the prevailing narrative, has driven egg prices up to record highs all on its own. As one industry executive put it, it’s all just “supply disruption, ‘act of God’ type stuff.” The popular response to this story has been what you’d expect: Scientists are discussing flu vaccines for chickens, politicians are blaming each other about bird culls, and many are concerned about how the massive scale of today’s egg farms enables—and exacerbates—avian flu epidemics. And none of that is necessarily wrong.
But something doesn’t add up about this “avian flu is the sole and natural cause of high egg prices” story. Despite the “act of God” going on — and the skyrocketing prices accompanying it — egg production is actually . . . not down by all that much. 115 million hens is a lot of birds to cull, but it’s important to put the loss of those hens in context: They weren’t lost all at once. They were lost over three years. And there have always been around 300 million other hens alive and kicking to lay eggs for America—not to mention a continuous pipeline of 120-130 million female chicks (called “pullets”) in the process of being raised into adult hens to replace the ones dying or aging out.
As a result of this pipeline, the effect of avian flu outbreaks on egg production, while not insignificant, has been relatively small. Monthly egg production during each of the last three years has averaged only 3-5% lower than it was in 2021, the year before the epidemic started. Meanwhile, demand for eggs has actually declined. According to a private report by the Egg Industry Center, Americans went from consuming an average of 210 eggs each in 2021 to less than 190 in 2024 — a ~10-percent nosedive. As many countries have closed their markets to American eggs since 2021 on account of the avian flu, egg exports have also fallen off a cliff — going down by nearly half between 2021 and 2022 and staying there ever since. That dynamic, according to my analysis of USDA data, has shaved another ~2.5% off aggregate demand on U.S. egg production.
So, reports of an unprecedented egg “shortage” are exaggerated. Nonetheless, egg prices — and egg company profits — have gone through the roof. Cal-Maine Foods — the largest egg producer and the only one that publishes its financial data as a publicly traded company — has been making more money than ever. It’s annual gross profits in the past three years have floated between 3 and 6 times what it used to earn before the avian flu epidemic started — breaking $1 billion for the first time in the company’s history. All of this extra profit is coming from higher selling prices, which have been earning Cal-Maine unprecedented 50-170 percent margins over farm production costs per dozen. Taking Cal-Maine as the “bellwether” for the industry’s largest firms — as people in the egg business do — we can be pretty confident that the other large egg producers are also raking in profits off the relatively small dip in egg production.
High persistent profits are an anomaly for the industry. Historically, egg producers have responded to avian flu epidemics—and the temporary rise in egg prices that often accompanies them—by quickly rebuilding and expanding their flocks of egg-laying hens. “Fowl plagues”—as these epidemics used to be called—have been with us since at least the 19th century. Most recently, large-scale avian flu epidemics hit egg farms in 2015 and 1983-1984. The egg industry responded to both of these destructive events by sprinting to rebuild and expand the egg-laying hen flock — something which checked price increases and ultimately made sure prices went back to pre-epidemic levels within a reasonable time....
....MUCH MORE
So it's not the cull, which is now up to 150 million birds but instead Big Egg that is to blame?
Credit: Luxuo
