New York, NY – Americans have been grappling with the soaring egg prices, as an outbreak of avian flu has decimated millions of hens across the country. This has resulted in empty egg sections at grocery stores, surcharges added to menu items, and an increase in egg prices. While the outbreak may seem like a valid reason for the spike in prices, Angela Huffman of Farm Action suspects that larger egg producers might have more to gain from the situation than meets the eye.
Huffman and her nonprofit organization began investigating the situation after noticing that while egg prices were rising, the profits of the biggest producers were skyrocketing even more. Despite the avian flu outbreak, Farm Action’s research revealed that the impact on egg production may not be as severe as consumers believe. In fact, egg-laying flocks have only decreased by around 5-10%, yet companies like Cal-Maine Foods have seen their profits triple and margins increase nearly 800%.
The surge in prices has led to investigations by the Department of Justice for alleged price fixing, resulting in a drop in stock for some companies. Lawmakers, including Sen. Elizabeth Warren, have raised concerns about producers leveraging the flu outbreak to hike up prices. However, companies like Cal-Maine maintain that their production lines have minimal effect on consumer expenses, as they base their prices on market supply and demand.
Food economists like David Ortega and Jadrian Wooten explain that during shortages, price increases help allocate scarce resources and prevent overconsumption. Huffman points out that the consolidation of the food sector into a few hands allows companies to exploit supply chain disruptions to price gouge consumers. Unfortunately, eggs being inelastic products mean that consumers continue to purchase them even at higher prices.
The ongoing situation highlights a larger issue of companies taking advantage of supply chain disruptions for profit. With little incentive for companies to decrease prices, consumers may continue to feel the impacts of inflated egg prices for the foreseeable future.