Egg prices: Capitalizing the coop
What’s cracking?
Nothing has quite cracked the internet so far this year like egg prices.
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Eggs, usually an affordable grocery staple, have recently turned into an expensive, memeable commodity. In the US, the cost of a dozen eggs in January more than doubled from a year prior; last October, France also experienced a doubling of egg prices; and now egg prices are soaring in Japan. The inflation has meant higher prices for bakeries, and has forced restaurants to re-evaluate their eggy dishes.
Various factors go into incubating egg prices—sudden shocks, labor shortages, avian influenza, and climate change, to name a few. Plus, unlike a spare part in a broken machine, you can’t just replace hens overnight.
Since reaching its peak in January, the rate of change for egg prices has started to ease in the US, which means supply is healing. At its yolk, though, the rise and fall of egg prices illustrates the resiliency of food supply chains: “Market forces, in general, work,” said Wendong Zhang, an agricultural economist at Cornell University, humbly put it.
But what humbled the egg? Let’s get hatching.
By the digits
$4.25: The cost of a dozen eggs in the US in January 2023, up from $1.79 a year before.
8%: Share of France’s egg-laying hens that were culled in 2022 when the country experienced its worst avian flu outbreak.
21%: Expected price increase of Japanese Kewpie mayonnaise, which is made from egg yolks.
65%: Year-over-year increase in quarterly profits of Cal-Maine, the biggest producer of eggs in the US, last fall.
~300: The number of eggs laid by a single hen in a year.
15-20%: Increase in the price of eggs in French supermarkets between Jan. 2022 to Oct. 2022.
85%: Increase in the price of adding an egg to Czechoslovakia’s traditional Kulajada soup.
$3.45: Average price of a dozen eggs in the US in March 2023—it’s coming down!
Why egg prices broke people
People will pay a lot for overpriced beer or a designer purse—but eggs? Cluck no. When egg prices soared, the memelords had their heyday, expressing their outrage. Some opportunistic Americans even attempted to smuggle eggs across the US-Mexico border.
Part of the furor comes from the fact that eggs are usually reliably cheap and accessible. Egg prices also tend to be inelastic. For many people throughout the world, protein-rich eggs are an essential part of their diet and that have few, if any, substitutes. People did turn to vegan alternatives during the worst of the price hikes, but those remain a sliver of total US egg sales.
The inelasticity of eggs means that even with high prices, demand never really decreases. People will still eat eggs, and they will eat the higher prices, too. But while surging food prices may be relatively short-lived, they aren’t so digestible by low-income households or those who allocate a large portion of their budget to food.
Quotable
“Anytime you see price increases like that, it’s never one thing, it’s always a stack of things. [When] these prices go up that fast… usually it’s because you’ve got demand shocks and supply shocks stacking on themselves at the same time.”
—Peter Bolstorff, an executive at the Association for Supply Chain Management
🎵 Inflation interlude
Remember the hip-hop song “Mr. Wendal” by Arrested Development, which came out in 1992?
Here, have a dollar
In fact, no brotherman here, have two
Two dollars means a snack for me
But it means a big deal to you
🧮 Let’s adjust that dollar for its worth as of March 2023:
Here, have a dollar
In fact, no brotherman here, have $4.25
$4.25 means a snack for me
But it means a big deal to you
Pop quiz
In 2017, the price of basic groceries was five times more than the minimum wage in which country? (Hint: It once was Latin America’s richest country before a 2014 oil bust).
A. Honduras
B. Ecuador
C. Argentina
D. Venezuela
Find the answer at the bottom of this email, not unlike a receipt at the bottom of your grocery bag, but much more useful.
Why egg prices flu the coop
The biggest contributor to the recent rise in egg prices has been avian influenza. The bird flu affected more than 57 million wild aquatic birds, commercial poultry, and backyard flocks between January 2022 and January 2023, according to the US Centers for Disease Control and Prevention. The first reported case of egg-laying hens affected by bird flu in the US was documented in February 2022.
In January 2023, egg prices had soared 70%, according to data from the US Bureau of Labor Statistics. Add in factors making food prices spicy everywhere—supply chain disruptions, the Russia-Ukraine war, to name two—and things got really scrambled.
This is not the first time avian flu has affected the supply of eggs. About 50.5 million birds died from an avian flu variant in December 2014—but the virus, which was largely contained among poultry farms in the American Midwest, essentially vanished by June 2015. The outbreak would cost farmers more than $1.6 billion.
Fun fact!
In 2013, a group of French farmers protesting low egg prices smashed 100,000 eggs outside a tax office in Brittany. The farmers wanted France’s total egg production to be cut by 5% to help raise prices, as their costs had risen partly because EU animal welfare rules require bigger cages for hens.
Take me down this 🐰 hole!
Did price gouging deceive the dozen?
Every time the price of a certain food item soars, people call out price gouging. They blame businesses for taking advantage of spikes in demand to charge exorbitant prices. “That doesn’t mean there isn’t malfeasance or collusion but absent any other evidence, the basic economics of the situation go a long way toward explaining the situation we are currently in,” wrote Jayson Lusk, an agricultural economist at Purdue.
Are egg producers making more money? That depends on whether they have eggs to sell or not, according to Lusk. A producer who lost hens to the flu will lose out on the revenue they would have received if they had not been hit. If a producer has been fortunate enough to not be hit by the flu, they may be making more money. Higher prices, in general, help prevent widespread stock-outs.
The highly-consolidated meat industry has been accused of manipulating prices many times and paid millions of dollars in fines and settlements for manipulating prices. The US government charged six industry executives in 2020 for allegedly fixing prices for broiler chicken products, as part of a federal antitrust investigation of the $65 billion poultry industry.
The government isn’t the only one pulling levers. Retailers such as Walmart have sued chicken suppliers, alleging the producers were coordinating to increase prices for broiler chickens since at least 2008. Chicken producers counter that their prices remain driven by grain prices, export sales, and other market forces.
Poll
How do you like your eggs?
Scrambled
Poached
Sunny-side up
Raw, in cookie dough
Give us a bite of what your brain is cooking up, we won’t judge.
💬 Let’s talk!
In our latest poll about radon, a confident 80% of you are thinking everything’s probably fine!
🤔 What did you think of today’s email?
💡 What should we obsess over next?
Today’s email was written by Michelle Cheng (Why did the egg cross the road?), and edited and produced by Morgan Haefner (I don’t know you tell me!!).
The correct answer to the pop quiz is D., Venezuela. It was once the richest country in South America until a series of government actions, including slashing imports and regulating the production of goods, made food and medicine scarce. Staples like eggs and rice became unaffordable, pushing Venezuelans to turn to expensive imports or to the black market.
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