"Eggflation," explained

Brut America

Egg prices have soared to record highs in recent months. Is the avian flu solely to blame?   This is "eggflation," explained.

Transcript

00:00I have just been priced out of buying eggs.

00:03I just got back from Trader Joe's, and my dozen eggs used to cost $3.50, and now they

00:08cost $4.99.

00:10By now, you've probably come across quite a few memes and TikToks about the price of

00:14eggs.

00:15I'm in the distribution, I'm like Atlantic.

00:20Let's take a look at how eggflation came to be, and why you should maybe take a beat before

00:24Googling where to buy chickens.

00:25Why did you get chickens?

00:26Because they got eggs!

00:27They laid like 10 eggs already!

00:31In January 2022, an avian flu epidemic broke out.

00:34It was the biggest outbreak since 2015, except this outbreak has lasted longer and killed

00:39more birds.

00:40About 44 million egg-laying hens across 47 U.S. states either died from the flu or were

00:46killed to control the spread.

00:47By December 2022, a dozen Grade A large eggs cost an average of $4.25, more than double

00:54what they had cost in December prior.

00:56Dominant egg producers pointed to the avian flu, among other reasons, as to why prices

01:01rose.

01:02I know I went in there last week and those eggs were $2.00.

01:05Now they fold!

01:06Some grocery stores struggled to keep their shelves filled, and others even started limiting

01:10how many eggs customers could buy.

01:12Meanwhile, many chose to cope with humor.

01:15How many do you need?

01:21Two.

01:23I'm gonna do two for five this time, but after that, can't do it no lower than that.

01:27Don't get us caught.

01:29The cost of egg production also rose for several reasons.

01:32Russia and Ukraine are major exporters of wheat and grains, which farms use as chicken

01:36feed.

01:37The war in Ukraine decreased their exports in 2022, which limited supply and drove up

01:41prices.

01:42And due to inflation, the price of fuel, labor, and packaging also increased.

01:46But do all these factors really justify the staggering price increase we saw with eggs?

01:51In January 2023, Farm Action, a farmers' advocacy group, sent a letter to the Federal

01:56Trade Commission urging it to look into price gouging among dominant egg producers.

02:01Oftentimes, companies will use or the industry will use supply chain disruption or some occurrence

02:09within the supply chain as an actual excuse to go out and excessively increase pricing.

02:16Pointing to data provided by the U.S. Department of Agriculture, Farm Action says the impact

02:20of the avian flu outbreak on the country's egg-laying hen population may have been overstated.

02:25The reality is, is that at no time did the number of hens decrease more than 6 to 8 percent

02:35in any given month.

02:36The hens that were still producing actually produced more eggs in 2022 per hen than they

02:44did the previous year.

02:45So what we found was that the net effect was closer to 3 to 4 percent fewer eggs in the

02:51market.

02:52It did not justify a 138 percent increase in the price of eggs at the grocery store

02:58to the consumers.

02:59CalMain Foods, the largest egg producer in the U.S., saw record profits in 2022.

03:04Their egg prices had increased along with the prices of other eggs on the market, but

03:08none of CalMain's facilities ever reported an outbreak of the avian flu.

03:11You would expect then that they would be in a great position to increase production,

03:17to stay the dominant firm.

03:19But why should they?

03:20No incentive for them, if they can get away with price gouging, to even try to balance

03:25the supply for the American consumer.

03:28One of the notes that the USDA, United States Department of Agriculture, noted in August

03:34of 2022 was that egg prices were high.

03:38They expected, as the economy and market dynamic would indicate, that somebody would

03:43come in and have more hens laying more eggs and take that market share.

03:49So if CalMain just stayed high, too high in the market, somebody would take that share

03:54away.

03:55But we did not see that in the market either.

03:57Therefore, that's a trigger to say possible tacit collusion for which the Federal Trade

04:02Commission Act in the United States says is illegal.

04:06So was there foul play?

04:07That's for the FTC to look into.

04:09But in the meantime, things are looking up.

04:11According to recent data, egg prices dropped over 50 percent since the start of 2023.

04:16And if you've been thinking about buying chickens to save on the cost of eggs, you're

04:20not alone.

04:21In interviews with the New York Times, several hatcheries reported higher demand from first-time

04:24buyers due to egg prices.

04:26But it's important to know that hens only start laying eggs at about six months of age

04:30and that raising chickens comes with its own set of costs.

04:33Those farm fresh eggs, they ain't free.

04:35You have to put them in a coop, right?

04:37So that costs money.

04:40And you have to feed them, obviously.

04:43Electricity, because it does get cold and the water will freeze.

04:47And your time.

04:48Your time is money, people.

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