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High egg prices due to a ‘collusive scheme’ by suppliers, group claims


Eggs for sale at elevated prices in New York on Jan 21, 2023.

Fatih Aktas/Anadolu Agency via Getty Images)

Egg prices soared to historically high levels in 2022 — and one group is alleging the trend is due to something more nefarious than simple economics.

Across all egg types, consumers saw average prices jump 60% last year — among the largest percentage increases of any U.S. good or service, according to the consumer price index, an inflation measure.

Large, Grade A eggs cost $4.25 a dozen in December, on average — a 138% increase from $1.79 a year earlier, according to U.S. Bureau of Labor Statistics data.

The industry narrative has largely focused on a historic outbreak of avian influenza — which has killed tens of millions of egg-laying hens — as the primary driver of those higher prices.

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But Farm Action, a farmer-led advocacy group, claims the “real culprit” is a “collusive scheme” among major egg producers to fix and gouge prices, the group said in a letter to the Federal Trade Commission.

Doing so has helped producers “extract egregious profits reaching as high as 40%,” according to the letter, issued Thursday, which asks FTC Chair Lina Khan to investigate for potential profiteering and “foul play.”

An FTC spokesman declined to comment due to a general agency policy regarding letters, petitions or complaints received from third parties.

Here's why eggs cost so much

However, food economists are skeptical an inquiry would uncover wrongdoing.

“I don’t think we’ve seen anything that makes us think that there’s something there other than normal economics happening right now,” said Amy Smith, vice president at Advanced Economic Solutions.

“I think it was just kind of a perfect storm of stuff that came together,” she added.

Economics or ‘profiteering’?

“Contrary to industry narratives, the increase in the price of eggs has not been an ‘Act of God’ — it has been simple profiteering,” the group said.

For example, the profits of Cal-Maine Foods — the nation’s largest egg producer and an industry bellwether — “increased in lockstep with rising egg prices through every quarter of the year,” Farm Action claimed. The company reported a tenfold increase in profits over the 26-week period ended Nov. 26, for example, Farm Action said.

While other major producers don’t report such information publicly, “Cal-Maine’s willingness to increase its prices — and profit margins — to such unprecedented levels suggests foul play,” Farm Action wrote.

Max Bowman, Cal-Maine’s vice president and chief financial officer, denied the allegations, calling the U.S. egg market “intensely competitive and highly volatile even under normal circumstances.”

Bird flu’s significant impact on hen supply has been the most notable driver, while egg demand has remained strong, Bowman said in a written statement.

Expenses for feed, labor, fuel and packaging have also “risen considerably,” feeding through to higher overall production costs and, ultimately, wholesale and retail egg prices, he said. Cal-Maine also doesn’t sell eggs directly to consumers or set retail prices, Bowman added.

A ‘compounding effect’ of bird flu on egg prices

Charly Triballeau | Afp | Getty Images

The pricing market is already coming down post-holiday.

Amy Smith

vice president at Advanced Economic Solutions

The dynamic is largely due to a “compounding effect” of demand, Rubio said.

For example, let’s say a big supermarket chain has a contract to buy eggs from a producer at a wholesale price of $1 per dozen. But that egg supplier then suffers a bird-flu outbreak. All supply from that source comes offline temporarily. So, the supermarket chain must then procure eggs from another supplier — raising demand for the other supplier’s eggs, which might ultimately sell eggs to the supermarket for $1.05 or more a dozen.

Once a farm suffers a flu outbreak, it likely won’t produce eggs again for at least six months, Rubio said.

This dynamic is happening simultaneously across multiple farms and supermarkets. Bird flu also generally dissipates in the summer, but outbreaks began anew in last autumn heading into peak demand season around the winter holidays, Rubio said.

Good news ahead?

Easter is usually another period of high seasonal demand for eggs.

F.j. Jimenez | Moment | Getty Images

Some good news for consumers may be ahead, though, economists said.

Wholesale egg prices had declined to about $3.40 a dozen as of Friday, down from a peak $5.46 a dozen on Dec. 23, Rubio said. (Current wholesale prices are still almost triple their “normal” level, Rubio said.)

On average, it takes about four weeks for wholesale price movements to be reflected in the retail market for consumers, Rubio said.

“The pricing market is already coming down post-holiday,” said Smith at Advanced Economic Solutions.

The Easter holiday is usually another period of high seasonal demand, however, meaning prices may stay elevated through March, assuming the bird-flu outbreak doesn’t worsen, economists said.

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