After egg prices have risen more than 100% in the past year in the United States, authorities have begun receiving requests to launch an investigation into possible price manipulation.
US Senator Jack Reed sent a letter Tuesday asking the Federal Trade Commission to investigate whether producers have mismanaged egg prices. Farm Action, a farmer-led advocacy group, filed a similar request last week, alleging that “there appears to be a collusive system among industry leaders to turn inflationary conditions and an outbreak of bird flu into an opportunity for outrageous profits.” ”.
The rise in egg prices has been attributed to the millions of chickens that were culled to contain the spread of bird flu as farmers have had to make up for rising costs caused by inflation.
But even though about 43 million of the 58 million birds that have been culled in the past year to help control bird flu have been laying hens, overall flock size has only been reduced by 5-6%. at a given time with respect to its normal size of about 320 million copies.
The national average retail price for a dozen eggs hit $4.25 in December, compared with $1.79 a year earlier, according to the most recent government data.
“At a time when food prices are high and many Americans are struggling to buy food, we must review the industry’s role in perpetuating high prices and hold those responsible to account,” Democrat Reed said in your letter to the committee.
But trade groups say commodity markets largely determine egg prices, and experts say the bird flu outbreak — combined with the sharp rise in the cost of gasoline, feed, labor and packaging, as well as the high demand for eggs—is the real culprit behind the price hike.
“Current egg prices are a reflection of many factors, many of which are beyond an egg producer’s control,” said Emily Metz, president and CEO of the American Egg Board trade group.
“From my point of view, the basic principles of economics explain the price rise very well,” said Jayson Lusk, an agricultural economist at Purdue University. He said small reductions in egg supply can lead to big price increases because consumer demand for eggs doesn’t vary much.
The Federal Trade Commission did not immediately respond to questions Tuesday about concerns about possible manipulation in egg prices, but the agency generally does not comment on outside requests for investigations.
Both Reed and Farm Action pointed to the top US egg producer, Cal-Maine Foods, as it reported last month that its quarterly sales had jumped 110% to $801.7 million thanks to record egg prices. , which helped him generate earnings of $198.6 million. The previous year his earnings were a mere $1.1 million.
The Ridgeland, Mississippi-based company said it “wants to reassure its consumers that we are doing everything possible to maximize production and keep supplies on store shelves,” adding that the “domestic egg market has always been highly competitive and highly volatile, even under normal market circumstances.
The prices that Cal-Maine charges its consumers are determined through its negotiations with the supermarket chains, wholesale stores, and distributors to which it sells its product. Cal-Maine said the median price for a dozen eggs was $2.71 in the most recent quarter. The figure is nearly double the $1.37 it charged a year earlier, but much less at the prices consumers are paying.