With the price of a dozen eggs climbing to never before seen heights, one agriculture watchdog group and at least one U.S. senator are crying “fowl” about price gouging, but an agricultural expert says the reasons are much less nefarious.
Florida Commissioner of Agriculture Wilton Simpson has been in the egg business for most of his life.
Simpson, a former state senator who also served as Florida Senate president, owns a large-scale egg-laying operation in Pasco County, Florida, and the eggs are distributed by Cal-Maine Foods, based in Ridgeland, Mississippi.
‘Eggs Are a Commodity’
“First, eggs are a commodity,” Simpson told The Epoch Times. “Eggs are quoted on the New York Stock Exchange under the Urner Barry market as a commodity. When a producer sells eggs to commercial outlets they sell them based on the market quote of the commodity itself.”“When someone purchases eggs, be it at a supermarket, a convenience store, or in a restaurant, they’re doing it based on a market rate,” Simpson said, adding that once a producer sells the eggs to a retailer, the retailer adds their markup.
When the stock value of eggs falls, “that should be reflective in the stores,” Simpson said. “If not, that should be looked at.”
Simpson also noted that the cost of producing those eggs also went up substantially last year due to inflation. Feed costs, fertilizer costs to grow the feed, and the cost of diesel to deliver the products are also factors that affect the price.
Bird Flu and Egg Prices
An outbreak of Highly Pathogenic Avian Influenza (HPAI), also known as the avian flu or bird flu, hit the United States last year.The U.S. Department of Agriculture (USDA) defines HPAI as a serious disease that “requires rapid response because it is highly contagious and often fatal to chickens.” HPAI is spread globally by wild and migratory birds.
“Avian flu hits periodically. It is a naturally occurring thing,” Simpson explained, noting that the last major outbreak was in 2014–2015.
When that many chickens are taken out of the laying population, Simpson said, “the price of that commodity is going to be driven up.”
But Farm Action is questioning that narrative.
‘The Real Culprit’
While HPAI is cited as the reason for the high price of eggs, Basel Musharbash, legal counsel for Farm Action, says “the primary contributor to skyrocketing egg prices is skyrocketing profits at the largest producers of eggs.”Farm Action describes itself as a nonprofit organization that “exposes the devious ways monopoly corporations maintain control over our food system.”
In a Jan. 19 letter to Lina Khan, chair of the Federal Trade Commission, Musharbash posited that while “industry-aligned consultants and leading egg producers” have blamed the dramatic price increases on supply disruption and “act of God” type of events, Farm Action contends “the real culprit behind this 138 percent hike in the price of a carton of eggs appears to be a collusive scheme among industry leaders to turn inflationary conditions and an avian flu outbreak into an opportunity to extract egregious profits reaching as high as 40 percent.”
“Moreover, the effect of the loss of egg-laying hens on production was itself blunted by ’record-high' lay rates observed among remaining hens throughout the year,” the letter stated.
Musharbash told The Epoch Times that the avian flu had no substantial effect on egg production.
Cal-Maine Foods
Cal-Maine Foods describes itself as “the largest producer and distributor of shell eggs in the United States.”In a September announcement, the company reported “record quarterly net sales of $658.3 million,” a 103 percent increase over the same quarter in 2021. Cal-Maine attributed the historic profits to record egg prices and steady consumer demand.
The company also confirmed in the announcement that there had been no positive tests for HPAI in any Cal-Maine Foods production facilities.
Simpson suggests the reason Cal-Maine wasn’t hit by HPAI is because the company implemented extensive and successful biosecurity measures to keep the virus out of its facilities. Companies like Rembrandt Foods in Iowa and Cold Spring Egg Farm in Wisconsin did not fare as well, and both had to cull their flocks due to outbreaks.
Simpson then drew attention to the retailers, noting that the prices are not determined by the commodities market.
‘Avian Flu Is Going to Gappen’
One U.S. senator is also questioning Cal-Maine’s profits.“Many in the egg industry have pointed to last year’s avian flu outbreak as the reason behind these substantial price increases,” Reed said in the letter. “However, as early as May 2022 the U.S. Department of Agriculture’s (USDA) Economic Research Service found that ’the price increase‘ observed in the egg sector was ’much larger than the decreases in production’ caused by the avian flu.”
Musharbash took issue with the company’s arguments.
“If you look at the statement they put out, they try to rehash the talking point that the avian flu had this massive, disruptive effect,” Musharbash noted. “But then they say the total size of their flocks was only 6 percent lower than it was a year earlier. They are admitting that the avian flu didn’t have such a massive effect on the production to justify their increase in prices.”
Musharbash said he wants to know how the egg industry was able to increase prices when there wasn’t an underlying egg shortage, and how it sustained those prices for more than a year.
“That’s why we want the FTC to investigate,” he said. “Because they, and the other anti-trust enforcers, have the authority to dig into the industry and see what’s facilitating this type of profiteering.”
However, Simpson posits a reminder that whether any one supplier loses birds to HPAI, it doesn’t affect the value of the commodity.
Commodity prices are set according to supply and demand of the product available on the market, not by the number of eggs produced by a specific company, Simpson said.
Cal-Maine should not be castigated for having successfully prevented an HPAI outbreak at its facilities, which enabled them to benefit from the high price of their eggs set by the commodities market, he said.
“I’m telling you, as an [agriculture] commissioner, we know avian flu is going to happen from time to time,” Simpson said. “What we have to do as a government is to make sure we don’t add any additional weights on the back of these farmers because, even though they might make a lot of profit this year, they lose a tremendous amount of dollars in bad years, and they have to have the capital to get through that.”
Simpson again pointed to retailers.
“The fact that prices are going down means that retailers have to adjust their prices in real-time if they’re going to be consumer friendly,” he said. “That’s part of this story. That’s part of the equation.”