Once more, egg prices are on the rise. Let me explain the reasons.
Egg costs soared by an impressive 28.1% in August compared to the same period a year prior, setting the record for the most significant increase among all food items monitored by the Labor Statistics Bureau.
The sticker price rise in the egg section barely scratches the surface even as overall food prices remain relatively stable (a 0.9% increase in August compared to the previous year) and inflation decreases in the broader US economy.
The primary reason behind this egg price surge is none other than the infamous avian flu outbreak.
Birds are falling ill by the millions, resulting in fewer eggs and higher grocery store prices due to the necessity to eliminate infected flocks.
"Avian flu is, without a doubt, the reason for the price increase," pointed out Phil Lempert, a grocery industry analyst and editor of SuperMarketGuru.com.
Egg production is dwindling
Since January 2022, reports from the Centers for Disease Control and Prevention (CDC) have confirmed that almost 101 million birds have been affected by highly pathogenic avian influenza (HPAI) in 48 US states.
"Consider their living conditions: packed in small spaces with numerous chickens," explained Lempert. "When one chicken gets the avian flu, they have no choice but to cull the entire flock. That's the problem."
As a consequence, total egg production in July decreased by 2.6% compared to the same month last year, according to new data provided by the US Department of Agriculture.
Additionally, the USDA reported a second consecutive decrease in the number of egg-laying birds.
"The impact of the HPAI outbreak on prices will be closely monitored," commented the USDA in August, highlighting that the bird flu has played a significant role in elevated egg prices during the summer by reducing the US egg-layer flock.
Fortunately, egg prices have not reached the heights they did in late 2022 and early 2023. At the time, the average cost of a dozen Grade A large eggs reached a record-breaking $4.82, according to BLS data.
Brian Moscogiuri, vice president at leading egg supplier Eggs Unlimited, revealed to CNN that overall inflationary pressures and feed prices have "eased" since that period.
"However, we require time free of major supply setbacks for production to recover," Moscogiuri stated.
Where egg prices are spiking the most
Despite the lower average price of $3.20 per dozen eggs in August, it still represents a significant increase compared to pre-pandemic times ($3 per dozen before Covid-19, according to BLS data dating back to 1980).
Now American consumers are paying nearly double the cost of eggs before the pandemic. Since October 2019, the average price of eggs has surged by 83%, according to market intelligence platform Datasembly.
Consumers in some states have been hit even harder by the price increases, with Minnesota leading the way (+137%), followed closely by Missouri (+123%), Iowa (+116%), Oklahoma (+109%), and Alabama (+109%), according to Datasembly's statistics.
When examining data from the past year, Datasembly found that egg prices have experienced the most significant increase in Hawaii (+49%), Minnesota (+44%), and Alabama (+38%).
The rapid price increase has caused some shoppers to hesitate.
Moscogiuri acknowledged that strong demand has decreased in recent weeks as retailers pass along high wholesale prices to consumers.
However, the good news is that wholesale prices have started to fall sharply, which should eventually benefit consumers. LL: Divided this text into a new paragraph for clarity.
"If we can make it through a 6-8 month stretch without AI (avian influenza), markets should return to more normal, long-term average levels," Moscogiuri stated.
Unfortunately, Kevin Bergquist, sector manager at the Wells Fargo Agri-Food Institute, warned in a recent report that prices will continue to rise during the fall and holiday season if the avian flu outbreak persists.
'There is no cushion'
A significant part of the issue may stem from consolidation. Like other industries, the egg industry has seen numerous mergers over the years, leading to increased dependency on a small number of large producers.
By 2020, the top five egg companies controlled between 36% and 40% of all egg-laying hens in the United States, according to a recent report by Farm Action, an organization dedicated to combating corporate control in the food system.
Cal-Maine Foods, the biggest egg producer in the US, now commands roughly 20% of national egg sales following several acquisitions. When egg prices skyrocketed to record highs in early 2023, Cal-Maine's profits increased by an astounding 718%. Cal-Maine declined to comment when approached by CNN.
According to Farm Action's report, "Farm Action," high egg prices during 2022 and 2023 were a direct result of price gouging by dominant egg producers, who exploited the cover of inflation and avian flu to secure profit margins of up to 40% on a dozen loose eggs."
Basel Musharbash, managing attorney at Anti Monopoly Counsel, an antitrust law and policy firm based in Texas, concurred with this assessment.
"There is no cushion. Whenever a shock occurs, there is a lack of supply. This helps maintain high prices at all times," said Musharbash, the lead author of the Farm Action report.
Emily Metz, president and CEO of the American Egg Board, the national marketing organization representing US egg farmers, refuted that allegation by stressing that there are more than 3,250 commercial egg farms in the United States and numerous egg brands to choose from.
"The fluctuation in egg prices is influenced by numerous elements, many of which are outside an egg farmer's reach," Metz explained to CNN through email, mentioning bird flu, significant demand, increased expenses for feed, labor, fuel, and packaging as key factors.
"American egg farmers are exerting their utmost efforts to maintain affordable costs while preserving a consistent supply of secure, delicious, top-notch eggs that the public adores and relies on," Metz added.
Economically challenged shoppers suffer the most
Egg price leaps impact the budgets of less affluent families the most severely.
Folks on food aid programs like SNAP often turn to eggs as a main protein source due to their affordability, Lempert, the grocery industry analyst, pointed out.
"Going from $2 per dozen eggs to $4 or $5 is a noticeable increase for individuals living on a tight budget," he said. "When prices are high, I have concerns about this demographic possibly not obtaining sufficient protein intake."
The soaring egg prices have significantly affected businesses that rely on eggs as a vital ingredient, leading to increased costs for various products.
The high cost of eggs has also impacted restaurants and food establishments, forcing some to adjust their menu items or prices to stay afloat.
