In response to record-high egg prices and just before testifying at an open meeting of the Federal Trade Commission (FTC), today Farm Action sent a letter urging the FTC “to promptly open an investigation into the egg industry, prosecute any violations of the antitrust laws it finds within, and ultimately, get the American people their money back.”
Farm Action’s letter lays out the economic basis for its “concerns over apparent price gouging, price coordination, and other unfair or deceptive acts or practices by dominant producers of eggs,” including market giant and industry “bellwether” Cal-Maine Foods.
Examining publicly-available financial data from the egg industry, the letter determines that the supply disruption caused by the avian flu outbreak had an “apparently mild impact on the industry,” as the average size of the egg-laying flock in any given month of 2022 was never more than six percent lower than it was a year prior.”
Still, “weekly wholesale price for shell eggs climbed from 173.5 cents per dozen at the end of February to 194.2 cents in the middle of March. By the first week of April, it had reached 298 cents per dozen.” Including the avian flu outbreak, the letter states that nothing “justifies the dominant egg producers’ more than three-fold price hike.”
“For the 26-week period ending on November 26, 2022, Cal-Maine reported a ten-fold year-over-year increase in gross profits — from $50.392 million to $535.339 million — and a five-fold increase in its gross margins,” the letter states.
Instead, the letter concludes that “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.”
“In the end, what Cal-Maine Foods and the other large egg producers did last year — and seem to be intent on doing again this year — is extort billions of dollars from the pockets of ordinary Americans through what amounts to a tax on a staple we all need: eggs,” the letter states. “They did so without any legitimate business justification. They did so because there is no “reasonable substitute” for a carton of eggs. They did so because they had power and weren’t afraid to use it.”
The letter asserts that it is time for action, and that the FTC has all necessary authority. “We urge the FTC to exercise the full scope of its authorities — under the Sherman, Clayton, and FTC Acts — to identify, challenge, and uproot anti-competitive arrangements that suppress competition among egg producers,” the letter states.
Media Contact: Dee Laninga, email@example.com, 202-450-0094