Reposted from: https://www.theepochtimes.com/after-reaching-record-levels-egg-prices-drop-steeply-in-march-as-price-gouging-allegations-linger_5190796.html
After soaring to record-high costs over the winter, egg prices declined at the highest rate in 36 years in March, according to Consumer Price Index data released by the U.S. Department of Labor (USDA) on April 12.
Prices for eggs decreased by 11 percent for the month along with drops in prices for some meat, poultry, and produce, the CPI showed. It marked the second consecutive month of reduced egg prices following a 7 percent decline in February.
In 2022, inflation escalated to its highest rate in four decades. According to the Department of Labor, food at elementary and secondary schools topped the list of the top 10 inflation categories in December 2022—compared to the previous December—at 305.2 percent.
Among the food items on the list, eggs were second at 59.9 percent followed by margarine (43.8 percent), butter (31.4 percent), lettuce (24.9 percent), flour and prepared flour mixes (23.4 percent), and dairy and related products—excluding milk, cheese, and ice cream (21.4 percent).
In February, consumers paid an average of $4.21 for a dozen Grade A large, Department of Labor statistics indicate. A year earlier, the average price for the same eggs was $2. In January 2023, the price climbed to $4.82, which set a record high.
Avian Flu Blamed
Officials attribute the exorbitant egg prices in 2022 to the worst-ever avian influenza outbreak that killed tens of millions of egg-laying hens. The Department of Agriculture has estimated that some 43 million egg-laying hens were cut from the U.S. flock through December of 2022 due to avian influenza.
The disease particularly impacts layer hens harder because those birds are in production for a longer period of time than broiler chickens—which are used for meat— and increases their risk of exposure to the virus, the University of Texas A&M said.
In late February, the department forecasted that egg prices will drop dramatically in 2023 if there are no further bird influenza outbreaks. Wholesale prices will drop by 26.8 percent in 2023, USDA Chief Economist Seth Meyer predicted. Egg production will increase 4 percent to 9.4 billion dozen and the number of egg-laying hens will rebound, the department said.
Brian Moscogiuri, a global trade strategist at California-based egg supplier Eggs Unlimited, said that there has not been a confirmed case of the avian flu at a commercial egg farm since December. Economists said that the increase in egg prices last year was also tied to rising costs for animal feed like corn and soybeans. The near-record highs for those prices have declined. The drop in egg prices is related to increased production and less consumer demand, Moscogiuri added. Wholesale egg prices have crashed in recent weeks, which could lead to even less expensive prices at groceries stores, Moscogiuri said.
The decline helped drive down grocery prices by 0.3 percent, reversing months of consecutive price hikes. The cost of food at home is still up 8.4 percent compared to March 2022.
Mississippi-based Cal-Maine Foods, the country’s largest egg producer, saw its profits skyrocket by more than 700 percent after it doubled egg prices, though the company said it has not experienced a positive avian bird flu test at any of its facilities. Cal-Maine controls 20 percent of the retail egg market. The company’s brands include Egg-Land’s Best, Farmhouse Eggs, and Land O’ Lakes Eggs.
In January, some Congressional Democrats accused Cal-Maine and other large egg producers of price gouging and called for an investigation. Sen. Jack Reed (D-R.I.) wrote a letter encouraging the Federal Trade Commission to determine if some egg producers are using the avian flu outbreak as a cover for the record-high egg prices.
“At a time when food prices are high and many Americans are struggling to afford their groceries, we must examine the industry’s role in perpetuating high prices and hold those responsible accountable for their actions,” Reed wrote in the letter. Reed is a member of the Senate Appropriations Labor, Health and Human Services, Education, and Related Agencies Subcommittee.
“Small producers, which have faced many of the same market challenges as the biggest producers, have managed to keep prices under control,” Reed added.
Cal-Maine released a statement claiming that its prices stem from higher demand, increased input costs, and fewer chickens. “The domestic egg market has always been intensely competitive and highly volatile even under normal market circumstances,” a Cal-Maine spokesperson wrote. “Even in this time of higher prices, the nutritional content of eggs remains a great value for consumers.”
Price Gouging Alleged
Farm Action, a Missouri-based nonprofit that was established “to create a food and agriculture system that works for everyone, not just a handful of powerful corporations,” also authored a letter in January asking the FTC to look into egg prices.
In the letter, a Farm Action spokesperson wrote that after examining publicly-available egg industry financial data—supply disruption related to the avian flu outbreak resulted in an “apparently mild impact on the industry.” The egg-laying flock’s average size in any month in 2022 was never more than 6 percent lower than the previous year, according to the letter, yet the “weekly wholesale price for shell eggs” climbed from $1.73 per dozen at the end of February to $1.94 in the middle of March. By the first week of April, it had reached $2.29 cents per dozen, the letter noted.
Nothing justifies the dominant egg producers’ price hike, it added.
Cal-Maine reported a 10-fold year-over-year increase in gross profits for the 26-week period ending on Nov. 26, 2022, according to the letter. That represented a rise from $50.39 million to $535.33 million.
“The real culprit behind this … 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,” Farm Action wrote. “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 said.
“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.”
In February, Sen. Elizabeth Warren (D-Mass.) and Rep. Katie Porter (D-Calif.) sent a letter to Cal-Maine and other major egg producers criticizing their practices. “American families working to put food on the table deserve to know whether the increased prices they are paying for eggs represent a legitimate response to reduced supply or out-of-control corporate greed,” the lawmakers wrote.
Profits Continue to Soar
On March 28, Cal-Maine Foods reported its results for the third quarter of Fiscal Year 2023, which ended on Feb. 25. “Our financial results for the quarter were led by net sales of $997.5 million compared with $477.5 million for the same period last year.
“Net income for the third quarter of fiscal 2023 was $323.2 million, or $6.62 per diluted share, compared with $39.5 million, or $0.81 per diluted share, for the third quarter of fiscal 2022,” Max Bowman, the chief financial officer of Cal-Maine Foods, said in a statement. “These results reflect the significantly higher market prices and favorable demand boosted by the busy holiday season,” Bowman added. “We remained focused on disciplined management of our costs during the quarter despite continued inflationary pressures and a tight labor market.”
Sherman Miller, president and chief executive officer of Cal-Maine Foods, said that “Our results are reflective of a dynamic market environment with higher average selling prices and favorable demand. “Elevated market pricing continues, primarily due to the impact of the ongoing epidemic of highly pathogenic avian influenza (HPAI), which has significantly reduced the nation’s egg-laying capacity. “At the same time, consumer demand for shell eggs remained robust in the third quarter, which included the peak winter holiday season,” Miller added. “In combination with the current inflationary environment, the HPAI epidemic has created additional challenges for all producers, with increasing costs and supply chain disruptions,” Miller continued.
“There have been no positive tests for HPAI at any Cal-Maine Foods’ owned or contracted production facility as of March 28, 2023.”
A Farm Action spokesperson told The Epoch Times on April 12 that she finds it odd that Cal-Maine continues to blame the avian flu on production costs when the company has not reported a positive test at any of its facilities. The FTC has “acknowledged receipt” of the organization’s January letter, the Farm Action spokesperson said. FTC investigations are confidential, the spokesperson noted, so the organization is unaware if a probe is underway.
“We continue to work to monitor actions [of corporations] all across the food system,” Farm Action’s spokesperson added.