Why are egg prices rising?

New york — Supermarket prices no longer skyrocket – unless, of course, you buy eggs.

Egg prices rose 28.1 percent in August from 12 months ago, easily the largest increase of any food item tracked by the Bureau of Labor Statistics.

The egg aisle label shock comes even as overall food prices are barely budging (up less than 1% in August from last year) and inflation is cooling in the US economy.

The main culprit behind rising egg prices is a familiar one: bird flu.

Birds get sick, and that means fewer eggs and higher prices at the grocery store.

“Bird flu is the number one reason for higher prices, absolutely,” said Phil Lempert, food industry analyst and publisher of SuperMarketGuru.com.

The egg supply is shrinking

Highly pathogenic avian influenza (HPAI), more commonly known as bird flu, has affected nearly 101 million birds in 48 US states as of January 2022, according to the Centers for Disease Control and Prevention (CDC).

“Think about how they’re housed: small spaces with lots of chickens,” Lempert said. “When a chicken gets bird flu, they have to cull the whole flock. That’s the problem.”

That helps explain why total egg production in July fell 2.6 percent year over year, according to new data released Monday by the U.S. Department of Agriculture.

The USDA also found that the number of egg-laying birds fell for the second month in a row.

“The price effects of the HPAI outbreak will be closely monitored,” the USDA said in August, adding that bird flu “contributed to higher egg prices” this summer by “reducing the U.S. egg flock.”

Fortunately, eggs are nowhere near as expensive as they were in late 2022 and early 2023. That spike in prices caused by bird flu drove the average price of a dozen large grade A eggs to a record 4 $.82, according to the BLS.

Brian Moscogiuri, vice president at leading egg supplier Eggs Unlimited, told CNN in an email that overall inflationary pressures and feed prices have “declined” since that challenging period.

“However, we need time without major supply failures for production to recover,” he said.

Where egg prices are rising the most

However, the current BLS average of $3.20 per dozen eggs remains high. Before Covid-19, eggs never hit $3 a dozen, according to BLS data dating back to 1980.

Americans are now paying nearly twice as much for eggs as before the pandemic. According to market intelligence platform Datasembly, the average price of eggs has increased by 83% since October 2019.

Shoppers in some states saw even bigger price increases for eggs, led by Minnesota (+137%), Missouri (+123%), Iowa (+116%), Oklahoma (+109%) and Alabama (+109 %), according to Datasembly.

Zooming in to focus on just the past year, Datasembly found that egg prices rose the most in Hawaii (+49%), Minnesota (+44%) and Alabama (+38%).

Prices are rising so quickly that it has given some shoppers pause.

Moscogiuri said he had seen previously strong demand take a hit in recent weeks as retailers passed on high wholesale prices to consumers.

However, the good news is that wholesale prices have started to drop sharply, a drop that should eventually trickle down to buyers.

“If we can go through a 6-8 month period without AI (bird flu), markets should return to more normal, long-term average levels,” Moscogiuri said.

However, Kevin Bergquist, sector manager at the Wells Fargo Agri-Food Institute, warned in a recent report that prices will continue to rise this fall and into the holiday season if bird flu infections continue.

“There is no buffer”

Part of the problem may be consolidation. Like other industries, the egg industry experienced a wave of mergers that left the nation more reliant on just a handful of large producers.

As of 2020, the five largest egg companies controlled between 36 percent and 40 percent of all laying hens in the United States, according to a recent report by Farm Action, a group that fights corporate control of the food system.

Cal-Maine Foods, America’s largest egg producer, controls about one-fifth of national egg sales through multiple acquisitions. When egg prices rose to record highs in early 2023, Cal-Maine’s profits skyrocketed 718%. Cal-Maine did not respond to a CNN request for comment.

“High egg prices in 2022 and 2023 were a product of price gouging by dominant egg producers who used inflation and bird flu hedging to extract profit margins of up to 40% on a dozen free-range eggs” , the Farm Action report concluded. .

Basel Musharbash, managing attorney at Anti Monopoly Counsel, a Texas antitrust law and policy firm, told CNN that the consolidation has allowed the egg industry to take advantage of supply shocks.

“There is no buffer. Whenever there is a shock now, there is a shortage. That helps keep prices high at all times,” said Musharbash, lead author of the Farm Action report.

Emily Metz, president and CEO of the American Egg Board, the national marketing organization for U.S. egg farmers, dismissed that argument, noting that there are more than 3,250 commercial egg farms in the United States and hundreds of brands to choose from.

“The volatility we’ve seen in egg prices is based on many factors, most of which are beyond the control of an egg farmer,” Metz told CNN in an email, pointing to bird flu, demand strong and higher costs for feed, labor, fuel. and packaging.

“America’s egg farmers are doing everything they can to keep their costs down while ensuring a steady supply of safe, healthy, quality eggs that Americans love and can rely on,” he said. Metz said.

Low-income buyers suffer the most

The increase in the price of eggs affects families with lower incomes the most.

Consumers participating in food assistance programs such as SNAP often use eggs as their primary source of protein because they are typically cheaper than meat, said Lempert, the food industry analyst.

“Going from $2 a dozen eggs to $4 or $5 is a big jump for a tight budget,” he said. “When the prices are high, I worry that this population is not getting enough protein.”

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