For some, there’s nothing left to do but crack up over the price of eggs (if you’re not crying in the grocery aisle). The internet is exploding with egg memes mocking how expensive this everyday diet fixture has become.
The average price of a dozen eggs is now $4.25, well more than double what it was just one year ago, according to the Bureau of Labor Statistics.
The bird flu has decimated commercial laying hen flocks, resulting in the depopulation of roughly 44 million hens over the past year, a significant hit to supply. The lost laying hens account for roughly 11% of the U.S. laying hen population of 389 million, according to 2021 data from the Department of Agriculture.
And when the supply hit is put in context with inflation and rising feed, fuel and labor costs, it’s a perfect storm for high prices.
“It’s a tough deal right now because supply is obviously fixed,” said Damian Mason, a farm owner and host of the Business of Agriculture podcast. “And demand has gone down, but not on a correlation basis to what the prices have done.”
Producers that have been able to escape the highly-contagious influenza are raking in the profits.
“This is where I think the ag sector stands to get a little bit of a black eye,” Mason said, adding it’s, “really problematic for the sector, only because of a public relations situation.”
The largest egg producer and distributor in the U.S., Mississippi-based Cal-Maine Foods, reported a record $198.6 million in quarterly net income in December, up from $1.2 million the same quarter a year ago. To do the math, that’s 165.5 times the profit. Cal-Maine reported that it has not had a single positive test for bird flu at any of its sites.
“The significantly higher selling prices, our enduring focus on cost control, and our ability to adapt to inflationary market pressures led to improved profitability overall,” Cal-Maine Foods CFO Max Bowman said.
Cal-Maine’s feed costs have gone up about 30% from a year ago, but the company’s net average selling price for a dozen eggs is roughly double in that same time frame. The company’s stock price has climbed roughly 30% over the past 12 months.
“I believe it’s gotten almost on the verge of excessive because they know the consumer still is really pushing eggs, eggs tend to be pretty inelastic in demand,” Mason said. “Are we going to start hearing politicians calling upon Large Egg, Big Egg, if you will, to come in before Congress and talk about how you’re passing along these and extorting the consumer? Will anything come of it? No, probably not. I mean, did all of a sudden Exxon or Shell Oil forfeit all their money over windfall profits? No, but it’s a bad look, and that’s my concern, frankly.”
Mason pointed out that it’s worth noting the agriculture industry historically operates on very thin margins and are capitalizing on the current supply-demand situation. For example, in the fiscal quarter ending Aug. 28, 2021, Cal-Maine had a net loss of more than $18 million.