A few months ago, I asked cafemadrid readers which price hikes bothered them most in our current high-inflation economic climate. The most common answer, by far, was eggs—a relatively small-card, but staple, item, and one whose price hikes have been a huge nuisance to many consumers. That was in August 2022. Now the situation with egg prices is even worse.
According to data from Urner Barry, who tracks the food commodity market, the average price of a dozen “Midwest large” eggs was $5.46 at the end of December 2022, well above the $0.89 it was in early 2020 before the pandemic hit. and even above other highs in the low $3 range last summer. After the spike in demand for eggs during the holiday season, prices started to cool, falling back to $3.64 as of Jan. 17.
“There is almost always a drop in demand after the holiday baking period, which causes wholesale prices to fall,” Karyn Rispoli, who covers the egg market for Urner Barry, says in an email. “However, this year’s decline was quite sharp because of the highs from which the market adjusts.”
Eggs have been part of the US economy’s inflation story for months now. Aside from the cost of one individual egg at the store, you should also remember that eggs are an ingredient in so many products from pet food to baked goods and more. So if the price of eggs goes up, that could put pressure on a lot of things.
So what’s going on now? Here’s a small overview.
Bird flu is bad
Eggs are especially expensive right now because chickens keep getting sick with a super deadly avian flu, largely spread by migratory birds. The last time bird flu hit this hard was in 2015 egg prices skyrocketed. Now it’s happening again, and it’s proving to be more stubborn than last time.
“In 2015, the virus more or less stopped when the weather warmed up and the spring migration was over, and the repopulation could get under way. [In 2022]it came back in the fall with winter migration,” said Brian Moscogiuri, a global trade strategist at Eggs Unlimited.
From the beginning of December there were about 308 million “layers”, meaning chickens lay eggs for consumption, in the US. That’s from 328 million the year before. “Usually you need about one bird per person to balance supply and demand with US consumption,” Moscogiuri said. “So we have, what, 331 million people in this country? You immediately see that there is a huge shortage.”
As cafemadrid’s Kenny Torrella explained, nearly 58 million birds in the US, most of them laying hens, have died of avian flu in the past year well above previous record of 50 million as of 2015. Once a farm or facility is infected with the virus, it spreads like wildfire and is almost always fatal. Either way, U.S. regulations require farmers to depopulate their operations as soon as avian flu is discovered, which means killing the birds with and without the virus.
“They have to clean and disinfect the entire facility, and then they have to test [the facility] to repopulate [to make sure the virus is cleared]Moscogiuri said. Egg producers have gotten better at restocking, learned from the experience in 2015, but as mentioned, the current outbreak is much more persistent than the last.
The 2022 avian flu outbreak coincided with a warm season for consumer eggs, leading to a bit of a perfect storm on prices. “The latest wave of outbreaks came at a time when the industry is adjusting egg-laying flocks seasonally to meet the increasing demand for eggs associated with the winter holidays,” the USDA said. wrote in a recent research paper. “By the end of the year, in-shell egg supplies were lower than normal, coupled with increased demand due to the holiday baking season, resulting in several consecutive weeks of record-high egg prices.”
Inflation is still a problem and the economy is a bit shaky
While bird flu is the main driver of the current rise in egg prices, other factors are also at play – factors that have haunted the egg market and the wider economy for months. Inflation seems to be cooling in some areas, but it is still high and many things are more expensive.
“Like with all other supermarket items, there is all this inflationary pressure, with interest rates, with oil, with feed prices, with raw materials, with packaging, cartoning, transportation. You have labor issues and labor costs,” Moscogiuri said.
I wrote an explanation on eggs and inflation in early 2022 that addressed many of these issues. The cost of an egg is more than half of the feed, Sam Krouse, vice president of business development at MPS Egg Farms, headquartered in Indiana, told me at the time. As the cost of corn and soybean meal fluctuates, so do egg prices. Changes in the prices of fuel and packaging – cartons and corrugated boxes and plastic wrap – can affect the final price of eggs. Demand also affects things. The holiday season may be over, but Easter, another time of year when consumers eat eggs, is just around the corner.
Being nice to chickens is often more expensive, which can lead to higher prices for free-range eggs. There was a law in California entered into force last year that requires all eggs sold in the state to come from cage-free hens. Massachusetts has one new law in effect stricter standards around egg production, and some companies have also made cage-free commitments. Like the Los Angeles Times recently noticed, cage-free chickens are more likely to come into contact with wild birds that can infect them with bird flu, although both cage-free and penned chickens have contracted the virus at similar rates. (It’s worth noting that amid the current craziness in the egg market, special eggs have sometimes been the better deal, but that’s generally not the case.)
Will eggs have a great fall?
As mentioned above, egg prices are starting to fall again, although what happens on the wholesale market is not always directly and immediately reflected on the store shelf. As notes the Wall Street Journal, some supermarkets have tried to keep egg prices ‘competitive’, even if it means sacrificing some profit, because they are a consumer staple and good for drawing people in. For the many stores that have raised prices, there are also likely to be delays in lowering them again.
“There’s usually a two to three week lag between wholesale prices and what consumers see in terms of retail prices,” Rispoli said. “However, that assumes that retailers pass on those lower costs. As many retailers sold eggs below cost when the market soared to record highs last month, they may be slower to react on the way down.”
The good news, if you’re a real egghead (I’m sorry), is that there are generally eggs on the shelves. The Journal reports that there have been “spotty shortages” of eggs, but not one that is very ubiquitous and widespread. Some regional supermarket chains in places like North Carolina and Colorado have experienced occasional shortages, or in some cases specialty or organic eggs have been a bit harder to come by. Overall, however, egg producers have been more nimble at restocking their farms and recovering from avian flu outbreaks than they were in 2015.
That said, the weather will start to warm up soon, meaning wild bird migration will start again, making infections more likely. Producers are getting better at protecting their flocks against bird flu, but they’re not perfect. (Besides, as Torrella points out, maybe the way to get really good here is to give the chickens a vaccine.) In the egg world, the concern isn’t that Winter is comingit is that spring is.
“Hopefully the repopulation continues and more production kicks in, and we don’t see any more [bird flu] when we go back to this spring migration, and the worst is behind us,” Moscogiuri said. “But we really don’t know.”