In recent months, eggs have seen a 138% increase in price year-over-year. Due to the avian influenza, which has decimated poultry farms in the U.S., causing the average price of a dozen eggs to rise to $4.25 per dozen, with the loss of some 58 million birds.
A farm advocacy group says that price gouging is another reason. The profits of America’s largest egg producer experienced a 600% increase in the quarter that ended in March.
Farm Action, a non-profit that fights corporate influence in agriculture, wrote to Lina Khan, Chair of the Federal Trade Commission (FTC). She alleged that Cal-Maine Foods, Mississippi, is engaging in “apparently price gouging,” price coordination and other unfair or deceptive practices as Americans are paying more for their staple ingredient.
Farm Action asserts that the real culprit behind massive price rises is a “collusive scheme of industry leaders to transform inflationary conditions into an opportunity for egregious profits.”
Cal-Maine Foods controls 20% of the retail eggs market. According to a December filing to the Securities and Exchange Commission, Cal-Maine Foods reported that quarterly sales increased by 110% and gross profit rose more than 600% compared with the previous fiscal year. Record sales and higher prices were attributed to the decreased supply of eggs nationwide caused by avian influenza. Cal-Maine brands include Egg-Land’s Best and Farmhouse Eggs.
According to the company’s quarterly report, there have been no positive avian influenza tests on any of its farms. Cal-Maine didn’t respond to a request for comment.
Joe Maxwell, co-founder of Farm Action, says that “Avian flu cannot be manufactured–it is real.” “But the dominant companies are using this supply chain disruption to deceive the consumers.” Our letter clearly shows that the loss of production due to avian influenza was minimal in comparison to the price charged.
A tightening supply of eggs caused by avian influenza is at the root of America’s rising egg price. The disease can cause serious problems for commercial poultry farms. They must remove all affected birds from their facilities and rebuild their flocks. This could leave them out of commission for several months.
Gino Lorenzoni is an assistant professor at Penn State University in poultry science and health. “This is the biggest animal emergency USDA has ever faced.” It doesn’t appear like it will stop anytime soon.
Industry groups and regulators have long debated whether corporations should be able to set prices and drive up grocery costs, particularly during times of crisis.
Although there is no federal law that prohibits price gouging in the United States, the FTC has the power to stop “unfair and deceptive acts or practices” as the top consumer protection enforcer. Farm Action believes that regulators will investigate. The FTC has historically been reluctant to use all of its authority under this provision.
Maxwell states that the FTC has greater authority in relation to deceptive practices. “The Chair addressed these issues directly, saying that the FTC intended to take more active enforcement on it so that we felt that that gave us the opportunity to present the case to the chair as well as the FTC.”
Farm Action reports that Khan previously suggested that enforcers should challenge monopoly power on markets with “highly elastic demand” that “imposes substantial cost on the public,” as Farm Action reports.
According to Basel Musharbash (a Farm Action lawyer), the U.S. egg inventories fell 29% in December relative to the beginning. This was largely due to the fact that the dominant egg producers decided not to increase production despite “favorable circumstances”.
Musharbash asks, “Could there possibly be an innocuous explanation for everything?” “Sure. It does indicate that something is worth looking into and how the industry seems to calibrate its production decisions among competitors to in order to induce or maintain extremely high prices throughout the year.