Monday 3 April 2023

Eggs-Tortion? Profits For Largest U.S. Egg Producer Soar 718%

 Remember when the price of eggs soared, and providers said it was inflation and higher transportation costs and a sudden drop in production and some kind of avian flu?

Pepperidge Farm remembers.

But it turns out that Cal-Maine Foods, the largest U.S. producer, more than doubled its revenue last quarter to nearly a billion dollars because of sharply higher egg prices — and profits surged 718%. And production wasn’t down. Cal-Maine, which controls about 20% of the domestic egg market, said the total number of eggs it sold rose by 1%, CNN reported.

The company said the average selling price for a dozen eggs in the quarter ending February 25 was $3.30. That’s more than twice what a dozen cost a year earlier, when its average price was $1.61, Cal-Maine said. Thus, net income soared to $323.2 million from just $39.5 million a year ago, CNN reported.

In January, the cost of a dozen eggs surpassed the price of a pound of beef, marking the first time that’s happened since the U.S. Bureau of Labor Statistics (BLS) began keeping data in 1980. The average price of a dozen large Grade A eggs ran at $4.82 in January 2023, while a pound of ground beef was $4.64, the BLS said. In January 2022, eggs were $1.93, and beef was $4.77, but egg prices have soared by 70% in the last year alone, according to the bureau.

Farm Action, a farmer-led advocacy group, says the “real culprit” behind sky-high prices is a “collusive scheme” among top U.S. egg producers to fix prices to gouge consumers. In a January letter to the Federal Trade Commission (FTC), Farm Action said the alleged collusion has helped egg producers to “extract egregious profits reaching as high as 40%.”

The letter said avian flu is not to blame. “Examining publicly-available financial data from the egg industry, the letter determines that the supply disruption caused by the avian flu outbreak had an ‘apparently mild impact on the industry,’” the group said in a press release.

The group also said egg producers are making money hand over fist. “For the 26-week period ending on November 26, 2022, Cal-Maine reported a ten-fold year-over-year increase in gross profits — from $50.392 million to $535.339 million — and a five-fold increase in its gross margins,” the letter said.

Some lawmakers have criticized egg producers’ pricing, accusing them of price gouging.

“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,” said a letter sent by Sen. Elizabeth Warren (D-MA) and Rep. Katie Porter (D-CA) to Cal-Maine and other large egg producers last month.

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