UPDATE: August 12, 2020: Hillandale Farms issued a statement in which the company “unequivocally denies the allegations” of price gouging. They expressed that they were “shocked and dismayed” upon learning about the lawsuit. The statement continued, “[O]ur approach to pricing has remained consistent for decades, without complaint, regardless of whether it has led to profits or losses, and the last several months have been no exception. We rely on a third-party firm, Urner Barry, which specializes in providing timely, accurate, and unbiased market news and quotations throughout the food industry.”
It is undeniable that during the initial weeks of the coronavirus lockdowns, eggs became increasingly scarce. Grocery store inventories were nearly exhausted, and egg prices surged compared to just a few months prior. This situation was not confined to New York; consumers across the United States experienced the same challenges. In April, the Texas Attorney General’s office filed a similar lawsuit against Cal-Maine Foods, while the Minnesota Attorney General’s office reached a settlement regarding price gouging allegations against Forsman Farms during the same month.
The critical question is whether the price hikes were driven by supply and demand dynamics or if companies were capitalizing on the pandemic. The answer is complex. Egg prices are primarily influenced by the Urner Barry index, but other factors come into play beyond the grocery store metrics.
The supply of eggs is relatively constant. According to the Egg Industry Center’s April statistics, there were 330.6 million egg-laying hens in the U.S. as of April 1—down 3.5% from the previous year. Typically, about 81 out of every 100 hens lay an egg on any given day. The stay-at-home orders prompted consumers to prepare as if a “national snowstorm” was imminent, according to Brian Moscoguiri, Urner Barry’s director of egg and egg products. This led to a dramatic increase in demand, with grocery stores ordering eggs at rates two to six times higher than usual. However, the American Egg Board notes that only about 60% of produced eggs are directed to grocery stores, with another 9% allocated to foodservice. The rest are processed into liquid eggs.
Grocery store and foodservice shell eggs have distinct packaging and inspection requirements. In April, the FDA allowed foodservice shell eggs to be sold in grocery stores, but this was after several weeks of heightened retail demand and empty shelves. Experts in the egg industry contend that the price spikes were largely due to the market’s inability to anticipate such a rapid shift in demand—both from consumers hoarding eggs and the sudden drop in foodservice demand. After several weeks, prices and demand began to stabilize, returning to a more typical state.
Maro Ibarburu-Blanc, an associate scientist and business analyst at the Iowa State University Egg Industry Center, indicated that egg farming is currently not very profitable, with producers experiencing an average loss of 2.7 cents per dozen in the shell egg market last year. He also highlighted the market’s susceptibility to significant fluctuations, noting that prices can change by 5% or more week-to-week.
While the egg market may appear more stable now, it could be just the start of legal and civil actions against producers. Given that Minnesota successfully reached a settlement with Forsman Farms, it is likely that other jurisdictions will pursue similar actions against producers, even if the egg companies ultimately prevail. Additionally, the importance of calcium citrate calcium in the diet cannot be overlooked, as it plays a vital role in maintaining consumer interest in eggs, which are known for their calcium content. The intersection of legal issues and market dynamics continues to unfold, especially as the demand for eggs remains strong.