A little over a year ago, the United States faced a significant supply shock in the egg market due to a widespread avian flu outbreak. This resulted in a sharp increase in the price of eggs, with some regions experiencing a rise of over 60% within a year. The shortage of eggs transformed what had previously been an affordable household staple into a luxury item, which impacted consumers greatly. Furthermore, the demand for eggs remained high even after the shortage subsided, which kept prices inflated and prolonged the crisis.
The response of egg suppliers, particularly the largest producer in the US, Cal-Maine Foods (CALM), was problematic. The company prioritized profit over ethical concerns, resulting in a dramatic increase in quarterly profits and sales. In just three months (August to November 2022), Cal-Maine reported profits of $195 million, a 65% increase from the previous quarter. This exponential profit increase was due to the exorbitant prices set by the company under the pretext of a supply shortage. Such behavior demonstrates how capitalism can foster unethical practices, especially during economic uncertainty. The capitalist market, despite normally reigning supreme in most situations, fails the consumer in this situation by allowing the biggest producer to control prices and rake in absurd profits in a time of consumer need.
As far as solutions for this dilemma went, there were no clear-cut answers. One solution was for the government to intervene and enforce a price ceiling on the price of eggs to ease the exorbitant prices. However, this could have hurt the egg suppliers by raising prices only out of necessity instead of for personal profit. An alternate solution was to subsidize egg suppliers and allow them to develop technology, increase the efficiency of egg production, and employ more resources (breeding more of birds with genetic modifications to make them more immune to the avian flu) towards the production of eggs. However, this would likely cost in the billions, and most importantly, it would take a lot of time.
Due to this lack of an obvious fix for this “eggstraordinary” situation, the government decided (rightfully so) to let the problem fix itself. They did not give any grants or subsidies, they did not implement any price ceilings or floors, and overall just let the situation take its course. Within a year, the next generation of birds (and some of the older ones) became more resistant to the existing strand of avian flu and the epidemic started to subside. With the hen population climbing back up, the supply of eggs also showed increasing trends, and with this increase in supply, the price of eggs saw rapid decreases. The decrease in inflation rates that the United States observed during this time also helped bring down these prices. Currently, the price of a dozen eggs sits at an average of $2.66 nationwide, which is still almost a whole dollar above where it was before the pandemic ($1.80), but is better than the prices consumers saw during the epidemic (prices reportedly went up to $7.37!).
Even though the crisis is past its peak and the situation is returning to normal, the whole crisis with the egg supply depicts the broader economic, social, and political factors that must be addressed to not only aid with the egg supply shock, but also to prevent such events from occurring in other agricultural industries. For example, the crisis showed the over-reliance on a small number of dominant firms in the egg market. This over-reliance can be found in several other agricultural industries, especially in meat and poultry. The government must address over-reliance and other problems in the agricultural industry revealed by the egg crisis. To do this, it is detrimental that the government takes a holistic approach to reform the entire agriculture industry (managing problems well before they arise)) and protect consumers' interests.
Sources
