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Farm group calls for investigation into high egg prices

The price of eggs has skyrocketed, increasing the overall pain of Bidenflation on American consumers. One farm group is calling for the Federal Trade Commission (FTC) to investigate the price increase, perhaps due to price gouging.

Is it bad behavior on the part of Big Egg or is it a combination of circumstances that has increased the price of eggs so noticeably? The price of eggs was up 138% year-over-year last month. The average price of a dozen eggs is about $4.25. Farmers blame the avian flu which is wiping out chickens across the country. Avian flu wiped out about 58 million birds last year.

Farm Action, a nonprofit that campaigns against corporate influence in the farm industry, said there may be another reason. That reason is price gouging. America’s largest egg producer saw a 600% gain in profits in the last quarter alone. The group sent a letter to FTC Chair Lina Khan claiming that Cal-Maine Foods, based in Mississippi, is engaging in “apparent price gouging, price coordination, and other unfair or deceptive acts or practices” causing American consumers to pay more for a basic staple ingredient.

Farm Action claims the “real culprit” behind the massive price increases is “a collusive scheme among industry leaders to turn inflationary conditions and an avian flu outbreak into an opportunity to extract egregious profits.”

Cal-Maine Foods, which controls 20% of the retail egg market, reported quarterly sales up 110% and gross profits up more than 600% over the same quarter in the prior fiscal year, according to a December filing with the Securities and Exchange Commission (SEC). The company pointed to decreased egg supply nationwide due to avian flu as the reason for higher prices and record sales. Cal-Maine brands include Egg-Land’s Best, Farmhouse Eggs, and Land O’ Lakes eggs.

Cal-Maine has not had any positive avian flu tests on any of its farms. Farm Action doesn’t buy the avian flu excuse.

“Avian flu is not manufactured–it’s real,” says Joe Maxwell, the co-founder of Farm Action. “But the dominant firms are using that supply chain disruption to gouge the consumers. The numbers in our letter clearly indicate that the production loss due to avian flu was minor compared to the prices being charged.”

It is logical to think that the tightening of the egg supply is due to avian flu. Commercial poultry farms have been impacted by avian flu and destroyed all birds at their facilities when testing is positive for the disease. Flocks have to be rebuilt and that can take months to complete. Gino Lorenzoni, assistant professor of poultry science and avian health at Penn State University notes, “This is the largest animal emergency that USDA has ever faced in this country. And it doesn’t look like it’s going to stop anytime soon.”

It’s been an eye-opener to watch the price of eggs rise in recent months. Increased egg prices have raised prices in bakeries and commercial restaurants, too. The increased costs for businesses for such a basic ingredient is passed on to consumers.

Should corporations have the power to set prices which may increase the cost o groceries, even in times of crisis? Industry groups and regulators have argued about that for a long time. There is no federal law about price gouging. The FTC does have the power to prevent “unfair or deceptive acts of practices” because it is the top consumer protection agency. The FTC has hesitated to use the full extent of its authority but Farm Action thinks there is a good chance regulators will investigate.

“The FTC has broader authority as it relates to deceptive type practices,” Maxwell says. “The Chair spoke directly to these types of issues publicly saying it was something that FTC intends on taking greater active enforcement on so we felt that opened the door to present this case to the chair and the FTC.”

Khan has previously argued that enforcers should seek to challenge monopoly power in markets “with highly inelastic demand” that “imposes substantial costs on the public,” according to Farm Action.

I believe in free markets. However, one large company shouldn’t put a thumb on the scale to the detriment of other companies and consumers. Can something less nefarious than price gouging be behind the high price of eggs? Sure. However, it may be worth an investigation to look into whether or not the industry is calibrating its production decisions to maintain extremely high prices over the entire year.

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