Eggs and the Complexity of Food Pricing

Many local grocery stores now have signs up alerting consumers of an increase in egg prices and a short supply. Recent regulatory and environmental changes have come together to create a perfect storm for both producers and consumers. Because eggs are one of the most affordable forms of protein for many families in the United States, a dramatic increase in their price or limited availability can have a troubling impact on consumers.

January 1, 2015 brought the implementation of California’s Proposition 2. The controversial proposition passed in 2008 and created a new statute requiring expansion of cages for egg-laying hens. Producers were given until 2015 to comply. In some areas of California, the price for a dozen large eggs have increased 66 percent as costs for the new cage system have made their way to consumers.

Following the passage of Proposition 2, legislators in California added the requirement that all shelled eggs sold in the state must be produced in compliance with the larger cage requirements. As a large net-importer of eggs, California has bargaining power with producers across the country and an inability to sell eggs in California can be damaging for producers in other states. The impact of California’s legislation reaches far beyond the state’s borders.

On top of regulatory change in California, the poultry industry has been impacted by the H5N2 avian flu virus that first appeared in commercial turkey and chicken farms this spring. The disease, which has led to the culling of almost 40 million birds is likely spread from the droppings of wild ducks and geese migrating to the upper Midwest, according to experts. Prices for wholesale large eggs have increased about 85 percent in the Midwest. Some experts say prices will continue to rise as retailers pass along higher costs to consumers.

Egg prices provide an important reminder of the complexity of the U.S. food system and all of the players involved. Each has a role to play and while it may not appear so on the surface, they all impact each other. Legislators, scientists, veterinarians, producers and consumers all have an interest and a responsibility to work together to provide a safe, healthy and affordable egg supply.