Prices have gone up for almost everything in recent years. But anyone who’s been shopping for groceries lately has probably noticed the price of one item in particular: eggs.
Buying eggs has become very expensive. In December 2022, the average price for a dozen eggs in the US was $4.25, more than double a year earlier:
There is a combination of factors at work here. Some, like inflation, have broader, longer-term effects on commodities in general. Others, such as outbreaks of highly contagious avian influenza, are specific to eggs and poultry. Today’s newsletter will explain how these causes have contributed to record high egg prices.
inflation
Americans eat a lot of eggs. According to the US Department of Agriculture, they consumed an average of 278 per person last year. That’s the equivalent of an egg for breakfast most days.
Keeping the supply of these eggs going depends on the hens that lay them. Like so much else, feeding chickens their typical diet of grains like corn, oats and barley now costs more for egg farmers. This chart shows grain prices in 2022 compared to previous years:
Russia and Ukraine are key suppliers of world wheat and grain, and the war in Ukraine greatly reduced their exports restricted global supply last year, driving up prices. Not only do egg farmers pay more to feed their hens, but they also face higher energy costs to run their operations and higher gas costs to transport their yields.
However, inflation alone does not explain the sharp rise in egg prices towards the end of last year.
bird flu
Another factor affecting egg prices is the supply of chickens themselves. The population of laying hens in the US plummeted during outbreaks of highly contagious bird flu early last year and then into the fall. About 44 million laying hens died as a result, or just over one in ten hens in the pre-outbreak population.
The virus, which is often deadly, killed many birds. Farmers slaughtered others exposed to the virus to stop the spread of the flu. After an outbreak, it can take months for farmers’ egg production to return to previous levels. Not only do you have to clear infected flocks, you also have to clean the facilities, introduce new hens and wait for them to grow and lay eggs.
The greatest demand for eggs is usually around Easter, for egg hunts and decorating, and the end-of-year holidays when lots of people are baking, said Amy Smith, an agronomics expert at Advanced Economic Solutions, a food industry consultancy. Therefore, the timing of these outbreaks, shown in the chart below, was particularly noticeable to consumers.
Eight years ago, about 43 million egg-laying birds died as a result of bird flu. Egg prices also surged at the time (as you can see in the first chart) and peaked about three months after the outbreak ended. Last year, the industry had less time to stock up on chickens between outbreaks. By December, the US egg-laying population had yet to return to pre-outbreak levels.
Sticky Egg Demand
Even though the price of eggs has risen steadily in recent months, demand for them has largely remained. Experts say it will take even bigger price hikes to reduce demand even slightly. Even if only the most expensive egg cartons are on the supermarket shelf, someone will probably still buy them.
Some people have looked for alternatives, such as herbal substitutes. Others have tried raise their own chickens. (Smith told me it wouldn’t necessarily save money.) Border officials spotted even more people tries to import eggs from Mexico.
For most consumers, there is no real substitute. Smith summed it up: “Eggs are eggs. And people want eggs.”
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