Why Are Egg Prices So High?

The Financial Times has an article out about a Mississippi family who is using the bird flu crisis to deepen their control over the egg industry in the United States. Cal-Maine Foods, which is based in Ridgeland, MS (a hop, skip, and a jump away from where I grew up) controls about 14.5% of the market share of eggs in the US. Based on some cursory Google searches, it appears that its closest competitor is about half its size. The family behind Cal-Maine, “Daughters LLC,” is engaged in some financial hijinks to buy back stock and consolidate company control. Meanwhile egg prices are 70% higher than they were a year ago. It seems the company is also restricting supply chains to artificially keep prices high. More below.

The family that controls the largest US egg seller is seeking to cash out amid a bird flu crisis that has driven prices to all-time highs. The four daughters and son-in-law of Cal-Maine Foods founder Fred R Adams Jr reached an agreement with the company to convert their super-voting shares to common shares, relinquishing control ahead of a “potential diversification of their individual financial portfolios”, according to a securities filing by the company. The family’s stake in Cal-Maine is held through a shell company called Daughters LLC. At Friday’s close, the stake is valued at nearly $532mn, including $434mn in super-voting shares and another $98mn in common shares. At the same time, Cal-Maine, based in Ridgeland, Mississippi, said it would undertake a $500mn share buyback programme, its first in two decades, and disclosed it could use the initiative to “repurchase some of the family members’ common shares” as they sold their holdings. … US egg prices reached $8.58 per dozen in wholesale markets this week amid a severe bird flu outbreak, a 70 per cent increase from year-ago levels, according to a commodity price information service Expana. The outbreak has led farmers to cull 100 million chickens, turkeys and egg-laying hens in the US since 2022, according to the US agriculture department, creating an egg shortage that experts forecast to keep prices near all-time highs for months to come. … “Dominant egg producers — particularly Cal-Maine Foods — have leveraged the crisis to raise prices, amass record profits, and consolidate market power,” advocacy group Farm Action wrote in a letter to the Federal Trade Commission and Department of Justice. “The slow recovery in flock size, despite historically high prices, further suggests co-ordinated efforts to restrict supply and sustain inflated prices.”