Tip of the hat to http://all-hat-no-cattle.blogspot.com

I don’t know about you, but I am so sick of hearing about the price of eggs. I guess the price of eggs is supposed to be the symbol of how bad inflation is right now.

The corporate owned media has a culprit for the price of eggs: Avian flu and the culling of sick birds last summer. While that seems like a very rational cause-and-effect classical market driven possibility, Robert Reich in his daily substack newsletter disagrees. 

Considering how much of the recent inflation spiral has been due to rise in corporate profits rather than any real market driven reasons, Reich’s hypothesis has merit.

As to the facts, there’s no doubt egg prices have soared. As CNN reported last week, the average selling price per dozen eggs from Cal-Maine — which controls about 20 percent of the U.S. egg market and sets egg prices nationally — more than doubled last year.

The question is why.

Fox blames avian flu. Avian flu did kill a lot of hens, but according to Farm Action, a farmer-led advocacy organization, in a letter sent last week to the Federal Trade Commission, avian flu did not reduce egg production.

After accounting for chicks hatched during 2022, the average size of the egg-laying flock in any given month of 2022 was never more than 7-8 percent lower than in 2021. And due to record-high rates of egg-laying among the remaining hens — between 1-4 percent higher than the average rate observed between 2017 and 2021 — the industry’s quarterly egg production experienced no substantial decline in 2022 compared to 2021.

So if the supply of eggs didn’t decline, what accounts for the surge in prices?

Fox then blames inflation. “Prices increased across all product categories last year due to high inflation.”

But Cal-Maine’s production costs didn’t jump nearly as high as its prices (as Cal-Maine told its investors).

What did jump was Cal-Maine’s profits. For the 26-week period ending November 26, 2022, Cal-Maine reported a 10-fold year-over-year increase in gross profits. Max Bowman, the chief financial officer of Cal-Maine, conceded that the firm’s high profits were due to “significantly higher selling prices, our enduring focus on cost control, and our ability to adapt to inflationary market pressures.”

Reich’s arguments are well founded and he has the numbers to back up his position. Once again it looks like corporate greed has used the pandemic and the unusual situations that occurred around it as cover to raise prices that raised profits.

Follow the money, follow the money, follow the money.