In an effort to prevent consumers from paying artificially high prices for eggs, U.S. Senator Jack Reed is asking the Federal Trade Commission to look into the high prices of eggs and possible price gouging by big egg companies.
Today, Senator Reed sent a letter to FTC Chair Lina Khan asking the federal agency “to open an investigation into potential price gouging and other deceptive practices by the country’s largest egg companies that appear to be contributing to cost increases for American consumers.”
Eggs are a household staple and used in the preparation of many types of foods. According to the Bureau of Labor Statistics, the price of a dozen eggs was up 138% in December 2022 compared to December 2021. Senator Reed notes that customers in Rhode Island paid $5.10 for a dozen eggs in December 2022 on average, according to Instacart.
Meanwhile, the largest U.S. egg producer, Cal-Maine Foods – which controls 20 percent of the retail egg market — reported record profits of $323 million as of the most recent quarter, swinging from a loss of $16.8 million during the same period in the previous year. The company also reported a huge increase in profit margins quarter-over-quarter, from negative 2.4% to 22.3%, which could be an indication of gouging.
“Consumers are used to seeing some volatility in the egg pricing market, but the current price spike in the industry’s favor warrants careful scrutiny. Independent federal watchdogs should look at the facts and follow the evidence to ensure consumers are treated fairly,” said Senator Reed.
Reed’s letter notes: “Many in the egg industry have pointed to last year’s avian flu outbreak as the reason behind these substantial price increases. However, as early as May 2022 the U.S. Department of Agriculture’s (USDA) Economic Research Service found that “the price increase” observed in the egg sector was “much larger than the decreases in production” caused by the avian flu. Indeed, while prices are up 138%, the American Egg Board recently reported that U.S. egg producer flocks are only 6% below normal levels. USDA also observed little effort among the largest egg producers to increase production to moderate record prices. It is also worth noting that small producers, which have faced many of the same market challenges as the biggest producers, have managed to keep prices under control.”
Senator Reed pointed to a recent article in EcoRI News, highlighting “that despite skyrocketing egg prices, local producers in Rhode Island have not increased their prices to keep pace with larger producers.”
“At a time when food prices are high and many Americans are struggling to afford their groceries, we must examine the industry’s role in perpetuating high prices and hold those responsible accountable for their actions,” wrote Senator Reed.
Full text of the letter follows:
January 24, 2023
Chair Lina Khan
Federal Trade Commission
600 Pennsylvania Avenue NW
Washington, DC 20580
Dear Chair Khan:
I write to urge the Federal Trade Commission to open an investigation into potential price gouging and other deceptive practices by the country’s largest egg companies that appear to be contributing to cost increases for American consumers.
According to the Bureau of Labor Statistics, the price of a dozen eggs was up 138% in December 2022 compared to December 2021. Customers in my home state of Rhode Island paid $5.10 for a dozen eggs in December 2022 on average, according to Instacart. Meanwhile, the largest U.S. egg producer, Cal-Maine Foods, reported record profits of $323 million as of the most recent quarter, swinging from a loss of $16.8 million during the same period in the previous year. The company also reported a huge increase in profit margins quarter-over-quarter, from negative 2.4% to 22.3%, which could be an indication of gouging.
Many in the egg industry have pointed to last year’s avian flu outbreak as the reason behind these substantial price increases. However, as early as May 2022 the U.S. Department of Agriculture’s (USDA) Economic Research Service found that “the price increase” observed in the egg sector was “much larger than the decreases in production” caused by the avian flu. Indeed, while prices are up 138%, the American Egg Board recently reported that U.S. egg producer flocks are only 6% below normal levels. USDA also observed little effort among the largest egg producers to increase production to moderate record prices.
It is also worth noting that small producers, which have faced many of the same market challenges as the biggest producers, have managed to keep prices under control. A recent article in EcoRI News, for instance, explained that despite skyrocketing egg prices, local producers in Rhode Island have not increased their prices to keep pace with larger producers. Policies and investments that support our local food systems are a win-win for our local economies.
At a time when food prices are high and many Americans are struggling to afford their groceries, we must examine the industry’s role in perpetuating high prices and hold those responsible accountable for their actions.
I appreciate your attention to this important issue, and look forward to your prompt reply.
Sincerely,
Like Newport Buzz? We depend on the generosity of readers like you who support us, to help with our mission to keep you informed and entertained with local, independent news and content. We truly appreciate your trust and support!
