Dive Brief:
- In a tweet earlier this week, Sen. Bernie Sanders renewed his call to “break up Big Ag” after sales for the country’s largest egg producer Cal-Maine surged 718% in the first quarter of the year.
- Cal-Maine president and CEO Sherman Miller said during the company’s earings report last month that the company’s strong profits and net sales, which were $1 billion, were the result of the current highly pathogenic avian influenza (HPAI) outbreak, which reduced the number of egg-laying hens at a time of robust demand. Sanders accused the protein producer of using the virus as a way to artificially inflate prices.
- Ever since the skyrocketing prices of eggs and images of empty shelves began dominating the media in late 2022, critics have charged that the largest producers are exploiting the bird flu crisis to enrich themselves.
Dive Insight:
After egg prices jumped 55% during the past year, according to the most recent Consumer Price Index, Cal-Maine’s profits in the last quarter — which followed the 110% increase in sales in the prior period — has added fuel to the fire of lawmakers’ critiques.
In the press release accompanying the egg giant’s earnings report, Miller said the prices are the result of a “dynamic market environment,” and that it sets egg prices based on market quotes from Urner Barry. Miller added that as of March 28, there have been zero positive tests for HPAI at any facility operated by Cal-Maine.
“We are a producer and distributor and do not sell eggs directly to consumers,” Miller said. “We are focused on the long-term, working within the proven operating model that has served us well throughout the various cycles that characterize our industry.”
Cal-Maine did not respond to Food Dive’s request for a comment on Sanders’ allegations.
Roughly 59 million birds have been infected with HPAI since early 2022, the CDC said. Year-over-year inventory for egg-laying hens is 15 to 20% lower than last year, Wells Fargo told Food Dive.
In January, Sen. Jack Reed, a Democrat from Rhode Island, wrote a letter to the Federal Trade Commission asking the agency to ensure consumers are not being price gouged by the big egg companies. He pointed to findings from the USDA’s Economic Research Service that said smaller producers have not raised prices as much as larger ones.
“USDA also observed little effort among the largest egg producers to increase production to moderate record prices,” Reed said in the letter.
Farm Action, a non-governmental organization made up of farmers, said in a January letter to the FTC the impact of HPAI did not provide the basis for the striking increase in prices. The group said the increase in egg prices is a “collusive scheme” led by Cal-Maine, which is a bellwether for the rest of the industry as it controls roughly 20% of the egg market.
There are some signs the volatility surrounding the protein are beginning to cool. According to the most recent CPI, egg prices decreased 6.7% in the last month.
