Waiting for the market to crack

Egg prices lead to calls for federal investigation

Posted 2/1/23

You can still get anything you want at Alice’s Restaurant — but you might pay a slight upcharge for eggs.

"This is the first time in quite a while that we’ve had to raise menu …

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Waiting for the market to crack

Egg prices lead to calls for federal investigation


You can still get anything you want at Alice’s Restaurant — but you might pay a slight upcharge for eggs.

"This is the first time in quite a while that we’ve had to raise menu prices,” said owner Catherine Fonesca (the titular Alice is her dog).  “In this business, you just have to go with the flow as prices bounce on eggs, meat, coffee — everything, really.”

The ongoing egg shortage has led to shellshock for consumers facing record prices, as well as challenges for local businesses. This is especially true of breakfast spots, which frequently buy them in bulk. Like Alice’s, the Cozy Grill on Warwick Avenue has had to adjust prices in response to the market.

“We go through 600-700 dozen eggs a week,” said owner Tommy Pildarian.

“The price on each of those dozens has jumped up from $1 a year and a half ago to around $4.95 for my last shipment. We’ve had to raise our prices a little, but all of our customers have really been understanding about the whole situation. They’re facing the same problem at the grocery store.”

An increasing number of consumers have been calling for government intervention, however, with emerging allegations that national egg producers may have hatched a plot to increase profits.

Sen. Jack Reed issued a statement this week decrying “price-gouging and other deceptive practices by the country’s largest egg producers that appear to be contributing to cost increases for American consumers.” Reed called upon the Federal Trade Commission to open an investigation into what his office referred to as “fowl play.”

According to Reed, egg prices have increased by 138% in the past year, with the average price of a dozen in Rhode Island currently at $5.10. Profit margins for major egg producers like Cal-Maine Foods (which accounts for 20% of the national egg market) have soared during this period: a year ago, the business was actually losing money each quarter to the tune of $17 million. Cal-Maine reported a profit of over $320 million for the last quarter.

Representatives from the industry’s leading companies blame the price hike on recent outbreaks of avian flu, saying that it decimated the country’s workforce of laying hens. In his statement, however, Reed cited a US Department of Agriculture report suggesting that the increased prices are not proportional to the decreased flock sizes, and that the biggest companies in the industry do not appear to be making efforts to increase production in order to offset the rising prices.

“When this started around Thanksgiving, my first thought was that the egg companies had found an opportunity to boost their profits a bit,” said Bill Meschino, a manager at Sandy Lane Meat Market. The market orders a bit fewer than 300 cartons of eggs each week, although Meschino estimates that egg sales have declined by about 50% since prices spiked.

“When inflation gets as bad as it is now, companies can start using it as an excuse to raise prices, thinking that people might not notice because everything else is more expensive, too. The decreased sales are starting to send a message to suppliers, though — keep in mind that eggs are perishable, so if you don’t sell all of your inventory, you can’t just hang on to it for later. Customers buying fewer eggs is forcing the market to stabilize as the demand dies down.”

Sandy Lane Meat Market purchases their eggs from a farm in New Hampshire, which was not heavily impacted by the avian flu epidemic which has been ravaging US and European chicken populations since October, 2021. An estimated 60 million birds throughout North America have been killed by the H5N1 subtype of the virus, which can also be communicated to humans.

Complicated market

Some commentators have suggested that claims of collusive egg pricing are not all they’re cracked up to be, however.

“Honestly, it’s foolish to think that you can point at a single farm or egg producer and blame them for the whole market,” said Bob Stamp of Stamp Egg Farm in Johnston.  Stamp is in the unique position of being on both sides of the egg market: although the roughly 3,000 chickens on his farm produce brown eggs for local distribution, he also orders shipments of white eggs from other local farms to sell in the Stamp Farm Store.

“You’d think this is my chance to strike it big on eggs after 59 years in the business, but the market is more complicated than that,” he said. “The Urner Barry Report identifies the price points on eggs according to inventory and sales across entire networks of farms. There’s no way for a single culprit to drive up the price across the whole market like that.”

According to the Urner Barry Consulting Group, there are several conditions driving up the egg market.  The most significant of these is the avian flu epidemic, which has affected roughly 13% of egg-laying hens in the country. Other factors include higher costs for fuel and feed, as well as increased wages for farm workers.

Senator Reed was expected to visit Baffoni Poultry Farm in Johnston on Monday, Jan. 30, for a tour, but the event was postponed due to the funeral of former South Kingstown Police Chief Vincent Vespia Jr.

“The senator’s office reached out and seemed really interested in learning more about the jump in prices and why it hasn’t affected us the same way as the big companies,” said fourth-generation poultry farmer Adam Baffoni. So far, the Baffoni’s 7,000-8,000 egg-laying hens remain safe from the flu and have been laying at the expected rate.

“The challenges a local egg farm faces are going to be different than on the national level, but they’re also going to be more serious. If an avian flu outbreak wipes out a big, commercial flock in Lancaster, Pennsylvania, it’s going to take time for the next generation of hens to mature and lay eggs, so that will lead to a shortfall which creates big challenges, even for a major company. But for a small, family farm, that same situation would be a death sentence. No matter how much you prepare, it basically comes down to luck: all you need is for the wrong goose to fly over your farm, and the droppings can start an outbreak that it’s impossible to recover from.”

Despite their potentially precarious situation, Baffoni says that the farm’s prices have only experienced a minor impact from the nationwide scramble on eggs.

“Prices for locally-grown eggs were already a bit higher than the national businesses, so although we’ve faced a bit of an increase, the price hike has actually brought our prices closer to those of the big companies,” he said. “That’s part of the reason I think prices stopped climbing once they hit that level. I don’t see them going up any higher than they are now, and I’d actually expect the prices to start dropping over the next month or two as the market levels out.”

Jason Oliver also sees a glimmer of light at the end of the tunnel — appropriate, perhaps, given the name of his restaurant on West Shore Road. “So far we’ve been able to avoid raising our prices at Sunnyside and have just been absorbing the difference,” he said. According to Oliver, 90% of the breakfasts ordered at his restaurant involve eggs in some fashion.

“It’s been difficult. But the price on the last shipment I ordered was 25% lower than the last one, which was a bit lower than the one before that. So if we hang in there, I think things will be back to normal soon.”

RELATED STORY: Counting chickens before they hatch; For family farm in Johnston, the egg hustle never ends

eggs, chickens


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