Shelling Out: High Price of Eggs Ruffles Feathers

Rutgers-Camden supply-chain expert breaks down avian flu’s impact on egg production

Last December, many families felt less than merry as they scrambled to find eggs for celebratory eggnog, cookies, cakes, and pies. Moreover, little has changed since then. Although a goose capable of laying golden eggs is just a fairy tale, these days, it may feel as if life is imitating art—because while eggs are not worth the price of gold, it feels like they are close.

“This is a classic case of supply and demand,” said Richard Michelfelder, associate professor of professional practice with Rutgers School of Business–Camden. “The avian flu has decimated the hen supply in the United States, so fewer eggs are available to purchase.” Pennsylvania, the nation’s fourth-largest egg-producing state, has lost 4.6 million egg-laying hens to avian flu.

According to a recent Consumer Price Index report, egg prices in December 2022 were nearly 60 percent higher than they were the previous year. The national average price for a dozen eggs hit $3.59 in November, up from $1.72 a year earlier. In some states, like California, egg prices are as high as $7 per dozen.

(Photo by Michael M. Santiago/Getty Images)

(Photo by Michael M. Santiago/Getty Images)

Richard Michelfelder, clinical associate professor of finance at Rutgers School of Business–Camden

Richard Michelfelder, clinical associate professor of finance at Rutgers School of Business–Camden

“Eggs are a commodity, meaning there is no significant product differentiation. An egg is an egg, for the most part,” Michelfelder said. “In a commoditized market, it is very hard not to pass increased production costs on to the consumer, because often the margins are small and there are plenty of competitors selling the same thing.”

As Michelfelder noted, the increase is primarily the result of the worst avian flu outbreak in U.S. history, which started in early 2022 and continues to affect the industry a full year later. According to the CDC, the virus affects more than 100 species of birds and can spread quickly, with a mortality rate of 90 to 100 percent in chickens. To date, nearly 60 million birds have died across 47 states because of the virus, according to data from the USDA, compared to the 50 million birds affected across 21 states in 2015. Since the beginning of the outbreak, there have been five to six percent fewer chickens laying eggs overall.

Michelfelder emphasized that in addition to the avian flu, chicken farmers are being hit with higher prices for feed and energy, which is putting an added strain on production. “Farmers are in a difficult spot because they are facing higher production costs while the avian flu is devastating their flocks,” Michelfelder said.

(Photo by Alex Wong/Getty Images)

(Photo by Alex Wong/Getty Images)

Not surprisingly, there has been a noticeable increase in the number of attempts to smuggle eggs illegally at the Mexican border. The number of incidents in which raw eggs were confiscated at the border jumped more than 100 percent during the final three months of 2022 compared to the same period a year ago.

“This is not unlike the period in our history during Prohibition when the Volstead Act was in place,” said Michelfelder. “Because alcohol production and consumption were prohibited, you saw an increase in people smuggling at the northern border and from the Caribbean.”

Since the avian flu shows few signs of waning, experts have expressed concern for the months ahead. As winter gives way to spring, migrating bird populations and animals in hibernation will be more active, presenting additional opportunities for virus spread.

Although the USDA recently reported that egg prices have started to trend downward, the avian flu remains an unknown variable. Prices may increase even further if there are sizeable outbreaks at egg farms moving into spring and summer.

As the Easter holiday approaches, egg hunting and egg-dyeing traditions may bring consumers to their breaking point.  

Creative Design: Douglas Shelton