Prices have risen for just about everything over the past couple of years. But anyone shopping for groceries recently has probably noticed the cost of one item in particular: eggs.
Buying eggs has become very expensive. In December 2022, the average price of a dozen eggs in the U.S. was $4.25, more than twice what they cost a year earlier:
A combination of factors is at work here. Some, like inflation, have a broader, more long-term impact on goods in general. Others, like the outbreaks of a highly contagious avian flu, are specific to eggs and poultry. Today’s newsletter will explain how these causes contributed to record-high egg prices.
Americans eat a lot of eggs. They consumed an average of 278 per person last year, according to the U.S. Department of Agriculture. That amounts to an egg at breakfast most days.
Keeping the supply of these eggs flowing depends on the hens that lay them. Like so much else, feeding hens their typical diet of grains like corn, oats and barley now costs more for egg farmers. This chart shows grain prices in 2022 compared with previous years:
Russia and Ukraine are key suppliers of the world’s wheat and grains, and the war in Ukraine greatly reduced their exports last year, restricting the global supply and thus driving up prices. In addition to paying more to feed their chickens, egg farmers have been confronting increased energy costs to run their farms and paying more for gas to transport their yields.
Still, inflation alone doesn’t explain the sharp increase in the price of eggs that occurred toward the end of last year.
Another factor in egg prices is the supply of hens themselves. The population of egg-laying hens in the U.S. fell drastically when a highly contagious avian influenza broke out early last year and again in the fall. About 44 million egg-laying hens died as a result, or slightly more than one in 10 hens from the pre-outbreak population.
The virus, which is often fatal, killed many birds. Farmers slaughtered others that were exposed to stop the flu from spreading. It can take months after an outbreak for farmers’ egg output to return to previous levels. In addition to clearing infected flocks, they have to clean the facilities, bring in new hens and wait for them to grow and lay eggs.
The highest demand for eggs usually comes at Easter, for egg hunts and decorating, and around the end-of-the-year holidays, when many people are baking, said Amy Smith, an agriculture business expert at Advanced Economic Solutions, a food industry consulting firm. So the timing of these outbreaks, shown in the chart below, were particularly noticeable to consumers.
Eight years ago, about 43 million egg-laying birds died as a result of avian flu. Egg prices rose sharply then, too (as you can see in the first chart), and peaked about three months after the outbreak ended. Last year, the industry had less time between outbreaks to restock their hens. As of December, the egg-laying population in the U.S. had yet to return to pre-outbreak levels.
Sticky egg demand
Even as the price of eggs has steadily risen in recent months, demand for them has mostly persisted. Experts say it would take still larger price increases to reduce demand by even a small amount. For now, even if only the most expensive cartons of eggs are all that’s on the supermarket shelf, someone will probably still buy them.
Some people have sought alternatives, like plant-based substitutes. Others have tried to raise their own chickens. (Smith told me this wouldn’t necessarily save money.) Border agents have even discovered more people trying to bring eggs in from Mexico.
For most consumers, there are no real substitutes. Smith summed it up: “Eggs are eggs. And people want eggs.”
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