10 ms·

Record-Breaking Egg Profits Prompt Accusation of Price Gouging

186 points by myshpa 4y ago

grecy 4y ago
Related: "I made a site that tracks the price of eggs at every US Walmart. The most expensive costs 3.4X more than the cheapest." [0] https://www.reddit.com/r/InternetIsBeautiful/comments/118y19p/i_made_a_site_that_tracks_the_price_of_eggs_at/ https://www.reddit.com/r/InternetIsBeautiful/comments/118y19... [1] https://eggspensive.net/ https://eggspensive.net/ NOTE: Not me. I didn't make the site. Someone on Reddit did.
- lolinder 4y ago
  Currently being discussed on HN here: https://news.ycombinator.com/item?id=34897534 https://news.ycombinator.com/item?id=34897534
jmholla 4y ago
> Cal-Maine’s gross profit jumped 10-fold from one 26-week period in 2021 to the same period in 2022, according to the company’s most recent quarterly financial statement. For the 26-week fiscal period ending in November 2021, gross profits were $50.4 million. In 2022 for the same period, gross profits were $535.3 million. This is pretty damning especially given the more deadly avian flu of 2015 did not cause prices to rise so significantly. Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands.
- lostlogin 4y ago
  > Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands. Why would that be the case?
  - throwaway1777 4y ago
    Because smaller independent and family farms aren’t colluding?
    - lostlogin 4y ago
      But they are already more expensive. Does that mean they were colluding previously? Couldn’t you argue that their pricing is more inflation resistant as their margins already allow for fluctuations in eg fuel prices?
      - azinman2 4y ago
        Or their costs are a lot higher. When you don’t pack the chickens in a dense a space, you have more expensive feed, and you have a lot less chickens in the first place, then I’d expect it to cost a lot more.
      - krustyburger 4y ago
        Their costs are higher as it is more expensive to raise chickens using their methods. So one would expect these eggs to be more expensive.
        scarby2 4y ago
        their costs are almost certainly not higher in proportion to their costs. There is almost without a doubt a premium because the people that they are selling to are not price sensitive.
        lostlogin 4y ago
        > their costs are almost certainly not higher in proportion to their costs. Do you mean “their costs are almost certainly not higher in proportion to their profits.” I’m struggling to understand.
      - freejazz 4y ago
        >But they are already more expensive. Does that mean they were colluding previously? how is that your conclusion?
- calvinmorrison 4y ago
  How is it damning if it's gross profits? If eggs get 5x more expensive, and you sell the same amount of eggs, shockingly, you will now have 5x gross profits, no?
  - GalenErso 4y ago
    Most elite HN CPA.
  - lostlogin 4y ago
    The profit margin isn’t that insane relative to other industries. “egregious profits reaching as high as 40%” (from the article).
  - quickthrowman 4y ago
    You’re assuming that producing an egg costs 5x more in 2022 than 2021. I can’t think of any input cost increase that could account for a 5x production cost. A hatchery takes in chicken feed and spits out eggs (and macerated male chick slurry), it’s a pretty simple business.
    - calvinmorrison 4y ago
      A lot of chickens died for those eggs you ungrateful consumer
    - deleted 4y ago
      [deleted]
    - flextheruler 4y ago
      Chicken food comes from corn, wheat, oats, some fish. It’s delivered by truck. The cost of fertilizer is at record highs. The cost of fuel has increased. I’m not justifying the exact increases but supply chains are never simple, especially in the modern economy.
  - voisin 4y ago
    Eggs don’t just get 5x more expensive on their own. Competition should keep gross margins in a mean-reverting band over periods of time.
- chihuahua 4y ago
  Regarding that last point, if it wasn't for the relentless media coverage, I wouldn't even have noticed that prices went up. The price that the milk-and-eggs home delivery service charges hasn't changed (organic, free-range, access to outdoors), and the pasture-raised certified humane eggs at Costco still cost the same.
  - nickpeterson 4y ago
    You’re buying the top end and are not price sensitive. This isn’t a criticism, but I would wager you dont feel a $1 increase in most groceries at all, compared to someone who has to choose between that item and heating their homes.
    - anamexis 4y ago
      It's not a matter of price sensitivity - the top end hasn't changed prices.
      - mtalantikite 4y ago
        Have they not? I buy pasture raised eggs which at my local Whole Foods used to be $5.99/dozen and lately have been $7.99/dozen. Granted, the $5.99 was cheaper than my other local grocery store, where they've been $7.99 all along (and I'm not sure what they've been charging recently).
        anamexis 4y ago
        I also only have anecdotes, but the prices of prices for free range eggs near me has been stable around $6/dozen for a long time.
      - nickpeterson 4y ago
        According to this they did: https://www.shefinds.com/collections/shoppers-crying-costco-raising-prices/amp/ https://www.shefinds.com/collections/shoppers-crying-costco-...
- Alupis 4y ago
  Literally everything manufactured got more expensive in 2022. Everything. Why would eggs be any different? It's not like they pop out of the chicken and land on your plate - there's a ton that goes into getting them into the store just so you can buy them. Assuming egg production didn't experience significant cost increases seems precarious without evidence. It's in the food industry - which suffered some of the most draconian restrictions on personnel and safety measures available at the time. For all we know, half of that cost increase could have gone to just sheets of plastic to hang all over the place and single-use disposable masks, gloves, boot coverings, hair nets and more that all had to be changed several times per day. It's not Price Gouging simply because we don't like it folks... > Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands No, not at all. It simply indicates the more expensive brands had enormous margins before covid and were able to keep pricing more stable against rising costs. Your cheap brands had nowhere to go, except raise prices when costs increase. This is so obvious and basic, it's weird it needs to be said. Additionally, government policies don't happen in a vacuum folks. Policies made it difficult to produce and manufacture, and shocker - prices went way up. This is not rocket science...
  - pfhayes 4y ago
    How does that lead to the 10x increase in profits (not revenue) cited by OP?
    - Alupis 4y ago
      Someone is playing fast and loose with the word "profit". The claimed amounts are gross profits - which do not account for majority of a company's overhead expenses, such as personnel, insurance, compliance, etc... ie. the things that increased in cost the most during covid. Net Profit would be far more interesting, but even there we would expect an increase if prices were raised due to costs. It just won't be as sensational as the number currently being tossed around. Not to mention we're comparing data to 2021, which had most things shut down. A better comparison would be to compare to 2019...
  - darkwizard42 4y ago
- HDThoreaun 4y ago
  This really isn't damning at all. Egg supply was hit hard by the bird flu, while demand didn't change. In order to keep the shelves stocked prices necessarily must go up, but the suppliers costs didn't change. Surprise surprise, charging more for your product leads to increased profits. Egg demand is quite inelastic, so reducing quantity demanded by just 10% could easily force prices to double as we have seen, which would explain the large profits. If prices hadn't increased you wouldn't be able to buy eggs. Is that really better? There simply are not enough eggs to satisfy demand at last years prices. The fancy egg prices weren't affected as much because those chickens live in better conditions and are therefore less likely to fall victim to a flu outbreak.
  - l33t233372 4y ago
    You say > Egg supply is quite inelastic But right before that you say > Egg supply was hit hard by the bird flu Then you say > reducing demand by just 10% could easily force prices to double I’m totally confused. Are you mixing up supply and demand?
    - HDThoreaun 4y ago
      fixed, thanks
      - theRealMe 4y ago
        It’s still not correct tho. Now it says that if demand drops by 10%, that means price goes up. But that should be the opposite of what happens.
        HDThoreaun 4y ago
        Demand curve is unchanged, quantity demanded changes as prices change.
  - pishpash 4y ago
    If prices didn't increase you could allocate eggs by lottery, or limit quantities. Some stores did limit quantities. Charging more for a product to allocate demand doesn't necessarily increase profits. If the profits aren't invested to raise production at the remaining farms, e.g. if supply is inelastic, which it might be in the short run (raising new chickens at farms that got bird flu would take just as long as at healthy farms, you can't force existing chickens to lay more eggs, etc.), then the profits ought to be rebated back. In fact, retaining profit can be a sign of price gouging. It means you've run into inelastic supply and there's no place to spend that money to solve a short-run problem. On the other hand, maybe they'll reinvest it next year or over the long term into expansion, and you might want to reward investors and management at well run farms; but if this flu is a freak accident of nature where equally run farms might get it or not, then no.
- fasthands9 4y ago
  I'm open to either possibility. It also seems completely possible to imagine a scenario where 15% of all eggs set to be produced never get maid. If you are a producer who had no damage to your chickens you are now getting bids in from grocery stores and areas that had never contracted you - and your profits increase. My local Trader Joe's was out of eggs yesterday. Presumably because prices have actually gone down and people are hoarding. But nonetheless, stores definitely were selling out because the prices actually did not reflect demand.
- ALittleLight 4y ago
  Cal-Maine had an unusually bad year the previous year, lost money one quarter and made a few million on 1.5 billion revenue. Cal-Maine was not affected by avian flu and many of their competitors were. They had a good year in '22.
- runako 4y ago
  > why the more expensive eggs at the store did not rise as much as the cheaper brands. Recently, I was stunned to find that the cheapest eggs in my area, by far, were at Whole Foods. Order of $2-$3 less per dozen than at other supermarkets.
  - clircle 4y ago
    Same here in DC area. Whole foods has the cheapest eggs. Strange times!
  - sb8244 4y ago
    I've been eating the premium blue eggs at my store because they didn't increase their price at all. Even though it's still a little more than a normal dozen, it's well worth it since they taste better.
- jeffwask 4y ago
  After watching the oil companies rake everyone over the coals why wouldn't every greed board abuse consumers. We have no consumer protections and half of our legislative branch is filled with obstructionist who have no interest in helping consumers and the other half is filled with people who only pay lip service to helping consumers.
  - volfied 4y ago
    They are super happy to pay that lip service while saying "look, we're the reasonable ones here, can't do anything cause of the other guys!" and reap the profits.
    - MikeTheGreat 4y ago
      This sounds like Murc's Law [0] [0] https://www.lawyersgunsmoneyblog.com/2017/12/great-moments-murcs-law#:~:text=Murc%E2%80%99s%20law%2C%20for%20the%20uninitiated%2C%20is%20the%20widespread,now%20present%20the%20definitive%20example%20of%20the%20genre%3A https://www.lawyersgunsmoneyblog.com/2017/12/great-moments-m...
    - aisengard 4y ago
      Of course, this is not really a useful (or provable) criticism as long as the actual obstructionists are obstructing! Much more useful to oust the obstructionists, then you can work on holding the alleged lip-servicers accountable.
      - jeffwask 4y ago
        Also, supporting candidates who refuse corporate and PAC money
  - dangwhy 4y ago
    > After watching the oil companies rake everyone over the coals What i don't understand is that why don't oil company stocks don't reflect these record profits. exxxon stock seems to be at 2014 levels. If we know oil companies are price gouging then why won't we just buy those stocks and get in on the action.
- drstewart 4y ago
  Why didn't they collude in 2015?
- deleted 4y ago
  [deleted]
- notfbi 4y ago
  It seems the 2015 flu was limited to the US, while this one has hit Europe and Asia hard too. The global markets might have softened 2015s price impact, see how exports from US dropped and imports increased: https://www.statista.com/statistics/196095/us-total-egg-imports-and-exports-since-2001/ https://www.statista.com/statistics/196095/us-total-egg-impo... With very little additional detail, this says it's worse than 2015: https://foodinstitute.com/focus/bird-flu-cull-surpasses-2015/ https://foodinstitute.com/focus/bird-flu-cull-surpasses-2015...
dehrmann 4y ago
Demonizing price gouging tells producers that there's no incentive to build up resiliency because at time when it's needed, they'll just get accused of price gouging.
- malfist 4y ago
  Are you serious? Demonizing price gouging has nothing to do with resiliency. Corporations run things as lean as possible at all times because it's not a good gamble to keep a lot of stock of perishable items for the once every couple of decades shortage in your specific item.
  - caturopath 4y ago
    On the margin, of course it's the case that being able to charge high prices incentivizes wanting to sell product. Home Depot would have a reason to stock a few more snow shovels every winter and Valero would have reason to pay a few more trucks overtime before a hurricane if they knew that they'd make their money back and then some in expected value. They might decide to or not, they might be right or wrong, but that's reality. It might not make sense even without laws limiting what you can charge for your products to stock up for such situations -- there are other ways we might want to incent things if it's worth it. Note: this is talking about price gouging situations. The egg thing is a different situation, where the accusation -- despite the headline -- is collusion, not price gouging.
- mrguyorama 4y ago
  Producers already refuse to build new capacity for temporary demand because if that demand slows after the temporary problem goes away, they are stuck with newly purchased hardware that they can't use without flooding the market with more product than demanded. We saw this with face masks for quite some time. It has become very obvious that "let them price gouge so it incentivizes producers to increase capacity" doesn't work.
- th0ma5 4y ago
  This is a false dichotomy. You can be resilient and also not price gouge. You can also do things in spite of accusations. Also blaming critics for misbehavior is classic DARVO.
lr4444lr 4y ago
Can someone ELI5 me the difference between price gouging, and a high priced supply/demand curve equilibrium point?
- chihuahua 4y ago
  Just like hate speech can be any thought that I disagree with, price gouging is when anyone other than me or my friends increases their price.
  - Spivak 4y ago
    I know this might be taking the bait but please find some actual academic sources on hate speech. You're letting the very people who want to dismiss policies that limit hate speech because it's just wrongthink define it as wrongthink. You can hold and express the most offensive vile opinions on any subject you can imagine without it being hate speech. Don't let the very worst of people convince you that their hate speech is the same you holding or expressing minority or counterculture opinions on controversial topics. It's just a tactic to get normal people to defend them becasuse "they're coming for you too."
    - gruez 4y ago
      >I know this might be taking the bait but please find some actual academic sources on hate speech. What do you propose should be the legal definition of hate speech then? And why do we need it as a separate category compared to existing laws (eg. existing laws against threats)?
      - Spivak 4y ago
        Any of these work for you? And because hate speech isn't a direct threat of violence. The UN: Any advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited by law. Canada: Every one who, by communicating statements in any public place, incites hatred against any identifiable group where such incitement is likely to lead to a breach of the peace. Every one who, by communicating statements, other than in private conversation, wilfully promotes hatred against any identifiable group. Everyone who, by communicating statements, other than in private conversation, wilfully promotes antisemitism by condoning, denying or downplaying the Holocaust Germany: Whoever, in a manner suited to causing a disturbance of the public peace incites hatred against a national, racial, religious group or a group defined by their ethnic origin, against sections of the population or individuals on account of their belonging to one of the aforementioned groups or sections of the population, or calls for violent or arbitrary measures against them or violates the human dignity of others by insulting, maliciously maligning or defaming one of the aforementioned groups, sections of the population or individuals on account of their belonging to one of the aforementioned groups or sections of the population. Russia: Actions aimed at the incitement of hatred or enmity, as well as abasement of dignity of a person or a group of persons on the basis of sex, race, nationality, language, origin, attitude to religion, as well as affiliation to any social group, if these acts have been committed in public or with the use of mass media. South Africa: No person may publish, propagate, advocate or communicate words based on one or more of the prohibited grounds, against any person, that could reasonably be construed to demonstrate a clear intention to be hurtful, be harmful or to incite harm, promote or propagate hatred. Sweden: Anyone who, in a statement or in another message that is disseminated, threatens or expresses disrespect for a people group or another such group of persons with allusion to race, skin colour, national or ethnic origin, creed, sexual orientation or gender-transgender identity or expression [1] https://www.ohchr.org/en/instruments-mechanisms/instruments/international-covenant-civil-and-political-rights https://www.ohchr.org/en/instruments-mechanisms/instruments/... [2] https://laws-lois.justice.gc.ca/eng/acts/c-46/section-319.html https://laws-lois.justice.gc.ca/eng/acts/c-46/section-319.ht... [3] https://www.gesetze-im-internet.de/englisch_stgb/englisch_stgb.html#p1368 https://www.gesetze-im-internet.de/englisch_stgb/englisch_st... [4] https://www.imolin.org/doc/amlid/Russian_Federation_Criminal_Code.pdf https://www.imolin.org/doc/amlid/Russian_Federation_Criminal... [5] http://www.justice.gov.za/legislation/acts/2000-004.pdf http://www.justice.gov.za/legislation/acts/2000-004.pdf [6] https://lagen.nu/1962:700#K16P8S1 https://lagen.nu/1962:700#K16P8S1
narcraft 4y ago
Farmers have finally cracked the code on how to increase greed and profits...economists puzzled as to why now
- nerdponx 4y ago
  Farmers don't set prices.
  - splitstud 4y ago
    [dead]
- karmelapple 4y ago
  Is there any indication chicken farmers are seeing a massive influx of money? Or is it just the companies that control the pricing to customers at grocery stores seeing the extra money, while farmers don’t make much more?
lostlogin 4y ago
There seems to be an unusual amount of downvoting going on in this thread. It doesn’t seem a very emotive, political or otherwise controversial topic to me, what am I missing?
- orangecat 4y ago
  It's a proxy for capitalism vs socialism.
xnx 4y ago
Boycott eggs. I started early (25 years ago).
- keneda7 4y ago
  Any explanation here? From what I can find, eggs are considered one of the super foods by most people.
  - jakeinspace 4y ago
    I would assume veganism or just opposition to factory farming is the explanation.
  - xnx 4y ago
    Vegan diet. Eggs can be a good nutrient source, but are not necessary.
JasonFruit 4y ago
Staple foods tend to rise in price by leaps rather than gradually. I think that stores accept a low profit margin on them at some times because of their disproportionate effect on the store's reputation for cheapness. We were probably about due for a leap in egg prices anyway, and the recent production difficulties provided an excuse. Now egg prices can come down slightly and be seen as a relief.
- tekkk 4y ago
  No, Americans are being ripped off. I can buy 15 large eggs for about 3€ in Finland. How come one of the highest taxed countries can have lower price per egg than the land of the free and brave? We haven't invented a special recipe for making eggs. It's probably exactly the same as in US, probably even more expensive since you do everything by massive scale.
  - Iwan-Zotow 4y ago
    avian flu
  - chelical 4y ago
    To be fair, this variant of the avian flu is just spreading to Europe now. https://www.reuters.com/world/bird-flu-spreads-new-countries-threatens-non-stop-war-poultry-2023-02-15/ https://www.reuters.com/world/bird-flu-spreads-new-countries...
ck2 4y ago
Happening in almost every industry. They'll pay just a month's worth of profit as a fine when they are finally caught years later by the feds So totally worth it.
caturopath 4y ago
[flagged]
vkou 4y ago
It's a little weird how an egg producer's optimal response to an egg shortage in our economic system is to keep not producing eggs. It's almost like after enough rounds of consolidation, there's no guarantee that market economics will produce optimal outcomes for consumers.
tptacek 4y ago
You can quickly get historical data on egg prices from the Fed: https://fred.stlouisfed.org/series/APU0000708111 https://fred.stlouisfed.org/series/APU0000708111 That last spike, in 2015, seems to correspond with the deadliest highly-pathogenic avian flu outbreak to date at the time. The spike before that in 2008? Another HPAI outbreak. The consolidation the advocacy letter to the FTC mentions was already in place in 2015, wasn't it? Why did prices fall back after the HPAI epidemic (to levels lower than before it, in fact)? If it's all price fixing, why is it cyclic?
- danuker 4y ago
  Why does the price spike when it should lower; aren't people spooked by the deadly disease?
  - kasey_junk 4y ago
    All the laying hens die.
  - 411111111111111 4y ago
    The whole floor gets slaughtered with only a single infection usually... So the price hike occurs because there are a lot less hens laying eggs, as they've all been killed and burned (sick chickens can't be sold for meat either). It's pretty macabre if you think about it
    - danuker 4y ago
      Ah, that explains it. Thanks.
kwhitefoot 4y ago
Surely it is every America's ambition to be a millionaire using the free market and some elbow grease. So how is this a problem? Shouldn't the high price just magically cause more egg factories to be built? :-) But if there is a cartel then that should be addressed regardless of the prices they charge. Of course there doesn't need to be a cartel for the prices to be artificially high; if demand is high enough and nearly fixed then none of the producers will need to reduce prices in order to keep the sales volume high. Not all of them will chase higher market share at the risk of reduced margins.
dwighttk 4y ago
It’s one banana Michael, what could it cost? $10?
darksaints 4y ago
So what are we to do about it? Shame them? Impose price controls that lock them in as incumbents with no willing competitors? It would be nice if more people could realize that supply shocks can only be solved by supply increases.
pigtailgirl 4y ago
-- at the market next to my house - 36 eggs are 6,700 won - I think $5.50? --
notatoad 4y ago
there seems to be a lot of comments here arguing that this is okay, as long as it's caused by natural market forces rather than illegal collusion. as if the current law is the unquestionable pinnacle of morality. whether this is caused by market forces or not, it's bad for society, bad for americans, and bad for the overall economy to allow egg producers to collect money like this just because they decided they want to. whether or not it's legal is a question for a court. the question worthy of discussion is whether or not it's moral, or should it be legal?
- notfed 4y ago
  If the top egg suppliers are really colluding to charge a higher price, then maybe folks should buy from a cheaper supplier? This isn't a new idea.
  - deleted 4y ago
    [deleted]
- swsieber 4y ago
  Should it though? If it's natural market forces then we have one of two solutions: * Raise prices to reduce demand until supply can meet demand * Randomly decide who can buy eggs because any eggs in the store at the lower price point will always be out of stock. The benefit of the first solution is that it encourages more suppliers to enter the market and correct the supply distortion... as long as it's actually market driven and not collusion driven.
  - josephcsible 4y ago
    A lot of people seem to prefer your second solution because they think it's immoral for people with more money to be able to buy more things than people with less money.
- msm_ 4y ago
  You sound like soviet-era politicians in my eastern European country, when they painted entrepreneurs (and private profit) as the root of all evil, and centrally planned everything. It didn't go well. Don't get me wrong, I think regulating markets is a good idea and the US probably doesn't do enough of that. But I don't get how raising egg prices are bad for society - nobody has to buy them, and this are just regular laws of supply and demand at work. If that's just a regular market activity, it will sort itself out.
dang 4y ago
Related ongoing thread: Eggspensive - https://news.ycombinator.com/item?id=34897534 https://news.ycombinator.com/item?id=34897534 - Feb 2023 (113 comments)
insane_dreamer 4y ago
anecdotally, here in Oregon the price of pasture raised eggs from small local farmers has not increased (was already $4-5 a dozen, still roughly that; the farm we buy from recently raised prices from $4 to $4.50/dozen large eggs).
mempko 4y ago
This is a great example of how supply and demand, in the real world, works. Prices don't automatically rise during supply constraints, or demand increases. Prices rise when those selling decide to raise them. Also, most people don't actually interact with markets day to day. They shop at distribution centers which have contracts with suppliers. To put it differently, throw out your economics textbooks because prices are far more complex. The reason inflation happens is producers decide to raise prices. It's a human decision made by a small group of people (management or owners of companies), not the mass of people spending.

186 points by myshpa 4y ago

Related: "I made a site that tracks the price of eggs at every US Walmart. The most expensive costs 3.4X more than the cheapest." [0] https://www.reddit.com/r/InternetIsBeautiful/comments/118y19p/i_made_a_site_that_tracks_the_price_of_eggs_at/ https://www.reddit.com/r/InternetIsBeautiful/comments/118y19... [1] https://eggspensive.net/ https://eggspensive.net/ NOTE: Not me. I didn't make the site. Someone on Reddit did.

lolinder 4y ago
Currently being discussed on HN here: https://news.ycombinator.com/item?id=34897534 https://news.ycombinator.com/item?id=34897534

jmholla 4y ago

> Cal-Maine’s gross profit jumped 10-fold from one 26-week period in 2021 to the same period in 2022, according to the company’s most recent quarterly financial statement. For the 26-week fiscal period ending in November 2021, gross profits were $50.4 million. In 2022 for the same period, gross profits were $535.3 million. This is pretty damning especially given the more deadly avian flu of 2015 did not cause prices to rise so significantly. Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands.

lostlogin 4y ago
> Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands. Why would that be the case?
- throwaway1777 4y ago
  Because smaller independent and family farms aren’t colluding?
  - lostlogin 4y ago
    But they are already more expensive. Does that mean they were colluding previously? Couldn’t you argue that their pricing is more inflation resistant as their margins already allow for fluctuations in eg fuel prices?
    - azinman2 4y ago
      Or their costs are a lot higher. When you don’t pack the chickens in a dense a space, you have more expensive feed, and you have a lot less chickens in the first place, then I’d expect it to cost a lot more.
    - krustyburger 4y ago
      Their costs are higher as it is more expensive to raise chickens using their methods. So one would expect these eggs to be more expensive.
      - scarby2 4y ago
        their costs are almost certainly not higher in proportion to their costs. There is almost without a doubt a premium because the people that they are selling to are not price sensitive.
        lostlogin 4y ago
        > their costs are almost certainly not higher in proportion to their costs. Do you mean “their costs are almost certainly not higher in proportion to their profits.” I’m struggling to understand.
    - freejazz 4y ago
      >But they are already more expensive. Does that mean they were colluding previously? how is that your conclusion?
calvinmorrison 4y ago
How is it damning if it's gross profits? If eggs get 5x more expensive, and you sell the same amount of eggs, shockingly, you will now have 5x gross profits, no?
- GalenErso 4y ago
  Most elite HN CPA.
- lostlogin 4y ago
  The profit margin isn’t that insane relative to other industries. “egregious profits reaching as high as 40%” (from the article).
- quickthrowman 4y ago
  You’re assuming that producing an egg costs 5x more in 2022 than 2021. I can’t think of any input cost increase that could account for a 5x production cost. A hatchery takes in chicken feed and spits out eggs (and macerated male chick slurry), it’s a pretty simple business.
  - calvinmorrison 4y ago
    A lot of chickens died for those eggs you ungrateful consumer
  - deleted 4y ago
    [deleted]
  - flextheruler 4y ago
    Chicken food comes from corn, wheat, oats, some fish. It’s delivered by truck. The cost of fertilizer is at record highs. The cost of fuel has increased. I’m not justifying the exact increases but supply chains are never simple, especially in the modern economy.
- voisin 4y ago
  Eggs don’t just get 5x more expensive on their own. Competition should keep gross margins in a mean-reverting band over periods of time.
chihuahua 4y ago
Regarding that last point, if it wasn't for the relentless media coverage, I wouldn't even have noticed that prices went up. The price that the milk-and-eggs home delivery service charges hasn't changed (organic, free-range, access to outdoors), and the pasture-raised certified humane eggs at Costco still cost the same.
- nickpeterson 4y ago
  You’re buying the top end and are not price sensitive. This isn’t a criticism, but I would wager you dont feel a $1 increase in most groceries at all, compared to someone who has to choose between that item and heating their homes.
  - anamexis 4y ago
    It's not a matter of price sensitivity - the top end hasn't changed prices.
    - mtalantikite 4y ago
      Have they not? I buy pasture raised eggs which at my local Whole Foods used to be $5.99/dozen and lately have been $7.99/dozen. Granted, the $5.99 was cheaper than my other local grocery store, where they've been $7.99 all along (and I'm not sure what they've been charging recently).
      - anamexis 4y ago
        I also only have anecdotes, but the prices of prices for free range eggs near me has been stable around $6/dozen for a long time.
    - nickpeterson 4y ago
      According to this they did: https://www.shefinds.com/collections/shoppers-crying-costco-raising-prices/amp/ https://www.shefinds.com/collections/shoppers-crying-costco-...
Alupis 4y ago
Literally everything manufactured got more expensive in 2022. Everything. Why would eggs be any different? It's not like they pop out of the chicken and land on your plate - there's a ton that goes into getting them into the store just so you can buy them. Assuming egg production didn't experience significant cost increases seems precarious without evidence. It's in the food industry - which suffered some of the most draconian restrictions on personnel and safety measures available at the time. For all we know, half of that cost increase could have gone to just sheets of plastic to hang all over the place and single-use disposable masks, gloves, boot coverings, hair nets and more that all had to be changed several times per day. It's not Price Gouging simply because we don't like it folks... > Collusion of the biggest producers would also explain why the more expensive eggs at the store did not rise as much as the cheaper brands No, not at all. It simply indicates the more expensive brands had enormous margins before covid and were able to keep pricing more stable against rising costs. Your cheap brands had nowhere to go, except raise prices when costs increase. This is so obvious and basic, it's weird it needs to be said. Additionally, government policies don't happen in a vacuum folks. Policies made it difficult to produce and manufacture, and shocker - prices went way up. This is not rocket science...
- pfhayes 4y ago
  How does that lead to the 10x increase in profits (not revenue) cited by OP?
  - Alupis 4y ago
    Someone is playing fast and loose with the word "profit". The claimed amounts are gross profits - which do not account for majority of a company's overhead expenses, such as personnel, insurance, compliance, etc... ie. the things that increased in cost the most during covid. Net Profit would be far more interesting, but even there we would expect an increase if prices were raised due to costs. It just won't be as sensational as the number currently being tossed around. Not to mention we're comparing data to 2021, which had most things shut down. A better comparison would be to compare to 2019...
- darkwizard42 4y ago
HDThoreaun 4y ago
This really isn't damning at all. Egg supply was hit hard by the bird flu, while demand didn't change. In order to keep the shelves stocked prices necessarily must go up, but the suppliers costs didn't change. Surprise surprise, charging more for your product leads to increased profits. Egg demand is quite inelastic, so reducing quantity demanded by just 10% could easily force prices to double as we have seen, which would explain the large profits. If prices hadn't increased you wouldn't be able to buy eggs. Is that really better? There simply are not enough eggs to satisfy demand at last years prices. The fancy egg prices weren't affected as much because those chickens live in better conditions and are therefore less likely to fall victim to a flu outbreak.
- l33t233372 4y ago
  You say > Egg supply is quite inelastic But right before that you say > Egg supply was hit hard by the bird flu Then you say > reducing demand by just 10% could easily force prices to double I’m totally confused. Are you mixing up supply and demand?
  - HDThoreaun 4y ago
    fixed, thanks
    - theRealMe 4y ago
      It’s still not correct tho. Now it says that if demand drops by 10%, that means price goes up. But that should be the opposite of what happens.
      - HDThoreaun 4y ago
        Demand curve is unchanged, quantity demanded changes as prices change.
- pishpash 4y ago
  If prices didn't increase you could allocate eggs by lottery, or limit quantities. Some stores did limit quantities. Charging more for a product to allocate demand doesn't necessarily increase profits. If the profits aren't invested to raise production at the remaining farms, e.g. if supply is inelastic, which it might be in the short run (raising new chickens at farms that got bird flu would take just as long as at healthy farms, you can't force existing chickens to lay more eggs, etc.), then the profits ought to be rebated back. In fact, retaining profit can be a sign of price gouging. It means you've run into inelastic supply and there's no place to spend that money to solve a short-run problem. On the other hand, maybe they'll reinvest it next year or over the long term into expansion, and you might want to reward investors and management at well run farms; but if this flu is a freak accident of nature where equally run farms might get it or not, then no.
fasthands9 4y ago
I'm open to either possibility. It also seems completely possible to imagine a scenario where 15% of all eggs set to be produced never get maid. If you are a producer who had no damage to your chickens you are now getting bids in from grocery stores and areas that had never contracted you - and your profits increase. My local Trader Joe's was out of eggs yesterday. Presumably because prices have actually gone down and people are hoarding. But nonetheless, stores definitely were selling out because the prices actually did not reflect demand.
ALittleLight 4y ago
Cal-Maine had an unusually bad year the previous year, lost money one quarter and made a few million on 1.5 billion revenue. Cal-Maine was not affected by avian flu and many of their competitors were. They had a good year in '22.
runako 4y ago
> why the more expensive eggs at the store did not rise as much as the cheaper brands. Recently, I was stunned to find that the cheapest eggs in my area, by far, were at Whole Foods. Order of $2-$3 less per dozen than at other supermarkets.
- clircle 4y ago
  Same here in DC area. Whole foods has the cheapest eggs. Strange times!
- sb8244 4y ago
  I've been eating the premium blue eggs at my store because they didn't increase their price at all. Even though it's still a little more than a normal dozen, it's well worth it since they taste better.
jeffwask 4y ago
After watching the oil companies rake everyone over the coals why wouldn't every greed board abuse consumers. We have no consumer protections and half of our legislative branch is filled with obstructionist who have no interest in helping consumers and the other half is filled with people who only pay lip service to helping consumers.
- volfied 4y ago
  They are super happy to pay that lip service while saying "look, we're the reasonable ones here, can't do anything cause of the other guys!" and reap the profits.
  - MikeTheGreat 4y ago
    This sounds like Murc's Law [0] [0] https://www.lawyersgunsmoneyblog.com/2017/12/great-moments-murcs-law#:~:text=Murc%E2%80%99s%20law%2C%20for%20the%20uninitiated%2C%20is%20the%20widespread,now%20present%20the%20definitive%20example%20of%20the%20genre%3A https://www.lawyersgunsmoneyblog.com/2017/12/great-moments-m...
  - aisengard 4y ago
    Of course, this is not really a useful (or provable) criticism as long as the actual obstructionists are obstructing! Much more useful to oust the obstructionists, then you can work on holding the alleged lip-servicers accountable.
    - jeffwask 4y ago
      Also, supporting candidates who refuse corporate and PAC money
- dangwhy 4y ago
  > After watching the oil companies rake everyone over the coals What i don't understand is that why don't oil company stocks don't reflect these record profits. exxxon stock seems to be at 2014 levels. If we know oil companies are price gouging then why won't we just buy those stocks and get in on the action.
drstewart 4y ago
Why didn't they collude in 2015?
deleted 4y ago
[deleted]
notfbi 4y ago
It seems the 2015 flu was limited to the US, while this one has hit Europe and Asia hard too. The global markets might have softened 2015s price impact, see how exports from US dropped and imports increased: https://www.statista.com/statistics/196095/us-total-egg-imports-and-exports-since-2001/ https://www.statista.com/statistics/196095/us-total-egg-impo... With very little additional detail, this says it's worse than 2015: https://foodinstitute.com/focus/bird-flu-cull-surpasses-2015/ https://foodinstitute.com/focus/bird-flu-cull-surpasses-2015...

dehrmann 4y ago

Demonizing price gouging tells producers that there's no incentive to build up resiliency because at time when it's needed, they'll just get accused of price gouging.

malfist 4y ago
Are you serious? Demonizing price gouging has nothing to do with resiliency. Corporations run things as lean as possible at all times because it's not a good gamble to keep a lot of stock of perishable items for the once every couple of decades shortage in your specific item.
- caturopath 4y ago
  On the margin, of course it's the case that being able to charge high prices incentivizes wanting to sell product. Home Depot would have a reason to stock a few more snow shovels every winter and Valero would have reason to pay a few more trucks overtime before a hurricane if they knew that they'd make their money back and then some in expected value. They might decide to or not, they might be right or wrong, but that's reality. It might not make sense even without laws limiting what you can charge for your products to stock up for such situations -- there are other ways we might want to incent things if it's worth it. Note: this is talking about price gouging situations. The egg thing is a different situation, where the accusation -- despite the headline -- is collusion, not price gouging.
mrguyorama 4y ago
Producers already refuse to build new capacity for temporary demand because if that demand slows after the temporary problem goes away, they are stuck with newly purchased hardware that they can't use without flooding the market with more product than demanded. We saw this with face masks for quite some time. It has become very obvious that "let them price gouge so it incentivizes producers to increase capacity" doesn't work.
th0ma5 4y ago
This is a false dichotomy. You can be resilient and also not price gouge. You can also do things in spite of accusations. Also blaming critics for misbehavior is classic DARVO.

lr4444lr 4y ago

Can someone ELI5 me the difference between price gouging, and a high priced supply/demand curve equilibrium point?

chihuahua 4y ago
Just like hate speech can be any thought that I disagree with, price gouging is when anyone other than me or my friends increases their price.
- Spivak 4y ago
  I know this might be taking the bait but please find some actual academic sources on hate speech. You're letting the very people who want to dismiss policies that limit hate speech because it's just wrongthink define it as wrongthink. You can hold and express the most offensive vile opinions on any subject you can imagine without it being hate speech. Don't let the very worst of people convince you that their hate speech is the same you holding or expressing minority or counterculture opinions on controversial topics. It's just a tactic to get normal people to defend them becasuse "they're coming for you too."
  - gruez 4y ago
    >I know this might be taking the bait but please find some actual academic sources on hate speech. What do you propose should be the legal definition of hate speech then? And why do we need it as a separate category compared to existing laws (eg. existing laws against threats)?
    - Spivak 4y ago
      Any of these work for you? And because hate speech isn't a direct threat of violence. The UN: Any advocacy of national, racial or religious hatred that constitutes incitement to discrimination, hostility or violence shall be prohibited by law. Canada: Every one who, by communicating statements in any public place, incites hatred against any identifiable group where such incitement is likely to lead to a breach of the peace. Every one who, by communicating statements, other than in private conversation, wilfully promotes hatred against any identifiable group. Everyone who, by communicating statements, other than in private conversation, wilfully promotes antisemitism by condoning, denying or downplaying the Holocaust Germany: Whoever, in a manner suited to causing a disturbance of the public peace incites hatred against a national, racial, religious group or a group defined by their ethnic origin, against sections of the population or individuals on account of their belonging to one of the aforementioned groups or sections of the population, or calls for violent or arbitrary measures against them or violates the human dignity of others by insulting, maliciously maligning or defaming one of the aforementioned groups, sections of the population or individuals on account of their belonging to one of the aforementioned groups or sections of the population. Russia: Actions aimed at the incitement of hatred or enmity, as well as abasement of dignity of a person or a group of persons on the basis of sex, race, nationality, language, origin, attitude to religion, as well as affiliation to any social group, if these acts have been committed in public or with the use of mass media. South Africa: No person may publish, propagate, advocate or communicate words based on one or more of the prohibited grounds, against any person, that could reasonably be construed to demonstrate a clear intention to be hurtful, be harmful or to incite harm, promote or propagate hatred. Sweden: Anyone who, in a statement or in another message that is disseminated, threatens or expresses disrespect for a people group or another such group of persons with allusion to race, skin colour, national or ethnic origin, creed, sexual orientation or gender-transgender identity or expression [1] https://www.ohchr.org/en/instruments-mechanisms/instruments/international-covenant-civil-and-political-rights https://www.ohchr.org/en/instruments-mechanisms/instruments/... [2] https://laws-lois.justice.gc.ca/eng/acts/c-46/section-319.html https://laws-lois.justice.gc.ca/eng/acts/c-46/section-319.ht... [3] https://www.gesetze-im-internet.de/englisch_stgb/englisch_stgb.html#p1368 https://www.gesetze-im-internet.de/englisch_stgb/englisch_st... [4] https://www.imolin.org/doc/amlid/Russian_Federation_Criminal_Code.pdf https://www.imolin.org/doc/amlid/Russian_Federation_Criminal... [5] http://www.justice.gov.za/legislation/acts/2000-004.pdf http://www.justice.gov.za/legislation/acts/2000-004.pdf [6] https://lagen.nu/1962:700#K16P8S1 https://lagen.nu/1962:700#K16P8S1

narcraft 4y ago

Farmers have finally cracked the code on how to increase greed and profits...economists puzzled as to why now

nerdponx 4y ago
Farmers don't set prices.
- splitstud 4y ago
  [dead]
karmelapple 4y ago
Is there any indication chicken farmers are seeing a massive influx of money? Or is it just the companies that control the pricing to customers at grocery stores seeing the extra money, while farmers don’t make much more?

lostlogin 4y ago

There seems to be an unusual amount of downvoting going on in this thread. It doesn’t seem a very emotive, political or otherwise controversial topic to me, what am I missing?

orangecat 4y ago
It's a proxy for capitalism vs socialism.

xnx 4y ago

Boycott eggs. I started early (25 years ago).

keneda7 4y ago
Any explanation here? From what I can find, eggs are considered one of the super foods by most people.
- jakeinspace 4y ago
  I would assume veganism or just opposition to factory farming is the explanation.
- xnx 4y ago
  Vegan diet. Eggs can be a good nutrient source, but are not necessary.

JasonFruit 4y ago

Staple foods tend to rise in price by leaps rather than gradually. I think that stores accept a low profit margin on them at some times because of their disproportionate effect on the store's reputation for cheapness. We were probably about due for a leap in egg prices anyway, and the recent production difficulties provided an excuse. Now egg prices can come down slightly and be seen as a relief.

tekkk 4y ago
No, Americans are being ripped off. I can buy 15 large eggs for about 3€ in Finland. How come one of the highest taxed countries can have lower price per egg than the land of the free and brave? We haven't invented a special recipe for making eggs. It's probably exactly the same as in US, probably even more expensive since you do everything by massive scale.
- Iwan-Zotow 4y ago
  avian flu
- chelical 4y ago
  To be fair, this variant of the avian flu is just spreading to Europe now. https://www.reuters.com/world/bird-flu-spreads-new-countries-threatens-non-stop-war-poultry-2023-02-15/ https://www.reuters.com/world/bird-flu-spreads-new-countries...

ck2 4y ago

Happening in almost every industry. They'll pay just a month's worth of profit as a fine when they are finally caught years later by the feds So totally worth it.

caturopath 4y ago

[flagged]

vkou 4y ago

It's a little weird how an egg producer's optimal response to an egg shortage in our economic system is to keep not producing eggs. It's almost like after enough rounds of consolidation, there's no guarantee that market economics will produce optimal outcomes for consumers.

tptacek 4y ago

You can quickly get historical data on egg prices from the Fed: https://fred.stlouisfed.org/series/APU0000708111 https://fred.stlouisfed.org/series/APU0000708111 That last spike, in 2015, seems to correspond with the deadliest highly-pathogenic avian flu outbreak to date at the time. The spike before that in 2008? Another HPAI outbreak. The consolidation the advocacy letter to the FTC mentions was already in place in 2015, wasn't it? Why did prices fall back after the HPAI epidemic (to levels lower than before it, in fact)? If it's all price fixing, why is it cyclic?

danuker 4y ago
Why does the price spike when it should lower; aren't people spooked by the deadly disease?
- kasey_junk 4y ago
  All the laying hens die.
- 411111111111111 4y ago
  The whole floor gets slaughtered with only a single infection usually... So the price hike occurs because there are a lot less hens laying eggs, as they've all been killed and burned (sick chickens can't be sold for meat either). It's pretty macabre if you think about it
  - danuker 4y ago
    Ah, that explains it. Thanks.

kwhitefoot 4y ago

Surely it is every America's ambition to be a millionaire using the free market and some elbow grease. So how is this a problem? Shouldn't the high price just magically cause more egg factories to be built? :-) But if there is a cartel then that should be addressed regardless of the prices they charge. Of course there doesn't need to be a cartel for the prices to be artificially high; if demand is high enough and nearly fixed then none of the producers will need to reduce prices in order to keep the sales volume high. Not all of them will chase higher market share at the risk of reduced margins.

dwighttk 4y ago

It’s one banana Michael, what could it cost? $10?

darksaints 4y ago

So what are we to do about it? Shame them? Impose price controls that lock them in as incumbents with no willing competitors? It would be nice if more people could realize that supply shocks can only be solved by supply increases.

pigtailgirl 4y ago

-- at the market next to my house - 36 eggs are 6,700 won - I think $5.50? --

notatoad 4y ago

there seems to be a lot of comments here arguing that this is okay, as long as it's caused by natural market forces rather than illegal collusion. as if the current law is the unquestionable pinnacle of morality. whether this is caused by market forces or not, it's bad for society, bad for americans, and bad for the overall economy to allow egg producers to collect money like this just because they decided they want to. whether or not it's legal is a question for a court. the question worthy of discussion is whether or not it's moral, or should it be legal?

notfed 4y ago
If the top egg suppliers are really colluding to charge a higher price, then maybe folks should buy from a cheaper supplier? This isn't a new idea.
- deleted 4y ago
  [deleted]
swsieber 4y ago
Should it though? If it's natural market forces then we have one of two solutions: * Raise prices to reduce demand until supply can meet demand * Randomly decide who can buy eggs because any eggs in the store at the lower price point will always be out of stock. The benefit of the first solution is that it encourages more suppliers to enter the market and correct the supply distortion... as long as it's actually market driven and not collusion driven.
- josephcsible 4y ago
  A lot of people seem to prefer your second solution because they think it's immoral for people with more money to be able to buy more things than people with less money.
msm_ 4y ago
You sound like soviet-era politicians in my eastern European country, when they painted entrepreneurs (and private profit) as the root of all evil, and centrally planned everything. It didn't go well. Don't get me wrong, I think regulating markets is a good idea and the US probably doesn't do enough of that. But I don't get how raising egg prices are bad for society - nobody has to buy them, and this are just regular laws of supply and demand at work. If that's just a regular market activity, it will sort itself out.

dang 4y ago

Related ongoing thread: Eggspensive - https://news.ycombinator.com/item?id=34897534 https://news.ycombinator.com/item?id=34897534 - Feb 2023 (113 comments)

insane_dreamer 4y ago

anecdotally, here in Oregon the price of pasture raised eggs from small local farmers has not increased (was already $4-5 a dozen, still roughly that; the farm we buy from recently raised prices from $4 to $4.50/dozen large eggs).

mempko 4y ago

This is a great example of how supply and demand, in the real world, works. Prices don't automatically rise during supply constraints, or demand increases. Prices rise when those selling decide to raise them. Also, most people don't actually interact with markets day to day. They shop at distribution centers which have contracts with suppliers. To put it differently, throw out your economics textbooks because prices are far more complex. The reason inflation happens is producers decide to raise prices. It's a human decision made by a small group of people (management or owners of companies), not the mass of people spending.