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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 o

by 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
I'm not sure that lines up with the result. If costs go up, profit as a percentage should stay stable. Why would their profit go up 10 fold??? That is what makes it gouging. The profit margin was greatly increased through potential collusion and/or unfair pricing for what they correctly perceive as an inelastic good.
- lotsofpulp 4y ago
  What profit margin should they have and why should they have that profit margin? https://www.macrotrends.net/stocks/charts/CALM/cal-maine-foods/profit-margins https://www.macrotrends.net/stocks/charts/CALM/cal-maine-foo... > 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. They had a near zero profit margin for 2021. And based on their record of profit margins, it seems like their business has been volatile since 2015 or so. I am not an expert on the egg business or food in general, but there is no reason that a 10x increase in profit has to mean malfeasance. Volatile businesses can have large swings in profit margin, otherwise no one would want to do them.
  - webdood90 4y ago
    Why do people shill for corporations?
    - lotsofpulp 4y ago
      Nobody was complaining about low egg prices when Cal-Maine was reporting losses and meager profit margins in 2017 and 2019 to 2021. But that is beside the point that there is no set nominal “appropriate” profit margin for a given business. That does not mean that businesses with high profit margins are not colluding, or corrupt, or acting in ways that should be illegal. But it also means you cannot simply conclude from a few quarters of higher profit margins that a business is behaving unethically.
ScoobleDoodle 4y ago
The profit increased drastically. Profit is the part they keep after expenses. That it increased so drastically is price gouging. And such drastic price going should only be possible with collusion whether explicit or tacit due to too few competitors. > 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.
- deleted 4y ago
  [deleted]
- Alupis 4y ago
  You're citing Gross Profit, not Net Profit - which is being used here by the article deliberately to emphasize their point. The net shows an increase as well, but not totally out of line with the increase in sales and costs, even when we look back several years.
  - BryanRamirez 4y ago
    A simple google search for cal-maine profit margins produces a table that includes year over year change in many metrics. For example Year over year increase in net profit margins: Feb 2022: Y/Y net profit margin is +119.63% May 2022: Y/Y net profit margin is +1633.06% Aug 2022: Y/Y net profit margin is +442.88% Nov 2022: Y/Y net profit margin is +7890.32%
    - deleted 4y ago
      [deleted]
MrSqueezles 4y ago
What are you talking about? Egg producers reported that avian flu affected supply, so they made employees wear, "hair nets ... changed several times per day"? Watch the movie The Informant. It's a true story and we only know it happened because one guy was trying not to go to jail. What's happening now is nothing new.

by Alupis 4y ago

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

I'm not sure that lines up with the result. If costs go up, profit as a percentage should stay stable. Why would their profit go up 10 fold??? That is what makes it gouging. The profit margin was greatly increased through potential collusion and/or unfair pricing for what they correctly perceive as an inelastic good.

lotsofpulp 4y ago
What profit margin should they have and why should they have that profit margin? https://www.macrotrends.net/stocks/charts/CALM/cal-maine-foods/profit-margins https://www.macrotrends.net/stocks/charts/CALM/cal-maine-foo... > 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. They had a near zero profit margin for 2021. And based on their record of profit margins, it seems like their business has been volatile since 2015 or so. I am not an expert on the egg business or food in general, but there is no reason that a 10x increase in profit has to mean malfeasance. Volatile businesses can have large swings in profit margin, otherwise no one would want to do them.
- webdood90 4y ago
  Why do people shill for corporations?
  - lotsofpulp 4y ago
    Nobody was complaining about low egg prices when Cal-Maine was reporting losses and meager profit margins in 2017 and 2019 to 2021. But that is beside the point that there is no set nominal “appropriate” profit margin for a given business. That does not mean that businesses with high profit margins are not colluding, or corrupt, or acting in ways that should be illegal. But it also means you cannot simply conclude from a few quarters of higher profit margins that a business is behaving unethically.

ScoobleDoodle 4y ago

The profit increased drastically. Profit is the part they keep after expenses. That it increased so drastically is price gouging. And such drastic price going should only be possible with collusion whether explicit or tacit due to too few competitors. > 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.

deleted 4y ago
[deleted]
Alupis 4y ago
You're citing Gross Profit, not Net Profit - which is being used here by the article deliberately to emphasize their point. The net shows an increase as well, but not totally out of line with the increase in sales and costs, even when we look back several years.
- BryanRamirez 4y ago
  A simple google search for cal-maine profit margins produces a table that includes year over year change in many metrics. For example Year over year increase in net profit margins: Feb 2022: Y/Y net profit margin is +119.63% May 2022: Y/Y net profit margin is +1633.06% Aug 2022: Y/Y net profit margin is +442.88% Nov 2022: Y/Y net profit margin is +7890.32%
  - deleted 4y ago
    [deleted]

MrSqueezles 4y ago

What are you talking about? Egg producers reported that avian flu affected supply, so they made employees wear, "hair nets ... changed several times per day"? Watch the movie The Informant. It's a true story and we only know it happened because one guy was trying not to go to jail. What's happening now is nothing new.