Last week, Farm Action sent a letter to the Federal Trade Commission and Department of Justice urging the departments to investigate and take action to restore competition and lower egg prices.
“We share the Trump administration’s concern about the cost of living crisis and the need to deliver emergency price relief to American families,” the letter reads, explaining that the FTC and Department of Justice can help deliver that relief through their respective investigative powers.
“While avian flu has been cited as the primary driver of skyrocketing egg prices, its actual impact on production has been minimal. Instead, dominant egg producers – particularly Cal-Maine Foods – have leveraged the crisis to raise prices, amass record profits, and consolidate market power. The slow recovery in flock size, despite historically high prices, further suggests coordinated efforts to restrict supply and sustain inflated prices,” the letter states.
A Farm Action investigation found that the wholesale price of Grade-A Large White Shell Eggs surged from around $0.50 – $1.30 per dozen in 2021 to $6.00 – $8.00 per dozen today.
Cal-Maine Foods, which controls 20 percent of the egg market, increased its gross profits by 237% between 2021 and 2024. Between 2021 and 2023, their gross profits shot up by 646%.
Cal-Maine has made more in a single quarter than they made in an entire year prior to the 2022 avian flu outbreak.
The investigation found that by not increasing their supply, the five dominant egg firms are forcing prices to stay high while reporting dramatic profit increases and level sales.
These same firms are then using their increased profits to acquire their competition, further driving market consolidation instead of investing in replenishing or expanding their flocks.
During the 2015 avian flu outbreak, the national flock numbers were recovered within eight months, yet this time around, a recovery has still not been achieved even though it could have been.
The Farm Action investigation was conducted by Basel Musharbash, an antitrust lawyer based in Paris, Texas.
“What we found was that every major industry involved with turning a chicken into an egg and an egg into a chicken from the breeders and hatcheries that create the hen to the egg producers who make and sell the egg, has been taken over by financier backed corporations and turned into a shortage creating and exploiting machine, instead of an industry in the business of making and selling eggs,” Musharbash told Corporate Crime Reporter in an interview last week.”
You say that egg prices have gone from a dollar a dozen four years ago to six to eight dollars today. And if you would believe the press, you would come to believe that the driving force behind those increasing egg prices is the bird flu.
“Avian flu is a real problem, it’s a real thing. And it does cause some disruptions in the supply chain. But prices are going up far, far more than you would expect considering how much of an impact avian flu has had on actual egg production. It’s not insignificant, but also small.”
“If you look at the last three years, in every year, egg production has only been, on average, three to five percent lower each month than the corresponding month in 2021. So, we’re not talking about a massive shortage that’s being created by the avian flu. We’re talking about a small dip in production, and yet prices are going through the roof.”
“Wholesale egg prices shot up from the $1.00 to $1.50 range before this avian flu outbreak. Now, egg prices have jumped into the $5 to $8 range. But more importantly than these momentary spikes are the annual average prices. The annual average wholesale price has gone up from $1.00 in 2021 to around $2.50 in 2002. Then last year they went back up to a little over $2.50. And now we are seeing prices escalate.”
“So, the prices are going up much more than you would think necessary considering how much impact avian flu is having. That’s a function of the lack of price competition in the industry and we can get into that later.”
“More interesting is the way that the dominant firms in hen breeding and the dominant firms in egg production seem to be exercising their power over the industry to throttle the recovery of flocks from the avian flu outbreak and to prevent egg producers not affected by avian flu from expanding their flocks to take advantage of the high prices.”
“We’ve had avian flu epidemics before. This isn’t the first time. We had one in 2015. We had one in 1983. We have had them going back to the 19th century. And what would happen historically is that you would have some disruptions in supply. Stores would go out to buy eggs in an emergency. That would give egg producers some pricing power and the price of eggs would momentarily go up.”
“But then almost as soon as the price went up, producers would expand production, producers adversely affected by avian flu would quickly rebuild. The breeders who make the hens for the producers would scale up their production of hens to help those egg producers rebuild their flocks. And the price would quickly go back down because production would recover and even increase as producers rushed to sell eggs at the higher price.”
“That’s what’s not happening in this avian flu epidemic. We’ve seen the breeders of hens retrench their capacity to produce small chicks and hens for egg producers to use in rebuilding their flocks and expanding their flocks. And we’ve also seen the sixty or so producers that make up egg production in this country — we’ve seen them not increasing the number of small hens – called pullets – that they are adding to their flocks. Instead, they have decreased that number. In 2022, you saw producers adding 20 million fewer pullets to their flocks than they did the year before in 2021. That is completely the opposite of what you would expect to happen in a competitive industry.”
You say that two European corporations control 90 percent of the world’s egg laying hens. And you say on the production side, Cal-Maine has a big portion of the market – 20 percent in the United States. But that was the case four years ago. It didn’t just consolidate in four years.
“Today you have these two European companies – EW Group and Hendrix Genetics that control the supply of egg laying hens to American egg producers. EW Group is the dominant company – it has around 70 percent market share. Hendrix has the last 20 percent to 30 percent market share.”
“That’s on the breeder side. On the egg producer side, you have Cal-Maine which has 20 percent of sales nationally. It can have much higher percentages of sales in regional markers, although we don’t have that kind of granular data. The egg producer industry as a whole is pretty consolidated. The top five producers of eggs, including Cal-Maine, control anywhere between 45 percent and 55 percent of all the hen laying eggs in the United States. The largest 20 producers of eggs control something like 75 percent of the hens in the country. It’s a pretty consolidated industry among those players.”
“You might ask – why didn’t they try to throttle the price of eggs in advance of the avian flu epidemic? It wouldn’t quite work. If you have a lot of surplus production, which we kind of did in 2019 or so, it can be difficult for any player to try and control the price. If Cal-Maine tried to reduce its production and induce a shortage, it wouldn’t quite work as well. Other producers could rush in and try and capture market share. Same for EWG and Hendrix – if they tried to reduce the supply of hens when there is a surplus of hens in production already, it wouldn’t work as well.”
“But if you have an avian flu epidemic that is bringing down hen stocks on its own, and bringing the supply of eggs into near equilibrium with demand, then suddenly the power to throttle the supply of hens, the power to intimidate producers out of expanding production, that becomes significant indeed. And you can use the flu epidemic profitably.”
“If EWG throttles the supply of hens to egg producers, egg producers can’t rebuild their flocks as fast, they can’t expand production in response to the high prices. And so the high prices might come down gradually. But they don’t necessarily come down to where they were before the avian flu epidemic.”
“As long as the supply of hens and the supply of eggs is in close equilibrium with demand, they can throttle it to keep it that way and in the process keep the price of eggs higher and by extension keep the price of hens higher.”
What needs to be done to keep egg prices down?
“There should be an antitrust investigation into the egg supply chain. How did these companies gain their power, how are they using it and maintaining it? If it turns out that these processes involve antitrust violations, the antitrust agencies should seek break ups to open the industry to competition again. That’s one part of the solution.”
“We also need to address the problem of avian flu epidemics. That’s going to take more than break ups at the company level. We are going to need to deconcentrate production at the farm level. That’s the source of the problem.”
“The average size of an egg farm in 2000 was something like 130,000 to 150,000 hens. Today, the average size of an egg farm is 300,000 hens. And many of them have millions of hens. Because of this concentration of hens, when the avian flu virus hits an egg farm today, that egg farm turns into a mutation machine for the virus. The virus can just propagate through hundreds of thousands of hens, quickly reproduce and in the process mutate again and again and continue to infect more and more flocks.”
“That makes it very difficult to develop a vaccine. It makes it very difficult to control avian flu outbreaks. And we need to address that consolidation.”
“You can use multiple levers to address that consolidation. The most important one is what we used to have in this country and what places like Canada have in dealing with this problem much better and with much less disruption – and that is supply management. We need a government program to control the production of eggs so that prices are at a reasonable level where a smaller farm operation can generate a reasonable return, an operation with 75,000 or 100,000 hens and generate a reasonable return and doesn’t have to be part of these larger conglomerates.”
“And finally, we need to open marketing channels for egg producers. One of the reasons you have had such massive consolidation in egg production is that most of the supply of eggs is going to the handful of giant retailers that have consolidated over the last two decades. That has made it very difficult for smaller egg producers to find outlets for their eggs. It’s made it much harder to enter egg production.”
“One thing that served to keep eggs affordable during the 20th century and that helped bring prices down during previous avian flu epidemics, like the one in 1983, is that it used to be that as soon as prices for eggs went up, new farmers would enter into egg production because they had outlets. If you have a few thousand hens, it doesn’t cost that much to start egg production and you could sell those eggs to different local stores and regional chains and local processors of eggs. All of that has basically disappeared.”
“Today it is much harder to enter into egg production. It’s much harder to be a small egg producer. And we need to change that. We need to open up the outlets for those small egg producers so that we can have a dynamic egg industry again, one that is responsive to high prices, not one that is able to exploit high prices.”
Famously, candidate Trump made egg prices a central issue in the 2024 campaign. What is President Trump doing about it?
“The Antitrust Division opened an investigation into the egg industry. And that’s a positive step in the right direction. The administration should go further. The Department of Agriculture should collaborate with the Federal Trade Commission to open an investigation using the authority it has under the Packers and Stockyards Act and Egg Inspection Act.”
“And that would allow us to get a much more detailed picture of the entire egg supply chain, all of the bottlenecks that exist across that supply chain, all of the choke points that dominant players could be using to throttle the supply of eggs. And we could use that kind of information to then form policy beyond antitrust cases to promote decentralization and resiliency in egg production across the board.”
“But unfortunately that is not the attitude that Trump’s Agriculture Secretary has been taking. She has been taking a much more industry friendly approach. It appears that her thinking is that an industry that has reaped something along the lines of $15 billion in windfall profits over the last three years needs more subsidies – nearly $1 billion in subsidies – in order to be incentivized into producing more eggs. This at a time when the profitability of producing eggs is at unprecedented levels.”
“The Secretary’s approach is to pay egg producers to produce eggs when it would make them more money than ever to do so. It makes no sense. President Trump, if he wants to deal with the problem of egg prices, should go the route of antitrust investigation and enforcement and try to govern here so that we can get the industry into a situation where you will have competing companies trying to produce more eggs, take market share from each other, compete for lower prices. Instead we have an industry where a trio of monopolists have the power to regiment the industry into a shortage exploiting machine.”
[For the complete q/a format Interview with Basel Musharbash, 39 Corporate Crime Reporter 12(13), March 28, 2025, print edition only.]