Pluralistic: Eggflation is excuseflation (10 Mar 2025)


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Eggflation is excuseflation (permalink)

Inflation has many complex causes and dynamics, but this much should be obvious: when prices go up, and the profits go up, the price rise – the "inflation" is in part the result of greed – it's greedflation.

Orthodox economists insist that greedflation is impossible. Sure, companies would prefer to jack up prices, but if they do, other companies would rush inn to sell more cheaply. Besides, there are all these other plausible explanations for inflation, like the covid supply-chain shocks, or avian flu. But greedflation can easily take hold despite competitive pressures, and the fact of bird flu can fuel greedflation, rather than disproving it.

When an industry is heavily concentrated, when it is a cartel that controls key chokepoints that restrict access to key markets, then rising prices don't trigger discounts from rival companies, because rival companies simply can't get any market oxygen. And when a shock – covid, bird flu, etc – strikes, cartels can hike prices way over their higher costs, and point the finger of blame at the shock. This is a special subspecies of greedflation called "excuseflation":

https://pluralistic.net/2023/03/11/price-over-volume/#pepsi-pricing-power

Egg prices are at record highs, and we're told that this is the fault of bird flu. but a closer look demonstrates that eggflation is excuseflation. The egg industry is a vertical stack of monopolies, duopolies, and cartels, controlling everything from the genomes of egg-laying chickens to the raising and processing of chickens, to the distribution and retailing of eggs. These monopolists have conspired in the open to use the excuse of bird flu to restrict production and raise prices, over and over, every time bird flu strikes, posting record profits while poormouthing about their rising costs – costs that don't actually show up on their balance sheets.

In "Hatching a Conspiracy," an investigative series for Matt Stoller's BIG newsletter, antitrust lawyer Basel Musharbash lays out the history, mechanics, and fantastical profits of Big Egg, whose price-fixing and price-gouging are every bit as shameless as their excusemaking over bird flu:

https://www.thebignewsletter.com/p/hatching-a-conspiracy-a-big-investigation

Start with bird flu itself. Bird flu outbreaks have been a fixture of poultry farming since time immemorial, though obviously things got worse with the advent ofindustrial poultry farming, with its bigger flocks in closer quarters. You'd think that, in the face of these frequent, deadly flus and the resulting mass culls, the poultry industry would have figured out how to cope with outbreaks, and you'd be right.

Bird flu culls can wipe out a lot of birds – over 115m layers in the US for the current flu – but these culls take place on a rolling basis, over a period of years. New layers can be incubated and raised very quickly, and there are large reserves of fertilized eggs that can be quickened on demand. Since the start of this current bird flu in 2021, egg production has only fallen by 3.5%. But even that picture is misleading, because American egg consumption has dropped over the same period by 7.5% – even as other countries have blocked imports of America's plaguey eggs, so the industry is shipping 2.5% fewer eggs abroad, too.

The upshot is the story about eggflation arising from bird flu doesn't withstand even cursory scrutiny. The industry claims it's raising prices to cope with a shortage that just doesn't exist. It's an excuse. It's excuseflation.

But – as our neoclassical econ friends will hasten to remind us – raising prices like this just invites competitors to flood into the market with cheaper options. The only way excuseflation can work is if the supply-chain is sewn up by a few dominant firms that can collude to rig markets and block new market entrants, and that is exactly what's happening here.

Start with the grocer's fridge, festooned today with signs warning you that you are limited to purchasing one dozen eggs per customer. At first blush, it may seem like that fridge's dwindling supply of eggs comes from a whole bunch of companies, but closer inspection reveals that nearly every egg for sale in America comes from a single company. Cal-Maine Foods is an obscure conglomerate that bought dozens of egg brands, including Farmhouse Eggs, Sunups, Sunny Meadow, Egg-Landā€™s Best and Land Oā€™ Lakes eggs:

https://pluralistic.net/2023/01/23/cant-make-an-omelet/#keep-calm-and-crack-on

Cal-Maine CFO CFO Max Bowman has done a series of investor calls trumpeting the company's rising profits, and attributing them to "significantly higher selling prices" and "our ability to adapt to inflationary market pressures." Investors responded with a buying frenzy, driving Cal-Maine's stock to record highs.

Since the start of the bird flu epidemic, Cal-Maine's profits have averaged between 300% and 600% of their pre-bird flu levels. But Cal-Maine's plague profiteering playbook didn't spring up out of nowhere in 2021. During the bird flu outbreaks of the 2000s, Cal-Maine observed that bird flus were good for big egg brands, increasing the price of eggs, but that these increases were transient, fading quickly as flock sizes recovered. During the 2015 bird flu pandemic, producers quickly raised layers to maturity and replaced their flocks, and saw only modest rises in egg prices (and profits).

This time, it's different. The 2021 bird flu outbreak sparked immediate, substantial, ongoing and durable increases in the price of eggs. The number of layers has plunged, driven by a dramatic decrease in the size of the "parent" flock, from whose fertilized eggs we get out supply of layers – from 3.1m hens in 2021 to 2.5m in 2025. The numbers don't tell the whole story, either – the parent flock is, on average, much older than historical norms, meaning that it produces fewer eggs.

That shortage can be seen in the number of pullets – immature hens – being added to farms since the bird flu outbreak. Despite record egg prices, farmers are not increasing the number of egg-laying birds on hand. As Musharbash writes, the only thing that's increased since the start of bird flu is profits. Parent flocks, fertilized eggs and pullets have all seen steady, deliberate decline. That has only worsened over three years. This isn't a bottleneck in the supply-chain – it's a monopoly at play.

Or, rather, monopolies. The whole poultry supply-chain is an inbred mess. The entire realm of chicken genetics – that is, which chickens exist at all – is controlled by two European firms, the PE-backed Hendrix Genetics and the billionaire-owned Erich Wesjohann Group. These companies have bought or killed virtually every source of egg-laying hens in America over 20 years. Here's Musharbash:

Today, no egg producer in this country can expand the number of hens in its flock ā€” or even replace the hens it already has when they age out or die ā€” without the cooperation of this duopoly. And, since the value of hens rises with the price of the eggs, when the price of eggs is high these two barons have a clear interest in keeping the supply of pullets to producers on a tight leash ā€” so the high prices stick.

But not everyone is at the mercy of the Big Bird Genome: Cal-Maine has a sweetheart deal with them, and can apparently access as many egg-laying hens as they need, whenever they need them. This has allowed Cal-Maine to outbreed, outsupply, outsell and destroy any rival egg company that interfered with its business or refused to sell out. The 60-ish family-owned producers are stuck in a peripheral, disadvantaged role relative to Cal-Maine, and anyone who steps out of line gets immediately and totally crushed.

Cal-Maine dominates the United Egg Producers trade association. A judge compared Cal-Maine's relationship to the UEP to a "mob boss":

https://storage.courtlistener.com/recap/gov.uscourts.ilnd.263305/gov.uscourts.ilnd.263305.713.0_5.pdf

Despite the fact that the UEP exists primarily to promote Cal-Maine's interests at the expense of other egg companies, family owned businesses like Rose Acre Farms have continued to join the association, seemingly out of the view that they have no hope of surviving unless they get in line. UEP acts as a kind of OPEC for eggs, setting production limits that the whole industry follows. As the court found, the EUP is a "bullhorn" through which Cal-Maine "barks out orders."

The UEP's own economists are admirably forthright in their description of this process. As economist Donald Bell put it in 1994: "More hens, less money!" You don't need an econ degree to understand the corollary: fewer hens, more money. And as the number of layers has plummeted, the wholesale price of eggs has climbed – up 75% in 2023 alone.

The US has a planned economy – the thing we were all told America would never submit to, not like the basket case USSR, with its dysfunctional production system and shortages. But America's eggs aren't at the mercy of technocrats – they're entirely dependent on the whims of greedy monopolists. When Trump Secretary of Ag Brooke Rollins met with Cal-Maine last month, she left promising to bribe Cal-Maine to increase production, at the most profitable moment in world history for these companies:

https://www.wsj.com/opinion/agriculture-secretary-brooke-rollins-my-plan-to-lower-egg-prices-6be0f881

Eggflation is a microcosm of other monopolies that dominate American industry, stealing from everyday people to enrich a tiny coterie of shareholders. This isn't even the only sleazy chicken monopoly in the USA – a different, equally sleazy arrangement dominates poultry farmers who raise birds for meat, called "chickenization":

https://rafiusa.org/undercontractfilm/christopher-leonard-on-chickenization-a-power-driven-drain-on-rural-america/

That's also true of the market for other kinds of meat, where a cartel pays a data-broker to help it fix prices:

https://pluralistic.net/2023/10/04/dont-let-your-meat-loaf/#meaty-beaty-big-and-bouncy

These data-broker-coordinated cartels are everywhere you look in the USA, rigging the price of everything from potatoes to your rent:

https://pluralistic.net/2025/01/25/potatotrac/#carbo-loading

The next time you go to Denny's and wonder about the $0.50 per egg surcharge on the menu, remember, that charge isn't downstream of bird flu – it's the inevitable eggflation cause by excuseflation, a form of greedflation.

Musharbash has two more installments to go in his series for BIG, but if you're feeling impatient, you can read the report this series is adapted from, "Kings Over the Necessaries of Lifeā€: Monopolization and the Elimination of Competition in Americaā€™s Agriculture System," which Musharbash wrote for Farm Action:

https://farmaction.us/wp-content/uploads/2024/09/Kings-Over-the-Necessaries-of-Life-Monopolization-and-the-Elimination-of-Competition-in-Americas-Agriculture-System_Farm-Action.pdf

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