- Farmers ramped up egg production so quickly following the 2015 avian flu outbreak that supply is outpacing demand, contributing to record-low egg prices, according to Bloomberg.
- In May, a dozen eggs retailed for $1.414 on average, representing the lowest price for the month since 2006, according to Bureau of Labor Statistics data. The government projects egg costs to drop about 6% in 2017, more than any other food group. Overall food inflation, in comparison, is forecast to be roughly 2% this year.
- Farmers across the nation are reducing chicken flocks in an attempt to cut back on production and normalize both egg supply and prices. U.S. Department of Agriculture data indicates that flocks have been reduced by about a million birds a month this year.
During a recent presentation, Adolphus Baker CEO of the nation’s largest egg company Cal-Maine Foods, said, "Historically, the egg industry has experienced many boom and bust cycles with periods of overproduction disrupting the supply-demand balance,” according to Bloomberg. But Cal-Maine’s shares have slumped 17% so far this year.
Compounding the oversupply of eggs is the need for farmers to increase cage-free flocks — which means even more eggs are being produced. Growing demand from consumers concerned about animal welfare is forcing restaurants like McDonald’s and Denny’s and retailers like Walmart and Kroger to move toward using or selling only cage-free eggs. At least one analyst predicts that premium prices for cage-free eggs will also disappear as they become more the norm.
So who is benefiting from this overabundance of eggs?
It’s definitely not a good situation for farmers or egg producers who are seeing revenues and margins slashed due to the glut in supply. The USDA actually implemented a $11.7 million bailout last year to assist farmers suffering from low margins during the commodity surplus.
Retailers aren't that excited either, since low egg prices keep a lid on their sales and margins as well. Coupled with bird flu scares and widely fluctuating prices driving some consumers from eggs to various alternatives and egg substitutes, it becomes more of a negative.
Many stores are now cashing in on the supply glut and using low-priced eggs to drive traffic. And it makes sense. The real winner in the egg scenario is the consumer. With eggs currently retailing as low as 59 cents a dozen in some areas of the country, it’s a good time to get cracking, frying and scrambling.