America’s largest egg producer was left with some explaining to do after reports indicated a more than 700 percent profit increase last quarter with only a one percent increase in sales volume.
Much like President Joe Biden shifting all the blame for rising energy costs on Russian President Vladimir Putin, avian flu was treated as the scapegoat for the average price of a dozen eggs more than doubling from $1.61 to $3.30 year-to-year in February.
For Cal-Maine Foods, which reportedly controls about 20 percent of the United States egg market, according to Reuters, net sales last quarter were up 109 percent year over year ending at $997.5 thanks to the increased price.
“The doubling of revenue was nothing compared to its profits, however. Net income soared to $323.2 million from only $39.5 million a year ago,” CNN detailed, amounting to a 718 percent profit.
Preceding the reported windfall, the farmer-led advocacy group Farm Action had issued a letter to the Federal Trade Commission challenging the rising prices of eggs and accusing producers like Cal-Maine of extorting consumers.
In January they wrote, “Examining publicly-available financial data from the egg industry, the letter determines that the supply disruption caused by the avian flu outbreak had an ‘apparently mild impact on the industry.'”
Greedy egg companies that have had zero cases of avian flu are using it as an excuse to jack up egg prices, all the while raking in record profits. Today Farm Action urged @FTC to investigate the egg industry and get consumers their money back. https://t.co/m4M4HUepAs
— Farm Action (@FarmActionUS) January 19, 2023
In greater detail, they pointed out to the FTC that while 43 million birds were lost because of the avian flu in 2022, the total size of egg-laying flocks had depleted by only 7-8 percent because of chicks hatched throughout the year. Furthermore, Cal-Maine claimed to lose no hens as a result of the outbreak.
“In the end, what Cal-Maine Foods and the other large egg producers did last year — and seem to be intent on doing again this year — is extort billions of dollars from the pockets of ordinary Americans through what amounts to a tax on a staple we all need: eggs,” Farm Action wrote as blame for a virus and supply chain issues were exaggerated.
“They did so without any legitimate business justification. They did so because there is no ‘reasonable substitute’ for a carton of eggs. They did so because they had power and weren’t afraid to use it,” the group accused. “This kind of organized theft is exactly what Congress — and the public it represents — ’empowered and directed’ the FTC to prevent.”
Following Farm Action’s lead, Sen. Elizabeth Warren (D-Mass.) and Rep. Katie Porter (D-Calif.) sent a letter to Cal-Maine and other major egg producers in February lambasting their practices and stating, “American families working to put food on the table deserve to know whether the increased prices they are paying for eggs represent a legitimate response to reduced supply or out-of-control corporate greed.”
Cal-Maine claimed their prices were set by independent market quotes, but benefitted all the same with gross profits as of November 2022 roughly ten times what they had been the year prior at about $535 million.
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