Egg Prices Skyrocket During The Pandemic
AILSA CHANG, HOST:
Is it egg-gregious (ph) or just good egg-conomics (ph)? The price of eggs skyrocketed during the pandemic, and now some states are suing egg companies for price gouging. Stacey Vanek Smith and Cardiff Garcia from our daily economics podcast The Indicator From Planet Money tell us egg-xactly (ph) what's going on with egg prices.
STACEY VANEK SMITH, BYLINE: We eat a lot of eggs in this country. The average American eats almost an egg a day.
CARDIFF GARCIA, BYLINE: Yeah, and during the pandemic, we really got egg-cited (ph) about eggs.
VANEK SMITH: (Laughter).
GARCIA: Grocery stores were ordering six times more eggs than normal, and a lot of store shelves were still empty.
VANEK SMITH: Yes. So demand for eggs went crazy. And the supply could not increase right away because there are only so many egg-laying hens in the U.S.
DAVID ORTEGA: And, you know, that increase in demand will lead to a rise in prices.
VANEK SMITH: That is David Ortega. He is a food economist at Michigan State University. And David says it's all about supply and demand. A spike in demand, plus a fixed supply, pushes up the price. And the price went way up - nearly 200% in March.
GARCIA: And now, a bunch of states have responded by suing egg companies for price gouging. These states included Texas, West Virginia and Minnesota. And they also included New York, where the attorney general accused egg company Hillandale Farms of taking in $4 million in revenues from overcharging people for eggs.
VANEK SMITH: And with egg prices, here is where things get tricky. I mean, did egg companies commit a crime by charging more for eggs? Were they just being good free-market citizens?
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ORTEGA: Well, so price gouging really happens when you purposefully set the price of a commodity, you know, significantly above the traditional price level that incorporates costs and other forces.
VANEK SMITH: David says part of the issue here is that costs went up for egg companies, too. Labor, transport supplies were all hard to get and often expensive in the early days of the pandemic.
GARCIA: But did those costs go up by 3- or 400% like their prices did? That is the question being hashed out in courts now, and it's kind of complicated.
VANEK SMITH: And part of the issue here, of course, is the egg itself, right? I mean, if ice cream prices or caviar prices or wine prices or something like that went up by 200%, it probably wouldn't be a legal issue, a price gouging accusation. But the idea here is that eggs are a staple and a staple that really vulnerable people count on, especially in a crisis. And this idea that companies were profiting off of vulnerable people in time of a crisis makes it seem kind of wrong.
GARCIA: David says it's especially tricky here because there was a time when pretty much all food prices were going up. In fact, between March and April, food prices saw their biggest jump in 46 years.
ORTEGA: But, you know, it's really difficult to draw the line as to, OK, what is a appropriate price response due to the shock versus what is sort of this type of illicit behavior that's trying to take advantage of the situation?
VANEK SMITH: David says we will have to see what the courts decide about egg prices and whether it was price gouging or just, you know, fair economics or maybe unfair but legal economics.
Stacey Vanek Smith.
GARCIA: Cardiff Garcia, NPR News.
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