The bird flu helped this egg company's profits soar, and now its pricing practices are under investigation - Entrepreneur Generations

Egg prices remain high as one producer sees its profits
and stock prices surge. (Adobe Stock photo)

U.S. top egg supplier Cal-Maine attributes its soaring profits and doubled stock price to hen shortages caused by bird flu, combined with savvy business practices. Lawmakers and regulators aren't buying that response as the full story. Patrick Thomas of The Wall Street Journal reports, "The Justice Department kicked off an investigation into the nationwide increase in the cost of eggs and is probing Cal-Maine’s and other companies’ pricing practices."

Cal-Maine explains its surging profits -- $508 million just in the first quarter of 2025 -- as the natural outcome of national egg shortages brought about by the severe avian flu outbreak, combined with its savvy production and investment strategy. The company's first-quarter profit was more than three times higher than the profit in its first quarter of 2024 -- $148 million. The company's chief executive, Sherman Miller, says, "He can’t ignore the rising animosity, and he’s ready to set the record straight," Thomas writes.

Miller told Thomas, “Someone has to get blamed for everything. They’re looking for a villain. . . . We’ve done absolutely everything we could do to supply every egg we could under circumstances we can’t control."

But what Cal-Maine can control matters because eggs aren't like other commodities. "The egg industry relies on contracts between a customer, like Walmart or Kroger, that wants to buy a certain amount of eggs from a supplier like Cal-Maine," Thomas explains. "Instead of producing all the eggs it sells in a year, Cal-Maine has historically handled spikes in demand by purchasing 10% to 25% from other suppliers on private exchanges such as the online Egg Clearinghouse."

Skeptics question Cal-Maine's private online exchange purchases. "Critics like Farm Action say that by buying eggs from rival producers on the Egg Clearinghouse, Cal-Maine contributes to limiting supply," Thomas reports. "This also can inflate prices because those purchases factor into the calculation for the industry benchmark prices, critics say."

Others wonder why Cal-Maine didn’t just "produce more eggs or decide to lower its prices during the avian-flu outbreak," Thomas writes. But company planners see the spike as temporary. "Historically, eggs tend to retail for $1 to $2 a dozen, and Cal-Maine executives say the sky-high prices probably won’t last."

Questioning Cal-Maine's pricing practices isn't new. "In 2023, a federal jury in Chicago decided that Cal-Maine and other big egg producers restricted supply in the early 2000s to raise prices, which inflated costs for companies that buy lots of eggs to make food products," Thomas adds. Several food companies were awarded $53 million in damages. Cal-Maine contested any claims of wrongdoing.

from The Rural Blog https://ift.tt/Yvagl0b The bird flu helped this egg company's profits soar, and now its pricing practices are under investigation - Entrepreneur Generations

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