A study* by agricultural economists at Michigan State University and Perdue University quantified the effects of COVID on prices and volumes of shell-egg and egg-liquid sales by segments of the U.S. industry.
The study documented the profound shift from eating out to at-home preparation. This change in purchasing and consumption of food disrupted both segments of the egg market. Panic buying in March and extending into April resulted in farm-gate and retail price increases of 140 percent and 180 percent respectively. In contrast breaking stock value fell by close to 70 percent. Specialty eggs including cage-free, organic and nutritionally-enhanced products lost premiums as consumers purchased generic eggs at the lowest possible cost.
Prior to the onset of COVID-19, consumers spent 54 percent of their food expenditure away from home representing a third of all food purchased. As the economy closed down, the food service sector using dedicated shell eggs and egg liquid collapsed and 75 percent of food expenditure comprised the purchase of groceries for at-home consumption.
Following representations to the Food and Drug Administration and supported by United Egg Producers, restrictions were relaxed allowing shell eggs that would otherwise have been broken to be diverted to retail sales. Initially this resulted in high demand for egg cartons with suppliers forced to triple-shift plants to satisfy demand.
The research team noted that preventing future disruptions will involve relaxation of barriers preventing interaction between the two segments of the egg industry. The study failed to demonstrate evidence that either heightened demand or the FDA relaxation of regulations “had a meaningful impact on the marketing margin for table eggs sold at grocery stores.”
It is anticipated that the findings of the study will be reviewed in current litigation relating to alleged price gouging by egg producers in actions initiated by States Attorneys General.
Malone, T., Schaefer, A., and Lusk, J., Unscrambling COVID-19 Food Supply Chains (August 10, 2020). http://dx.doi.org/10.2139/ssrn.3672018