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Tess Vigeland: Take a walk through the aisles of your local supermarket and one thing’s glaringly obvious: prices are soaring for the stuff we eat. According to some estimates, we’re facing the worst case of food inflation in nearly 20 years.
Our response? Cut back on restaurant meals, heat up more leftovers, buy fewer name-brand grocery items, but there’s at least one commodity that’s got farmers and eaters scrambling for answers.
Marketplace Sustainability reporter Sarah Gardner attempted to crack the price of eggs and discovered a whole lotta ingredients.
Sarah Gardner: What are you making this morning?
Husband: A delicious sausage and cheese omelette.
Gardner: Tempting, but I don’t eat eggs anymore — cholesterol problem — but my husband? Don’t get me started. He’s back on one of his low-carb kicks. Instead of cereal, it’s eggs every morning.
Gardner: Do you know how much those eggs cost?
Husband: No. I don’t have a clue.
Well, I’ll tell you. $3.30 a dozen. I pay more than the national average because… well, everything costs more in LA, but also because I’m lazy and get my eggs delivered to my door.
But a few years ago I was paying about half the price like everybody else. What’s cluckin’
That’s the canned sound of hens, by the way. Getting into a henhouse these days is like getting an audience with the Pope. The reason? “Biosecurity.” Farmers don’t want visitors unknowingly tracking in germs that might infect the flock.
So I called Clint Hickman in Arizona. He’s one of the biggest egg farmers in the country. As long as I didn’t get near his hens, he was happy to talk to me.
Clint Hickman: Just about everything we do and touch with our business has seen a marked increase in cost.
The biggest increase? Chicken feed, which gobbles up at least 60 percent of an egg farmer’s budget. Maybe we should stop using chicken feed as slang for a trifling amount of money because it’s doubled in price over the last year.
Hickman: It’s over three pounds, almost four pounds of feed to produce a dozen eggs.
Hickman says chicken feed’s pricier mostly because it’s full of corn. Corn used to be boring. Now farmers compete for it along with ethanol producers, so the price is soaring. And of course, getting the feed to the hens costs more too. The truck driver carrying those eggs to the market is paying $1.25 a gallon more for diesel than he did last year.
That raises wholesale costs, says Ephraim Leibtag. He’s an agricultural economist at the USDA.
Ephraim Leibtag: You know, we have a system of food distribution that’s predicated on mass distribution and relatively cheap transportation costs and that’s changing now.
But every food producer in the country’s squawking about fuel and corn prices. Egg prices have flown up more than most foods — 45 percent in the last eight months. Unscramble that one, economists.
Turns out demand is outstripping supply at this moment in egg history. See, farmers cut back on production a few years ago when prices were weak. Now that demand’s high and supply is still pretty low, egg farmers are enjoying a decent profit.
Don Bell: They’re reluctant to go back to the bad times. They certainly enjoy the good times.
Consultant Don Bell says farmers were scratched in the past when they expanded production too quickly. They’re taking it slow this time. They’re worried about the political climate too. Listen to this ad:
[Humane Society of the United States ad]: Did you hear that Wendy’s is using eggs from hens kept in tiny cages? Yeah, those poor birds can barely move their whole lives.
Animal welfare advocates have been rattling the industry’s cages over its henhouses. The upshot? There’s now a little more space for each bird.
Mitch Head: So you have fewer hens in a henhouse, you’re gonna have fewer eggs.
Mitch Head, an industry spokesman, says farmers are also reluctant to invest in new henhouses when some states may ban them in favor of cage-free egg farming.
So supply is tight. And demand? Think egg foo young. The rest of the world, including China, is now competing for our eggs and they’re bidding up prices. Even the Netherlands buys some of our eggs because the weak dollar makes them so cheap. Ephraim Leibtag:
Leibtag: Any countries that have rising income and growth rates that are faster than the current U.S. level will be looking for expanded diet and that would include importing meat and protein products and what’s interesting about eggs is it’s one of the relatively cheaper protein sources.
The United Egg Producers won’t soft-boil it for you. They expect prices to remain high as long as fuel and feed costs do too. So if eggs are still your breakfast of choice, you can always stretch an egg with cheap filler, the penny pinchers say. Potato and onion omelet anybody?
In Los Angeles, I’m Sarah Gardner for Marketplace Money.
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