The U.S. Egg Industry And COVID-19
The COVID-19 pandemic has resulted in far more people eating at home instead of dining out at restaurants. This change caused an increase in demand for eggs from retail locations like grocery stores, stressing the supply chain and causing prices to increase. The U.S. egg industry successfully petitioned the FDA to exempt some egg farms from a food safety rule in order to return the price of eggs to their normal levels. In this study, the authors analyze the effects of the pandemic and the temporary suspension of this rule on the price of different types of eggs.
There are two main ways eggs are sold. The first way is as “table eggs,” whole eggs sold in their shells at retail locations such as grocery stores. These eggs can also be sold directly from farmers to customers. In the U.S., the table egg industry uses about 230 million hens. Another 99 million hens are used in the second part of the industry, known as the “breaker” market. Although some of these eggs are dried for use in processed food, breakers are usually liquid eggs that are sold to customers such as restaurants and cafeterias. Because more people are eating at home during the pandemic, the number of table eggs being sold has gone up while the number of breaker eggs has gone down.
The authors analyzed USDA Agricultural Marketing Service data to estimate what table and breaker egg prices would have been if the pandemic had not occurred. By comparing these predicted prices to the actual prices, they were able to estimate the impact the pandemic had on egg prices.
The authors forecasted that because of the pandemic, table eggs cost 141% on April 1, 2020 than they would have if the pandemic hadn’t happened. For table eggs sold directly from farmers to customers, the pandemic increased the price 182%. The opposite was true for breaker eggs, which cost two-thirds less than the price the authors forecasted for mid-April.
Under its Egg Safety Rules, the FDA requires that facilities where table eggs are farmed test for salmonella when the hens are between 40 and 45 weeks old. These farmers must also register with the FDA and keep records of their compliance with the rules. Because breaker eggs are pasteurized, they are unlikely to contain salmonella and do not have to follow this rule.
On April 3, 2020, the FDA agreed to a request from the egg industry and temporarily changed its regulations so that farmers of breaker eggs could instead sell table eggs to retail locations without having to follow the Egg Safety Rules’s testing, monitoring, and recordkeeping requirements. The goal of this change was to increase the supply of table eggs to keep their prices from rising further.
At the end of May, prices for table eggs had decreased and were only slightly higher than before the pandemic (13% higher for retail eggs and 26% higher for eggs sold from farmers to customers). Breaker eggs had also largely returned to their predicted prices, costing 6% less than the authors expected.
Not all egg prices changed back to their pre-pandemic levels, however. Usually specialty table eggs, like “cage-free” eggs or eggs laid by hens fed an organic, vegetarian, or omega-3-enriched diet, cost more than regular table eggs. After the pandemic began, the price differences between the specialty eggs and conventional eggs shrunk. Even after the FDA changed its rules, the price difference for cage-free eggs was 20% less than before the pandemic and 11% less for eggs laid by vegetarian-fed hens. For eggs laid by hens fed an organic diet, the price differences went down even more after the rule change, and were 38% less than they were before the pandemic. Only the price differences for omega-3-enriched eggs went back to their level from before the pandemic, actually increasing by 10%.
The authors strongly believe that this means that consumers are less concerned with the environmental and animal-welfare aspects of egg production than they were before the pandemic and instead care more about the supposed health benefits of omega-3-enriched eggs versus conventional table eggs.
The authors found that if the FDA had not made breaker egg farmers exempt from the Egg Safety Rules, table eggs would have cost between 53% and 56% more than they really did at the end of May. They also found that breaker egg prices would have been about 50% lower than they actually were. Without this change, they estimate that the pandemic would have result in a $600,000 per week loss for table egg farmers. Because of the change, table egg farmers actually gained an additional $500,000 per week.
Once the pandemic began, the prices of store-bought and farm-bought eggs rose. In an effort to keep the prices down, the FDA allowed some egg farmers to be exempt from its egg safety rules. This brought down the price of table eggs and made more money for table egg farmers. At the same time, consumers may have become less concerned with buying eggs that are marketed as being better for the environment or better for the chickens who lay the eggs. The authors also note that while the FDA’s regulatory change caused prices to return to where they would have been without the pandemic, the health consequences of exempting some farms from the Egg Safety Rules remain to be seen.