As egg prices climb, advocacy groups and politicians call on FTC to investigate possible price gouging scheme: 'Somebody needs to pay attention'

• A dozen large eggs reached $4.25 last December, over twice as high as in December 2021.
• Advocacy group Farm Action and others have asked the FTC to investigate price gouging, pointing to record profits.

Egg production companies are fighting back against allegations of price gouging from politicians and farm groups.

In letters to the Federal Trade Commission this week, Sen. Jack Reed of Rhode Island as well as Farm Action — a non-profit that fights "against monopolistic corporate control over our food and farming system" — called for an investigation into skyrocketing egg prices they believe are far surpassing market value.

The average carton of large eggs cost $4.25 in December 2022, over double the price of $1.78 recorded in December 2021, according to Federal Reserve data. While egg companies claim an outbreak of avian flu, combined with inflated transportation and packaging costs, justify record-high prices, others are calling foul.

"Somebody needs to pay attention, and we didn't really see anyone asking why," Joe Van Wye, Farm Action's director of policy and outreach, told Insider. "We wanted to call attention to the issue, make sure that our enforcers knew that we thought something fishy was going on."

Eggs hit record-high prices

The term "price gouging" is largely used when prices reach extreme levels following natural disasters, other emergencies or during the height of the pandemic, but is also frequently used by politicians accusing companies using inflation or minimum wage increases as an excuse to raise prices to boost profits.

While the price of eggs has more than doubled, the Department of Agriculture reported that egg inventories across the country were 29% lower in December 2022 than the start of the year, as over 43 million egg-laying hens died of the avian flu or were killed to prevent the further spread of the disease.

The letters to the FTC acknowledge that while the avian flu and other factors account for part of the price increase, the fact that some of the largest egg producing companies — including Cal-Maine Foods and its 20% market share — have reported record profits is an indication that the prices are excessive.

Van Wye said Farm Action doesn't believe the price increases match up with the number of birds lost, while experts like Purdue University agricultural economics Jayson Lusk told The Associated Press that companies could be correct in saying that several other factors could increase the price.

"In my view, the basic economics of the situation well explain the price rise," Lusk said.

Cal-Maine faces price gouging claims

Van Wye said if investigators determine illegality is at play, enforcement agencies have "a number of tools at their disposal," which could include restitution to consumers who were affected by the high prices.

Even if no price gouging took place, Van Wye said it "isn't good for anybody" to have one company control 20% of the market of a product as it gives them too much power to set prices at a level that allows them to reap significant profits.

In April 2020, a lawsuit was brought by the state of Texas against Cal-Maine over allegations of price gouging when prices increased from about $1 per dozen eggs to around $3 per dozen with no major supply disruption, the American Bar Association noted in an August 2022 study of price gouging cases.

The suit was dismissed after Cal-Maine argued that while their supply was not disrupted, the price was largely beholden to other forces in the market.

The FTC declined to comment on the letters, and Cal-Maine Foods and Sen. Reed did not immediately respond to Insider's requests for comment.