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Soaring Egg Prices Blamed on Costs of Fuel, Feed, Chicks

Prices up more than 30% in many supermarkets

By Truman Lewis
ConsumerAffairs.com

June 3, 2008

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The price of the lowly egg has risen more than 30 percent over the last year in much of the country, but farmers say you shouldn't blame the chickens. Scratch around a little and you'll find that, like everything else these days, high gas prices are largely to blame.

The wholesale price for Grade A eggs currently hovers around $1.14 in much of the country, which translates to a retail price of about twice that much. At Pavilions on W. Olympic Blvd. in Beverly Hills, Calif., Lucerne cage-free A eggs were on sale for $4.79 a dozen this morning. A Safeway in Fairfax, Va., was offering Lucerne large AA eggs for $2.19 a dozen.

Like so many other food staples, eggs are found in a wide variety of prepared foods and are used extensively by do-it-yourself chefs, making it hard to avoid shelling out more for the nutritious ovoids. Egg substitutes are available but they usually cost more than the real thing.

Chicken ranchers say the cost of getting a hen ready to lay eggs is up 60 percent, thanks to chicken feed that, well, isn't chicken feed anymore. Feed costs a third more than last year. Then there's diesel fuel that's approaching $5 a gallon and packaging costs that are climbing nearly as fast. The plastic containers that hold the eggs have gone from 5 cents to more than 7 cents in many areas.

And don't forget those chilly mornings. Most chicken ranchers use propane to heat their chicken houses and provide hot water for washing the eggs. The cost of propane has risen 50 percent in the last year.

Ethanol gets the blame

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So if chicken ranchers aren't to blame for the high prices, who is? Supermarkets say they're having trouble dealing with rising food and transportation costs while their customers become increasingly tight with a buck.

The National Retail Federation, the Washington-based trade association for grocery stores, chain restaurants and other retailers, puts a big part of the blame on Congress and its love affair with ethanol .

"We've seen a tremendous increase in food prices. I don't think there's any disagreement that our ethanol policy has played a role in that," said Erik Autor, a federation vice president, told the Atlanta Journal-Constitution. "We're very concerned about this. And it is one thing Congress can do something about."

Trying to cut imports of oil from the Middle East, Congress has mandated that Americans use 9 billion gallons of ethanol by year's end and 36 billion gallons by 2022. In addition, oil refiners who blend ethanol with gasoline receive a 51-cent-per-gallon tax credit.

Most of the nation's ethanol is produced from corn -- and corn is what makes the feed that fattens up not just hens but beef cattle, hogs and other creatures bred for human consumption. So as corn is diverted to gas tanks, there's less available for animal feed.

Rising demand for corn in China, India and other developing countries is also driving up prices.

Corn currently is going for about $5.99 a bushel but with fewer acres planted this year, prices could climb to $7 or even $8, some agriculture observers predict.

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