The high price of eggs prompted the senator to call for an investigation into price gouging

The high price of eggs prompted the senator to call for an investigation into price gouging

Sen. Jack Reed on Monday called on the Federal Trade Commission to open an investigation into “possible price gouging and other deceptive practices” as egg prices soar.

The Rhode Island Democrat noted in a letter to the agency’s president, Lena Khan, that the price of 12 eggs rose 138% in December compared to the same time a year earlier, citing data from the Bureau of Labor Statistics.

Egg prices rose in December to $4.25 from $1.79 during the same period in 2021, an increase of 138%, according to Bureau of Labor Statistics data.

The sharp rise in egg prices is attributed to the millions of chickens that were slaughtered to curb the spread of bird flu and farmers having to offset inflation that drove up their costs.

The largest producer of eggs in the United States, Cal-Maine Foods, was singled out by Reed’s because it reported last month that its quarterly sales jumped 110% to $801.7 million based on record egg prices, helping it turn a profit of $198.6 million. , up from just $1.1 million a year ago.

American Farms Group calls for a review of high egg prices

Senator Jack Reed speaks on the phone as he leaves a closed lunch meeting with Democratic senators at the US Capitol on January 24, 2023. (Drew Angerer/Getty Images/Getty Images)

“Consumers are used to seeing some volatility in the egg pricing market, but the current price hike in favor of the industry requires close scrutiny. Independent federal oversight agencies must look at the facts and follow the evidence to ensure that consumers are treated fairly,” he said in the letter to the FTC. Reed noted that the Department of Agriculture found that price increases in the sector were “far greater than the declines in production” caused by avian influenza.

Although about 43 million of the 58 million birds slaughtered over the past year to help control the flu were laying hens, the overall flock size is down only 5% to 6% at any given time from its normal size of about 320 million chickens.

A woman shopping for eggs

Racks of eggs with a note apologizing to customers for the price increase are seen in San Mateo, California, on January 23, 2023. (Tayfun Coskun/Anadolu Agency via Getty Images/Getty Images)

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“At a time when food prices are skyrocketing and many Americans are struggling to buy groceries, we must examine the industry’s role in perpetuating high prices and hold those responsible accountable for their actions,” Reed wrote.

A farmer-led advocacy group called Farm Action made a similar request last week. He argued that “there appears to be a collusive scheme among industry leaders to turn inflationary conditions and the outbreak of bird flu into an opportunity to reap huge profits”.

Cal-Maine Foods told FOX Business in a statement that it “wants to reassure its customers that we’re doing everything we can to maximize production and keep store shelves stocked” and that “the local egg market has always been highly competitive and very volatile even under normal market conditions.”

Eggs at a Michigan grocery store

Eggs for sale at a grocery store in Detroit, Michigan, on January 18, 2023. (Matthew Hatcher/Bloomberg via Getty Images/Getty Images)

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The Mississippi-based company’s fee rates are determined through negotiations with the grocery chains, club stores, and distributors to whom it sells.

Cal-Maine said its prices averaged $2.71 per $12 in the most recent quarter. That’s nearly double the $1.37 he was getting a year ago, but it’s still below the prices consumers are paying.

The Associated Press contributed to this report.

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