There's a steady flow of customers on a recent afternoon at The Sugar Shack Bakery.
The buyers take their time choosing from the colorful assortment of cookies, cakes and brownies that line the shelves of the small shop in Sioux City, Iowa.
To make each sweet treat possible, it takes a whopping 300 eggs every two to three days. Lately, that’s meant a much higher bill for Claudia Hessa, the bakery’s owner, who has been spending more than double on eggs for the last couple of months.
Despite a brisk holiday business last month, her profits were down about 20%. Hessa said there's no way to double or triple sales to make up for it.
“You just can't. You would be out of business,” Hessa said. “So it's like, what do you do?”
Consumers may have gotten used to seeing higher food prices at the grocery in the last couple of years, but egg prices have risen more than any other food product, according to the U.S. Department of Agriculture’s Consumer Price Index.
The average cost for a Grade A large carton of eggs reached $4.25 last month, economic data compiled by the Federal Reserve Bank of St. Louis found. That’s up almost 60% over the same time last year, according to the CPI.
“It’s the largest increase we've seen in any category for quite some time now,” said Pat Westhoff, the director of the Food and Agricultural Policy Research Institute at the University of Missouri.
Same demand, less supply
Inflation has hit all food prices. The causes can be traced to many different sources: supply chain disruptions, the war in Ukraine and high labor wages.
But, eggs have had an added obstacle. The supply of eggs shrank this year.
That’s a problem, Westhoff said, because eggs have what economists like to call “inelastic demand” – meaning people are still likely going to buy a carton, no matter the price.
“It takes a pretty big increase in price to convince people not to buy quite as many eggs,” Westhoff said. “So your relatively modest percentage decline in production has resulted in a very large percentage increase in prices.”
In other words, they're harder to substitute than many other food items, which makes egg prices more sensitive to market disturbances.
Bird flu to blame
So, when a deadly bird flu began to sweep through egg-producing farms last year, it heavily impacted prices.
Analyst Maro Ibarburu of the Egg Industry Center said the disease devastated egg supplies. Table-egg production decreased by nearly 5% year over year, according to the USDA’s October outlook.
“We lost 44 million laying hens last year because of avian influenza,” he said. “That really creates a reduction in the number of eggs that can be produced.”
Avian influenza is deadly for entire flocks. When the virus is detected in one bird, federal law requires that all remaining birds be culled to keep the highly pathogenic virus from spreading.
Last year marked one of the virus’ deadliest outbreaks. In March, a huge U.S.egg-producer, Rembrandt Enterprises, had to cull a flock of more than 5 million egg-laying hens. The virus killed almost 15 million egg-layers in just Iowa, which leads the nation in egg production.
Major bird losses continued through September – right before winter, when eggs hit peak demand.
“At the end of the year we always face a much stronger demand here because it's the baking season for most families,” Ibarburu said.
The sunny side
But, those prices may be easing off – at least a little – in the near future.
As we move away from the holiday baking season, we’re likely moving past the peak for prices as well.
Iowa State University agricultural economist Lee Schulz says the USDA is forecasting better wholesale prices. He said a decrease in cost is likely to come, as egg production is expected to ramp up.
“They do expect product prices to decline some, maybe about 30% off these historically high levels in 2022, as we look at 2023 prices,” he said.
That all depends on how long it takes for egg producers to recuperate their flocks and whether bird flu causes another disruption to the supply.
Hessa, the bakery owner, is counting on the drop to happen soon. She said she can’t remember a time when ingredients have been so expensive.
“Eggs are such a staple,” she said. “Hopefully, it will change.”
Kendall Crawford is Iowa Public Radio’s western Iowa reporter based in Sioux City.
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest. It reports on food systems, agriculture and rural issues. Follow Harvest on Twitter: @HarvestPM
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