Harbingers of economic fragility: eggs and rice

Japan took an unprecedented measure: an emergency rice reserve auction not related to a natural disaster. And U.S. eggs are in a very small basket.

“Don’t put all your eggs in one basket.” Yet, the top two U.S. egg producers control approximately 38 percent of laying eggs. At the end of 2023, a federal jury imposed a $53 million judgement against Cal-Maine foods, by far the largest egg producer in the country, for price fixing. They were sued along with Rose Acre Farms, and two trade groups, in a lawsuit that lasted a dozen years, by industry giants Kraft Foods, General Mills, and Nestlé. I am no expert on eggs. What I do know has been fed to me by some kind readers who are experts. It’s a tough industry.

Image: Grok. I must say Grok does a great job of making “food porn” images on the first try.

Since 2022, the egg industry has been hard hit by avian influenza—bird flu. Now, the Trump Justice Department is looking into Cal-Maine and Rose Acre farms again, that the two are conspiring to keep egg prices high during the bird flu epidemic that has led to supermarket scarcity and restaurants imposing an “egg surcharge,” POLITICO reported Friday.

I was just at the supermarket yesterday and the egg shelves at Publix were bare except for the premium, high priced eggs from places like Vital Farms, selling for over $11 per dozen. I have been able to find more reasonably priced eggs by shopping around. But Passover and Easter are coming, and I honestly have no idea how I’m going to find the metric ton of eggs required to cook for the holidays. I’m sure many readers are in the same situation.

USDA Secretary Brooke Rollins announced a billion-dollar plan to fight bird flu and lower egg prices, including looking at egg imports to juice the supply. But U.S. eggs are under completely different regulatory paradigms than many other countries, especially in Europe, where washing eggs is forbidden. In the U.S., the cuticle—a natural covering over the egg shell—is washed in an effort to sterilize the eggs and prevent salmonella. In Europe, the cuticle is maintained, and cleanliness standards are applied to the farms themselves, making eggs shelf-stable without refrigeration. But in Europe, sometimes you get ugly eggs, not the perfect ones you see in the carton here. The issue here is that importing eggs from other countries isn’t something easily done, or even something that would be accepted by American consumers.

The fact is, we’re largely egg-independent, and we’re stuck with what we have. In some European countries, hens are vaccinated against salmonella, which can infect laying hen ovaries, leading to human sickness. We don’t do that in America [Correction: we do. I have been informed by an egg expert in the comments.] (because we wash and pasteurize the eggs). Some industry groups are pushing research into avian influenza vaccination. The Chinese have a program to vaccinate laying hens, however there’s a problem with that.

Without getting too far into the weeds: the current solution to bird flu spread is to cull the hens—to kill them. The reasons for this are, first and most obviously, to limit the spread of the virus. Second, to stop the potential for mutation. Vaccination tends to bring out new mutated versions of a virus that are not stopped by the vaccine. This is what may defeat the Chinese program. It’s also bad for global egg production, since it leads to ever-more challenging viruses and more need for vaccination.

The third reason is related to the second. More mutations means that one of the mutated forms of avian influenza could infect humans. As touted by the United Egg Producers (“Egg Farmers of America”), an industry trade group (for disclosure, it was one of the groups sued in the 2011 case), both “USDA and CDC confirm that avian influenza is not a food safety issue or a public health risk.” That’s true, for now. However, a policy of mass hen vaccination could potentially lead to the status-quo changing, if a form of avian influenza could sicken humans.

In egg farming, biosecurity is no joke. I asked our egg farmer reader why I couldn’t just go and buy a dozen eggs from the local farm that supplies some of the supermarkets here, and the answer was that I wouldn’t be let into the facility, period. (That, plus, well, the supermarkets wouldn’t look kindly on their supplier undercutting them.) All the talk in the world about free-range hens and such don’t apply at the industrial level. Farmers don’t want their laying hens having contact with wild birds, or other animals. They don’t want just any equipment or feed coming onto their farm. Keeping the hens segregated is a biosecurity imperative, because it protects the hens from infection.

But the best way to keep future hens safe is, at this point, unfortunately for the exposed hens, mass culling. And mass culling leads to rolling shortages. And rolling shortages leads to price instability. And price instability highlights the fragility of the egg market. Because eggs can’t be strategically stockpiled. (Pedants, hold your emails about freezing and other methods.)

So whatever the politicians say, eggs are not going to get cheaper. And if the Justice Department goes after Cal-Maine Foods and Rose Acre Farms, forcing them to pay fines, that will only increase the price instability more.

If you’re an egg expert, feel free to give your take in the comments.

We can’t stockpile eggs in the U.S., but Japan can and does stockpile rice. Rice is such a staple in Japanese culture, that the government maintains a strategic emergency stockpile, which on occasion, for say, a natural disaster, they release at auction. But the Japanese government has done something it’s never done before. They are releasing strategic reserve rice to try to stabilize prices, which have nearly doubled in the last year.

Since 1995, the Japanese government has built a store of about a million tons of rice to help through disasters like earthquakes and typhoons. They are releasing 150,000 tons, and potentially an additional 60,000 tons, at auction this week due to a year of poor harvests, hot weather, and hoarding after a “megaquake” panic over the summer.

In August, shelves emptied of rice due to the “megaquake” panic, and that has led to a supply squeeze, which has pushed the price of rice higher.

Again, the fragility of a core food supply in a country that largely relies on its own ability to produce, is highlighted by a string of negative effects: poor harvest, panic buying, and increased demand.

With all the trade wars, rumors of war, bad actors and evil axes of power, food supply fragility, and the harbingers of American eggs and Japanese rice, lead me to some very Biblical-proportion thoughts on what famine and inflation really mean. Surely, we will have eggs again, though maybe not for $3 per dozen. And surely, the Japanese will have rice, without exhausting their strategic emergency stocks.

But both of these are threatened by situations we have little control over. Avian influenza and heat waves are beyond human ability to exterminate. Both of these have the ability to infect our food supply and cause shortages. And the shortages seem to be increasing in frequency.

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