Egg prices cracking the bank
The Washington Post
WASHINGTON – In the race between her family’s income and four hungry sons, Norma Jean Young says the boys are beginning to win.
The cost of the five loaves of bread and four gallons of milk that her three teenagers and 11-year-old churn through in a week has increased 11 to 17 percent since early last year. The price of eggs is up even more, jumping 30 percent to their highest point since 1984, according to federal tracking data.
“It’s ridiculous, and my kids eat them by the gallon,” said Young, an occupational health nurse from Annandale, Va. “They’ll routinely make three-egg omelets when they get home, for a snack. … It’s a quagmire that I never step out of.”
Lee Rathbun, meanwhile, has cut trips to the meat aisle by half to save money. So when he saw a special on eggs during a recent visit to the Safeway, he grabbed three dozen. They were on sale, “a two-for-one deal,” he said. “That means there’s going to be potato salad this week,” he said.
And at the national average of $2.17 a dozen, the 15,200 eggs set to be dyed and rolled on the White House’s South Lawn on Monday would cost $697 more than they did last year. Luckily for Uncle Sam, he gets them gratis from the American Egg Board and the Virginia Egg Council.
On Easter weekend, even the humble egg can’t escape the nation’s economic angst. A surge in egg exports, the weak dollar, pricey grain, oil at more than $100 a barrel and cuts in the national chicken flock have contributed to the fortunes of the region’s farmers and to supermarket sticker shock.
“Nobody ever thinks about what all goes into that product they purchase and how tied into the world you are,” said Bill Hibberd, who has been raising chickens for 30 years in New Windsor, Md. “It just amazes you. Where do these eggs go when they leave us?”
But first, the chickens.
The 103,000 white hens pecking at feed troughs in the mechanized barn of one of Hibberd’s fellow producers in nearby Westminster, started their harried lives 15 months after a shipment of embryos arrived in Canada from a breeding facility outside Hamburg, Germany. Two generations later, the female chicks from the resulting flock were rumbling toward Maryland’s Sunnyside Farms.
The females, beaks clipped so they don’t tear one another apart, are fattened up and start work at 18 weeks. (Male chicks are sent to a high-speed grinder or fed to zoo animals; the breed isn’t considered meaty enough to raise for drumsticks.)
In henhouse 2 at Sunnyside, the chickens are placed in 13,920 cages stacked four high, above a large manure pit cleared twice a year. Chains drag a crushed-corn mixture to the birds, and a conveyor system with white rubber fingers eases the eggs – 22 dozen per hen per year – out to be processed for consumers.
“You take care of the hens, get the eggs out and try to feed the world,” farm manager Jeff Shanks said.
With the market “way high,” Sunnyside’s 430,000 hens are producing more than 8 million dozen eggs a year, part-owner Donald Lippy said.
“If that goes for a while, you make good money. You make real good money,” Lippy said. “But then you go to the other side of it, and you give it back. It’s another typical farming deal.”
Prices have gone in cycles, often dropping so low that farmers have had to unload their eggs below cost. In recent years, such losses have squeezed many out of business.
“Sometimes it gets to be survival of the fittest,” said Gabe Zepp, an agriculture official in Carroll County, Md., which produces 10.6 million dozen eggs. Sunnyside’s operation is the largest still standing in the county. In Hampstead, distributor Sauder’s Eggs stays busy washing eggs and using glowing lights and ultrasound to check for cracks.
Many U.S. producers who stayed afloat cut their number of chickens.
In 2005, Hibberd trimmed his flock from 160,000 to 4,000. “You couldn’t justify operating it,” he said.
At the same time, most U.S. farmers, feeling pressure from animal welfare advocates at home and in Europe, have been voluntarily cutting the number of birds kept in a typical 24-inch by 20-inch cage.
Together, the cutbacks, resulting in 5 million fewer hens nationally, helped bring about today’s spike. Fewer eggs equals higher prices.
Feed costs are up, too, pushed by overseas demand for grains and corn-hungry ethanol producers. And bills are higher for the fluorescent henhouse lights and fuel.
But energy costs affect everybody, said Dave Harvey, a USDA poultry and fish farming analyst. “Eggs have gone up a lot more than most other things,” he said. “It’s a combination of lower supplies and high export demand – those are the big things right there.”
Jurgen Fuchs, an international egg trader based outside Frankfurt, Germany, whose father started the business to fill shortages after World War II, watches world markets and relies on timing and connections to buy low and sell higher.
In January 2007, a dozen eggs were selling in U.S. stores for $1.55, cheaper wholesale. The eggs that Fuchs bought last year from U.S. producers ended up on the plates of diners in Hong Kong and the Middle East.
Now, “the market is so high, nobody can pay these prices,” Fuchs said.
Seizing the opportunity, Hibberd, although still in debt, added 20,000 hens in October. He enjoys working with the birds, which bob and squawk all day like scratchy chorus singers. “At night, there’s no sound. I always loved that,” Hibberd said. “You walk in after dark, and they’re sleeping. They purr.”
Norma Jean Young is still buying three to four dozen a week, but she is changing the way she manages the family’s food.
With her husband’s income as a lawyer and her nurse’s salary, the family is comfortable but careful about spending. Their prescription co-pays are higher, their oldest son starts college in the fall and a recent trip to a BJ’s warehouse store for groceries hit $450. “Our food bill has climbed, and our bag count has gone down,” Young said.
So if her four boys want frozen pizza, and it’s not on sale, they must track down the coupons. She has stopped taking the kids to the food aisles with her because she feels uncomfortable saying no. She’s trying harder not to let produce go bad and points out leftovers on plates. And she is quietly holding back a few eggs on big Sunday breakfasts for six.
“If you had a whole big smorgasbord, you would crack 14 or 16 for scrambled eggs, in addition to pancakes or whatever you’re making. Now I pretty routinely go about 10,” Young said. “I’m buying more at the need level than at the want level.”