I confess that I'm an egg-for-breakfast person. A couple of eggs scrambled with a slice of toast, and I'm good for the day. So, all of this news that something is going on in the Egg World certainly has me concerned. I've noticed the Egg crisis at the supermarket, where the price of a dozen eggs has nearly doubled in Pennsylvania over the past year.
And that should be our first clue. As we do, anyone who follows the markets will acknowledge price conveys information. Generally, as prices rise, like our favorite breakfast, something is happening with the supply side. The fact that prices have increased dramatically throughout the nation tells me that we are starting to feel an egg shortage.
That's what our media is telling us. The nation's news outlets are reporting on rising egg prices, blaming a recent avian flu outbreak as the cause. And they may be right. So far, more than 50 million birds have been euthanized because they carried the flu. And that's bound to have an impact on supply.
There is another factor at work causing a reduction in egg supplies: the number of eggplant fires. Just massive coups; the latest fire occurred in Connecticut last week. A significant fire killed 100K laying hens, likely raising egg prices in Connecticut even further.
That's not a conspiracy. It is simply a statement of fact. A fire did occur, which wiped out 100k birds in Connecticut last week. The assertion that this was a wanton act is where reporting facts becomes a conspiracy.
Is someone, or some group, destroying our egg supply? In the last couple of years, there have been over 100 eggplant fires in the country, and anything is possible. I see why people may think that's a conspiracy.
So today, let's look at the question: is there a conspiracy to destroy the Egg Market?
To answer that, we'll turn to the nation's number one egg producer, Cal Maine Foods. You may not know their corporate name, but depending upon where you live, you may be very familiar with their two most popular brands: Eggland's Best and Land O Lakes. Where I live, in the mid-Atlantic region, Eggland's Best is the dominant brand of eggs and is featured in every supermarket I visit.
Cal Maine sells a billion shell eggs yearly and has a 20% nationwide market share. Far and away, the dominant player in this very specialized market. In total Cal-Maine manages 50 million laying hens.
My research indicates that Cal-Maine has suffered four major eggplant fires in the past four years. Incidentally, Cal-Maine does not disclose their plant fires in any of their public financial reports, so if you should find a fire that I missed, please post it in the comments below.
In 2019, Cal-Maine suffered two devastating fires. The first in Rice County, Kansas, claimed 80K birds, and the second in Parmer County, Texas, claimed 1 million birds. Parmer Sheriff Randy Geries makes a fascinating observation at this second fire.
Remember, this was a massive facility to house a million birds. Sheriff Geries comments that the fire moved from building to building in just minutes. He was implying, at least, that the fire's origin was suspicious. Unfortunately, nothing further was said, and no investigation, if there was one, was reported.
More recently, Cal- Maine had fires destroy their facilities in Farwell, Texas, which killed 800k birds, and just over a year ago in Dade City, Florida, that killed 240K.
Unfortunately, in the company's annual report, these fires are lumped in with the rest of the Property, Plant, And Equipment line item, so we can't see the individual cost of these losses. Nor does Cal-Maine report the income loss from the loss of that number of birds. But it helps explain why the nation's largest egg producer may have been under cost pressure over the last few years.
Add to Cal Maine's four first the 96 other fires, and we're beginning to understand why the price of eggs is skyrocketing. And, of course, we cannot ignore the impact of the 50 million birds culled for the avian flu.
These higher egg prices in our Super Markets are indeed the result of fewer eggs available on the market. First from the culled birds and second from those eggplant fires. So, overall the free market still works.
Unfortunately, the question of who's behind these fires remains open. But the fact that Sheriff Geries wanted to go on record to let us know how quickly the fires spread from "building to building" is, it seems to me, a clue.