Why Eggs Aren’t Cheaper By the Dozen

Egg markets have been scrambled.

It should have been classic supply and demand but it wasn’t.

avian influenza has devastated the egg supply chain

Sick Chickens

Because of bird flu or extermination, 32 million egg-laying hens are dead; one-third of Iowa’s egg layers were wiped out. Not seen since the 1980s, an avian influenza outbreak is serious but this one is the worst. To come back, farmers exterminated whole flocks, disinfected their homes and secured new birds. The expense was immense.

The flu means higher prices, fewer “breaker” eggs sold as liquid to food processors and whole eggs in grocery stores. Thinking of McDonald’s breakfast menu, you can imagine all of the eggs they need for all of those Egg McMuffins. Comparably, any restaurant serving breakfast needed to respond. Some have changed their recipes. Michaels, a seller of plant-based egg substitutes has seen demand for its products spike.

Now, with the flu gone, those who switched are not necessarily returning to eggs.

Our Bottom Line: Supply Elasticity

In the short run it is tough to increase your chicken supply. As economists, we would say that in the short run chicken supply is inelastic. Because the chicken supply is difficult to increase in a short time period, any supply upset increases prices while quantity dips.