At a 15-year low, the hen to human ratio in the United States is three. While the reason is the Avian flu, the bigger problem is egg prices.
Egg prices are up 59 percent year over year, and 11 percent during the past month. In California, where prices are highest, one dozen Grade A eggs was $7.37. Not quite as expensive, national egg prices averaged $4.25 a dozen in December while two years ago, they were $1.79. Meanwhile, reflecting the plight of smaller eateries, The Egg House Cafe in Crystal, Minnesota reported that egg prices have tripled from $20 to $65 a case.
During the last big Avian flu epidemic, farmers killed 32 million egg-laying hens. Now they have “depopulated” 44 million.
Meanwhile, in our backyards, more of us have rented chickens. While the trend started during Covid, the numbers are soaring. With the standard $665 package from Rent-the-Chicken, you get two egg-laying hens, the coop, water dishes, the food, and instructions. A cheaper but more chancy alternative is buying baby chicks.
Our Bottom Line: Supply Elasticity
With the impact of Covid on labor and feed prices and then of Avian flu, egg supply could take awhile to recover because of supply inelasticity. My favorite example of supply inelasticity is unexpectedly popular holiday toys. Manufacturers would love to send more to the stores but they do not have the land, labor, or capital to do it quickly. An economist would say the reason is inelasticity.
Similarly, in the short run it is tough to increase your chicken supply. As a result, any supply upset nudges prices skyward while quantity dips. Below, I’ve illustrated supply inelasticity with an almost vertical supply curve:
So, where are we? We have the CPI signaling that inflation could be coming down but egg prices are not.
My sources and more: Always my Saturday favorite, Slate Money inspired today’s post. From there, my research on egg prices, here and here and here took me to chickens, the Avian Flu, and to backyard chicken statistics.. In addition, we can look at the CPI press release for inflation news. (Please note that I could not confirm the hen to human ratio that I heard from Axios’s Felix Salmon during the Slate Money podcast..)