Behind the "rocketing" rise in egg prices in the United States: Grocery stores selling at a loss, will the future impact be even more intense?

The price of eggs in the United States has reached a historic high and may continue to rise, but the situation could get worse. According to the latest data from the US government, consumers are paying an average of $4.95 for a dozen large Grade A eggs at supermarkets, which is still more than $3 cheaper than at grocery stores. Data from commodity research company Expana shows that wholesale egg prices reached $8.15 per dozen on Wednesday, the highest level since 1985. Yahoo Finance senior columnist Janna Herron believes that grocery stores have not passed on all the costs to consumers because they want eggs to be as cheap as possible so that consumers will continue to shop at their stores. However, this strategy may be difficult to sustain, and consumers may face even greater price shocks in the future. "Loss-leader" sales tactics Richard Volpe, associate professor of agribusiness at California State Polytechnic University, says that milk and eggs have long been considered "loss-leader" products, priced below wholesale costs to attract shoppers to stores. Volpe said, "For consumers, the storage costs of these products are high. People keep buying them, and a lot of people are buying them." Milk and eggs are also placed in the refrigerated area in the back of the store, so shoppers have to walk through the entire store to buy them. This provides ample opportunities for consumers to pick up other items along the way. But as egg prices soar, this strategy becomes more complex. The avian flu outbreak has led to a sharp decline in the number of egg-laying hens in the US. Once one hen is found to be infected with avian flu, nearby hens must also be culled to prevent the spread of the virus. Since the outbreak of avian flu in February 2022, nearly 158 million poultry have been affected, many of them being egg-laying hens. As a result, egg prices have skyrocketed. Kevin Bergquist, industry manager at Wells Fargo & Company's agricultural food research institute, said the speed of the egg price increase exceeds that of other price hikes in recent years, such as the doubling of egg prices in 2020. He said, "It can be said that the price trend is like riding a rocket." Egg prices reach historic highs Retailers' "creative" response to rising egg prices US retailers are striving to cope with the rise in egg prices. With inflation still plaguing consumers, food retailers are unwilling to raise egg prices or prices for all items. Instead, supermarkets typically reduce discounts and other promotions, such as "buy two get one free." Due to the lag in data on food and grocery discounts and promotions, actual data may not be available until several months later. But the latest weekly statistical data from the US Department of Agriculture shows a decrease in egg advertising activities, noting that "due to supply issues, retailers continue to limit egg sales." For food retailers, egg shortages are more worrisome than price hikes, as empty shelves can lead to customer loss. Volpe said, "This leads to the loss of market share for stores and the loss of reputation. Therefore, retailers are very, very eager to avoid empty shelves." That's why chain supermarkets like Trader Joe's and Costco are limiting the number of eggs customers can purchase to prevent hoarding and keep shelves stocked. Another way food retailers are offsetting egg losses is by getting shoppers to spend more than usual. At Weis Markets, Inc. in Loyal Valley, Pennsylvania, anyone with a Weis Preferred Shopper's Club card can buy 18 large Grade A eggs for $2.99 with 100 reward points (spending $100), compared to the regular price of $10.45. Volpe said, "This is the essence of loyalty programs, they clearly attract people's attention to high-demand eggs." Will prices continue to rise? The sustainability of these retailers' strategies remains to be seen, especially as egg prices continue to rise. This year, there have been 32 cases of avian flu infections in the US egg industry, resulting in the deaths of over 20.5 million egg-laying hens, accounting for over 6% of the total hen population in the US. Even if the avian flu outbreak subsides, it will take several months to rebuild these flocks. Ryan Hojnowski, egg analyst at Expana, said, "Historically, in the US, each person needs one egg-laying hen to meet demand." With a population of 340 million in the US, the number of egg-laying hens is less than 300 million. Hojnowski added, "The supply gap is becoming more and more evident." Meanwhile, demand for eggs in the US remains strong. And with Easter, the peak consumption period for eggs, still over a month away. However, a recent survey found that two-thirds of shoppers are willing to pay between $3 and $5 for eggs. Currently, egg prices in the US are at the high end of this range, which could disrupt demand.