Cracking the Egg Crisis
25:24 Share

Get the Angel Reef Special at McDonald's now. Let's break it down. My favorite barbecue sauce, American cheese, crispy bacon, pickles, onions, and a sesame seed bun, of course. And don't forget the fries and a drink. Sound good? Ba-da-ba-ba-ba. And participate in restaurants for a limited time.

Thanks to IP.

Learn more at phrma.org slash IPWorksWonders. When the world is normal and eggs are not comically expensive, Dr. Jada Thompson is not being pestered by reporters. Never. You know, my joke has been that I am important for this two seconds and I will fade into obscurity again. Thompson is an associate professor at the University of Arkansas.

And maybe every so often she gets a call about the Arkansas poultry industry. But it's not like this. This is insane. Off the charts. This is the most media I have ever done in my career. And the thing you have to understand about eggs is that they are, in economic terms, inelastic.

Think of it this way. Usually, when the price of something is high, you get less of that thing for your money, something economists call shrinkflation.

That's just not how eggs work. You can't shrink plate a carton of eggs. And so I'm going to see the price change very drastically in my face. To $5.99 or $6.99. And granted, I live in New York City, but I saw regular old eggs for $9.99 a dozen this week. The ongoing bird flu is ravaging the chicken population, driving up egg prices from about two bucks for a dozen eggs last fall

to now eight

A growing number of restaurants are now adding an additional charge for eggs. A nationwide egg shortage spurred by avian flu outbreaks now forcing some eateries to charge customers egg surcharges to offset some of the higher pricing. The prices are really high. Here's $10 a carton. I can't really think twice about that. And guess what? The government just said egg prices may rise more than 40% this year.

So today on the show, we are going to peel back the layers of confusion in this story. How the egg market works, how bird flu is contributing, and why it's all so much worse right now. With, God help me, an egg spurt. I'm Lizzie O'Leary, and you're listening to What Next TBD, a show about technology, power, and how the future will be determined. Stick around. This episode is brought to you by Discover.

It's smart to always have a few financial goals. And here's a really smart one you can set. Earning cash back on what you buy every day. With Discover, you can. Get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously. All of it. Discover trusts you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card.

Okay.

Progressive Casualty Insurance Company and affiliates. Price and coverage match limited by state law. Not available in all states.

There are a lot of factors that go into the price of eggs. Obvious stuff, like the cost of feed, transportation, egg cartons. Slightly less obvious stuff, cost of electricity at farms, water, propane, bedding, cleaning. Then there is the egg market. Egg producers sell their eggs to wholesalers who sell eggs to your supermarket.

Most of the time, these wholesale prices are set by big contracts. And so when the wholesale market price goes up, retail prices are going up. So then the question begs, what happens at the wholesale? And wholesale market is an auction type of style. And then it is the demand is dictating the price. And so as supplies are really, you know, when they're numerous, those prices aren't very high. You know, we're getting those prices, we're getting those goods at a lot lower prices when...

Supplies are tight. Prices go up. And right now we have some of the tightest supplies we've ever had in history. Could you lay out for me simply how bird flu contributes to this question of price? Yeah. Bird flu, its name is highly pathogenic avian influenza. And the reason it gets that name is...

highly pathogenic is because at least 75% of the birds, the chickens that are going to get this disease are going to die. So we have mass, mass deaths, the mortality rates. This particular strain is closer to 90 to 94%. Just to emphasize, if a bird gets this particular strain of bird flu, you'll hear Thompson call it HPAI, it's correct name, they are going to die.

It's sad, but simple. I'm talking about just if a house of birds get that, that's the mortality rate we're going to get. So when we start talking about HBI, we want to control that. We want to control the spread of that. We want to control it from getting into more houses because it's going to be devastating.

The poultry industry has three distinct segments, each of which feels the impact of bird flu differently. Turkeys are their own slice of the market. Broilers, those are the chickens we eat. And layers, aka hens, the ones producing eggs.

And so from a layer standpoint, in 2024, the whole year in 2024, there were 38 million birds layers that were affected by HPAI. In 2025, so it is February 27th right now, whenever I'm recording this, there are 30 million birds just this year.

So in a scalability that we want to talk about why our egg price is so record high is because we have record high counts of birds out of the system. And as those birds are out of the system, all of the eggs that they were going to produce are no longer being produced. And so you have this huge drastic reduction in supply of eggs. And then you have people who are inelastic, that they need those eggs, are baking goods and doing things. And so you have this huge demand and it leads to higher prices. I mean, in some ways, this is like

classic econ 101 supply and demand and an inelastic demand, right? Just people are like, I want eggs and that's the deal.

A hundred percent. I imagine that textbooks will use this in the future, that when people are using this in classrooms, that this will be a very good quintessential real life example of this is what it looks like. There was some research done by some colleagues of mine, Brandon McFadden, and I think Jason Lusk did a paper. And what they looked at is even during times of financial stress, that eggs are a good that's in our basket, that we still consume eggs. So even times where eggs are really high, people are still demanding them because they're just a basic good. But

This bird flu, like it's been going on for a couple of years. And I guess I wonder, like, why does it feel so acute right now?

Yeah. So we had a really bad outbreak in 2015 and it led to higher prices at the time. And it was a really big issue, but the disease died off. 2016, we saw recovery. And then we actually saw record low prices because we'd overcompensated in the industry. They had all these oversupply. And so egg prices were super low. Again, nobody's calling me then. And so

And so then we fast forward, 2022 happens and I did get calls. At the end of 22, when we had at that point with record prices into 23, it was, hey, prices are so high, what do we do about this? And it was, we hoped the disease would die out like it did previously, but it didn't. This strain is different in the ways that it's post-adapted. So the host that's carrying in the wild aren't affected

did like the commercial birds are. So they're just different kinds of birds. They're not affected in the same way. They don't have this mass mortality. So they're still carrying this disease out. They're moving it around the U.S. up and down kind of migratory pathways. It's spreading to wild birds. So within an area, and then it's getting into the houses and where it is highly pathogenic avian influenza and it is leading to high mortality rates. And then we have control measures on top of that.

And so we're not seeing the die out. You had at the end of last year, so the last quarter of 2024, so remember those big numbers I was telling you, it's the last quarter of 24, we had 20 million birds that were affected in the last quarter of 2024. So our prices in holiday season where we have really high demands,

were lower because we had all of these birds that were out of the system. And then you add 2025's numbers in where we have 30 million. So at this point, last quarter of 24 and this quarter, we are 50 million birds light. That is bigger than all of 22 together. 50 million birds. 50 million birds. Dead? Yeah, out of the system. Do not exist now because they have the disease. They were going to die from it and or depopulation.

When we come back, we look at the Trump administration's containment strategy and whether it's working. Get that Angel Reef special at McDonald's now. Let's break it down. My favorite barbecue sauce, American cheese, crispy bacon, pickles, onions, and a sesame seed bun, of course. And don't forget the fries and a drink. Sound good? Ba-da-ba-ba-ba. I participate in restaurants for a limited time. This podcast is brought to you by Progressive Insurance.

Do you ever find yourself playing the budgeting game, shifting a little money here, a little there, just hoping it all works out? Well, with the Name Your Price tool from Progressive, you can be a better budgeter and potentially lower your insurance bill, too. You tell Progressive what you want to pay for car insurance, and they'll help you find options within your budget. Try it today at Progressive.com. Progressive Casualty Insurance Company and Affiliates. Price and coverage match limited by state law. Not available in all states.

Workdays can be unpredictable, but your workwear shouldn't be. With a Cintas Apparel Plus program, you'll have freshly laundered garments for everyone on your team delivered every week. Cintas has workwear for just about any job imaginable with high-performance fabrics and an uncompromising fit that stretches and moves with you. Don't leave looking and feeling good to chance. Visit Cintas.com and get ready for the workday.

So what are the different containment strategies here? The Trump administration has been emphasizing biosecurity and a little bit less, if I'm correct, emphasizing culling flocks of birds. Is that right?

Yeah. So the Trump administration has just promised some money for kind of offsetting biosecurity costs. And of course, biosecurity is important. That's the washing of our hands during the flu season. Those are things that are the first line of defense at a farm. And there's always potential some marginal benefit for biosecurity. The question is, is how much biosecurity is at a certain point where it's not solving the problem? We talked about culling, and I think that there's a lot of questions going on as culling the effective strategy. Culling the effective strategy

Culling means killing off part of the flock to try to contain disease. And so, one, the answer that I have had is yes, that that is the effective strategy. And the reason why we want to say it's a yes is because we have such high mortality rates. And so the reason those birds are going to die

And if we're not having a culling strategy, there's a little bit more suffering from a welfare standpoint when I can think about that. But also that that's continuously growing more viral load. And so that viral load is going to get in the atmosphere. That means more wild birds are going to get it. That means there's more chances for humans to get it, more chances for dairy cows and other cattle and other animals to get it. And so then we have this problem or concern about zoonosis spread between animals from an epidemiological standpoint.

you want to reduce the viral load as quick as possible to reduce the spread of that disease. And so depopulation is one of those controllable strategies. I think that the next step is going to be vaccines. And I think that they have a conditionally accepted Zoetta's vaccine. I think that that will be the better containment method. I think that that will be, instead of being proactive in biosecurity and saying, hey, we can do all the biosecurity. And yes, let's continue biosecurity. And instead of being reactive with culling,

Let us be more proactive with this vaccine to try to help not get the disease at all so we don't have to react. God, I feel like the phrase viral load gives everyone just like the worst hangover of the last five years. Like that is something that I learned that I never wanted to have to learn. Yeah, I'm sorry. It's coming back at you now.

So there's also this issue of some of the mass firings that have taken place in the Department of Agriculture. Some of the USDA's APHIS employees, Animal and Plant Health Inspection Service, were fired. They're trying to hire them back. Like, what does that confusion add to this picture?

What it adds is a bit of a lag in the control. So the ultimate best control mechanism is going to be where you have coordination between federal, state, and local authorities.

And animal health, we talk about veterinarians from all those different levels that are working together to try to contain it on a local level, to try to contain it on a state, and then at a national level. And so maybe if you have less labor and less institutional knowledge that's being able to be shared between those institutions, we might not be able to address all of the issues as they arise as quickly as we would like to. Got it.

And if you are an everyday consumer trying to make sense of how much bird flu contributes to this price question,

Where do you put that in your brain with all the other factors that contribute to egg pricing? I'm going to say 95% of what these huge prices are going to be because 90 to 95 are going to be because of bird flu. Wow. You have such a supply shortage in a shorter period of time. And then there's a biological lag. And this is the other component of this. I've done some work on price recovery and looking at how fast the

does price recovery. And it's very much tied to the biological lag and how long it takes to get new birds in that system. And so you look at from the day my birds are gone, I'm devastated. And we say, oh, I need new birds for that house. I wasn't planning on those. So there's no, none of those birds are in the replenishment system. It takes 21 days to hatch a chicken egg and it takes another 20 weeks to get that chicken up to sexual maturity. So you're looking at six months before I have a new flock to put in my house. Now,

the industry can compensate. There's going to be movement around in terms of molting. Maybe we can rob Peter to pay Paul a little bit, move birds around and kind of shuffle them. But that doesn't

Totally changed my numbers. At the end of the day, I still have to replace those birds. And so that means that there's a cost to that system and there's a cost to the eggs that are going to come out of the system. So right now, we're looking at the impact of eggs today. It is what has happened recently, also up to six months ago.

So, again, when I'm talking about 50 million birds in the quarter two of 2024, we're talking about all of those are impacting our egg supply right now. What do you make of the news stories and the view that avian influenza isn't the only culprit here, that this is also about, I don't know, greed?

I don't have any data to substantiate anything at this point. I think that there's nothing that I can look to and say that there's actual numbers that we can point to to talk about that. There is a lot of players along the supply chains, the wholesaler, the retailer. I'm not saying that I can't understand that there might be changes of prices along that strategy, which is why I can understand that conversation. And that's where I think anything should be able to be held up to scrutiny. At the end of the day,

I think the root of all of this is eggs, that we have a shortage of eggs. And if we look at historical egg prices, egg prices will go exceptionally high and then they will come back down as egg supply comes back online. And so I would expect the egg prices are going to come back down. They're not sticky. One of the things that has gotten brought up is

Some egg companies have made very high profits or high revenues during this time when we're saying eggs are short and then they're still making these huge profits. My commentary on that is if you look at who is being affected by bird flu,

And we look at some of those companies that people are going to point to. Typically, the companies have not been as affected. They have not had as many houses out of the system. And that's a little bit of geography where they are located. This disease has really impacted the Midwest. It's everywhere. But it has really been very impactful in the Midwest area. And so the companies that are operating in that Midwest have been more impacted than the companies not.

not operating in the Midwest. And so I would caution that we think horses before we think zebras, and not that it's never zebras, but that let's make sure that we are addressing the horse issue before we start...

trampling down looking for the zebras. There's also the question of why chicken prices, the broilers we talked about earlier, haven't gone up in the same way the price of eggs has. Thompson says there's a fairly simple explanation. Chickens have been impacted, but at a much lower rate than egg layers. And there's twofold for this. One is geography, where those chickens are located. So the disease, they're located in the southeast in a lot warmer climates. The disease doesn't do as well in the heat. So there's some geography.

geographical benefits for the broader industry and two,

This disease specifically is more infectious to turkeys and is more infectious to older birds. And broilers are just younger. So we harvest them quite a bit younger than we do layers who are older, right? They're older, they're laying eggs. And so they're more susceptible to it than those broilers. And so in general, are there broilers that are coming out of the system? Yes. Chicken prices probably are raising for certain products. And there is some effect of that in the system.

We're just not seeing the same counts of those. So instead of 50 million, you're talking about 4 million or 5 million broilers. And so that scalability is substantially different between those two industries. So thinking about that six-month timeline that you're talking about, for eggs to hatch, for birds to reach maturity, if I had you back in six months, are we going to say like, whew, wow, that was tough, but we made it, eggs are affordable, or are we just in like completely uncharted waters?

I think the question would be how many more cases happen between now and six months. Let's pretend that there's a scenario where we have no more cases and that six months from now or even kind of smaller case counts, not this kind of exceptional numbers.

I think the conversation would be that prices are down substantially. What is affordable? Like what is the level that everybody will make happy? And so that's a harder question for me to say, yeah, eggs are a great price. It's like, I don't know. Compared to today, I think anything lower is happier, right? So I think that if we didn't have any more large,

scale outbreaks, that conversation in six, seven months would be, yeah, prices are lower. They would almost be a non-issue or a non-issue compared to today because there is that recovery in the system. And what you start seeing is we see exits going up. So we see the number of birds that they're setting today so that they have, you know, more birds coming online. We saw the number of exits starting in October and November and December of last year. So those will come online. So there's hope on the horizon. It just isn't here yet.

Dr. Jada Thompson, thank you so much. Thank you. Dr. Jada Thompson is an associate professor for the University of Arkansas, where she focuses on agricultural economics and agribusiness. And that is it for our show today. What Next TBD is produced by Evan Campbell and Patrick Ford. Our show is edited by Elena Schwartz. TBD is part of the larger What Next family.

And right now, independent journalism is under threat. If you want to help us keep doing what we're doing, please think about joining Slate Plus. You get all your Slate podcasts ad-free, as well as exclusive bonus content like The Discourse, which is our bonus show that covers one big thing in the online conversation. We will be back next week with more episodes. I'm Lizzie O'Leary. Thanks for listening.

Get that Angel Reef Special at McDonald's now. Let's break it down. My favorite barbecue sauce, American cheese, crispy bacon, pickles, onions, and a sesame seed bun, of course. And don't forget the fries and a drink. Sound good? Ba-da-ba-ba-ba. And participating restaurants for a limited time.