Was the dramatic increase in egg prices in the winter of 22-23 caused by anatural or artificial shortage? Who or what is to blame for the rise in costs? by Senator Elizabeth Warren and Representative Katie PorterUnited States Congress, February 16th 2023Dear Mr. Baker,I am writing regarding my concerns about the elevated price of eggs and the extent to which egg producersmay be using fears about avian flu and supply shocks as a cover to pad their own profits at the expense ofAmerican families. In the midst of record-high egg prices, your company, the largest egg producer in theUnited States, announced a 65% annual increase in profits in the third quarter of 2022, and no positivecases of avian flu. Although wholesale prices are finally starting to drop, they have not yet dropped for retailconsumers. And given the extent to which the high prices of eggs in 2022 and early 2023 harmed consumersand small businesses, we have ongoing questions about what caused the massive spike in egg prices - andhow to make sure it is not repeated. Given corporations' rampant profiteering during the COVID-19 pandemicand the ensuing economic crisis, and the egg industry's history of anticompetitive practices, I ask that youprovide transparency about the rationale for the increase in egg prices and the financial impact on yourcompany.According to the Bureau of Labor Statistics, increases in retail egg prices have outpaced all other foodcategories, jumping 59.9% annually as of December 2022, with consumers in some states paying more than$7 per carton. The avian flu outbreak, which producers have largely blamed for the price hikes, impactedapproximately 43 million egg-laying chickens. However, advocates have noted that the outbreak hasdecreased the size of the total flock by no more than 6 percent in most months, and in October 2022, totaltable egg production was down no more than 4.2 percent.At the same time that prices were skyrocketing, your company, which controls approximately 20% of theretail egg market, was reporting record profit margins and no positive avian flu cases on any of its farms. InDecember, Cal-Maine Foods reported gross profits increase of more than 600% over the same quarter in2021, which the company claimed was "driven by record average conventional egg selling price." Althoughthe other top egg producers are private companies that have not publicly announced either their profits ordisclosed the financial impact of the avian flu on their flocks, past anticompetitive practices in the eggindustry raise concerns about price gouging on their part. Lawsuits against Cal-Maine and other dominantproducers accused the companies of price gouging, collusion, and "cartelistic conspiracies" to limitproduction and keep supply artificially limited.This is a pattern we've seen too often since the COVID-19 pandemic: companies jacking up their prices topad their own profits, putting an additional burden on American families and the economy as a whole.American families working to put food on the table deserve to know whether the increased prices they arepaying for eggs represent a legitimate response to reduced supply or out-of-control corporate greed.Although wholesale prices have decreased, consumers are still waiting for relief at the grocery checkout,which could take several more weeks. In order to address my concerns about your company's pricingdecisions, I ask that you please appear before a Congressional hearing to answer the questions raised bythis letter by March 1, 2023:

The dramatic increase in egg prices during the winter of 2022-2023 was driven by a combination of…

Answered: Was the dramatic increase in egg prices…

Was the dramatic increase in egg prices in the winter of 22-23 caused by a natural or artificial shortage? Who or what is to blame for the rise in costs?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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