Ken Terry used to buy two dozen eggs every week. After prices rose earlier this year due to a nationwide bout with bird flu, he says he buys a carton a month — if that.
“I grew up on a farm, so I know all about eggs and all about what they should cost and what they don’t cost,” Terry, a shopper at the Arnold Green Valley Marketplace, said. “I’m not paying $8 for a dozen eggs.”
According to the Department of Agriculture, wholesale egg prices dropped throughout the country in March. But retailers have not lowered the prices customers pay at the same rate.
According to the agriculture department’s daily report on Friday, a carton is between $3.84 and $3.88 wholesale in the New York market, one of a handful of regions the department tracks. But In both Baltimore and Anne Arundel counties, the cheapest eggs at retailers like Giant and Safeway are around $5.29 a dozen. The average price of eggs nationwide, as calculated by the St. Louis Federal Reserve, was nearly $6 as of the end of February. Eighteen-count packages of higher-end varieties are going as high as $11 a carton.
Marketing Department Chair at the University of Maryland Smith School of Business Amna Kirmani said it will be some time before consumers see the full benefits of lowered wholesale prices.
She said the decline in wholesale prices comes from a variety of factors. Farmers have been able to contain the bird flu, and the United States is importing eggs, stabilizing supply. But the inflated prices on the retail side have made consumers pursue less expensive proteins, lowering demand, contributing to the price fall.
Still, egg prices continue to hit some consumers hard.
“I used to eat maybe two or three a day,” said Ken Fru, a shopper at a Baltimore Whole Foods, who had a new carton of eggs in his bag. “But now maybe once [a day] or something. [I] try to cut down, because it’s so expensive.” His organic eggs at Whole Foods were just over $10 a carton.
But for retailers, it’s a game of chicken. Around Easter and Passover, demand for eggs tends to go up, and there are fears that the spring migratory bird season will bring the flu back, potentially worse than it was earlier this year, cutting their supply once again.
“It takes a while for those that drop in price to go through the supply chain and reach the retailers,” Kirmani said. “Retailers are still selling eggs from their higher-priced inventories, and so they are going to charge high prices until this wholesale price drop reaches them, but I’m not sure that even then they will actually decrease the price, because there’s still a lot of uncertainty.”
Kirmani said retailers want to charge as much as they can for as long as they can, while the public’s perception is “eggs are expensive right now.”
“Those who are still buying will continue to buy those high prices, and retailers, probably for some time, will enjoy extraordinary profits based on eggs alone,” Kirmani added. “Going back to lower prices is going to happen when competition starts to lower their prices at the retail level.”
She said that egg prices are “sticky downwards,” meaning they are slow to fall in price.
Some retailers like Trader Joe’s are selling eggs at $3.49, while limiting how many cartons can be bought at once, which Kirmani said could indicate the retailers trust that bird flu will not return, or may be taking a loss on the egg prices to bring shoppers in.
Even as alternatives gain popularity, Kirmani felt that eggs’ use as a breakfast food item and as an ingredient for recipes means that once retail prices recover, so will demand.
Matt Battaglia, Vice President of Marketing and Merchandising for Green Valley Marketplace, a supermarket chain in Anne Arundel and Howard Counties, was on the other side of egg pricing.
“We were at the mercy, of course, of the manufacturer and the producer’s cost. When eggs were up close to $10 a dozen, we were actually taking little to no profit on the eggs,” he said. “Just to make sure that we’re not passing an even higher cost [to the] customer. It’s been very volatile.”
Battaglia placed the start of price increases in November and said Green Valley has already been able to lower its prices in response to wholesale market changes: $4.69 a carton.
“In a few of our stores where we got the cost advance earlier, we dropped the price even before our cost dropped,” Battaglia said. “What you may be experiencing is some of the bigger guys operate on contracts, whereas we’re market pricing. So, the second an adjustment occurs, we adjust with our wholesaler costs.”
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