Eggstra! Eggstra! Read all about it! -- Price of eggs is rising -- Cost cracks into consumers' wallets
The high price of fuel has finally come home to roost.
Chickens and eggs, no matter which came first, are reflecting the effect of higher costs attributed to the rising price of fuel and increased demand for new fuel alternatives.
Just an interesting sidenote: The average household is now paying more than $2 per dozen for the food staple that a year ago averaged 99 cents.
The increased price is easily explained by the agricultural community -- rising cost for feed that is in higher demand, more being spent for utilities in poultry facilities and to transport product, and industry response to environmental concerns.
Development of ethanol as an alternative to oil-based gasoline has driven up the cost of the alternative's basic raw ingredient -- corn. As in any commodity, stable supply and increased demand make prices go higher.
"We use a tremendous amount of corn," says Gary Bethel, vice president of Hillandale Farms, a major producer and processor of shell eggs.
Bethel says egg producers have staved off rising costs as long as possible, but when competition with ethanol plants increased production costs 150 percent, the charges had to be passed on.
Consumers don't notice price changes until the cost reaches a certain threshold, says Lori Connelly, director of communication for PennAg Industries. Once a carton of large eggs went over the $2 mark, people started paying more attention.
Before the cost of corn increased, Bethel says, "Honestly, we had production of eggs to a sophisticated science that led to a controlled cost."
"American households spend less of a percent of their average annual income on food than anywhere else," Connelly says.
Large family and corporate farms have not had time to plant more in response to the changes in the demand for corn. Even with more corn, prices will never come back down to past levels, Bethel says. Although hard to predict exact figures, Bethel says consumers will never see the 89 cents per dozen of two years ago.
"The market will definitely maintain current retails." He doesn't see prices decreasing beyond $1.60, $1.40 ever again.
"It's new waters. It's the highest the egg market has been and I don't think it is as high as it will get."
Gary Silvestri, manager at Ferri's Shur Save in Murrysville hasn't seen less regular eggs going out the door even with large eggs fetching $2.19 a dozen. He has overheard people commenting on the rise in prices but they are still buying.
This Easter there will not be egg sales at his store. If anyone offers eggs below $1 as in the past, Silvestri thinks it will be tied to additional purchases or as a loss by the grocer to get customers into the store.
Many area grocery stores are seeing added interest in specialty eggs like Eggland's Best, which produce more nutritious content in part because of the type of feed and environment of the laying hens. The usually higher price is now more comparable and there have been manufacturers coupons in the newspapers recently.
That won't last long either, says Bethel, whose company participates in Eggland production. Those eggs and others will see higher prices in the future as the chickens' restricted diet will experience similar and even more costly increases. Also the Hillandale exec says, "By late-2008, organic eggs will see a drastic increase."
Another factor adding to egg pricing is the industry's response to animal rights activists who have promoted better standards of hen care, including increased cage space. It was a process phased in to avoid market disruptions but has taken the single poultry house from past residency of 150,000 chickens to 120,000. Better, more sanitary accommodations, but with the result of less productivity.
Bethel hopes people will look at their buying habits that include running into a convenience store to buy a bottle of water instead of using the money to pay for the higher price of a carton of eggs, which furnishes 13 essential nutrients and a good source of protein and riboflavin.
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