It Was More Than Bird Flu Driving Up Egg Prices

Are Formula Based Pricing Structures Good for the Economy?

Just over a year ago we were analyzing the National Chicken Council’s petition to the Food and Drug Administration (FDA) to allow surplus broiler eggs into the U.S. food supply as a means of increasing egg quantities and, hopefully, bringing down egg prices.  Today that conversation has shifted to antitrust lawsuits.

In the spring of 2025 a dozen eggs were selling for $6.23, setting a new record for the typically affordable protein causing both consumers and food manufacturers to take action. The FDA never did allow broiler eggs into the food supply.  Instead, the Department of Justice took a closer look at factors that could be driving egg prices up so high.  What they found was a price fixing scheme on the part of egg producers.

Seventeen states joined the Department of Justice in accusing Cal-Maine Foods, Hickman’s Egg Ranch, and Versova Holdings of working together to further inflate already high egg prices.  Based on email correspondence between the three companies, coupled with records of their individual reported earnings between 2022 and 2025, the DOJ proved the companies had acted in a manner that harmed American business and ultimately, American consumers.

The Roll of Eggs in Food Security

Eggs hold a unique place in the U.S. food supply.  They are important to food security because they are the most affordable protein option.  Even the lowest income families can count on a nutrient dense meal if they purchase eggs.  Eggs are also an ingredient that is hard to replicate.  Baked into foods they add nutrients, but they also act as binders, leavening agents or add moisture.  No single other ingredient can perform all of these actions at once or perform them more cost effectively than eggs.  

When egg prices skyrocketed, it created problems for industry and the individual American household.  Consumers upset about the cost of a carton of eggs may have purchased less, but they likely didn’t stop buying products containing eggs.  Demand was redistributed across products, but it remained consistently high.

In March of 2025 the conversation of expensive eggs circled around Highly Pathogenic Avian Influenza (HPAI) and volatile input costs.  Prices were extremely high, but then again, barns were culling laying hens by the hundreds of thousands across the country.  The average American can track along with these economics, especially if they also encountered high production costs in their own industries. If it costs more to feed the chickens and transport the eggs then naturally the price per dozen will increase.  

How Is The Price of Eggs Determined?

What a consumer pays at a grocery store for an item should consider producers or manufacturers, a distributor and the grocery store itself. The price of the product accounts for transportation, refrigeration, rent, wages, packaging, insurance and taxes.  But for eggs, the price is also influenced by the daily bid average.  Eggs have their own trading platform.  Bids here are indicative of the supply and demand ratio and set the daily wholesale price for eggs based on a formula.

This auction-like structure adds an additional layer of complexity and is now cause for consumer scrutiny.  Food manufacturing companies know how many eggs they need for future production and will buy eggs not yet produced in order to secure a large quantity at a set price.  If the producer is unable to fill the contract, they can bid on and purchase someone else's excess eggs to make up the difference.  In turn, if a producer finds themselves with a surplus of eggs on hand they can auction them off to fill a gap.  Commercial producers use this platform on a daily basis to fill contracts and avoid waste.

Are Formula Based Pricing Structures Good or Bad?

Eggs are not the only commodity operating on formula based pricing structures.  Milk, poultry and lumber are other industries reliant on benchmarking to dictate not just what consumers pay but how much farmers or operators profit or lose.  Sometimes this model exists because the industry is consolidated. Poultry supply chains, like eggs, are vertically integrated; just a few large companies control most or all of the chain.  With a small pool of producers whatever one does naturally benchmarks the others and they keep a close eye on each other to remain competitive.  

In other cases, like lumber, the supply chain is highly susceptible to short-term disruptions that can influence what the product is used for or how much a mill can accommodate.  Lumber companies aim to secure large quantities at set prices, but because dynamics can change quickly they, like egg producers, find themselves needing to fill gaps or offload excess.

These trading platforms keep the economic wheel turning and are not intended to be foolproof structures when it comes to financial protection.  Like a livestock sale, the first bids of the day tend to set the average price buyers can expect to pay.  The average will change from day to day based on what’s available and who is buying.  Sales happening on the same day in different states can have drastically different averages.  

On some level, there is a little manipulation happening on all of these trading platforms.  As Matt Levine from Money Stuff puts it, given the design, “it would be weird if egg producers didn’t manipulate {it}.”  A tiny move on a few bids early in the morning might mean you make a lot of money in the afternoon.  The problem was that many of the early morning bids never made it to sales and the individual producers worked as a team to influence prices in their favor.

Formula based structures used to determine wholesale prices on commodities encounter increased antitrust risks when the supply pool is small.  The pool becomes small when fewer people are able to enter the industry.  While you might have neighbors who get their eggs from their own backyards, the odds of them growing a commercial business are slim.  It takes a lot of capital to compete at a higher level and even small time producers struggle to gain access to larger markets.  Lowering the barriers of entry into any of these formula based industries would make it more difficult for big corporations to influence prices.