Understanding the Current Egg Price Crisis: The Chicken and the Egg Dilemma

Image Source: Armstrong Economics

Egg prices in the United States have recently skyrocketed, leaving many consumers baffled and frustrated. As the national conversation swirls around inflation, political finger-pointing, and economic strategies, you might find yourself wondering: what’s really behind the sharp rise in egg prices? At Extreme Investor Network, we aim to cut through the noise and shed some light on this pressing economic issue.

The Bird Flu Impact

First and foremost, let’s address the elephant in the room: avian influenza, widely known as bird flu. Since 2022, a staggering 108 million chickens have been culled across the U.S. to stave off the spread of this disease, according to the USDA. Recently, around 13 million more were killed, triggering a rapid 15% increase in egg prices just this January. While some may want to link this crisis back to political figures, the reality is that this epidemic has wreaked havoc on the supply chain.

Interestingly, this problem isn’t as pronounced in other countries. Take Canada, for instance. While American egg prices have soared, Canadian prices have remained relatively stable, thanks largely to a unique supply management system established in 1972. This system helps regulate production and prices, allowing smaller farms to thrive without the fear that one outbreak will cripple an entire industry.

The Farm Structure

The size of egg farms in the United States significantly complicates matters. American egg farms often host millions of chickens, increasing efficiency but also making them more vulnerable to disease outbreaks. The USDA’s policy dictates that if bird flu is detected at a farm, every chicken on site must be culled. This "one-size-fits-all" approach is not practical for businesses operating on such a large scale.

In contrast, Canada’s smaller farms typically house an average of just 25,000 hens. This distributed model allows for better management of infected flocks and tailors responses to outbreaks, limiting the potential for widespread loss. If a few smaller farms in Canada are affected, the impact on egg availability is negligible.

Economic Policy vs. Market Forces

The lack of a supply management system in the U.S. leads to instability in the market—what goes up can come crashing down just as easily. While the American economy thrives on capitalism and free market principles, the current crisis raises questions about whether it’s time to rethink how we manage agricultural supply. The economic rationale for allowing prices to fluctuate has resulted in pain for consumers, especially in the face of rising inflation rates.

Amidst the current turmoil, the U.S. government is working to alleviate some of the pressure. For example, Turkey recently struck a deal to ship 15,000 tonnes of eggs to the U.S. by July, a move that might increase availability but won’t necessarily drive prices down in a significant way.

Future Outlook

Looking ahead, Canada’s Food Price Report for 2025 forecasts a 6% rise in egg prices, which pales in comparison to the projected 20% increase in the United States. While Canada’s systematic approach allows for controlled price increases, the U.S. must grapple with the implications of large-scale farming and a significant reliance on a few major providers.

The consensus is clear: without changes to farming practices, supply management, or a stronger focus on biosecurity, the U.S. will continue to face challenges in stabilizing egg prices. This situation serves as a reminder of how interconnected our food systems are and how quickly they can be disrupted.

At Extreme Investor Network, we’re committed to providing our readers with deep insights into the economic factors affecting your daily life. In times of uncertainty, staying informed is your best investment. Join us as we continue to explore ways to navigate these challenges and make informed financial decisions.