Egg Supply Chain Problems Persist

Shell Shock: Why America's Egg Prices Remain Stubbornly High

Consumers across the United States continue to face elevated costs for a fundamental kitchen item: eggs. This year has seen dramatic escalations in the price per dozen, with some retail locations charging close to ten dollars. This figure represents a fivefold increase compared to the established long-term average cost. Simultaneously, the breakfast sector thrives within the US hospitality industry, yet restaurants find themselves compelled to raise menu prices. Each year, the typical American consumes 280 eggs, prompting critical considerations. Does a conclusion appear imminent for the inflated expense associated with this basic kitchen item? Alternatively, does the current climate compel exploration into egg alternatives?

Unpacking the Price Surge

Recent months have witnessed extraordinary volatility in egg pricing. In March 2025, the average cost for a dozen Grade A large eggs reached a record high of $6.23, marking the third consecutive month of new records. This represents a staggering 60.4% increase compared to the same time last year. While overall food prices rose by 3% over the past year, the egg market experienced significantly steeper climbs. By way of contrast, prior to February 2022, the mean cost for twelve eggs generally stayed under $2 going back to March 2016. Although wholesale prices have recently dropped somewhat, these changes have yet to fully translate to consumer relief at the checkout. As of early May 2025, national wholesale prices for large, loose eggs hover around $3.29 per dozen, with retail carton prices in major markets like New York steady at $3.72 per dozen. California prices remain higher, with the benchmark for large shell eggs at $5.20 per dozen.

The Avian Flu Epidemic: A Primary Driver

A significant factor behind these soaring prices is the persistent outbreak of Highly Pathogenic Avian Influenza (HPAI), commonly known as bird flu, specifically the H5N1 strain. This highly transmissible and fatal disease has devastated commercial poultry flocks, especially egg-laying hens, since early 2022. The outbreak rapidly became the largest in US history. When HPAI is detected, official policy mandates the culling, or slaughter, of entire affected flocks to limit the virus's spread. This necessary measure directly impacts the supply of eggs reaching grocery stores. Since February 2022, the virus has necessitated the removal of nearly 126 million commercial egg-laying hens from production. Further compounding the issue, millions of young pullets, destined to replace older layers, have also been culled.

Lingering HPAI Effects on Supply

The repercussions of HPAI extend beyond immediate flock losses. Rebuilding the nation's egg-laying hen population is a time-consuming process. It takes approximately 19 to 20 weeks for a newly hatched chick to mature into an egg-producing hen. Consequently, even after an outbreak is contained in one facility, the recovery period significantly delays the return to normal supply levels. The virus continues to pose an active threat. In the first few months of 2025 alone, HPAI led to the depopulation of over 30.6 million egg-laying hens across nine states. While the number of new outbreaks appeared to decline significantly in March 2025, a new case was confirmed in Ohio in early April, underscoring the ongoing volatility. The constant risk necessitates costly biosecurity measures for farmers, adding another layer of expense to production.

A New Viral Strain Emerges

Compounding the existing HPAI challenge, a new genotype of the H5N1 virus, identified as D1.1, emerged in wild migratory birds in September 2024 and subsequently spread to domestic poultry. This strain is known to have spread across all four major North American migratory waterfowl flyways. This particular variant has also shown the ability to spill over into mammals, including dairy cows and, in rare instances, humans. While human-to-human transmission has not been reported, the emergence of D1.1 signifies a potentially more challenging phase of the outbreak, contributing to the most destructive three-month period (December 2024 – February 2025) since HPAI arrived in North America three years prior. The virus is no longer solely associated with migratory patterns but appears established in local wild bird populations year-round, increasing the persistent risk to poultry farms.

Image Credit - Freepik

Beyond the Virus: Economic Headwinds

While HPAI is a primary driver, broader economic factors exacerbate the elevated egg expenses. General inflation has increased the costs associated with producing and transporting eggs. Key inputs like chicken feed, primarily corn and soy, have become more expensive. Energy costs impact everything from farm operations to the refrigerated transport required to move eggs safely from producers to retailers. Labour shortages and increased wages also contribute to higher operational expenses for farms and distributors. These rising costs, affecting every stage of production and distribution, add pressure to already constrained supplies, inevitably leading to higher prices for consumers. Even as the HPAI situation potentially improves, these background inflationary pressures could prevent prices from returning to previous lows.

The Role of Supply and Demand

Basic economic principles of supply and demand are central to the egg price situation. HPAI outbreaks directly reduce the supply of eggs available on the market. When farmers cull flocks, fewer hens are laying eggs, tightening the overall supply. Simultaneously, consumer demand for eggs has remained remarkably resilient, even in the face of significantly higher prices. Eggs are considered a relatively affordable and versatile source of protein, making them a desirable staple for many households. Demand for eggs is often described as "inelastic," meaning price increases do not proportionally decrease consumer purchases. This mismatch – reduced supply meeting steady or even slightly increased demand – fundamentally drives prices upward.

Retail Strategies and Market Dynamics

The tight supply situation has also influenced how grocery stores approach egg pricing. Historically, retailers often used eggs as "loss leaders," pricing them very low (sometimes below wholesale cost) to attract shoppers into the store, anticipating they would purchase other, higher-margin items. However, with supplies constrained by HPAI, aggressively low pricing could lead to empty shelves, frustrating customers. Retailers now price eggs at levels intended to manage inventory and avoid sell-outs, contributing to the higher costs faced by consumers. The structure of the egg industry is also examined, suggesting that consolidation may play a role, although the primary driver remains the supply shock from HPAI. There have been calls for investigations into potential anti-competitive behaviour, though most analysis attributes the price hikes primarily to supply constraints.

Impact on Household Budgets

The enduring elevated expense for eggs places a tangible strain on American households, particularly those operating on tighter budgets. For many families, eggs represent an essential, affordable protein source. Prices reaching $6 per dozen or more significantly impact weekly grocery expenses. Widespread consumer concern exists about HPAI's effect on food costs, with reports suggesting many Americans stopped buying eggs due to high prices earlier this year. This forces families to make difficult choices, potentially cutting back on this staple or seeking out less preferred or more expensive alternatives to manage their food budgets. The situation highlights the vulnerability of household finances to disruptions in basic food supplies.

Restaurants Feel the Pinch

The food service industry, particularly establishments focused on breakfast, also feels the pressure of high egg costs. Diners and cafes often use hundreds of eggs daily for classic breakfast plates, omelettes, sandwiches, and even ingredients in batters. While breakfast service has seen growth, with foot traffic for morning meals increasing, restaurants face the challenge of absorbing or passing on the elevated egg expenses. Specific egg surcharges have appeared on some menus, including at chains like Waffle House, while others try to shield customers by adjusting prices elsewhere on the menu or finding other cost savings. This delicate balancing act affects restaurant profitability and menu pricing across the sector. Fast-food breakfast items, many featuring eggs, have seen average price increases exceeding general inflation rates.

Panic Buying Exacerbates Shortages

Consumer behaviour has sometimes worsened the problem of limited egg availability. Media coverage highlighting rising prices and potential shortages can trigger "panic buying," where shoppers purchase more eggs than usual out of fear that prices will climb even higher or shelves will soon be empty. This behaviour, similar to patterns seen with other goods during crises, creates sudden demand spikes at local stores, quickly depleting available stock even if the underlying supply disruption hasn't worsened significantly. Retailers may implement purchase limits (e.g., two cartons per family) to curb this effect, but panic buying puts additional, temporary strain on an already stressed supply chain. Sticking to normal shopping habits is advisable to avoid compounding the issue.

The Rise of Egg Alternatives

The substantial expense and periodic scarcity of conventional eggs have stimulated interest in egg substitutes. The market for these alternatives, often plant-based, is experiencing significant growth. Factors driving this trend include the rising popularity of vegan and flexitarian diets, concerns about cholesterol and allergens associated with eggs, and desires for more sustainable food options. Food manufacturers are investing in research and development, creating substitutes from ingredients like soy, legumes, starches, and algae designed to mimic the binding, emulsifying, and textural properties of eggs in cooking and baking. North America is a significant market for these products. While challenges remain regarding cost and perfectly replicating taste and function, innovation continues to improve the quality and availability of egg replacements.

Image Credit - Freepik

Regional Price Differences

The price consumers pay for eggs can vary considerably depending on their location within the United States. While national averages provide a benchmark, local market conditions, transportation costs, and the proximity of HPAI outbreaks influence regional pricing. California, for example, currently sees significantly higher benchmark prices compared to the Midwest or New York. States with specific regulations, such as requirements for cage-free eggs, can also experience more intense price spikes and shortages when HPAI disproportionately affects those types of flocks, as occurred in 2024. These regional variations mean the sticker shock experienced by consumers is not uniform across the country.

Government and Industry Responses

Both government agencies and the poultry industry are actively working to address the HPAI crisis and its economic fallout. Agencies closely monitor outbreaks, implement culling protocols, and provide guidance on biosecurity. Enhanced biosecurity measures on farms are crucial, focusing on preventing contact between wild birds (natural carriers of the virus) and domestic flocks. Efforts include stricter farm entry controls, securing feed and water sources, and enhanced cleaning protocols. Significant government funding has also been allocated to support producers with biosecurity implementation and offset losses from culled flocks, although debates continue about the most effective allocation of these funds. Vaccination strategies are also under consideration or implementation in some countries, though not yet broadly embraced as the main approach within the United States.

Current Trends and Future Outlook

As of early May 2025, the egg market shows some signs of stabilisation but remains volatile. Wholesale prices for caged eggs have firmed slightly, while cage-free prices weakened. Demand is currently light to moderate following the typical post-Easter slowdown. Supplies are generally sufficient, but retailers remain cautious about promotions due to recent HPAI activity and the desire to maintain stable inventory. While consumer prices have eased from the extreme peaks seen earlier in the year, they remain elevated compared to historical norms. Future price trajectory remains uncertain. Forecasts suggest continued month-to-month volatility, with predictions for a significant overall price increase for eggs in 2025 compared to the 2024 average, considering the increases already seen. The key factor remains controlling HPAI outbreaks. Until producers can consistently rebuild flocks without major disruptions from the virus, prices are unlikely to return sustainably to pre-outbreak levels.

Conclusion: Navigating the New Normal?

The narrative surrounding elevated egg expenses across the United States originates from a complex combination of elements, dominated by the devastating impact of Highly Pathogenic Avian Influenza on egg-laying hen populations. Compounded by broader economic inflation increasing production and transport costs, and fuelled by steady consumer demand, prices reached record levels. While recent wholesale market fluctuations offer glimmers of hope, significant challenges persist. Rebuilding flocks takes time, the threat of new HPAI outbreaks (including new strains) remains, and biosecurity costs are substantial. Consumers and the food service industry continue to adapt, adjusting budgets and exploring alternatives. Whether current price levels represent a temporary crisis or a transition towards a more expensive "new normal" for this kitchen staple largely depends on the long-term success of efforts to control avian flu and stabilise the supply chain.