The Egg Shortage, Explained

The price of eggs has long been a political symbol. In 1989, as Poland implemented free market reforms, advisers to finance minister Leszek Balcerowicz famously told their boss to watch the price of eggs closely. If farmers resumed bringing their eggs to market and prices began to drop, the economy would stabilize. They did and it did (although unemployment increased).

The price of eggs has been less kind to Joe Biden and his economic advisers. Even as overall inflation has slowed and overall grocery prices have cooled, eggs have remained stubbornly expensive. Between January 2022 and January 2023, according to the Bureau of Labor Statistics, the average price of a dozen Grade A eggs in an American city skyrocketed from $1.93 to $4.82. During the same period, the annual rate of inflation, as measured by the Consumer Price Index (CPI), had fallen from 7.5 percent to 6.4 percent. By September 2024—with the presidential election looming—CPI inflation had slowed to 2.4 percent year-over-year, but egg prices were still stubbornly high at $3.82.* See where this is going yet?

Egg prices quickly caught on as a meme, helping to sustain inflation as a powerful election-year issue, even as actual inflation was steadily dropping. Even Donald Trump’s running mate, J.D. Vance, eventually tried to get in on the act (with mixed results). But how did egg prices get so high, why did they remain that way even after other inflation indexes began to drop? And why, as of January 2025, are grocery stores nationwide experiencing severe shortages?

Bird flu is back.

The short answer is “bird flu.” Laying hens in the U.S. are dying in unprecedented numbers (from the virus and as a result of culls of exposed poultry), and hatcheries are simply unable to produce enough eggs to meet demand. “Bird flu” refers to avian influenza A viruses, which occur naturally in wild birds throughout the world and spread through migration and within flocks. Scientists divide bird flu into “low pathogenic” and “highly pathogenic” strains. It is the latter that periodically causes outbreaks among domestic poultry. 

Outbreaks of “fowl plague” among domestic birds are nothing new, with the earliest outbreak among poultry in the United States occurring in the fall of 1924. There were 15 reported cases of highly pathogenic avian influenza worldwide between 1959 and 1995, followed by 11 between 1996 and 2008. The newer, more frequent outbreaks were more destructive as well, in some cases killing millions of birds. In 2020 a new, more lethal variant emerged among wild birds in Europe, spreading to the United States and Canada by 2021, and showing up in domestic bird populations by 2022. 

The U.S. is currently experiencing what can best be described as a cascading series of bird flu outbreaks among its domestic hens. Poultry farmers spent much of 2022 euthanizing entire herds wherein the flu had been detected–45,000,000 birds in total, according to Purdue University’s Center for Food Demand Analysis and Sustainability–resulting in the January 2023 price spike and subsequent ups and downs. In December 2024, there were 18.25 million birds kept on premises infected by avian flu, 11 million more than the previous month. As of this writing, the BLS hasn’t released egg price data for that month, but record-high prices—exceeding those of January 2023—and empty shelves have been making headlines nationwide. 

And this strain of bird flu is not strictly for the birds. Dairy cows in the United States first tested positive in March 2024. By the end of the year, the virus was detected in samples of raw milk from a dairy in Sacramento, prompting a statewide recall. 

As of early January, the Centers for Disease Control and Prevention had reported 67 cases of humans infected with Avian flu since 2022, with all but one reported in 2024. And on January 6, the Louisiana Department of Health reported the first U.S. human death from avian flu. The victim was over 65 with underlying medical conditions and contracted the virus through exposure to infected birds. This last point is why the CDC still considers the public health risk from avian flu to be minimal: there are as of yet no known human-to-human transmissions, but zoonotic transmission is, historically, a thing. 

The impact of cage-free legislation.

Transmission on this scale was unforeseen back in 2020, when the Colorado General Assembly passed HB20-1343, a bill setting standards for confinement of egg-laying hens. The legislation mandates all commercial egg growers with 3,000 or more laying hens to provide cage-free facilities. An initial phase-in required growers to provide at least one square foot of “usable floor space” per hen by January 1, 2023. The next phase, requiring more expansive space and monetary penalties for violations, came into effect on January 1, 2025. As egg shortages hit in December, one Colorado grocery chain placed informational signs about the new law in front of empty refrigerated cases that would normally hold egg cartons. 

There is no doubt that cage-free eggs are more expensive to produce (nor is there doubt that laws like Colorado’s level the playing field somewhat for smaller producers). Given that Colorado lost 85 percent of its egg-laying hens to avian flu in 2022 alone, the cage-free law could not have come at a more challenging time. Nonetheless, Colorado now joins California, Massachusetts, Nevada, Utah, and several other states in mandating cage-free production. 

Price-gouging or tight supply?

Members of both political parties have accused egg producers of price-gouging. The merit of these accusations is difficult to assess because price gouging has no precise meaning, at least not one that economists can agree on. During the early days of the 2020 COVID lockdown, New York Attorney General Letitia James filed a lawsuit against Hillandale Farms, a massive egg producer, for predatory pricing. Hillandale settled the case by agreeing to deliver 100,000 cartons of eggs to food banks in the state (though it defended its pricing). A similar lawsuit by Texas Attorney General Ken Paxton was dismissed in 2020 and then revived in 2022. 

Early in 2023, Sen. Jack Reed of Rhode Island sent a letter to the Federal Trade Commission requesting an investigation into egg prices. Massachusetts Sen. Elizabeth Warren has cited eggs as an example of bad food industry behavior, 

In late 2023, a federal jury awarded $53 million to a group of U.S. food manufacturers who accused several major egg producers of price-fixing between 2004 and 2008. Among them was Rose Acre Farms, an Indiana-based egg producer whose chair, John Rust, had recently stepped down to campaign for the Republican Party nomination for Indiana’s vacant Senate seat. His primary opponent (and eventual winner of the seat), Jim Banks, accused Rust of—you guessed it—price-gouging. Rust in turn accused Banks of standing with corporations against American farmers. 

Egg producers generally base their pricing on the Urner Barry Index, a food industry analyst firm that uses data to provide price quotes to its clients. Retailers then pass these prices on to consumers. According to critics such as James, Reed, and Banks, egg manufacturers take advantage of perceived crises to jack prices up as high as possible. According to the manufacturers themselves, demand for eggs is inelastic, meaning that if people need eggs they will buy them regardless, even when tight supply pushes prices upward. 

And, as of January 2025, supply is certainly crunched, and the avian flu outbreak that began in 2022 is most certainly to blame.

Correction, January 9, 2025: This article has been updated to more accurately describe CPI inflation trends.