In July, Natural Grocers reluctantly raised the price of free-range eggs by a dollar for members of its loyalty program. But as signs posted around the egg shelves reminded shoppers at the time, “Even at $2.99, they are still priced less than they are at other stores.”
The Lakewood-based grocery chain received little pushback from customers, said Katie Macarelli, the company’s spokeswoman. Likely because around the same time, gas was nearing an average of $5 a gallon in Colorado, the Federal Reserve had made its first of four (so far) three-quarter-point interest rate hikes, and the U.S. had just hit its largest inflation rate increase in 40 years.
Still, it was still a tough decision for the company, which aims to offer healthy and affordable food options for customers. It has subsidized free-range and organic eggs for its {N}Power members since 2017.
“The general ethos (of subsidizing eggs) is multilayered, but eating good food should not cost you your whole paycheck,” Macarelli said. “You should be able to feed you and your family in an affordable way. Eggs are really the perfect food. They have all the essential amino acids, they have so many nutrients and vitamins. For the pennies it costs you to have two eggs in the morning, it’s probably one of the most economical food products you can buy.”
While the Russian war on Ukraine and the billions in federal relief in the pandemic contributed to overall inflation, including for egg farmers, other factors may have played a greater role in pushing egg prices higher than they’ve ever been.
Farmers were still reeling from the added costs of the pandemic when the contagious avian flu began wiping out 85% of Colorado’s egg-laying chicken population in March. Nearly 5 million chickens have been slaughtered. And now, starting in January, a state law goes into effect requiring commercial egg producers to make hen pens roomier with a cage-free housing system, though farmers have two more years to comply with cage-free environments.
“It’s kind of the perfect storm,” said Dawn Thilmany, an economics professor of labor and agribusiness at Colorado State University. “At the same time those laying hens are (being euthanized), pretty much for every food product, we have high inflation.”
And the new law will likely add more costs, she said. “If we follow what happened in California (after) they went to cage-free laying hens, we tended to see higher prices because the space for those laying hens had to be bigger and as soon as you need more real estate, it’s going to be more costly. Plus, there’s record keeping for those layers,” she said. “Everything that could make prices go up right now probably is making prices go up right now.”
How high?
Egg prices have indeed been rising this year, though retailers have often used them as a loss leader. Advertised prices have been as low as $1.24 a dozen in September, according to the USDA advertised egg prices data.
But at wholesale, a dozen large Grade A white eggs in the South Central region, which includes Colorado, reached $4.23 in October. It fell back to around $3 but is back up to $3.68 as of Nov. 10.
“The cost associated with producing eggs has gone up,” said Bill Scebbi, executive director of the Colorado Egg Producers, which represents local egg farmers. “We’re producing 1 billion eggs in our state and giving 1 million eggs to food banks or the needy. Those eggs have to go through the shipping process to get to the right areas. You’ve got a lot of costs involved with shipping of eggs to distribution points. You’ve got an increase in materials and packaging. You’ve got an increase in labor costs. Everything that’s associated with inflation is associated with the production of eggs as well.”
The cost of food has gone up higher than overall inflation, according to the Consumer Price Index from the U.S. Bureau of Labor Statistics. In the latest inflation report for Denver, area prices were down from August, but up 7.7% in September compared to a year earlier. Food prices were up 11.8% and eggs — part of the meats, poultry, fish and eggs category — were up 12.9%. But who pays for that isn’t just the consumer or customer.
“What happens is that you get hit with inflationary pressure and there’s a gap between when you start getting hit before you reprice. And in that gap, you’re eating it,” said Marco Antonio Abarca, president of Denver-based Ready Foods, which provides prepared soups and sauces from scratch for restaurants and supermarkets. “I’m eating more and more as the customer is reluctant to take the inflationary hit. It’s understandable but the people who really eat it are the manufacturers or the producers.”
During the last recession around 2009, Abarca said he used that time to invest in real estate and expand. He’s doing that again because he needs a larger factory, but with higher interest rates, he’s paying more for the real estate loans. His new factory will have more automation and robotics as a way to manufacture more efficiently. But he still needs workers, which he said he pays above minimum wage for. That’s going up too. Denver’s minimum wage will increase 9% to $17.27 an hour on Jan. 1.
“It’s getting more expensive because the base is rising,” he said. “I’m going to need good industrial workers who are able to handle robotics and other things. So there’s inflation and the labor shortage that are causing these issues.”
Christie Pettys, who visits farms to check on the welfare of animals as Natural Grocers’ product standards manager, said she’s seen the pressure of inflation on local farmers, as well as the fear of avian flu. She hasn’t heard that any of her egg suppliers were affected by the flu, but farmers canceled film shoots with the Lakewood-based grocer out of extreme caution.
“They said, ‘We’re not worried about you humans getting sick. We are worried about you killing our birds,’” Pettys said. “That’s a huge concern.”
Natural Grocers still offers $1.99 free-range eggs to members of its program, which is free to join. But they had to raise the price on some brands and specialty eggs. Organic and pasture-raised eggs increased 50 cents a dozen to $3.99 and $4.99 respectively. It’s tough for smaller grocery chains to absorb the rising costs, especially when industrywide costs for eggs have increased about 20% since 2019.
“The real cost increase on all these farms was two-plus years ago,” Pettys said. “They have been holding the cost for us. And finally, they have had to pass it on to customers because they cannot afford to keep having all of their increases in the cost of business go up and not change the price.”
Plenty of eggs in Colorado though not all are native
The most recent commercial outbreak of avian flu in Colorado was in late September in Weld County. Roughly 1.15 million hens were euthanized in early October. Smaller hen houses found on backyard farms continue to show up in the state’s avian flu weekly updates. There have been no reinfected facilities in Colorado, though there have been in other states, said Olga Robak, a spokeswoman for the Colorado Department of Agriculture.
It’s been devastating, she said. But most cases are among backyard, noncommercial farmers who don’t realize the gravity. The contagious virus affects the organs and has a 90% to 100% mortality rate in chickens, often within 48 hours, according to the Centers for Disease Control and Prevention. Avian flu tends to be spread by wild birds, which shed the virus through saliva, nasal secretions and feces. But birds can also get infected through contact with contaminated surfaces — and people.
“In fact, we had a case here in Colorado, it was a backyard case, where the husband went duck hunting and five days later, all of their chickens died from” avian flu, Robak said. “We don’t know exactly how (it happened but) he was out there touching water fowl, he didn’t follow proper biosecurity and he wasn’t aware of it. And so somehow, he was the mechanical vector that tracked the virus from the wild birds into the domestic chickens.”
As farmers ramp up egg production again (and for the curious, the chicken comes first in production, said Scebbi, with the Colorado Egg Producers), the process can take a year to get back to full production. After removing the birds and cleaning up, there’s a 150-day quarantine or “virus elimination phase,” followed by additional testing to make sure the virus is not present. Only then can a farmer consider repopulating the coop. Specialty eggs, like organic and cage free, and larger eggs take longer to produce.
In the meantime, Colorado gets eggs from neighboring states, Scebbi said.
“Our egg industry is a very tight-knit industry. So when eggs are required in the state of Colorado, and we don’t have the number of eggs to get into the stores, those eggs are purchased from other farms in other states,” Scebbi said. “They work with each other to make sure that there’s a sufficient quantity of eggs to serve the 6 million people in the state of Colorado. The economic impact really isn’t going to be on the loss of the egg to the consumer. It’s going to be the loss of the farmer. The farmer is going to be paying more for those eggs with shipment and logistics.”
But the thing is, there should be enough eggs for every Coloradan who wants to buy them, even if prices are higher than they were a year ago.
“We are a global society,” Robak said. “Just because we produce eggs here in Colorado doesn’t mean those are the only eggs we eat.”