Controversy is spreading over allegations that America's largest egg producers cited bird flu as an excuse while colluding behind the scenes to drive up prices.
US DOJ Sues Three Companies for Alleged Collusion
According to a recent Financial Times report, the US Department of Justice and the attorneys general of 17 states filed a civil lawsuit on the 29th of last month in the Northern District Court of Iowa against three major egg producers — Cal-Maine Foods, Hickman's Egg Ranch and Versova — on price manipulation charges.
The complaint alleges that these companies publicly claimed "the entire industry was suffering because of bird flu," while executives privately encouraged one another to "keep raising prices."
The companies are believed to have engaged in collusion from June 2022 through March last year. According to prosecutors, they flooded the wholesale market with large volumes of buy orders they had no intention of fulfilling, creating the illusion of strong demand.
In particular, by placing numerous buy orders at premium prices without actually completing the transactions, they appear to have driven up the prices set by Urner Barry, a price-index provider. The daily prices calculated by Urner Barry serve as the basis on which retail stores and restaurants across the United States set egg prices.
Materials presented by prosecutors show that even amid the bird flu situation, the market moved according to the usual supply-and-demand logic, and the companies intervened whenever prices showed signs of falling. Prosecutors believe their buy orders both pushed up egg prices and served as a shield to prevent declines.
CEO Text Messages the Decisive Evidence
Prosecutors substantiated these collusion allegations with text messages exchanged among executives. In December 2024, when US egg prices soared to record highs, the former chief executive of Cal-Maine, the largest US fresh-egg producer and distributor, sent a text reading "Let it rip" to the head of a competitor. In December 2022, the head of Hickman's Egg Ranch reportedly instructed executives at rival firms to "place strong buy orders frequently and early."
The investigation found that Cal-Maine increased its fiscal 2023 dividend more than 40-fold from the previous year through these methods. Although the volume of eggs sold itself changed little, gross profit swelled more than threefold.
Consumer groups reacted with outrage. Thomas Gremillion, director of food policy at the Consumer Federation of America, said, "They were caught red-handed colluding. The text messages the CEOs exchanged are truly shocking," adding, "Consumers pay a higher price for that corruption."
All three companies deny the charges. Cal-Maine countered that its conduct was within legal bounds, and that price fluctuations were caused by external factors such as bird flu, the COVID-19 pandemic, weather conditions and inflation.
Meanwhile, US egg prices have fallen sharply since news of the authorities' investigation emerged. The price of a dozen eggs, which was $6.23 in March last year, dropped below $2.20 in May this year.
"Worst in Two and a Half Years" — But Prices Keep Rising
