Pluralistic: Eggflation is just more price-gouging (23 Jan 2023)

doctorow · 23 January 2023 20:49

Originally published at: Pluralistic: Eggflation is just more price-gouging (23 Jan 2023) – Pluralistic: Daily links from Cory Doctorow

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Eggflation is just more price-gouging: Cal-Maine Foods owns every egg brand you've ever heard of and its profits are up 65%.
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Humpty Dumpty, smashed and crying at the bottom of a wall. To his left, a tiny Jacobin makes ready to decapitate an aristocrat in a guillotine. The guillotine's basket is full of eggs.

Eggflation is just more price-gouging (permalink)

The very instant that world governments rolled out relief funds so quarantine-shuttered businesses wouldn't fail and covid-furloughed workers wouldn't starve, corporate executives started rubbing their forelegs together and planning to raise prices and blame it on inflation brought on by letting The Poors have too much money.

They weren't exactly subtle about it: the CEOs of America's largest companies got on their quarterly investor calls and chortled about the willingness of "consumers" to blame inflation for the price-hikes they were cramming down their throats:

https://pluralistic.net/2021/11/20/quiet-part-out-loud/#profiteering

Republicans – always happy to serve as useful idiots for monopolists – stickered gas-pumps up and down the country with Joe Biden "I Did That" stickers, even as gas companies declared record profits and boasted to investors about how they were able to drill directly into drivers' wallets under cover of inflation.

In absolutely unrelated news, eggs are suddenly incredibly expensive. A dozen "conventional" eggs are currently averaging $2.88, which is double what they cost a year ago. Supposedly, this is caused by a supply chain shock (an avian flu outbreak).

But – and this will shock you, I know – the single company that dominates the US egg industry, Cal-Maine Food (AKA CALM – ugh) is making record profits. Their Q3/22 net was up 65% from the year before. Cal-Maine's Q4-22 sales were up record-smashing 110% – $801.7m:

https://www.cnn.com/2023/01/13/business/egg-prices-cal-maine-foods/index.html

Egg prices have climbed month-on-month even as other prices have stabilized or fallen. In its communications to investors, Cal-Maine's eminently guillotineable CFO Max Bowman attributed the monopolist's good fortune to "significantly higher selling prices" and "our ability to adapt to inflationary market pressures." Cal-Maine's stock is up 47% from a year ago – a record high.

All of this militates for price-gouging as the factor driving record egg prices, with bird flu standing in for inflation as a handy smokescreen. But even if we stipulate that Cal-Maine has cut its margins to the bone to help out the American egg-eater amid an avian superflu, that's no reason to CALM down.

Supply-chain shocks are endemic to concentrated markets. When we put all our eggs in one basket (see what I did there?) then even minor disruptions can have huge effects.

https://pluralistic.net/2022/02/02/its-the-economy-stupid/#overinflated

You may think that Cal-Maine is only one of many egg companies, but that's only because it's a many-tentacled octopus of a company, having rolled up dozens of other companies, including "Farmhouse Eggs, Sunups, Sunny Meadow, Egg-Land’s Best and Land O’ Lakes eggs."

The egg-aisle at your supermarket is just another Duff brewery, where all the different vats are being fed with the same sludge out of a common pipe:

https://simpsons.fandom.com/wiki/Duff_Tour_Guide

In this regard, it's no different from the rest of the groceries elsewhere in the store. Nearly all the consumer packaged goods in your store come from one of two companies; Unilever and Procter and Gamble. If a local company does manage to eke out a success, one or the other will buy them, announcing as they do that "We know our customers value choice."

But giving control over our production to a single company doesn't just deprive us of the choice to take our business elsewhere. It's an invitation to dominant firms to squeeze all the slack out of their supply chains, stripping out all the safety margins, selling off plant and leasing it back, relocating to distant, low-tax jurisdictions.

Because not all inflation is caused by price-gouging. Some is caused by too little capacity:

https://pluralistic.net/2022/06/01/factories-to-condos-pipeline/#stuff-not-money

Concentrated, financialized companies slash their payrolls, firing senior staff, declare massive dividends, then they founder when business picks up (looking at you, Southwest Air):

https://pluralistic.net/2023/01/16/for-petes-sake/#unfair-and-deceptive

Whenever this kind of thing happens, corporate ghouls, ineffectual regulators, and the lickspittle apologists who carry their water shrug and say, "What, do you expect us to spend money on resilience, or take lower profits when your cost basis shifts?"

Yes. That is exactly what we should expect. And if they don't like it, we should shatter their monopolies. You can't make an omelette without breaking a some eggs.

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Colophon (permalink)

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