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And we are all right. Hi, Stacy. Hi, Scott. How are you? I'm good. I'm in the kitchen.


Scott Horsley is NPR's chief economics correspondent.


And from what I understand, you are about to make a dish that you are making a lot these days, making more of than I certainly have in days past.


And that's an omelet.


Scott says he eats at least an omelet a week these days now that he's mostly cooking for himself at home and lighting the burner there, oil in the pan.


And of course, a lot of people have been breaking a lot more eggs lately. Scott Horsley is no exception.


You mean he's no exception, right? He's no exception. God, this is going to be a whole episode of this, isn't it? Oh, yes.


Dating back to the 80s. I've eaten about five dozen eggs in the last several months, which is definitely more eggs than I would eat in a normal period.


And Scott says there are some good reasons for this extreme egg. Yeah. Oh, my gosh.


Now, just about if there's since the pandemic, we've all been eating a lot more food at home, cooking for ourselves. And one reason eggs are in demand is, you know, eggs are a good, cheap source of protein. And for a lot of folks, they were a substitute for even more expensive kinds of protein, like beef for chicken. That might have been hard to get during the pandemic. They keep pretty well. They're not that hard to cook.


You know, even even if you're a schlub like me, you can make a pretty a pretty attractive omelet.


In the spring, the price of eggs went way up right along with their popularity. Prices have settled down a little since then. But now a bunch of states are suing egg companies, saying they took advantage of the pandemic egg craze and started price gouging customers. This is the indicator from Planet Money. I'm Stacey Vanek-Smith. And I'm Cardiff Garcia.


Today on the show. Eggs, eggs have been on kind of a wild ride. Price spikes, rationing, stockpiling, nationwide shortages. It's all so extreme. Yeah, I know. And show what this all tells us about eggs and about the country's food supply.


Also, Scott makes an omelet. We may have talked too long, I might have gotten the stove a little harder than I meant to, but that's all right. This message comes from NPR sponsor Microsoft. The world has changed and Microsoft teams is there to help us stay connected. Teams is the safe and secure way to chat, meet, call and collaborate. To learn more, visit Microsoft dotcom teams support also comes from fundrise fundrise. Makes it easy for anyone to invest in high quality real estate by building your portfolio with their more than one billion dollars in assets get started at fundrise dotcom indicator to have your first 90 days of advisory fees waived.


We eat a lot of eggs in this country. The average American eats almost an egg a day and during the pandemic we really got excited about eggs.


Grocery stores were ordering six times more eggs than normal and a lot of store shelves were still empty. So much so that a lot of places started limiting how many eggs you could buy at a time. Yes.


So demand for eggs went crazy and the supply could not increase right away because there are only so many egg laying hens in the U.S. And if you want more eggs, you have to raise more hens and the new hens don't lay eggs right away. It takes about four months for a chicken to start laying eggs. And that is part of why store shelves were empty.


Yeah, so there was a spike in demand, but there was fixed supply. And so Economics 101 tells us that that would push up the price. And the price went way up nearly 200 percent in March before covid.


The wholesale price of a dozen eggs in the U.S. was under a dollar was about 95 cents. And in March and April, the price of eggs just spiked. And Scott Horsley, reporter extraordinaire, that he is saved. His grocery receipts went back through and checked what he'd been paying.


I'd been going back through my receipt back in May. I bought some eggs at Safeway that were 499. I think that was the most expensive eggs I bought during the pandemic.


Stacey sounds a little shell shocked.


He does. He does sound sales. A lot of people were five dollar eggs were happening all over the country. That is more than quadruple what eggs cost before the pandemic.


And now a bunch of states have responded by suing egg companies for price gouging. These states included Texas, West Virginia and Minnesota. And they also included New York, where the attorney general accused egg company Hillandale Farms of taking in four million dollars in revenues from overcharging people for eggs.


Yes, and the thing about eggs is that they are a really cheap source of protein. They don't go bad very fast.


So a lot of people in really bad economic situations were sort of counting on eggs to feed their families, like stocking up on them, keeping them, cooking them to survive.


And New York is now saying that egg companies took this moment of panic buying and that they profited off of like the most vulnerable people in the state.


And the egg producers defended themselves by citing economics.


If you've got two, three, four or five fold increase in demand, it's totally understandable that the price goes up. And I think that's what this this case sort of illustrates is, you know, the attorney general is accusing this company of violating the laws of New York, but their behavior is completely consistent with the law of supply and demand, which is when demand spikes and supply is fixed, the price is going to soar.


And then, of course, the real challenge is the flip. Well, you know, I may have misspoken this this may be kind of a masterpiece here.


Maybe that real hot pan was a plus.


And with prices, here is where things get tricky. I mean, did egg companies commit a crime by charging more for eggs?


Were they just being good free market citizens?


Yeah. To answer this, we decided to leave Scott in his arms for a minute to talk with food economist David Ortega. He's based out of Michigan State University.


What is the difference between reacting to supply and demand and price gouging?


Well, so price gouging really happens when you purposefully set the price of a commodity significantly above what the traditional price level that incorporates cost and other forces are.


DaVita's part of the issue here is that costs went up for aid companies to labor. Transport supplies were all hard to get and often expensive in the early days of the pandemic.


Also, a lot of aid companies produce big flats of eggs for restaurants and restaurants. We're not really buying eggs so much anymore. So the egg producers had to pivot and put eggs into smaller packages for grocery stores, and that meant new machines investing in new egg cartons. David says it is early days, but there is evidence that many egg makers didn't actually make a bigger profit off of their higher prices.


The higher prices were just going towards paying the higher costs that the egg producers had.


But did those costs go up by three or 400 percent like their prices did? That is the question being hashed out in courts now. And it's kind of complicated and part of the issue here, of course, is the egg itself, right? I mean, if ice cream prices or caviar prices or wine prices or something like that went up by 200 percent, it probably wouldn't be a legal issue, a price gouging accusation. But the idea here is that eggs are a staple in a staple that really vulnerable people count on, especially in a crisis.


And this idea that companies were profiting off of vulnerable people in time of a crisis makes it seem kind of wrong.


David says it's especially tricky here because there was a time when pretty much all food prices were going up. In fact, between March and April, food prices saw their biggest jump in 46 years.


Yes, and things have settled down, but we are still paying more for food and eggs than we were in January. And David thinks this will continue until the pandemic is totally under control.


But David adds that this whole thing has made him realize something which is just how strong and resilient the U.S. food supply is. That record spike in food prices, the biggest one in almost 50 years. It was two point six percent. That's it. And that is today's indicator, by the way, two point six percent.


This is sort of the largest shocker that we've seen or any of us have experienced in our lifetimes, you know, not only to the food supply, but society and in our our way of living. And, you know, we saw you go to the grocery store and another food available. It's, you know, prices increase. But a lot of that was short term. We're seeing prices starting to come down.


DaVita's We will have to see what the courts decide about egg prices and whether it was price gouging or just, you know, fair economics or maybe unfair, but legal economics.


And meanwhile, economics has been slowly solving the problem. When egg prices weren't really high in March, chicken farmers raised more hens and those hens have just started laying eggs, which means that supply of eggs will increase and that will help with prices, too. That is basic economics at work.


Meanwhile, Scott Horsley, our omelet maker extraordinaire, says whatever happens to the prices or nearly whatever his weekly omelet is probably just going to be baked into his schedule now. And he says it like he's really gotten some skills in all these months of, like, weekly omelets.


I'm going to put some cheese in the middle here. Of course, you got a little salsa on top.


That's pretty good. Yeah. Yeah, that's well worth two twelfths of three dollars.


Ninety nine cents. Feels like even with the slight price hike, like the omelet feels worth it.


Exactly. This episode of the indicator was produced by Nick Fountain Fact, checked by Britney Cronan, The Indicators edited by Paddy Hirsch and is a production of NPR Exit Stage Left.