The Table Egg Market in California under New Regulations and the Price of Table Eggs (3/25/2015).
Data from the National Agricultural Statistics Service indicate that about 55% of the 2014 U.S. egg production
(100.010 billion eggs or 8.334 billion dozen eggs) took place in seven states: Iowa (16.5%), Ohio (8.8%), Indiana
(7.7%), Pennsylvania (7.6%), Texas (5.1), Georgia (4.7%), and California (4.5%%). Eighty seven percent of this
production were table eggs. The 2014 table egg production reached a record level of 87.184 billion eggs (7.265
billion dozen eggs). The USDA is projecting a 1% increase in the table egg production (7.320 billion dozens) in 2015
(USDA/ERS: Livestock, Dairy, & Poultry Outlook/LDP-M-249, March 2015).
Beginning in 2015, there is a new law in California (i.e., California Shell Egg Food Safety Rule) that requires more
space for caged laying hens producing shell eggs for the California market. The law requires, among other things, a
minimum of 116 square inches of floor space per laying hen. The new law exempts laying hens whose shell eggs are
pasteurized or otherwise processed to decrease the risk of salmonella contamination.
The law affects egg producers in California and producers in other states who supply table eggs to California. The
options for those producers to meet the new law requirements are to either increase the space for laying hens or
reduce their flocks; either way, production costs increase compared with the standard way of producing eggs. It is
expected that the new law will increase the price of shell eggs in 2015, particularly in California. The law could also
lead to a reduction in egg sales to California, as egg producers may choose not to modify their facilities or reduce
their flocks and sell their product to other markets, possibly of reducing the price of eggs in those markets.
In general, egg prices fluctuate throughout the year from week to week. Prices tend to be lower at the beginning of the
year and usually rise by the end of the year. Figure 1 shows regional (not including California) monthly average large
table egg prices (warehouse delivered). As Figure 1 shows, large table egg prices are typically lower in the Midwest
than the rest of the country where larger egg producers such as Iowa, Ohio, and Indiana are located. The Figure also
indicates that average prices of large eggs were higher in 2014 than average prices of large eggs during the previous
year in each of the U.S. regions. Prices during the last two months of 2014 experienced a sharp increase compared to
prices the same period a year ago (see Figure 1).
Combined regional prices during November and December 2014 averaged $1.51/dozen and $2.08/dozen,
respectively, representing an increase of 11% and 31%, accordingly, compared to prices the same period in 2013
(November and December). Even though egg prices are typically higher during the last quarter of the year, USDA
indicated that this sharp and sudden peak in prices was due to an increase in exports of table eggs to Mexico during
November and the uncertainties about how the anticipated California law, could affect the egg market in that state and
the rest of the country. By January 2015 large table egg prices declined, from 44% in the Midwest to 40% in the
Northeast, averaging about $1.20/dozen across all regions. Wholesale large table egg prices during February 2015 and
the first three weeks of March 2015 were stronger across the country than those in January 2015, averaging
$1.40/dozen and $1.49/dozen, respectively. According to the USDA, egg prices during the first quarter of 2015 are
expected to remain strong due to an early Easter (beginning of April), when egg demand normally intensifies.
Considering California’s large population and egg consumption, California has to import table eggs from other states.
For this reason, table egg prices in California are historically higher than prices in other states. Figure 2 shows large
table egg prices (delivered to store door) in Southern California and New York. As Figure 2 shows, large table egg
prices in Southern California increased sharply during November and December of 2014 as in the rest of the country;
however, average egg prices in Southern California in January 2015 not only did not decrease as in New York and the
rest of the country, but climbed to $2.75/dozen (5% increase) during that month compared to the average price in
December 2014 ($2.62/dozen). Moreover, large table egg prices in January 2015 were 95% above prices in January
2014 ($1.41/dozen). Since January, table egg prices in Southern California have declined, averaging $2.29/dozen in
February and $2.01/dozen during the first three weeks of March. These prices are still 38% and 28% higher than a
year ago. Egg prices in New York during January 2015 were $1.26/dozen compared to $1.89/dozen in December
2014.
Egg prices across the country abruptly increased by the end of 2014 due in part to the expected changes that the new
law starting in 2015 would bring to shell eggs sold in the California market. Since then, prices in all regions of the
country, except for California, have decreased to levels similar to a year ago. Egg prices in California have declined
since January 2015, but so far, remain above prices in 2014. Typically California egg prices are higher than prices in
other markets such as the New York market (as indicated by t-test, p=0.005); however, the new law has widened the
price difference between California and other parts of the country even more. The California egg market under the
new law is now a much more differentiated segment of the market.