Eggspensive

Eggspensive, in economics, refers to a phrase used to describe the condition of rising egg prices due to the spread of contamination. The prime reason for occurrence is the spread of bird flu or any disease among the flock of chickens and hens. 

The primary evidence of this event happened last year (in the 2000s). It caused the demand for eggs to increase by a significant amount. As a result, the associated grocery items are also influenced by this effect. In addition, it led to the death of many hens. 

• Eggspensive refers to the economic phrase used to describe the rising prices due to the transmission of bird flu or contagious disease. 
• It is caused mainly by the spread of bird flu or Avian" influenza virus among the flocks of birds. However, chickens and turkeys are the prime targets. 
• In 2014, more than 50 million chickens and turkeys died due to this outbreak. A similar incident also occurred in 2004. 
• Its impact is visible in the rising prices of bakery items, revenues of retail outlets, and decrease in consumption index. 

Eggspensive is an economic situation that results in high egg prices in the market. In short, it refers to the eggs getting expensive due to certain variables. If the prices tend to rise, consequently, the prices of bakery items also surge. There are various reasons for the eggspensive to occur. However, the primary cause remains the Avian Flu in the United States. 

Between the late 1990s and 2022, many expensive situations were created in the nation. The Avian Flu outbreak in 2004 was one of the substantial reasons for the increase. Within this period, restrictions were imposed on the eggs and egg products of the US. However, in late 2004, the impositions were taken down. 

As a result, the post-effect caused the prices of eggs to rise to $1.99 between 2007-08. At this time, the consumption had dropped to 242.8 per capita income in 2010. 

From 2014 to 2015, the spread of pathogenic Avian influenza (HPI) resulted in more than 50 million chickens and turkeys dying in the states. As a result, in the later stages, it impacted poultry production and trade worldwide. Among all nations, the US was heavily influenced by this outbreak. Thus, the aggregate demand for eggs was also affected. According to reports, the expensive let the prices touch $2.47 from $2.02. 

The recent expensive event was visible in 2018, with the flocks circulating in Asia, Africa, the Middle East, and other parts of Europe. Due to this, the prices of eggs again rose by a certain percentage. In 2022, the eggspensive resulted in the price reaching $2.86.

Although it substantially affects the economy, it is necessary to examine the factors causing it. Let us look at the causes or reasons for its occurrence:

1. Bird Flu

Among the significant factors is the famous bird flu or Avian influenza, which results in eggspensive. It is a contagious disease within the birds that can spread through touch or transmission. Thus, if this outbreak occurs in one region, it can spread quickly in other regions too. 

2. Inflation

To ever-rising prices, the link is mainly chained to inflation. As the costs of poultry feeds (like soybean, corn, and other grains) and transportation rise, production costs also rise. Thus, the producers transfer the additional costs of factors to the consumers. Moreover, during an outbreak, inflation shoots up. As a result, the final or retail price of items also tends to surge. For example, the costs of grains like wheat, barley, soybean, and maize saw a price jump from mid-2006 until 2007. However, the duration of the eggspensive will depend on the inflationary period due to the outbreak. 

3. Rising Demand

Lastly, it can occur due to increased aggregate demand for eggs. During a particular season, the prices will tend to rise. For example, on Christmas Eve, the demand for cakes and other bakery items rises. But, if the demand is not fulfilled, it can raise the prices. The demand for eggs surpasses the supply and may eventually cause eggs to be expensive. As a result, the surging demand will lead to a shortage. If this continues, the prices will keep inflating. 

Let us look at the examples for comprehending the concept in the best way possible.

Example #1

Imagine a small town named Sunnyville, located near a city. The residents primarily engaged in agriculture and poultry farming. Suddenly, a disease outbreak occurs among the chickens, severely affecting their health. It leads to a drastic reduction in egg production: initially, there's a 40% drop, which soon worsens to a 50% decrease.

Due to this significant decline in egg production, Sunnyville begins to experience a shortage of eggs. This shortage is critical because the town is a crucial supplier of eggs to the surrounding areas. As a result of the reduced supply, egg prices in Sunnyville and nearby regions increase by 35%, a situation referred to as "eggspensive."

The egg shortage in Sunnyville had widespread effects:

1. Bakery Sales Decline: Local bakeries, heavily reliant on eggs, faced increased costs. Some raised prices while others compromised on quality with substitutes, leading to lower sales.
2. Price Hikes in Food Products: A major mayonnaise brand, dependent on eggs, raised its prices in response to the shortage. It led to cost increases for food businesses like burger outlets, forcing them also to hike up their menu prices.
3. Seasonal Impact: The egg shortage's effect was particularly felt during winter, a peak season for bakeries, resulting in decreased sales due to higher egg prices.

Overall, the egg production drop in Sunnyville due to disease not only impacted poultry farmers but also had a domino effect on businesses like bakeries and food outlets, highlighting the interdependence within the local economy.

Example #2

As of January 2023, the eggspensive phenomenon has caused egg prices to skyrocket by 89%. According to President Brandon Schulz of the Wisconsin Grocer's Association, the price for a typical carton of eggs has jumped from less than $2 to, in some cases, more than $6.

This surge in prices not only affects consumers directly but also has broader implications for businesses reliant on eggs, such as bakeries and food manufacturers. The eggspensive scenario serves as a stark reminder of the interconnectedness of agricultural production, market forces, and consumer prices, highlighting the need for resilience and adaptability in food supply chains.

As discussed above, various factors can potentially lead to eggspensive. However, the impact of the same is substantial. So, let us look at it.

1. Rise in the prices of by-products

The significant impact is seen in the other groceries. Items that include eggs as a significant ingredient will eventually turn expensive. Some items that include eggs include mayonnaise, cakes, croissants, brownies, biscuits, souffles, custards, puddings, and others. In addition, the revenues of retail outlets that sell secondary products from eggs will also be affected. 

2. Decreased consumption

The sudden effect of the eggspensive causes a fall in the consumption index. As the prices rise, consumption also falls. People who prefer eggs will switch to substitutes or refrain from purchasing them. Also, the consumption pattern of the eggetarian groups gets influenced. 

This has been a guide to Eggspensive and its meaning. Here, we explain the concept along with its causes, impact, and examples. You can learn more about financing from the following articles –

• Inflation Risk
• Inflation Hedge
• Hyperinflation