Wednesday, June 10, 2015

Egg Prices--Back to the Good Old Days

I mentioned this back in April, when I was amused by the euphemism--"depopulation" used to cover killing the infected poultry.

Now the bird flu epidemic has resulted in killing so many birds that there's an "egg crisis".

As is usual these days this reminds me of my youth.  In the 1950's we just beginning the process of switching from small growers to contract growers.  The reason for the change was economics. There were two cyclical processes at work: supply/demand and feed prices.

  Small growers like my parents had no pricing power, meaning that egg prices yo-yoed up and down.  If feed prices were down, you could make money.  But if you were making money you'd increase your flock and your neighbor would blow the dust off her brooder stoves and order some chicks.  The result would be overproduction, and prices would drop.  Meanwhile the prices of feed (corn, wheat, oats) would have their own fluctuations.

My mother would get very indignant at this, blaming the people who weren't true chicken farmers but who simply jumped on the bandwagon of higher egg prices.

The solution, obvious in retrospect, was for consolidation to give big egg producers some pricing power, and the ability to adjust production in line with market conditions.  That meant going to contract farming, where the farmer has the chicken house and associated equipment, and simply contracts with the big outfit to produce x number of eggs from y number of hens. (It's similar to the process for growing chickens for meat.)  This reduced price risk meaning egg prices have been more stable.

Unfortunately, the logic of contract farming meant replacing small flocks with large flocks, taking advantage of labor-saving equipment (I've no fond memories of gathering eggs from under possessive hens who'd bite my hand and twist.)  In effect it's like moving air travel from lots of single engine planes to 747's, meaning safer air travel and fewer accidents, but when there is an accident, it's big.  That's where we are now.

No comments: