David Ortega, Aeg Companies, Stacy Vanik Smith discussed on Marketplace
After a tumultuous summer he's ready to pay attention to the presidential race for NPR news. I'm Angela Cochair guy in El Paso. You're listeningto all things considered from NPR news. Is it egg greediness or just good economics. The price of eggs skyrocketed during the pandemic, and now some states are suing AEG companies for price gouging. Stacy Vanik Smith in Cardiff Garcia from our daily economics podcast, the indicator from Planet money, tell us exactly what's going on with egg prices. 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. 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 US and you know that in prison, a man will will lead to a rise in prices. That is David Ortega. He is a food economist at Michigan State University. And David says it's all about supply and demand. A spike in demand, plus a fixed supply pushes up the price and the price went way up nearly 200% in March and now a bunch of states have responded by suing AEG companies for price gouging. The state's included Texas, West Virginia in Minnesota, and they also included New York, where the attorney general accused egg company Hillandale Farms of taking in $4 million in revenues from overcharging people for eggs. And with prices here is where things get tricky. I mean, Did eight companies commit a crime by charging more for eggs. Were they just being good free market citizens? Also challenging really happens when you purposefully set the price of a commodity, you know, significantly above the traditional price level that incorporates costs and other forces, David says. Part of the issue here is that costs went up for eight companies to labor transports. Supplies were all hard to get and often expensive in the early days of the pandemic, But did those costs go up? By three or 400%, 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 I scream prices or caviar prices or wine prices or something like that went up by 200%. It probably wouldn't be a legal issue a price gouging accusation. But the idea here is that eggs are a staple in a stable that really vulnerable people count on, especially in a crisis, and this idea that companies were profiting off of vulnerable people in time of 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. But you know it's really difficult to draw the line as to what is a appropriate price responds due to the shock versus what isthe sort of this type of illicit behavior that's trying to take advantage of the situation, David says. We will have to see what the courts decide about egg prices and whether it was price gouging or just, you know, faire economics or maybe unfair but legal economics. Stacy.