Written by: Paul Thompson
Primary Source: Thornapple CSA
Hanging out with Jane Bush the other day, she mentioned the dramatic decline in the wholesale price of eggs. Here, I must note a disconnect because since Diane and I buy all of our eggs directly from Jane, I haven’t been paying a lot of attention to the retail price of eggs. As such, I could be accused of mansplaining in today’s blog, but here goes anyway.
You may recall that it was just a little over a year ago that bird flu wiped out a number of flocks in the Midwest. According to a Wall Street Journal report, U.S. egg poultry producers lost 39 million birds in April and May of 2015. The same report notes that egg prices were soaring. As crazy as it might sound to a person with average economic understanding, the same thing explains why egg prices are plummeting today.
Here’s where the mansplaining comes in. With egg prices at record levels in June of 2015, anyone with the basic infrastructure to produce eggs is going to jump in and fill that infrastructure up. In some industries, you can indeed pump up your inventory to take advantage of an increase in the market price of the stuff you’re selling pretty much like you turn up the flow of water from a spigot. If Hot Wheels are selling like hotcakes, you order more. And if there are more orders for Hot Wheels, Mattel puts on another shift at the plant and orders up more supplies to make them. These things don’t happen instantaneously, but they can usually happen pretty quickly. Even more important, though, is the fact that once the fad cools, you turn down these flows just as quickly as you turn them up.
There are some parts of the food industry that are similar. Kellogg’s can crank up the supply of corn flakes because there is generally plenty of corn lying around, and the companies that supply baby chicks to the poultry industry can pump that up pretty fast, too. So last year at about this time, the orders for those baby chicks started to come in. By the time egg prices were peaking in June, there were lots of egg producers and a few wannabe egg producers who were either replacing hens they had lost or (in the case of the Farmers Egg Co-op that Jane is affiliated with) increasing their capacity. But here’s where things start to rub. It takes about six months for a hen to mature enough to start laying any eggs at all, and about nine to twelve months before they are really going to hit their stride. In the case of an egg laying hen, hitting your stride means laying an egg every day.
Economists call this “asset fixity,” and if you’ve ever experienced the constipation associated with a fixed asset, you know how uncomfortable that can be! More mansplaining (which as is typical for mansplaining mainly consists in saying the same thing over and over again): While in many industries you turn your production process off and on like a spigot in response to market prices, increasing your investment when prices are up, decreasing your investment when prices go down, there is a significant amount of irreversibility in the investments that farmers make in response to high prices. It’s going to take months for that crop to come in, and you can’t unplant it. Similarly it’s going to take months for those chicks to become hens laying an egg every day, and once you’ve invested in feeding them for all that time, well what are you going to do? Asset fixity is important in food ethics because it mansplains why farmers are so cantankerous, but that’s probably a topic for another blog, altogether
Amazingly, the robot who monitors my spelling actually thinks that mansplaining is a real word. Now that’s something even I won’t try to mansplain.