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The largest US egg seller reported surging profits amid a bird flu epidemic that has pushed prices to record highs, and acknowledged it had been contacted by US authorities investigating price fixing.
Cal-Maine Foods reported net income of $508.5mn on Tuesday for the quarter covering December through February, a 247 per cent increase from a year prior. The company credited an 80 per cent increase in the average price of eggs from year-ago levels for the results.
The Ridgeland, Mississippi, company’s earnings have jumped as wholesale egg prices reached record highs in February. A years-long outbreak of avian flu forced producers to cull some 30mn birds so far this year. Buyers of a dozen grade-A large eggs in US cities in February paid the most in more than a decade, according to the Bureau of Labor Statistics.
Chief executive Sherman Miller credited the egg producers’ efforts to continue “maximising production through a period of high demand” and “recent acquisitions, which helped increase our production capacity in this challenging supply environment” for the boost in earnings.
But the results come amid mounting accusations from advocates for independent farmers and consumers that Cal-Maine and other large producers artificially kept prices high. Wholesale egg prices fell from a record high of $8.58 per dozen in February to $3.91 last week, according to commodity price information service Expana, as bird flu cases slowed and farmers rebuilt their flocks.
Cal-Maine said it made “significant progress” towards ending the nationwide egg shortage by growing its average number of layer hens by 14 per cent in the past year and investing in biosecurity.
The price drop also accelerated after the justice department launched an investigation into price fixing by egg producers. Cal-Maine said in a securities filing that it received a civil investigative demand from the department last month and was co-operating with the investigation.
The family of Cal-Maine founder Fred R Adams has sought to cash in on the company’s recent success, reaching an agreement to convert their super-voting shares to common shares ahead of a potential share buyback.
US agriculture officials said last week that consumers should soon start to see falling prices at grocery stores, noting that supply had recovered enough for many chains to stop enforcing purchase limits.
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