Egg Pricing At Different Levels In The Marketplace

Farm prices are the lowest prices and these vary according to their size. In most cases, the farmer receives the same price for all sizes large and above, and lower prices for

Table 1 Factors associated with egg price variation

Factor

Examples

Level in the marketplace

Quotation system

Number of price changes per year

Product characteristics

Seasonal cycles

Price spread between sizes

National flock size (annual changes)

Regional

Size of package Media attention

Retail outlet Delivery of product

Associated services

Farm nest run, processed, wholesale, retail (consumer) Urner Barry, USDA

35 75 times per year fewer on the West Coast, more in the remainder of the country

Size, grade, color, specialty, shell/liquid

Summer low prices, winter high prices

Summer large differences, winter low differences

Large flock low prices, small flock high prices

Lower prices in surplus production states, higher prices in deficit states

Bad press reduction in demand and lower prices.

Good press high demand and higher prices

Retailers have unique markup policies for similar products

Processor dock, warehouse delivery, individual store assortment of products

Discounts, credit, shelf space purchases, sales and advertising allowances, store returns medium, small, and undergrade eggs. In recent years (1999 2003), U.S. egg prices at the farm level have averaged between 45 50 cents per dozen for large unprocessed eggs. Corresponding values for medium and small eggs were 33 38 and 15 20 cents per dozen, respectively. Undergrade eggs (for breaking) were priced at 25 30 cents per dozen. The average annual price for the blend of all egg sizes is usually five cents per dozen less than the price for large eggs or 40 45 cents per dozen, but this varies with the season as price differences between the sizes change.

Wholesale egg prices include processing, packaging, and often delivery. Current industry studies estimate these added costs to be 20 25 cents per dozen. Thus, the total cost of product at this stage is estimated to be between 65 75 cents per dozen for large eggs. Costs vary according to the type of delivery (store vs. warehouse), breakdown of pallets (one size per pallet vs. multiple sizes and products), packaging costs, and the efficiency of the processing plant.

Retail prices differ between the type of product, the type of store (supermarket, small independent, and convenience), the pricing policy of the individual company, and between regions. In a 1996 survey of 81 supermarkets in 28 U.S. cities,[1] prices averaged $1.35 per dozen for white eggs, $1.54 per dozen for brown eggs, $2.09 per dozen for specialty eggs, and $3.48 per dozen (equivalent) for frozen or liquid eggs. Prices in individual states ranged from $1.05 to $1.83 per dozen large white eggs. A California survey in 1998 compared the type of store and egg prices for large white eggs. Farm store prices averaged $1.10 per dozen, supermarkets averaged $1.75 per dozen, and warehouse stores averaged $.72 per dozen.

Market quotations theoretically represent prices at the wholesale level, but actual sales are at significantly lower levels because certain costs associated with the sale are not included (See earlier discussion of price discovery and reporting). As described, these prices are used only as benchmarks to measure the change in the market and for passive pricing. They do not represent actual sales or purchases at the prices published.

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