price-fixing chicken eggs
considerations on food costs, inflation, and security
Remember when I was lambasting Canadian grocer CEOs for their record profits and inflation of food prices, or the lack of firm federal action around that same issue? I missed a huge piece of the food cost puzzle in all of it: price fixing.
Price fixing has left me with complicated feelings about the cost of food in Canada and America for 2024. There’s always room for more nuance, more consideration of power and policy in food, and how it ends up being reflected in what sorts of agency we have as individuals to make sense of the system we live in.
It’s simple to catch “greed-flation” by grocers: last year, I paid $13.99 for a pound of my regular coffee, on sale it could be $15.99 for two pounds and a whole lot of personal satisfaction. That same brand is now $18.99 for one pound, on sale for $20.99 sporadically for two pounds. Mentally, that hits different.
Then there is shrinkflation, something I’ve observed with fascination through the world’s dwindling cocoa supplies. How companies pivot to reduce the amount of chocolate in order to balance “foreign exchange rates.” In post-Brexit Britain, over 206 food items were made smaller and held to the same cost. Toblerone received tremendous public backlash for changing its shape, later reverting to the original shape but reducing the amount of chocolate per bar from 200g to 150g.
But with price fixing, there is a more sinister, inside-job feeling to it, in a way that is easier to veil from the public. Price fixing is generally when parties that would normally compete against each other coordinate strategies to raise, maintain, or stabilize the price of goods together. In most scenarios, it’s a form of colluding to maintain a profit at the expense of the public’s wallets.
what came first: the collusion or the eggs?
The chicken egg price fix by egg producers in America demonstrates a years-long effort by food manufacturing companies to price gouge through a manipulation of private sector guidance and product availability.
Both Cal-Maine Foods and Rose Acre farms were identified and sued in the chicken egg price fixing scheme. Cal-Maine Foods is the largest egg producer in the United States, and markets shell eggs to grocery stores, club stores, and other foodservice distributors. Cal-Maine brands include Egg-Land’s Best, Land O’Lakes, Farmhouse, and 4-Grain. Cal-Maine is the largest egg producer in the United States, selling around 20% of all shell eggs produced in America, and owning over 8% of American chicken flocks. Rose Acre Farms is is the second-largest egg producer in the United States. Rose Acre Farms holds about 7% of the shell egg production and 6% of the egg-laying flocks in America.
The lawsuit directed against Cal-Maine and Rose Acre was put forward by major food distributing companies, including Kellogg, General Mills, and Nestle. (This is where I feel my complicated feelings arise, having been a long-time critic of Nestle and their freshwater stealing and infant formula scandals). In the lawsuit, egg producers were alleged to conspire from 2004-2008 to reduce their egg supply and subsequently increase the overall price of eggs. This included increasing egg exports to promote a reduction in the domestic supply market. They also reduced cage space and flock numbers on farms to limit the number of chickens available for egg-laying.
A federal jury in Illinois found the food companies (Kellogg, General Mills, Nestle) were injured by these conspiracies, and Cal-Maine was ordered to pay $17.7 million USD in damages to the food manufacturing companies. Both Cal-Maine and Rose Acre Farms continue to deny their price-fixing scheme.
The dynamic around this price-fixing scheme has interesting implications around food prices and animal welfare, as detailed by Claire Kelloway in her analysis for Food & Power. Early 2000s efforts by the United Egg Producers (UEP) to participate in an animal welfare program that improved egg facilities, feeding practices, ventilation, and employee training.
While these were successful improvements, the new UEP guidelines weren’t a significant shift in the actual industrial practices, and the lawsuit confronted this by looking specifically at manipulation practices put forward by Cal-Maine and Rose Acres farm that included early molting. These practices are largely critiqued for animal cruelty, and involve deprivation of water, light, and feed to have flocks lose feathers earlier and stop layer eggs altogether. It is these behind-the-scenes practices, rather than public regulations, that end up exploiting consumers or producers to slow production.
In the egg pricing fix, early molting was internally agreed upon by the producers in 2000, 2002, and 2004, which led to slower egg production and organization of smaller flocks. It’s a fine line between private regulator advances on animal welfare and conspiracy to intentionally reduce supply to increase demand, but an interesting element to the broader arguments around food pricing.
What is illuminating for my own understanding of food prices is how many years it took to take this case to court: roughly 15 years to hold egg producers accountable for price fixing, which then spills into more contemporary discussions around the price of food itself. I saw it swiftly conflate with the current avian influenza spread across the United States. It becomes a question of what is happening now, and what happened back then that informs the now? But quite often, those elements aren’t untangled in a 30 second Reel or TikTok itself. I found myself initially confused about how avian flu and price fixing of eggs raised costs together, despite these being two separate time periods.
canadian price fixing
The most prominent price fixing scheme on the Canadian landscape has been bakery price fixing through Canada Bread, which became public in 2017 and has involved our old grocer friends (Weston Foods Canada Inc) colluding to inflate bread prices across the country. This one has some broader consequences for the Canadian food landscape, too.
Canada Bread is major producer of baked goods and packaged fresh breads and operate 17 major bakeries across Canada. Subsidiaries and brands such as Dempster’s, Villaggio, POM, Bon Matin, Ben’s, Takis, and more. (In what I am not sure is joke or reality, Canada Bread was sold by Maple Leaf Foods in 2014 to Grupo Bimbo, and has changed its brand name to Bimbo Canada).
The Competition Bureau of Canada (the Bureau) investigation began in 2016 against Canada Bread, and alleged that at least $1.50 was added to the price of a loaf of bread during the 16-year conspiracy (2001 to 2015) and involved some of Canada’s largest bakery wholesalers and grocery retailers. Under these arrangements, those involved regularly increased prices on a coordinated basis. Loblaws and the Westons did not publicly admit to any involvement, instead opting to cooperate with the Bureau’s investigation and received immunity.
Canada Bread itself has denied participating in what they have deemed a “lengthy, wide-ranging conspiracy” to fix the price of bread in grocery stores and denies any profiting from the price increases that the investigation has revealed. Grocers such as Loblaws and Empire Company (owner of Sobeys and Safeway) argued publicly through the parliamentary committee hearings about the scandal that they are not colluding so much as “passing on higher costs from suppliers.”
The Bureau has focused their investigation into “anti-competition” practices, which are concerned with accumulation and exercise of market power by a select few dominant players. These dominant players tend to have substantial control over the prices and choices of foods available to the public.
Canada Bread eventually (and recently) pleaded guilty and admitted to years of bakery price fixing. They agreed to pay the $50 million fine after admitting to collusion. This is the highest-ever price fixing fine that has been imposed by a Canadian court, and fees will go directly into the federal government’s general revenue pool for various government services. There is public outcry around why it is not directly returning to anyone who purchased overpriced bread, and notes of how low the fine really is for a company that annual bakery sales jumping from 945.7 million to 1.087 billion in 2011 (during price fixing years).
At face value, the Canada Bread scandal marks a time period where customers were conservatively spending around $250 to $400 (based on average family sizes fluctuating) over a 14 year period of small incremental and mutually agreed upon price fixing. It also marks the first time a food producer has been fined so steeply, and yet fails to catch some of the red flags that this suggests across the broader grocery and producer realm.
price fixing as an acceptable Canadian strategy
Galen Weston is any easy person to point fingers towards, and it is admittedly always tempting when it’s the evil dork trying to keep looking cool. But ultimately, there are countless claims and current lawsuits around price fixing in America and Canada, none of which are consistently factored into the economic scenarios of food production in current capitalism.
At a larger scale in America, there’s the revelation that the agriculture data and analysis company Agri Stats has been providing competitively sensitive information to predominant meat and poultry producers and processers through an industry-wide price fixing scheme. This involves major companies like Tyson Foods, JBS, Cargill, and Smithfield. The access that Agri Stats produces for companies creates a landscape of consistently fixed retail price increases, reduces prices paid to food producers, and allows for the maintenance of profit across food retailer industries with little questioning.
Within Canada, price fixing investigations are less focused on anti-trust and more with healthy competition. As Dr. Sylvain Charlebois argues, there is a messy relationship with the mere concept of competition across Canadian businesses. He argues that monopolization and Crown corporations are unquestioned until prices become too high, and the public begins to seek government input on a situation they have little current control over.
Discussions here have been pigeon-holed to bread, rather than thinking about the consistent patterns and strategies used by producers and grocers. The case of Canada Bread is interesting, in that while it was sold by Maple Leaf during the period where the Bureau began its investigation, Maple Leaf remains one of the top suppliers of meat across Canada.
A publicly available email sent in 2007 from the then-CEO of Maple Leaf Foods (Michael McCain) reveals a very straightforward internal evaluation of price fixing:
Maple Leaf Foods wanted to do with meat what they had been doing successfully with bread. In a larger assessment of grocery monopolies in Canada, it seems the Bureau is slow to investigate, and the big grocers are all complicit in some degree of price fixing.
The infamous Loblaws “price freeze” campaign of 2022 was revealed by Metro as a regular black box practice across the big three (Empire Ltd, Loblaws, and Metro). Through Metro’s admittance of the regularity of price fixing, Dr. Charlebois points out in an interview that it demonstrates a more upstream collusion across all grocers, with new market conditions impacting retail prices down stream.
consumer choice, agency, and codes of conduct
I’ve shared before that there are ongoing processes looking into building a Grocery Code of Conduct through the Bureau in Canada. This would ultimately provide some general disciplines and regulation within the food supply chain and keep food companies and grocers more accountable. But like many elements of the Bureau, it will be slow moving.
In contrast to this, I think it’s useful to look at how grocers respond to food corporation price increases in Europe. The grocery chain Carrefour has pulled PepsiCo products off their shelves in Spain, Belgium, Italy, and France due to what they have deemed unacceptable price increases. In this there is a dynamic where collusion isn’t normalized between producers, manufacturers, and distributors. Carrefour has explained that they will place notes on shelves to explain to their customers why certain Pepsi brands are missing, a political reminder during a daily experience that offers more transparency into their food system.
There’s also the element of consumer choices: opting for more affordable substitutes, off-brand items, shopping across multiple food markets to get the best deals for certain departments. There’s the ability to call public attention through grocery haul videos, where viewers are asked to guess how much a small basket of groceries costs, or where a video creator compares the prices of the same ingredients across two stores that are notably mentioned in a TikTok. These seem to be the most effective forms of public pushback, but also tend to end in rotting produce sitting in stores with jacked up prices. I would like to say there’s a lot more public power in how we understand and look at our food production systems, but I would be remiss to not acknowledge how exhausting it is playing the coupon-clipping, grocery-store-hopping, price-saving game.
There’s got to be a sweet spot, with continued public pressure, to call out the normalization of price fixing, of greed-flation, shrink-flation, and profiteering through anti-competition and anti-trust.
I hope that in bringing these stories all together, it makes it easier to call it out in your grocery run experiences, maybe encourages the odd call-out video on social media and brings some power back to us as agents in a game that seems all too rigged against our own kitchens and wallets.