February 19, 2008

How much of the increase in egg prices is due to ethanol?

There is a story in the news today that talks about egg production in New York state. In the article they give some numbers that I found interesting.

While production is down, prices paid to New York farmers for eggs remain up. A dozen eggs brought New York poultry farmers an average of $1.29 in December, up 4 cents from November and up 57 cents from December 2006.

Full Article

And the reason that I find these numbers interesting is because so much blame has been aimed at ethanol for egg price increases. With these number we can actually figure how much of the increase is due to higher corn prices.

The USDA gives some numbers as to how much corn is needed to produce a dozen eggs.

The feed conversion ratio for egg production is approximately 4 pounds of feed per 1 dozen eggs or approximately 30 billion pounds of feed use in 2006.

Approximately 80 percent of egg-type feed is corn or 24 billion pounds in 2006.

The USDA also provides numbers for the price of corn for the time periods mentioned. The average price for a bushel of corn in December 2006 was $3.01 and for December 2007 it was $3.76.

Since there are 56 pounds in a bushel of corn, that would mean that in December 2006 a pound of corn would cost 5.4 cents. So even if all the feed needed to produce a dozen eggs was corn that would mean that the feed costs would be 21.6 cents per dozen eggs.

In December 2007 a pound of corn would cost 6.7 cents and that would mean that feed costs would be 26.8 cents per dozen eggs.

So from December 2006 to December 2007 the feed costs to produce a dozen eggs went up by 5.2 cents and the amount the farmer got went up by 57 cents. So less than 10% of the increase seen at the farmer level was due to higher feed costs.

Clearly the bulk of the increases seen in egg prices is coming from factors other than rising corn prices.

Hat tip to Food and Fuel America.


An Analysis of the Effects of an Expansion in Biofuel Demand on U.S. Agriculture
USDA: Prices January 2008
USDA: Prices December 2007

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