The Great Egg Caper Groucho Marx once said "If the price of pumpernickel ever hits a dollar,

head for the hills." Pumpernickel crossed that line in the '90s and is currently close to (or over) $2 a loaf.

fewer eggs per chicken. This drives down the supply of eggs and, thus, drives up the price for consumers. This isn't a bad thing. The humane treatment of chickens is more important to many consumers than the cost of the eggs. Or so we thought.

Eggs have also gone up in price over the last several years (to the tune of a 220% increase between Dec Apparently now consumers want to have their cake 2004 and Jan 2008 according to the USDA) and and eat it too. They want chickens treated humanely some people claim that American egg companies and they want cheap eggs. Unfortunately only one have engaged in conspiracy and price fixing in the of those is possible at a time. The egg companies egg market in violation of the Sherman Act. haven't conspired to drive prices up, consumers have demanded regulations that lead to higher Several groups and companies (including Kraft prices and they have reaped what they have sown. Foods and Kellogg's) have filed suits in federal court over the alleged misconduct. Several cases In this case, as expected, the free market has have been thrown out and a few companies have responded to consumer demands and prices have settled out of court. adjusted as well. If there is any conspiracy in the increasing price of eggs it is animal rights groups So what caused the rise in egg prices and are the that have conspired to protect the chickens at egg egg producers really conspiring to gouge farms and not with the companies that sell the eggs. consumers? The free-market economic model suggests that coordinated price fixing inevitably Nevertheless this is seen by many as a failure of the fails as there is always one company willing to free markets. If prices don't go down then the undercut their competitors prices and start a price markets have failed and government regulation is war that keeps consumer prices low. needed. Wait until these cases are resolved and egg companies are forced to pay millions in damages for In this case the answer is regulation, although something they had no control over. Prices will surprisingly, not government regulation. The United increase again to offset the losses and people will Egg Producers certification program is a private balk even more. company that was started in 1968 in response to consumer demands for more humane conditions for Then the ignorant masses will demand that the chickens at egg farms and regulates the conditions federal government regulate egg prices and the that egg-producing chickens can be kept in at egg companies will be taken over. Prices will no longer farms. be set by the rules of supply and demand, they will be determined by a bureaucrat in Washington who Today all major egg producers meet UEP will estimate the rate of egg consumption and certification standards (although participation in the calculate a national cost for eggs. program is strictly voluntary) and most egg sellers (like Wal-Mart) will only sell UEP certified eggs. Companies will go bankrupt and if you think egg prices are high now just wait until Washington starts Before UEP certification became the norm (in the setting them then people will wish for the days 1990s) egg producers crammed hens into tiny cages, when the UEP standards were the only thing trimmed their beaks, and force-fed them in order to affecting egg prices. produce the most eggs per acre and keep costs to a minimum. This meant low prices for consumers and a maximum supply of eggs on the market. Now, however, egg companies have to conform to UEP guidelines which means fewer chickens per acre and