Why are egg prices so high?

When the price of each egg reached Tk15 at retail shops, fingers were again pointed at the poultry industry for allegedly 'manipulating prices'. What has been absent from the conversation about egg prices is any data about the state of Bangladesh's layer farmers who are producing those eggs.

In fact, there seeems to be a real gap in official data of the number of layer farms in the country, how many are in production, and how many are shut down. Kazi Farms is one of several companies selling layer chicks and feed to farmers; so our sales department maintains its own data regarding the market, collected by our salespeople. I will try to use this data to explain why prices have risen.

The above graph shows the price of Layer Layer1(LL1) feed, which is the major feed used by layer farmers to produce eggs. With the start of the Ukraine war in February 2022, international grain prices shot up, and feed prices increased by almost 30% over the next year. This had a direct impact on the cost of producing eggs, as feed is the biggest single cost for any poultry farmer.

However, it's the next graph which is really illuminating.

This above shows Kazi Farms' estimate for national daily egg production since the start of the Ukraine war. Production has decreased by 14%, as a corresponding number of the country's layer farmers have shut down. The reason is obvious from the previous feed price graph: farmers couldn't afford to buy feed. Bear in mind that the Ukraine war came shortly after two terrible Covid-19 years during which practically all farmers lost money. It's easy to see how layer farmers could be discouraged from farming by high feed prices.

Since the start of the Ukraine war, one thing that hasn't changed is demand for eggs; consumers still want them. However, supply has dropped. In any market, when supply drops and demand is unmet, the shortage causes prices to rise. This is basic economics. It shows that the allegations of 'price manipulation' from various quarters are unfounded. What we are witnessing in Bangladesh is a real shortage of eggs, which is causing a rising price of eggs through the economic laws of supply and demand. 

In the light of the above, the media and government agencies should stop accusing the poultry industry of manipulating the price of eggs. It is pointless to speculate about market manipulation raising prices when the real problem is obviously an egg shortage. In particular, Kazi Farms has always sold all our eggs through a competitive SMS auction process; such auctions make it impossible for anyone to manipulate prices, as the daily price is determined by whatever the customers bid.

The government's time would be better spent solving the real problem behind the egg shortage, namely that layer farmers around the country no longer have money to feed their chickens. There are many possible solutions, such as enabling loans to layer farmers on easy terms. However, pointing fingers at the poultry industry will not solve anything.

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