Cal-Maine Foods has said it will “vigorously defend itself” against a lawsuit issued by the Texas attorney general alleging the US-based egg supplier has engaged in price-hiking during the Covid-19 pandemic.
In a statement the Jackson, Mississippi-headquartered company said: “Cal-Maine has not exploited this tragic national pandemic for gain.”
Texas Attorney General Ken Paxton filed the lawsuit on Thursday (23 April) alleging Cal-Maine, which is said to have a 19% share of the US eggs market, raised the price of its eggs amid the coronavirus pandemic.
The lawsuit alleges that Cal-Maine hiked the price of eggs from about US$1.00 per dozen to about $3.00, despite experiencing no disruption to its supply chain.
In response, the company said it had worked hard during this crisis to meet increased consumer demand.
“In doing so, Cal-Maine Foods has not changed its long-standing approach to pricing. Any allegation to the contrary is simply not true,” it said.
Cal-Maine added: “There has always been great volatility in the egg pricing market. The Covid-19 pandemic caused a massive disruption in every sector of the economy, including the egg industry. Retail demand for eggs reached historically high levels and egg prices increased significantly in line with those demand trends. However, egg prices have since declined quickly to pre-Covid-19 levels.”
The company said that, like other egg producers, it prices egg sales based on a model utilising independent, third-party market quotes published by Urner Barry, a provider of protein market news and information for the food industry.
“Importantly, the Urner Barry-based pricing model is mutually agreed to by our customers,” it said.
It added: “Egg prices can fluctuate on a weekly and even daily basis and are also subject to seasonal changes in demand. This is why egg buyers and sellers often refer to an industry benchmark service, such as Urner Barry, when negotiating pricing formulas. Much like other basic agricultural, oil and energy industries, the egg industry is subject to the balance of supply and demand and other natural market forces.
“The recent increase in the price of eggs is directly related to unprecedented retail demand, which also occurred during the peak Easter season when demand for eggs is typically high, not the result of price–gouging nor any other improper conduct by Cal-Maine Foods. The Company does not sell eggs directly to consumers or set retail egg prices.”
With regard to the lawsuit, it said: “We intend to defend our good name and prove that these allegations are without merit.”