N.Y. Accuses a Top Egg Producer of Price-Gouging in Pandemic

(Bloomberg) -- A top U.S. egg producer raised prices at the start of the pandemic, charging as much as four times more and hitting low-income families, according to a lawsuit filed by New York Attorney General Letitia James.

Hillandale Farms, one of the top five American egg producers, allegedly hiked prices on more than 4 million cartons sold to major grocery stores, the U.S. military and wholesale distributors. The company pocketed an estimated $4 million by unlawfully increasing prices, according to the lawsuit.

Hillandale “unequivocally denies the allegations,” the company said in a statement.

The New York move follows a similar complaint by Texas Attorney General Ken Paxton, which in April accused Cal-Maine Foods Inc., the largest egg producer in the U.S., of taking unfair advantage of the pandemic to raise prices by around 300%. Cal-Maine strongly denied the allegations back then.

“As this pandemic ravaged our country, Hillandale exploited hardworking New Yorkers to line its own pockets,” James said in a statement. “In less than two months, Hillandale made millions by cheating our most vulnerable communities and our service members, actions that are both unlawful and truly rotten.”

Lockdowns in the U.S. beginning in March resulted in consumers clearing shelves of toilet paper, cleaning supplies and foods. Prices for some goods such as beef surged to records, prompting the U.S. Department of Agriculture to probe beef packers. New York even started making its own hand sanitizer to prevent gouging.

Closely-held Hillandale charged Western Beef supermarkets 59 cents to $1.10 for a dozen large egg whites in January, according to the lawsuit. By mid-March, prices had gone up to $1.49 and eventually reached $2.93. Large eggs at the military academy at West Point were sold in April at $3.15 per carton, up from 84 cents in January, the attorney general says. Stores passed on the higher prices to customers, prompting complaints.

“As retail demand for eggs reached historically high levels earlier this year, our dedicated personnel rose to the challenge and worked tirelessly to meet that demand through the most consistent production and delivery measures possible,” Hillandale said in its statement, pointing out that egg prices now are lower than at the same time in 2019.

The suit alleges that a poultry industry group defended the price increases, pointing to demand that was sharply higher. Hillandale--founded in Flushing, Ohio, in 1958--was the fourth-biggest U.S. egg producer with 20 million hens last year, according to WATTAgNet.

The company raised prices by following indexes published by market researcher Urner Barry. According to the suit, the pricing system works like “a feedback loop,” where producers feed prices to the researcher, which then uses them to form its indexes.

“Egg producers such as Hillandale then use Urner Barry’s indexed prices as justification to set their own prices for the sale of eggs,” according to the statement.

Urner Barry didn’t immediately respond to a request for comment.

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