INFLATION

Minnesota to usher in new laws with New Year

Brielle Bredsten — Tue, 31 Dec 2024 12:00:00 GMT

ST. PAUL — With the new year comes several new statewide laws that go into effect on Jan. 1, 2025.

Laws passed during the last two legislative sessions will soon impact consumers, employment, health care services, housing and public safety.

Pricing transparency

The Ticketing Fairness Act restricts how online ticket sellers, bulk ticket buyers and resellers operate. The law bans deceptive advertising and speculative pricing, giving ticket buyers added protection. It also prohibits the use of bots to purchase tickets.

Another consumer law will prohibit businesses and people from advertising, displaying or offering a price for goods or services that doesn’t include all of the mandatory fees and surcharges, excluding taxes.

This particular law does not apply to fees authorized by law for motor vehicle purchases or leasing by a dealer. It also does not apply to real estate settlement services, except for broker commission and fees.

Employee pay

Minimum wage rates will be $11.13 an hour for all employers outside of the Twin Cities metro. The new law also increases the hourly training wage for workers under the age of 20 to $9.08. Annual earnings for those working 40 hours a week on minimum wage will now be $23,150 for both large and small employers outside of the metro. Employers are mandated to display updated wage rate posters, available for free at dli.mn.gov/posters.

Job postings will also require disclosure of the starting salary range or fixed pay rate, along with all benefits and other compensation. This provision of the 2024 Labor and Industry Policy Law, co-sponsored by Sen. Jennifer McEwen, DFL-Duluth, applies to businesses with more than 30 employees.

Coverage of abortion and gender-affirming care

Going forward, health plans must provide coverage for abortions and abortion-related services, including pre-abortion and follow-up services. Health plans cannot impose any cost-sharing or limitations for abortion care that are out of line with its other coverage offerings for similar services. Eligible or exempt organizations can choose not to cover these services, and therefore, health plan companies must cover the services with separate payments.

Medically necessary gender-affirming care must be covered by a health plan that also covers physical or mental health services. According to the American Medical Association, such services to treat gender dysphoria include mental health counseling and gender-affirming hormone therapy or surgery. Nonprofits and certain for-profit religious organizations may be exempt. Partial coverage must specify which services are not included.

Tenant rights

Tenant associations can now organize to improve housing conditions, amenities or community life. The new law prohibits landlords from retaliation, such as raising rent or filing legal action against tenant organizations for reporting code violations, contacting media or providing testimony regarding conditions of the premises.

If move-in dates change due to construction delays, the landlord must provide alternate housing, payment, lease termination, and return any payments incurred upon entering the lease agreement.

Gun control

Firearms with binary triggers will be banned in Minnesota. Binary triggers allow a gun to fire a round when the trigger is pulled and another round to be fired when it is released. The law makes owning or possessing a binary trigger a felony with a punishment of up to 20 years in prison, up to a $35,000 fine, or both.

For a complete list of laws passed in the 2023 and 2024 legislative sessions, visit house.mn.gov/newlaws.

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ALICE report helps Bemidji United Way identify new ways to assist struggling families

Ashley McKenzie — Tue, 10 Sep 2024 16:21:59 GMT

BEMIDJI — The United Way of Bemidji Area is making strides to bring attention to the growing challenges faced by families in the community who, despite being employed, are struggling to make ends meet.

Known as ALICE households, these families fall just above the poverty line, leaving them vulnerable to financial crises.

A new report, "ALICE in Minnesota: A Study of Financial Hardship," released by United Ways of Minnesota and United For ALICE, reveals that despite wage increases, the number of struggling households in Minnesota has continued to grow.

“Alice is an acronym. It stands for Asset Limited, Income Constrained, Employed. And it is data about people or families that live just above the poverty line and are working and are one emergency away from being in poverty,” said Denae Alamano, executive director of the Bemidji United Way.

Challenges facing ALICE families

The report highlights how wage growth, even at the fastest rate in four decades, has been no match for inflation. From 2021 to 2022, the number of households living paycheck to paycheck in Minnesota increased to 36%, or 834,343 households. This includes 233,779 in poverty and 600,564 ALICE households.

Alamano noted that Minnesota is not the first to adopt the ALICE data.

“I think we're the 31st or 32nd state to get this information for our state," she said. "The reason we found it important is that these are the people we're talking about in every community issue meeting. They're the people who need transportation to work and their cars aren't working, or they want to qualify for day care but they live just above the threshold where they could get help with day care costs."

For many in Bemidji, these challenges are not abstract statistics but day-to-day realities.

According to the report, in 2022 in Beltrami County, 28% of households were ALICE, compared to the state average of 26%, and 14% of Beltrami County households were in poverty, compared to the state average of 10%. This means in Beltrami County, more households are struggling per capita than the state average, with 42% percent below the ALICE threshold.

“It's exciting to get this information because then we can do something about it," Alamano said. "We have the story and the data, and we can make a difference with that information for the families that live in our community.”

With the official report having launched Sept. 10, Alamano is eager for community members to access the findings, noting how surprising it may be to see the cost of just paying bills today, without considering savings or vacations.

The ALICE households span all demographics and ages, highlighting that the financial strain cuts across generations.

“We’re not just talking about younger families. It's across the spectrum for all ages,” Alamano said.

The report says that for a family of four with an infant and a preschooler, the basic costs to live and work in Minnesota, excluding tax credits, rose from $63,444 in 2021 to $77,304 a year later. Compounding the issue in 2022 was the loss of up to $15,000 in federal child tax credits and stimulus payments that this family had access to in 2021.

In 2022, household costs in Beltrami County for a single adult ($25,524) and a family of four ($74,700) were well above the federal poverty level of $13,590 and $27,750 respectively.

"The findings in this one-year period are consistent with a more than decade-long trend: Since the end of the Great Recession, despite some ups and downs, the number of ALICE households in Minnesota has been steadily growing," the report said. "From 2010 to 2022, the total number of households rose by 10%, households in poverty increased by 1% — and the number of ALICE households grew by 33%."

Inflation, stagnant wages and rising costs of living — especially housing — further complicate the picture.

“When I bought a home as a young married couple with just one baby at the time," Alamano shared, reflecting on her own experience, "that house cost $140,000 then. I looked it up on Zillow to see what it costs now and it's $320,000. Yes, salaries have increased, but not at a rate that could ever keep up with inflation.”

Addressing ALICE needs

To address the problem, the United Way is already working on solutions. One initiative, Wheels to Work, helps families repair vehicles needed for transportation to work, school or day care.

“It's exciting to have this data because now we know the county has a couple of car repair programs. So we know their threshold, what an income needs to look like. And now we can fill that gap,” Alamano explained.

The United Way is also collaborating with local entities and looking to the future.

“So the hope is that anyone can use this (data), including our own local nonprofits, too — I know Greater Bemidji is really interested in the data. So is the county, and Bemidji State had lots of stakeholder meetings with different people sharing that this is coming,”

she said.

Through the report, the United Way hopes to guide future support and programs. Initiatives like child care scholarships and housing trusts could offer solutions drawn from other states' experiences.

Alamano said the organization will seek out nonprofits that serve ALICE families, emphasizing a focus on helping these often overlooked yet vital contributors to the local economy.

“We allocate dollars every year to nonprofits in our community," she added. "And we'll be asking if they're serving ALICE families and how they're doing that. We want to put a focus on ALICE with the dollars that we receive here.”

To learn more about the United Way, visit unitedwaybemidji.org, and to view the full ALICE data report, visit unitedforalice.org/state-overview/Minnesota.

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Bankers eye interest rate cuts, inflation in regional economic surveys

The Bismarck Tribune — Wed, 28 Aug 2024 16:02:00 GMT

Almost half of rural bankers recently surveyed in the Midwest and Plains region want two Federal Reserve rate cuts before the end of the year, and a leading economist thinks they'll get their wish.

About 48% of bankers who took part in Creighton University's Rural Mainstreet survey in July advocated for two rate cuts of one-quarter percentage point or one-half percentage point.

The nation is “at a major crossroads between risking the creation of a major recession by keeping interest rates in this range too long just to reach a target inflation number," said Don Reynolds, chair of Regional Missouri Bank in Marceline, Missouri.

Creighton economist Ernie Goss, who oversees the monthly survey as well as the monthly Mid-America Business Conditions survey, said the wholesale price gauge in the latter survey fell in July to a level indicating cooling inflationary pressures.

“This is the fifth straight month that the inflation gauge has fallen," he said. "The regional inflation yardstick has clearly declined into a range indicating inflationary pressures moving toward the Federal Reserve’s target for the second half of 2024. As a result, I expect the Fed to cut interest rates two times in the remaining months of 2024.”

The Federal Reserve System's Federal Open Market Committee next meets Sept. 17-18.

Surveys' results

The two Creighton surveys serve as leading indicators of economic conditions in the Midwest and Plains region.

The Rural Mainstreet Index is based on a survey of rural bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. It focuses on about 200 rural communities with an average population of 1,300 people.

Its overall index in July sank below growth-neutral for an 11th straight month, to 41.3 from 41.7 in June and 44.2 in May. Any readings above 50 on the index that ranges from 0 to 100 suggests economic growth in the months ahead, with readings below 50 indicating decline. Goss cited weak agriculture commodity prices, sinking agriculture equipment sales and declining farm exports for July's number.

The Mid-America study surveys supply managers in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. Its overall index in July was above growth neutral for the fourth time this year, but it declined slightly to 50.7 from June's 51.3.

“The overall index, much like the U.S. reading, has vacillated around growth neutral since December of 2023," Goss said. "Additionally, supply managers remained pessimistic regarding the 2024 outlook, with only 11% expecting growth for the rest of 2024.”

The Mid-America survey's business confidence index, which looks ahead six months, slumped to 30.6 from June’s 34.2.

The Rural Mainstreet confidence index fell to 28.3, down from June's 29.2 and its lowest level this year.

The full Creighton reports can be found at bit.ly/3Y0SedN and bit.ly/3SavggB.

©2024 The Bismarck Tribune. Distributed by Tribune Content Agency, LLC.
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Minnesota farms, rural businesses REAP rewards of federally funded grant program

Noah Fish — Wed, 07 Feb 2024 14:30:00 GMT

ST. CHARLES, Minn. — Minnesota is the No. 1 state in the country when it comes to utilizing Rural Energy for America Program funding.

REAP is a federally funded grant and loan program run by the U.S. Department of Agriculture that helps farmers and rural small business owners access renewable and efficient energy technologies.

The program was established through the 2002 Farm Bill, but the Inflation Reduction Act made a $2 billion investment in REAP, quadrupling its funding. Before the IRA passed, a farmer or small business owner could receive a grant that covered up to 25% of the cost of solar. Thanks to the IRA, a REAP solar grant now covers as much as 50%.

U.S. Secretary of Agriculture Tom Vilsack visited Minnesota on Feb. 1 to highlight USDA's investments in clean energy infrastructure.

Vilsack visited family-owned grocery store Miller’s Market, where he joined Minnesota Gov. Tim Walz to meet with local producers and small business owners that have received funding from REAP.

"As we move towards a cleaner energy future — not getting into the debates around climate change — it makes sense to produce energy as close to home as we possibly can," Walz said. "It makes sense to make sure that people making a profit off that are in the very communities where it's being produced. And it helps lower the bills for the people doing this."

Walz said the detail he was most proud of about the clean energy infrastructure projects was that owners looked to hire in-state contractors to do the work.

"Minnesota is the home to the largest solar manufacturing panel company in North America, because people are embracing it," he said, referring to Heliene’s solar panel factory in northern Minnesota.

Minnesota is the No. 1 state in the country when it comes to utilizing REAP funding, Vilsack told a crowd at Miller's Market in St. Charles.

"In the last couple of years, Minnesota has received 495 projects that have been funded through the REAP program," he said. "$53.8 million of USDA resources have been provided to folks like we've heard from here today, in grants to install wind, solar and other renewable projects."

Out of 675 projects nationally the USDA announced for January 2024, Minnesota received 87.

Miller’s Market

Miller’s Market, owned by Jon and Tara Miller in St. Charles, received a $64,000 grant to install a 50-kilowatt solar array that is expected to replace 102,500-kilowatt hours of electricity per year, enough energy to power nine homes and the equivalent of 12.6% of the store’s annual energy consumption.

Across the parking lot is Ace Hardware — also owned by Miller — which was awarded $52,000 to install a 39-kilowatt solar array. That project is expected to replace 78,850 kilowatt hours of electricity per year — 85.5% of their total annual energy usage.

Miller’s family-owned grocery store has been a fixture in St. Charles for 45 years. Miller and his wife took over the operation from his parents in 2019.

"We were just trying to find the right time to get the best return on our investment for that, and it worked out right this past year with the REAP grant," Miller said. "We are a very, very large consumer with all of our refrigeration and stuff here, so it's more just an offset of our monthly costs."

Millers said it's important a community staple like Miller's Market stays around for St. Charles for years to come.

"We're the only grocery store in town," he said. "And we try to give back to our local community as much as we can, as one of the larger employers in St. Charles."

Goldberg Farms

Mark and Karen Goldberg of Stewartville received a grant of nearly $78,000 to install a wind turbine on their farm, which will save them $11,520 per year, according to estimates. The construction of the turbine was recently concluded and replaces over 103,000-kilowatt hours of electricity each year.

"We farm about 1,000 acres and are a fourth-generation farm," Karen Goldberg said. "We have a fifth generation on the way, up and coming, so we're trying to preserve everything to be able to pass it on down to our kids."

She said they found out about the REAP funding at a farm show about a year ago, and thought they'd check it out.

"They increased the funding, so it definitely made it a viable option for us to go ahead and look at doing the wind turbines," she said. "The wind turbine will basically produce the energy to pay for the electricity that we use on the farm between both homes, and then we'll be able to sell back on the grid, to help our neighbors with everyone's electricity needs."

Goldberg said she recommends other farms look into REAP funding. Mark Goldberg said the turbine took up very little space on their active farmland.

"We were able to put it right next to just a small waterway, and we didn't use up really any extra farmland," he said. "What we lost of farmland was maybe 5 feet, because a lot of the foundation is underground. It was really something that we thought would be very easy to farm around and not have any impact on our farm."

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Sanford Bemidji to no longer own, operate proposed Rail Corridor wellness center

Nicole Ronchetti — Tue, 06 Jun 2023 16:19:58 GMT

BEMIDJI — The proposed Sports and Wellness Center planned to be a part of Bemidji’s Rail Corridor development has hit a hurdle after Sanford Bemidji announced that it no longer plans to own or operate the facility.

First proposed in 2021, Sanford initially brought the idea to the city to aid in the development of the Rail Corridor, an underdeveloped former industrial area located just south of downtown Bemidji.

The plan was for the city to sell the land for development to Kraus-Anderson Construction, which would build the Sports and Wellness Center. Sanford would then operate the facility with a lease-to-own agreement that would be completed in 20 years.

The center itself, which was proposed to include ice rinks, basketball and volleyball courts and an aquatics center, was just one of the planned features of the Rail Corridor development. The rest of the corridor's development is planned to include space for housing, shopping and parks.

However, since it was first discussed, the required investment for the wellness center has increased dramatically, Karla Eischens, Sanford Health of Northern Minnesota president and CEO, explained to the Pioneer.

“Over the past three years, the cost to build and operate the facility has more than doubled. With capital and interest rate changes, the investment for Sanford is $121 million (over 20 years) to build, lease and operate the facility,” she detailed. “As a result, we have decided not to proceed with the Sports and Wellness Center as currently proposed.”

However, Eischens also emphasized that Sanford will still be invested in the project, with plans to donate a $10 million community dividend to the effort.

“We will continue to be partners, we are still dedicated to wellness in our community,” Eischens shared. “Our role is the change from owning and operating to being a partner.”

Eischens explained that the decision to shift roles was not an easy one, but came after looking at the numbers and how they could impact Sanford Health's primary mission of providing health care in the region.

“We were never in this to make money,” Eischens said, adding that the projected losses went from something Sanford Bemidji could absorb to figures that it couldn’t. “There would be impacts to our facilities here, to our patients and our employees.”

By moving from owning and operating the facility to investing as a partner, Eischens explained that Sanford hopes to continue its dedication to community wellness without negatively affecting its regional services.

Where the project stands

While not the end of the project, this change does present a challenge, explained Dave Hengel, executive director of Greater Bemidji, which has been leading the fundraising efforts for the Rail Corridor development since a plan was laid out.

“If this didn’t happen, I’d have been thrilled. It’s a big hurdle. But it's a hurdle, not a wall,” Hengel said. “Over the next six months what I really see ourselves doing is pausing for a minute and rethinking the project. I think we’ll find a different route to make it happen.”

Since fundraising began, Greater Bemidji has raised $11.2 million of a $25 million goal. With Sanford's $10 million added to that figure, it brings it up to $21.2 million and Hengel believes the project has a strong foundation for when fundraising begins again.

“I’m pretty confident that the desire in this community to have a wellness center is still strong, the desire to redevelop our Rail Corridor is strong,” Hengel shared. “I think we’re going to build a facility that at some level this community is going to be proud of.”

In meetings with donors and the city on the project, Hengel asked for patience as Greater Bemidji has conversations with potential partners who might be interested in owning and operating the center in Sanford’s stead.

“We’ve just started looking at other options,” Hengel explained. “Give us time to find that alternate route to get to an end that’s good for our community.”

Along with not starting at square one, Hengel also shared that the developers for the project, Kraus-Anderson, are still on board. Combined with the support of donors and other partners, he believes the project will find a way to come to fruition.

"I think there are very few projects that literally change the trajectory of your community," Hengel shared. "I really think this is one."

City response

When Eischens and Hengel broke the news to members of the Bemidji City Council during meetings on Monday, however, questions and concerns were still raised.

One of these was ensuring that accessibility would remain a top priority for the wellness center, regardless of who would own or operate the facility.

“If we end up in a place where to make this work as a business plan it’s no longer accessible to the bulk of our community, I think that’s going to be really hard for this council to support,” shared Mayor Jorge Prince. “Accessibility is going to be a huge thing.”

Prince also didn’t want the considerable nature of this change to be lost.

“This is a significant, marked change,” Prince said. “I think it’s going to take a little while, not only for the council to digest but for the community to digest.”

Ward 4 Councilor Emelie Rivera asked if there were alternatives to the location or other ways that the funding could be used. Hengel responded that developing the Rail Corridor was an integral part of the project and its fundraising.

“(The project) is tied up on location as well,” Hengel said. “The Rail Corridor itself is a part of the reason $11.2 million dollars were donated.”

By developing the Rail Corridor, the city could grow its tax base considerably, something significant for a city like Bemidji which has a large portion of non-taxable land.

"This project is around $90 million dollars in tax base. That's big. That's important for me, important for Greater Bemidji and important for the city," Hengel told the councilors.

Even with these concerns, the council still seemed favorable to being patient while the project finds a new direction.

“I think we can wait patiently while you make some progress,” Ward 5 Councilor Lynn Eaton said. “We’re hopeful that we can build some viable project out there that enhances our tax base and is not a drain on our community. I think that can happen.”

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US manufacturers can't shake that inflation feeling even as supply snarls ease

Timothy Aeppel / Reuters — Thu, 18 May 2023 19:16:00 GMT

CHICAGO — For Matthew Prange, it's easy to see why the inflation surge of the last two years has proven so difficult for the Federal Reserve to tame.

"When prices go up, it tends to stick," said Prange, who oversees $3 billion worth of purchases of electronic parts, plastics, and metal as the top supply chain manager at Milwaukee Tool, a venerable Wisconsin toolmaker owned by Hong Kong-based Techtronic Industries Co.

The view among economists during the COVID-19 pandemic was that the burst of inflation was an inevitable result of the sudden increase in demand for goods by people stuck at home with plenty to spend. Global supply chains grew overwhelmed as they struggled to deliver.

But Prange said most of his supply chain had stabilized - meaning he was able to get most of what he needed - by the end of 2021. And yet the outsized price increases kept coming and, in some cases, he said, continue today.

Milwaukee Tool is among the companies, including Cummins Inc and Schneider Electric, gathered in Chicago this week at a Reuters Events supply chain conference. They described what they view as the slow and uneven decline of inflation, with some of them seeing the pace of price increases ease in one part of their business but continue to surge in others.

"One of the headwinds is inflation," said Kevin Austin, the supply chain chief for Toyota Motor North America. He attributed the price pressures in part to pent-up demand, which remains strong in the auto industry even as the economy has slowed.

Inflation has fallen as the Fed has raised its benchmark overnight interest rate by 5 percentage points over the last 14 months - the fastest pace of rate hikes in four decades. The annual increase in U.S. consumer prices slowed to below 5% in April for the first time in two years.

Still, that and other measures of inflation tracked by the Fed remain well above the U.S. central bank's 2% target. Data from the Philadelphia Fed on Thursday showed the path to lower inflation remains uneven: its monthly index of prices paid by manufacturers in its region rose for the second time in the past four months.

Meanwhile, the global supply chain snarls of the pandemic have diminished. The New York Fed's Global Supply Chain Pressure Index ticked down to a reading of -1.32 in April, compared to a revised -1.15 in March. Negative readings point to pressures that are below the historical average.

Not a uniform picture

Economists attribute the persistence of relatively high inflation to factors beyond strained supply chains. The risks of long global pipelines for goods, which were highlighted by the pandemic, and growing geopolitical tensions - the war in Ukraine and a souring U.S.-China relationship - have sparked a rush to move production closer to end markets. Those new factories, however, are costly to build and the goods they produce come at a higher price.

Ken Engel, who manages the North American supply chain for Schneider Electric, a French electrical equipment maker, said he noticed a shift in attitude among customers over the last six months. He no longer hears from people desperate to find goods. Instead, they are asking when they will see lower prices.

But the picture is not uniform. "It differs by business," Engel said. For instance, Schneider makes small circuit breakers widely used in residential construction, which has slowed under the weight of higher interest rates. By contrast, demand for the company's "engineered-to-order" electrical parts to build data centers continues to boom.

"For the cloud providers" building those massive data centers, he said, "there's been no slowdown."

Much like Milwaukee Tool, Engel said Schneider's North American factories have largely recovered from the shortages of the last few years. But supplies can still be spotty, which often means paying more for those scarce items.

"Our problem is our upstream suppliers," such as firms that mold plastic parts, Engel said. In many cases, those suppliers have all the materials and machinery they need but lack the labor to produce enough to meet orders, he said.

Mario Guerendo, who oversees the global supply chain for Cummins, said one bright spot for the Columbus, Indiana-based engine maker has been rapidly falling shipping and logistics costs.

"It was crazy during COVID," he said.

And yet, the same thing is not happening with many of the raw materials that the company buys. Steel prices, for instance, have eased but remain well above pre-pandemic levels.

"We're also seeing it vary depending on geography," he said.

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LETTER TO THE EDITOR: Opportunities within the Inflation Reduction Act

Jordan Lutz, Bemidji — Sat, 18 Feb 2023 12:10:00 GMT

Having entered the second month of the new year, I have decided it is time to learn about opportunities available to homeowners and renters through the Inflation Reduction Act.

I recently heard about Rewiring America, a nonprofit supporting the electrification of homes, businesses and communities. Their website provides a tool for calculating financial savings available through the IRA. After inputting my zip code, proud Bemidji resident, and homeowner status, renters qualify for incentives, too; household income before taxes; and size of my household, I clicked “Calculate.”

What populated was an overview of the total incentives from which my family and I can benefit. Perhaps most exciting is how some of the incentives come in the form of upfront discounts, which reduces purchase price at the point of sale.

There were a couple of categories I was particularly drawn to — incentives for the purchase of electric vehicles EV and those for electrifying common home appliances. Based on energy costs in Minnesota, it is estimated we could save $1,150 every year if we both begin driving an EV and swap our existing furnace and water heater for electric alternatives.

Switching to an EV would entail upgrading our electrical panel, which offers a $4,000 rebate; installing a Level 2 EV charger in our garage, which offers a $1,000 tax credit; and finding the right EV to fit our needs.

Thankfully, we are not limited to buying a new vehicle, though — the IRA provides up to $4,000 for the purchase of a qualifying used EV. Electrifying our water heater and furnace with heat pumps qualify for rebates of $1,750 and $8,000 respectively.

Our 50-year-old home would also benefit from weatherization — air sealing, insulating, door and window upgrades and ventilation improvements — for which we could receive up to $1,600 in rebates.

Call me a tree-hugger, because, in addition to the financial incentives for improving the comfort and value of our home, I love the idea of reducing my family’s carbon footprint.

To learn how you can do the same, visit rewiringamerica.org/app/ira-calculator.

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High egg prices should be investigated, U.S. farm group says

Leah Douglas / Reuters — Sat, 21 Jan 2023 19:01:00 GMT

The Federal Trade Commission (FTC) should examine high egg prices for signs of price gouging from top egg companies, a farm group said, as Americans continue to pay more than ever for the household staple.

U.S. regulators, farmers, and industry have often argued in recent years about the power of top agriculture firms to set prices and drive up what consumers pay for groceries, such as when the price of beef skyrocketed in 2021.

The latest concern is eggs, the price of which was up 138% in December from a year prior, to $4.25 a dozen, according to the Bureau of Labor Statistics.

The U.S. Department of Agriculture (USDA) has pointed to a record outbreak of avian flu as a reason for the high prices. But the nation's antitrust regulator should also examine record-high profits at the top egg company, said Farm Action on Thursday in a letter to FTC chair Lina Khan.

Cal-Maine Foods, which controls 20% of the retail egg market, reported quarterly sales up 110% and gross profits up more than 600% over the same quarter in the prior fiscal year, according to a late December filing with the Securities and Exchange Commission.

The company pointed to decreased egg supply nationwide due to avian flu driving up prices as a reason for its record sales. The company has had no positive avian flu tests on any of its farms.

U.S. egg production was about 5% lower in October compared to last year, and egg inventories were down 29% in December compared to the beginning of the year, the latest USDA data shows - a significant drop, but one that may not explain record-high prices, said Basel Musharbash, an attorney with Farm Action.

"We want the FTC to dig in and see if consumers are being price gouged," Musharbash said.

The FTC declined to comment.

In a statement, Cal-Maine said that higher production costs, along with avian flu, were contributing to higher prices.

The American Egg Board, an egg marketing group, said in a statement that egg prices reflect a variety of factors and that wholesale egg prices are beginning to fall.

Nearly 58 million chickens and turkeys have been killed by avian flu or to control the spread of the virus since the beginning of 2022, mostly in March and April, according to USDA. The previous largest outbreak, in 2015, killed 50.5 million birds.

Cal-Maine shares have fallen in recent weeks after climbing almost 50% last year.

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Avian influenza at heart of shell-shocking egg price increases

Michael Johnson — Wed, 18 Jan 2023 23:13:00 GMT

Shoppers are finding it a bit painful to purchase a dozen eggs from the local supermarket with prices reaching above $5 in the region.

"What's driving this increase?" and "When will it end?" are questions many consumers are asking right now.

For perspective, on Tuesday, Jan. 17, a Rochester, Minnesota, Walmart was asking $4.68 for a dozen large eggs. Cashwise in Fargo had Eggland's Best large eggs priced at $5.19 a dozen, while Clearly Organic cage free large eggs were less at $4.79 a dozen.

In California, the priciest market, shoppers were shelling out an average of $7.37 for a dozen Grade A large eggs, roughly three times the cost from a year earlier, according to the The Washington Post.

According to the U.S. Bureau of Labor, in December, the Consumer Price Index for eggs rose from $1.79 per dozen in December 2021 to $4.25 per dozen in December 2022.

While supply chain issues, feed prices, inflation and demand issues all come to roost in this market, it's avian influenza that has had the biggest impact on the egg prices, according to University of Minnesota Extension educator Abby Schuft in Willmar, Minnesota. Schuft focuses on poultry.

"Since September of last year there has been 12.8 million layer hens euthanized because of avian influenza, which means there is almost equally as many eggs every day no longer in the market," Schuft said.

Those layer operations hit early in 2022 have recovered, but the near 13 million missing now might not rejoin the ranks until this spring.

It's a four- to six-month timeframe where birds cannot be back in a facility that's had an influenza outbreak as regulated by the USDA. So it's not always a quick process to build up the supply again.

"If you remove 13 million eggs out of the production system at one time it's gong to create some hiccups, speed bumps," she added.

American Egg Board CEO Emily Metz said farmers have been doing a bang-up job keeping supplies strong despite all of those speed bumps. She said that the recovery from bird flu is far faster than the last major outbreak that occurred in 2015. She reminds consumers that this isn't brought on by the farmer.

"This is a highly volatile, highly unusual situation," Metz said. "Farmers don't set the price of their own product. The price of eggs is set on the commodity market, just like grain, just like a whole host of products."

Metz explained that the market reflects the high demand for eggs and farmers are responding to any shortages. If farmers are seeing higher prices for eggs now, it is only offsetting the investments they have had to make to protect their flocks against the avian influenza and make sure that eggs remain available, even at a higher cost, Metz explained.

Schuft says there's enough eggs out there, but retailers are limited by contracts. That was seen in April 2022, when the regions' Walmarts were emptied of eggs. Other supermarkets had plenty. Schuft said that in that instance one of Walmart's main egg producers was hit by the avian influenza.

The egg price hikes don't hit all egg producers quite the same, but all are feeling it at least indirectly.

Jason Amundsen, owner and farmer at Locally Laid Egg Company, a specialty egg producer in Wrenshall, Minnesota, just southwest of Duluth, said the egg business is tricky in that supply almost never meets demand.

“And you have no way of predicting it,” Amundsen said Tuesday, Jan. 17. Locally Laid distributes eggs across Minnesota, Wisconsin and the Dakotas.

The specialty egg business is different from the more common commodity eggs at your local supermarket or gas station. While commodity eggs have ranged from $1.50 to $5.49 recently, the specialty egg prices are typically higher in price and fluctuate very little. They are, however, indirectly impacted by the recent commodity egg price increases. As the price of commodity eggs matches or surpasses specialty egg prices, or if those eggs are non-existent, consumers scoop up those specialty eggs.

Amundsen explained that the egg business is very cyclical in that every 14 months or so, a new batch of hens comes in to replace the other chickens, whose egg quality has started to diminish. He explains that for all egg laying operations, there is the typical 5-7 week period where egg production drops off between groups of new and older hens.

Amundsen pointed to several reasons he believes egg prices are going fowl right now including an increase in grain prices. That was apparent in the summer of 2022, when grain prices were 50% higher than that time in 2021, Amundsen said.

Some of the main feed grain prices, like corn, have increased from about $6 a bushel last January to about $6.75 a bushel now. Soybeans were about the same price this time last year, according to the USDA. Wheat has dropped in price.

Chicken supply is the main culprit egged on by the devastating avian influenza outbreak. The USDA shows that nearly $58 million birds in the U.S. have been affected in the last year. That includes the country's biggest egg producer, Iowa, which has seen over 15 million birds affected. Minnesota, in total, had about 4.2 million birds affected. South Dakota had nearly 4 million affected birds.

As the demand for new birds ripples through the system the demand for pullets, or young chickens, skyrockets.

“We are getting not quite half of (the pullets) we asked for,” Amundsen said.

So while Locally Laid has six farms producing, and a planned addition, he believes they’ll either struggle to have enough eggs or have an abundance.

“Either way you are wrong,” Amundsen lamented.

As the cycle continues, Amundsen believes the prices will come down for eggs, though they’ll continue to work to keep prices as steady as they can.

“Our goal is no drama,” he said.

Egg prices may soon lower as indicated in the USDA’s Midwest Regional Eggs report on Friday, Jan. 13. It reported that delivered prices were 75 cents lower for large and extra large and 65 cents lower for medium eggs. Prices delivered to store for extra large eggs were mostly $4.66 to $4.68 last week.

Metz said that egg producers are working in a new normal. What that might mean for egg prices is unclear. While it's a big jump, Metz, said it remains a value.

"Consumers really value eggs, and they recognize that it's the most affordable protein they can feed their family," she said.

Supply could again become overly abundant and reverse prices before long, but everything else must follow suit as well. Labor, transportation, more highly pathogenic diseases and war continue to bring unknowns to the table. Schuft said one thing is certain:"The hens are not on strike."

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U.S. producer prices increase more than expected in September

Lucia Mutikani / Reuters — Wed, 12 Oct 2022 14:10:30 GMT

WASHINGTON — U.S. producer prices increased more than expected in September amid strong gains in the costs of services and goods, suggesting inflation could remain uncomfortably high for a while.

The producer price index for final demand rebounded 0.4% last month, the Labor Department said on Wednesday. Data for August was revised lower to show the PPI falling 0.2% instead of dipping 0.1% as previously reported. In the 12 months through September, the PPI increased 8.5% after advancing 8.7% in August. Economists polled by Reuters had forecast the PPI rising 0.2% and climbing 8.4% year-on-year.

The moderation in annual producer inflation is being driven by an easing in supply chain bottlenecks as well as a retreat in commodity prices from the highs seen in the spring. But the pass through to consumer prices has been marginal.

Oil and gasoline prices have likely bottomed following last week's decision by the Organization of Petroleum Exporting Countries and allies to cut crude production.

Data on Thursday is likely to show consumer prices picking up in September, according to a Reuters survey of economists, sealing the case for the Federal Reserve to raise interest rates by 75 basis points next month for the fourth time this year.

Financial markets have almost priced-in a rate hike of three-quarters of a percentage point at the Fed's Nov. 1-2 policy meeting, according to CME's FedWatch Tool.

The Fed has since March raised its policy rate from near zero to the current range of 3.00% to 3.25%.

Excluding the volatile food, energy and trade services components, producer prices also rose 0.4% in September. The so-called core PPI gained 0.2% in August.

In the 12 months through September, the core PPI rose 5.6% after a similar increase in August.

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