EGG PRICES fluctuate enormously. It is the producers' fault -- the people, not the birds.
When prices rise they buy more hens, whose eggs flood the market, causing prices to fall. The discouraged producers then reduce their flocks until finally the prices rebound. The cycle can be quite short. In January 1984 the price of eggs in 12 cities the government surveys was 112.4 cents a dozen. The estimated net return on each dozen was 37.4 cents. By May 1985 the price had fallen to 56.8 cents and the margin per dozen had become a 10.2 cent loss. Now both are recovering again.
In part to stabilize this pattern, a group of producers last year petitioned the Agriculture Department for what is called a marketing order. Producers would pay a fee of a penny to 2 cents a dozen into a government fund, to be controlled by a 21-member board. Half of the money would be used to promote per capita egg consumption, which is down, thanks to fear of cholesterol and the decline of the hearty breakfast. In 1965 Americans ate 313 eggs apiece; last year, 256.
The other half of the fund would be available to buy up surplus hens when the board and secretary of agriculture judged production to be too high. The benefit to producers is obvious: price declines would be controlled. Proponents say there would be a reciprocal benefit to consumers: they would be protected against the other extreme of the cycle -- overreaction, the slaughter of too many hens and periods of excess prices.
There are 48 other marketing orders in existence, mostly for fruits and vegetables. The administration has attacked them in the past on the double grounds that the government has no business intruding in markets and that the orders tend to distort investment patterns and hold prices artificially high. The egg people say their order would be different: 1) there would be no particular produc) the ability to intervene would be limited by the size of the fund.
But this is an increasingly concentrated industry. America's hens now produce a little over 60 billion eggs a year for domestic consumption. About 90 percent of these come from producers who own more than 10,000 birds. There are about 1,700 such producers; some own millions of birds. Producers this large can be presumed to be able to average out the cycles for themselves. In seeking the government's help, they bear a particular burden of proof as to the likely effect on consumers. The secretary should approach their petition skeptically.