PHILADELPHIA
- Peter Skiadas is an immigrant who sells omelettes at
Hank's Place, a roadside diner in Chadds Ford, Pa.
Charles Pizzi sells batches of Butterscotch Krimpets
as chief executive of Tasty Baking Co. in
Philadelphia. Both have a common enemy.
Rising
egg prices are beating down profits and pocketbooks.
A
catalytic rise in the cost of eggs over the last year,
fueled by soaring energy costs, expensive chicken feed
and what some call a general food crisis, is battering
the bottom lines of brunch operations and big-scale
bakers like the makers of TastyKake sweets.
Tasty
Baking last week said egg prices were partly to blame
for its $1 million loss in the first quarter.
The
spiraling price has left businesses scrambling for a
way to cope with the culinary cost crisis.
"I'm
thinking seriously to create new sources of buying
eggs straight from the chicken farms," said
Skiadas, 73, who said eggs have gone from 83 cents a
dozen wholesale to $1.75 a dozen over the last six
months or so.
The
owners of Talluto's Authentic Italian Foods in
Folcroft, Pa., who use 1,500 pounds of fresh eggs a
week for ravioli, cavatelli and other fresh-frozen
pasta, imposed price increases in February, in part
because of high egg prices.
"It's
absolutely becoming a concern because your customers
obviously don't want a price increase," said
Angel Storti, of Talluto's.
On the
retail level, a dozen eggs in March cost $2.20 - 34.8
percent more than in March 2007, when they sold for
$1.63, according to the Bureau of Labor Statistics.
When
you're using eggs by the thousands, this translates
into a lot of lost greenbacks.
"We
continued to feel the impact of industry-wide
commodity increases as the cost of ingredients and
packaging rose by $2 million dollars compared to the
same period a year ago," Tasty's Pizzi said
during a call with analysts.
A third
of that $2 million, company officials said, came from
increased egg costs.
Tasty
Baking goes through 75,000 pounds of fresh egg
products a week, or 4.8 million pounds a year, said
Chad Ramsey, who handles investor relations for the
company.
Tasty
has also been grappling with expensive flour and oil,
whose prices have skyrocketed over 18 months for some
of the same reasons egg prices are soaring. TastyKakes
are more expensive at the store - and more price hikes
in the hopper.
The
story is similar at Hank's, where Skiadas is
overseeing a 10-day shutdown while workers expand the
small eatery on Route 1.
Skiadas,
73, said the diner goes through more than 2,400 eggs a
week. So far, he's held back on raising prices.
But
he's considering a 10-percent increase on menu prices
- and maybe shopping for eggs closer to home.
"I'm
thinking in the future of going up to the
(Pennsylvania) Dutch country and to find people that
are raising chickens and they produce their own
eggs," Skiadas said. "That way, perhaps, I
might get 15, 20 cents less a dozen."
Ronald
Rohrer of Westfield Egg Farm in Lancaster County, Pa.,
said prices are up because the cost of chicken feed -
corn, grain, soybeans - has gone through the roof
because of supply. More farmland is being used to grow
corn for biofuels such as ethanol rather than wheat,
soybeans or corn.
But the
largest and most efficient egg producers, such as
Cal-Maine Foods, Inc. of Mississippi, are cashing in.
Cal-Maine
profits rose nearly $40 million, or 229 percent, in
the three months that ended March 1 compared with the
same quarter last year.
Analyst
Mitch Pinheiro, who monitors Tasty Baking for Janney
Montgomery Scott L.L.C. in Philadelphia, said
wholesale buyers can't negotiate and lock in prices
for eggs as they do with flour because eggs are not
traded in the futures markets.
That
means prices are set from day to day. If feed costs
begin to outstrip profit, he said, things could get
worse.
"It
could happen that egg farmers decide the margins
aren't big enough, the costs are rising so fast that
they decide to limit the amount of eggs that they
actually produce," he said.