Eggflation: Eggsploring The Reasons of Egg Price Surge and Its Ramifications

Figure 2. How Much People Want Eggs: Average Egg Consumption in Indonesia (2012-2022) (Annur, 2023)

To understand Indonesia's obsession with eggs, we must understand what Indonesians think about eggs. A study conducted by Abiyani (2022) tries to justify Indonesia's obsession with eggs. For Indonesians, eggs are a basic necessity. Even if someone is not into egg, they will still buy it as it is part of the Indonesian basic necessity.  Thus, even if the prices of eggs rise there will always be a demand for eggs. 

Because Indonesian households hold eggs in such high importance, one of the factors that creates demand-pull inflation is population. Yearly, the Indonesian population increases by 1% (Figure 3). As a result, the consumption of eggs goes up with the population. With this, we can conclude that at its base the consumption of eggs is already high. In a sense, a demand-pull inflation happens every year as the population rises because eggs have become such a staple in the Indonesian diet.

Figure 3. Indonesia's Total Population -- Mid Yearly (Annur, 2023)

2. )Consumer Behavior During Pandemic

One notable quote from the hit Disney movie "Zootopia" is said by Bellweather who said "Fear always works." This is exactly what happened mid pandemic. Lagaida et al. (2022) have noted that during 2022 the average price of egg rises in 28 provinces. At the same time, rumors of new variants of the Covid-19 virus are brewing. As the danger of new variants looms, the government readvised its citizens to socially distance again (Fitria, 2022). With distasteful memories of the happening during the pandemic, it creates panic buying; a phenomenon for which is defined as a phenomenon of sudden increase in consumption  and quantity of one or more necessary goods which is provoked by an adverse situation" (Cooper & Gordon, 2021). 

Due to the hike of quantity at a short amount of time, creates a higher price due to great increase of demand as firms are incentivized to capitalize on this phenomenon. As a result, all commodities have risen in price as the value for money falls thus also increasing the price of all commodities. Because of this, due to the rise of every other commodity, egg's price must increase in order to "fit" with the other commodities. Furthermore, during the pandemic citizens are not the only ones buying up eggs. As a means to help its citizens, the government holds a variety of social aid to unfortunate people affected by the pandemic the most. Within their social aid is usually eggs as eggs is a common Indonesian food. As the government buys in huge amounts, this also contributes to the demand-pull inflation for eggs.

3. Implication and Action Taken in Regards to the Price Hike

According to industry trends (Mulder, 2023), the egg market often experiences price peaks followed by declines, usually a year or two later, driven by producer responses to increased profit margins. However, the current situation varies due to unique factors. While some countries with ongoing avian influenza (AI) pressures, import restrictions, financial challenges, and regulatory changes may maintain high egg prices in 2023, regions with extreme price peaks like the US, Europe, and Japan are likely to see declines, albeit not as severe as previous crises. Sustained high input costs will prevent prices from returning to pre-2021 levels.

Concerns arise regarding the affordability of eggs for low-income consumers, especially in emerging markets where eggs are a crucial source of protein and nutrients, with potential social and health risks if prices continue to rise. Eggs serve as a vital staple food and source of protein and essential nutrients, such as vitamins B6, B12, and D. These markets position eggs as the most accessible protein source, easily distributed without the need for a cold chain. Should eggs become more expensive and less accessible to these consumers, it could pose substantial social and health risks. 

With that discussed, the Government of Indonesia has taken steps to bring balance back to the prices of eggs. The government is taking concrete steps to maintain egg price stability across the entire supply chain, from farmers to consumers. The National Food Agency (NFA), headed by Arief Prasetyo Adi, is implementing strategic programs that include food assistance for eggs and chicken, monitoring price movements in provinces and municipalities, and facilitating the distribution of corn to livestock farming regions to stabilize feed prices. This effort aims to ensure price equilibrium from production to consumption and support the sustainability of the national egg ecosystem. The government has gradually executed various strategic programs, including the distribution of eggs and chicken to Stunting Risk Family (KRS), effectively absorbing eggs and chicken produced by independent farmers at fair prices for the purpose of reducing stunting rates (NFA, 2023).