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CONSUMER AFFAIRS / DENISE GELLENE

Lower Egg Prices at Easter Are No Bargain

April 01, 1994|DENISE GELLENE

With Easter a few days away, grocers in Southern California are slashing egg prices by as much as 50% to lure shoppers during the peak egg-buying season.

Does this mean supermarkets are losing money on eggs? We don't think so. Retail egg prices in California are so high that a sale price here is an everyday low price elsewhere in the country.

In February for example, Southern Californians paid an average of $1.66 for a dozen large eggs, 84% more than what consumers paid nationally. A look at retail prices during the last 10 years shows that Southern Californians have consistently paid at least a third more for eggs than consumers nationwide.

UC Riverside poultry specialist Don Bell said California supermarkets are making bigger profits on eggs than grocers in other parts of the country. That's because wholesale egg prices don't vary much with geography, he said. A supermarket in California buys eggs at about the same prices as a supermarket in Michigan, he said.

(California eggs are U.S. Department of Agriculture Grade AA while eggs in the rest of the country are USDA Grade A. Bell tells us the difference in quality between the two grades is negligible and has no effect on wholesale prices because eggs are sold on the basis of size.)

California grocers can charge higher prices because consumer demand for eggs doesn't fluctuate much in response to price. Bell said there is no evidence that egg consumption is lower in California than in states where eggs are cheaper.

High retail prices here are understandably upsetting for California egg producers, who don't share the extra profits. Said Robert Pierre, president of the California Egg Commission: "The supermarkets are benefiting and the farmers are getting robbed."

A representative for the California Grocers Assn. said egg prices can't be looked at in isolation.

"Egg prices might be higher in Los Angeles, but bread might be cheaper," said Don Beaver, president of the trade organization. "There isn't a marketing area in the country that is the same."

Beaver said profits at individual supermarket chains, regardless of location, are less than 1% of sales. "It all works out in the end for the consumer," he said.

A representative of the parent company of Alpha Beta markets said prices are higher to cover the cost of transporting some eggs from the Midwest, though economists say those costs are not a significant factor.

Representatives of Vons, Ralphs and Lucky didn't respond to requests for comment.

It appears that eggs are hugely profitable for Southern California grocers. A rule of thumb in the grocery business is that supermarkets must charge consumers at least 25% more than what they pay for an item to make a profit. At February's wholesale price of 51 cents a dozen, Southern California supermarkets charged consumers an average 225% more than what they paid for large eggs.

In a random survey in Los Angeles County this week, we spotted a dozen large eggs at Alpha Beta for $2.19 (79 cents with a coupon) and at Vons-owned Pavilions stores for 99 cents (39 cents with a coupon).

Bell said egg prices nationally shot up in 1983 when a salmonella outbreak in chickens sharply reduced supplies. The market recovered in 1984 and retail egg prices dropped across the land, except in California.

Through most of the country, he said, "$1 a dozen is a barrier (grocers) are concerned about breaking." In California, he said, the price barrier is around $2, although supermarkets occasionally go through it.

And we thought only geese laid golden eggs.

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New credit card: A community bank in Boston expects to launch a credit card soon aimed at the city's half a million gays and lesbians, becoming one of a handful of financial institutions to do so.

Wainwright Bank & Trust Co. said it plans to offer the card in May. The bank will donate an amount equal to 1% of charge volume to nonprofit gay and lesbian organizations. People who use the affinity card will be asked to chose beneficiaries from a preapproved list of charitable organizations.

Wainwright Vice President Steven F. Young said the bank expects at least 1,000 people will sign up for the card initially. Such a response would double the bank's card holders; it currently issues a traditional-style MasterCard. While Young expects many users of the new card will be gay or lesbian, he said the card, to be called the Freedom Card, is for "anyone who believes in social equity."

Seattle-based SeaFirst National Bank, a unit of Bank of America, has the Pride Card, issued with Pride Foundation, a gay and lesbian nonprofit organization in Seattle. It has 800 active card holders.

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Odds and ends: "Under new management and ownership," shouts an ad for the Villas at Fox Hills in the February issue of the advertising circular, "Apartments for Rent." Who's the new owner? "The bank," said a rental agent for the apartment complex. . . . The Federal Trade Commission said the parent company of Popeye's and Church's fast-food chains settled charges that it misstated the recyclability of its food containers. The FTC said while the containers were capable of being recycled, virtually no collection facilities accept food-contaminated paper.

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