By Patrick Thomas | Photographs by Emily Kask for WSJ

EDWARDS, Miss. -- About 30 miles outside of Jackson, Miss., employees at a secretive and little-known company recently gathered in the break room to watch a TikTok video. It lambasted their employer, Cal-Maine Foods, which is being blamed for a massive frustration in America: the high price of eggs.

Eggs are the most visible symbol of the toll that inflation is taking on U.S. consumers, and no one sells more of them than Cal-Maine.

Its 50 million hens produce roughly one out of every five eggs sold in the U.S. As egg prices have tripled in three years during a nationwide bird-flu epidemic, its stock has doubled. That makes it public enemy No. 1 for lawmakers and regulators trying to restrain the forces of food inflation. The Justice Department kicked off an investigation in March into the nationwide increase in the cost of eggs and is probing Cal-Maine's and other companies' pricing practices.

The 60 employees at Cal-Maine's corporate headquarters work out of a second-floor office in a small complex, wedged between an insurer and an accounting firm. The longtime family-controlled company likes to keep a low profile and doesn't hold quarterly earnings calls with investors, unlike most publicly traded companies.

But Chief Executive Sherman Miller says he can't ignore the rising animosity, and he's ready to set the record straight.

"Someone has to get blamed for everything. They're looking for a villain, " Miller says in an interview, egg statues near his desk and an American flag draped above the computer. But, he adds, "We don't control the power to lower egg prices."

Miller grew up in Mississippi and has spent his whole career at Cal-Maine. He rose to CEO in 2022, a monumental year in the industry. That was the start of what would turn out to be the worst outbreak of bird flu in U.S. history.

In his eyes, Cal-Maine has made smart, conservative moves during the crisis -- avoiding overproduction and banking profits for when margins return to more typical, meager levels.

Egg companies argue it's a classic case of supply and demand, where limited supply and high demand lead to higher prices. The average American eats about 279 eggs a year, and an average hen can lay around 300 eggs a year. There has long been about one hen per person in the country, and the flock has kept up with population growth for years.

Bird flu scrambled that equation.

The outbreak has resulted in the death of more than 150 million U.S. chickens since 2022, according to federal data. The avian flu is highly contagious and has a nearly 100% mortality rate in chickens, so if one gets sick, an entire flock has to be culled.

As the price of a dozen eggs soared above $6 for the first time, families joked about coloring potatoes for Easter. Breakfast chains like Waffle House and Denny's implemented surcharges. Egg shortages left some grocery-store aisles empty, and shoppers face limits on how many cartons they can buy at a time.

"We've done absolutely everything we could do to supply every egg we could under circumstances we can't control," Miller says. That includes appealing to a higher power: Miller said company meetings begin with a prayer, including asking for protection from the virus.

The company got its start in 1957 when Fred Adams Jr. purchased a used truck to deliver chicken feed to farms in Mississippi. When one couldn't cover its bill, Adams took over and started Adams Egg Farms. In 1969, he bought a California dairy farm and a Maine egg farm and renamed his company Cal-Maine to reflect its coast-to-coast reach.

When Cal-Maine went public in 1996, a class of supervoting shares ensured a small group of Adams's family members retained majority voting power. Adams's four daughters had no interest in the family business, so he turned to one of his sons-in-law, Adolphus Baker.

Baker's first assignment: overseeing removal of hen excrement from barns and using it to fertilize neighboring farmers' fields. Baker worked his way up to CEO in 2010 and continued to buy smaller egg companies and build new facilities. In 2014, the company for the first time sold more than 12 billion eggs -- or, in industry parlance, one billion dozen.

On the 30-minute drive from the company's headquarters to its Edwards, Miss., farm operation, Miller chatted about growing up in the rural South and pointed out a railroad bridge that was featured in the 2000 movie "O Brother, Where Art Thou?"

From the back seat, the company's finance chief ribbed Miller for his cautious, slow driving. Miller says he doesn't really have any hobbies besides his family and Cal-Maine. His wife would say he married Cal-Maine before her.

Miller spent years managing its operations before becoming the first nonfamily CEO. When he drives up to the gate at Edwards, he greets the elderly attendant as an old friend. His truck is sprayed down with disinfectant, one of the many biosecurity precautions the company has spent $70 million on to help prevent the spread of bird flu.

Cal-Maine didn't have an outbreak until December 2023 and has lost a smaller portion of its hens to bird flu than most competitors. "I'm 100% confident that we've had divine intervention along the way," Miller says.

Annual profit is on pace to top $1 billion, a fourfold increase from a year earlier. Its market value has doubled over the past two years to about $5 billion, making it one of the top-performing stocks on Wall Street.

After the shares hit a record, Adams's descendants began making moves to cash out. The five family members converted their supervoting stock to regular shares. Each stake was worth at least $100 million as of last month, and the company has agreed to repurchase $50 million worth.

Baker, who is now chairman, declined to comment, and other family members didn't respond to requests for comment.

Behind the price of eggs is a complicated market that behaves differently from other commodities.

"There has been one clear winner in all of this: Cal-Maine," wrote nearly three dozen Democratic members of Congress in an April letter to the company. The lawmakers accused the company of manipulating production to keep egg prices and profits high.

"What we see is Cal-Maine taking advantage of the avian flu in order to pocket a lot of money, pay their stockholders and pay out the owners $500 million all on the backs of the consumer," said Joe Maxwell, co-founder of Farm Action, a watchdog group in U.S. agriculture.

As part of a civil investigation, the Justice Department told Cal-Maine and other egg companies to preserve documents about pricing conversations with customers and competitors. Cal-Maine has said it's cooperating.

Miller says these claims misunderstand how eggs work as a commodity. "They're not widgets that we can just go out there and turn up the machine or run an extra shift and produce more," he says. "It's a long planning process."

It takes about six months for a chick to mature to lay eggs.

Inside the Edwards complex, a line of 14 metal barns house about 750,000 egg-laying hens. A conveyor belt ferries their eggs to a small processing facility next door, where they move through a washer that was installed in 1992 and, Cal-Maine executives like to say, still works "just fine."

Machines sort eggs by size and drop six at a time into multicolored cartons bearing many local brand names, none of which are Cal-Maine.

Cal-Maine has dozens of such facilities. That scale, Miller says, can be a blessing and a curse. Even a one-cent change in egg prices can have an outsize effect on its profitability.

Prices for a lot of major commodities like hogs, corn, wheat, soybeans and cattle trade on markets run by exchange operator CME Group. Futures trading in these commodities can help farmers and businesses hedge against price fluctuations.

Eggs are different.

The egg industry relies on contracts between a customer, like Walmart or Kroger, that wants to buy a certain amount of eggs from a supplier like Cal-Maine.

Instead of producing all the eggs it sells in a year, Cal-Maine has historically handled spikes in demand by purchasing 10% to 25% from other suppliers on private exchanges such as the online Egg Clearinghouse.

That's where the cynics come in.

Critics like Farm Action say that by buying eggs from rival producers on the Egg Clearinghouse, Cal-Maine contributes to limiting supply. This also can inflate prices because those purchases factor into the calculation for the industry benchmark prices, critics say. Others have questioned why Cal-Maine didn't just produce more eggs or decide to lower its prices during the avian-flu outbreak.

If Cal-Maine overproduces, the price of eggs could tank and drive some egg companies out of business, industry analysts say.

Cal-Maine executives say that the flock size is planned about two years in advance and that buying eggs from other producers helps Cal-Maine navigate spikes in demand. Ramping up production would mean hatching and feeding extra chicks, only to have to throw eggs into the landfill when demand ebbs.

This isn't the first time Cal-Maine has been accused of manipulating egg prices. Texas' attorney general sued Cal-Maine in 2020, alleging it price-gouged consumers during the Covid-19 pandemic. The company says panic buying drove up prices. The case is pending.

In 2023, a federal jury in Chicago decided that Cal-Maine and other big egg producers restricted supply in the early 2000s to raise prices, which inflated costs for companies that buy lots of eggs to make food products. The judge awarded $53 million in damages to several food companies, including Kraft Heinz and Kellogg. The egg companies denied wrongdoing.

(MORE TO FOLLOW) Dow Jones Newswires

May 09, 2025 20:00 ET (00:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.