ECONOMICS FOR BUSINESS AND MANAGEMENT I
ASSIGNMENT
Article: “Australians turn to back yard chickens to beat the rising price of eggs:
From pandemic hobby to beating the egg shortage, more people are falling in love with
keeping chickens” by Catie McLeod and Jonathan Barrett, The Guardian, 29/03/2025
https://www.theguardian.com/australia-news/2025/mar/30/australians-turn-toback-yard-chickens-to-beat-the-rising-price-of-eggs
Topic: supply and demand
Summary
Due to the increasing cost of eggs, many Australians have started raising backyard
chickens to produce their own. The reasons behind this decision are the growing cost of
eggs and their limited availability in supermarkets, both caused by an outbreak of avian
influenza that led to mass chicken culls in 2024. According to the Australian Bureau of
Statistics, egg prices have risen by 12% compared to last year. This issue is not unique
to Australia but is a global problem, especially present in the United States as well.
Although the passion for backyard chickens initially surged during the COVID-19
lockdown, the current egg crisis has revived the trend. Many chicken supply businesses
have reported a significant rise in demand. For example, Talking Hens, a chicken supply
business, is fielding 60% more inquiries for egg-laying hens compared to this time last
year.
Despite its appeal, new owners have a lot to consider, and buying backyard chickens
doesn’t always result in a financial payoff. They must account for the costs of purchasing
hens, building a coop, buying feed, and ensuring the animals’ health. Additionally, a 2022
study found that backyard hens' eggs contained, on average, more than 40 times the lead
levels of commercially produced eggs, although this doesn’t necessarily pose significant
risks for people who consume a moderate amount of eggs.
Still, Christine Dinas, who has been raising and selling chickens for more than 15 years,
believes that keeping backyard chickens helps people better understand the origins of
their food. She also says that people can taste the difference in flavor and texture between
homegrown and store-bought eggs.
267 words
Essay
In 2024, an article from The Guardian titled “Australians turn to backyard chickens to beat
the rising price of eggs” explained how the rising cost of eggs in Australia affected
people’s everyday lives. The article also shows how some basic economic theories work
in real-world situations. Some of these include the supply and demand model, consumer
behavior, and the idea of trade-offs. The article describes how Australian consumers
reacted to higher egg prices and reduced supply by choosing a practical alternative:
raising backyard chickens.
At the heart of this situation is the basic economic model of supply and demand. In simple
terms, supply is how much of a good or service sellers are willing and able to sell, while
demand is how much buyers are willing and able to buy. When supply goes down, but
demand stays the same, or increases, prices go up. This happens because there are
fewer goods available, but people still want to buy them. On a graph, this means the
supply curve shifts to the left, and the new interaction with the demand curve becomes
the new equilibrium, where the price is higher. A situation like this is exactly what
happened in the Australian egg market.
The main cause of this disruption in supply was an avian influenza outbreak in Australia.
To stop the disease from spreading, many chickens had to be culled. Because of this, the
number of eggs being produced dropped a lot. At the same time, farms also had to spend
more money to meet stricter welfare standards and improve their facilities, which made it
harder to quickly rebuild the egg supply. These extra production costs pushed prices even
higher. Reports showed that the price of a dozen free-range eggs rose to about $6, and
extra-large eggs reached $9. Data from the Austrian Bureau of Statistics showed that egg
prices increased by 12% in a single year, while overall food prices rose by just 3%.
Even though egg prices increased, people didn’t stop buying them. Australians eat a lot
of eggs, about 250 to 260 per person per year, which is a higher number globally. Eggs
are a basic part of many meals, so the demand for them is considered inelastic. Inelastic
demand means that even when prices go up, people still buy more or less the same
amount because they see the good as necessary and there are not many substitutes.
This explains why prices kept rising and supply dropped, but demand didn’t fall much.
However, not all consumers were willing to just pay more. Some people started to look
for alternatives to buying eggs from supermarkets. One popular option was raising
backyard chickens. According to the article, there was a 60% increase in inquiries for egglaying hens, and the number of people requesting information about raising backyard
chickens doubled compared to five years ago. This shows how consumer behavior can
change when prices rise. When goods become too expensive, people may change their
habits and try to find ways to get the same goods for a lower cost or from a different
source. In this case, some people became small-scale producers to meet their own
needs.
Raising chickens at home is a great example of the economic concept of trade-offs. A
trade-off means that when you make a decision, you have to give up something in return
for something else. People who decided to raise chickens got a steady supply of eggs,
better control over food quality, and more independence from changing prices. But at the
same time, they also took on the costs of buying chickens, building coops, feeding them,
and dealing with health risks and diseases. These are all things that wouldn’t be a concern
if someone just bought eggs at the store. So people had to weigh the benefits of lower
long-term costs or food security against the time, and money required to raise chickens.
The situation also shows the limit of the basic supply and demand model. In economics,
we often assume that all consumers have perfect information, act rationally, and that the
goods being sold are the same. But in real life, these assumptions don’t always apply.
For example, not everyone truly understands why egg prices went up or the risks and
costs of raising backyard chickens. That challenges the assumption of perfect
information. People also don’t always act based only on money or prices. Some people
may have decided to raise chickens because of ethical reasons, like animal welfare or
environmental and health concerns. This challenges the idea that consumers act
rationally. Lastly, eggs aren’t always seen as identical goods anymore. Some people
differentiate between store-bought eggs and backyard eggs, preferring backyard eggs
because they think they taste better or are healthier. This goes against the assumption
that goods in the market are homogeneous.
These examples from the Australian egg market show how the real world is often more
complicated than basic economic models suggest. Still, understanding these theories
helps us make sense of what’s happening. The egg shortage and price spike clearly show
how supply and demand affect prices. They also show how consumers respond to
changing prices with different strategies, like reducing purchases or finding substitutes.
Some of these strategies like raising chickens also show how people make trade-offs to
cope with market changes.
In conclusion, the case of rising egg prices in Australia helps us understand how basic
economic theories play out in everyday life. It shows how supply disruptions can rise,
especially when demand is inelastic. It also shows how people respond differently
depending on their situation and how economic choices often involve trade-offs. Finally,
it reminds us that while economic models are useful tools, the real world is influenced by
emotions, habits, and different living conditions. Learning from real examples like this one
helps us apply what we learn in economics to understand the choices people make.
978 words
When supply goes down, but demand stays
quite the same, prices go up.
The supply curve shifts to the left, and the
new interaction with the demand curve
becomes the new equilibrium, where the
price is higher.