Corporate Profiles - 2021 - 34

INDUSTRY REVIEW: MEAT AND POULTRY
Meat and Poultry
D
Rising prices may temper strong domestic and global demand
espite numerous headwinds that have buffeted the North American
meat and poultry category in 2021, including higher feed costs, logistics
and supply chain challenges, labor shortages, and drought, the
industry continues to benefit from elevated demand domestically and globally.
A question facing meat and poultry processors is will the elevated demand
continue?
In 2021, US beef, pork, lamb, mutton, chicken and turkey per capita demand
is forecast to be 222.8 lbs, down from 225.3 lbs in 2020, according to
the US Department of Agriculture's August Livestock, Dairy and Poultry Outlook
report. Most responsible for the decline is per capita chicken demand,
which is forecast to fall to 95.8 lbs in 2021 from 96.2 lbs in 2020.
The per capita decline from 2020 to 2021 may be attributed to the early
months of the pandemic when consumers were stockpiling food, but another
reason may be rising prices.
In 2021, consumers have found themselves facing steadily rising prices at
grocery stores. The Bureau of Labor Statistics' Consumer Price Index for meats,
poultry, fish and eggs rose 1.5% in July (the most recent data available), the
seventh monthly increase in a row, following a 2.5% increase in June.
The rising prices reached the political stage in early September when three
policy advisers in the Biden administration said consumer demand played a
role in the high prices, but also argued the rising prices were driven by a lack
of competition in meat processing.
" Just four large conglomerates control the majority of the market for each
of these three products (beef, pork and poultry), and the data show that these
companies have been raising prices while generating record profits during the
pandemic, " the advisers said.
The White House said that since December 2020, beef, pork and poultry account
for half of the price increases in food at home for consumers. Specifically,
prices rose 14% on beef, 12.1% on pork and 6.6% on poultry.
" The meat processors are generating record profits during the pandemic,
at the expense of consumers, farmers and ranchers, " the Biden administration
said. " The dynamic of a hyper-consolidated pinch point in the supply
chain raises real questions about pandemic profiteering. During the pandemic,
wholesale prices for beef rose much faster than input prices for cattle.
That means that the prices the processors pay to ranchers aren't increasing,
UNITED STATES
red meat and poultry forecasts
PRODUCTION
million lbs
2018
Beef
Pork
Broilers
Turkeys
26,872
26,315
42,601
5,878
2019
27,155
27,638
43,905
5,818
2020
27,174
28,303
44,583
5,743
2021*
27,742
27,739
44,774
5,629
2022*
26,875
28,145
45,340
5,715
Total red meat
and poultry 102,435 105,266 106,556 106,615 106,819
Source: US Department of Agriculture
34 \ October 2021
Milling & Baking News * Food Business News * Baking & Snack * Meat+Poultry * Pet Food Processing * Dairy Processing
PER CAPITA DISAPPEARANCE
retail lbs
Beef
Pork
Broilers
Turkeys
Total red meat
and poultry
2018
57.3
51.0
92.6
16.2
219.8
2019
58.1
52.4
95.1
16.0
224.4
2020
58.4
52.0
96.2
15.8
225.3
2021*
58.3
50.3
96.0
15.4
222.8
2022*
56.5
50.9
97.0
15.4
222.7
*forecast
but the prices collected by processors from retailers are going up. "
The North American Meat Institute (NAMI) disagreed with the Biden administration's
assessment and referred to the USDA's assessments about the meat
and poultry industry.
" As with almost every industry, meat and poultry packers and processors of
all sizes have been, and continue to be, affected by the global pandemic and
the inflationary trends that challenge the US economy, " said Mark Dopp, chief
operating officer with NAMI. " American consumers of most goods and services
are seeing higher costs, largely due to a persistent and widespread labor shortage.
The meat and poultry industry is no different. "
Tyson Foods, Inc., Springdale, Ark., also published a statement saying it
" categorically rejects " the conclusions by the Biden administration.
" Multiple, unprecedented market shocks, including a global pandemic and
severe weather conditions, led to an unexpected and drastic drop in meat processors'
abilities to operate at full capacity, " the company said. " This led to an
oversupply of live cattle and an undersupply of beef, while demand for beef
products was at an all-time high.
" So, as a result, the price for cattle fell, while the price for beef rose. Today,
prices paid to cattle producers are rising. Labor shortages - the inability of the
industry to adequately staff its plants - has exacerbated the situation. Labor
shortages are also affecting the nation's pork and poultry supply. "
Adding to the price pressure has been global demand for US meat and poultry.
Data released by the USDA and compiled by the US Meat Export Federation (USMEF),
Denver, showed red meats exported from the United States remained strong
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