Michael Donohue Poultry Economy

Michael Donohue, vice president of data service Agri Stats Inc., speaks at the National Conference on Poultry Health, Processing and Live Production on Sept. 27, 2021, in Ocean City, Md.

OCEAN CITY, Md. — Chicken prices are flying high, but so are production costs.

The pandemic is a big reason for the upheaval, but some of the changes began well before COVID-19 emerged.

"Certainly our industry has changed," said Michael Donohue, vice president of data service Agri Stats Inc. "If you've been doing this for 40 years, you've seen a lot of dynamic” changes.

Donohue spoke at the National Conference on Poultry Health, Processing and Live Production, which was held Sept. 27-29 in Ocean City.

Frozen chicken leg quarters rose from 20 cents a pound in September 2020 to 43 cents in June, a spike that Donohue said may reflect the growth of export opportunities. While breast meat is popular in America, Japan and other countries prefer dark meat.

On the domestic market, seasonal demand no longer drives prices as it once did. Chicken breast consumption is not all about the summer grilling season, and wings have expanded beyond the Super Bowl.

By June, breast prices had more than doubled year over year. Wing prices have also gone up dramatically — although Donohue lamented that they used to seemingly be tied to the New England Patriots winning the Super Bowl and the Patriots don't seem to be holding up their end of the deal anymore.

Higher prices are good news for the poultry industry, but they come as labor and feed costs are seeing increases of their own.

Soybean and corn meal costs were up 40% year over year in September, Donohue said.

Average employee pay, including benefits, hit $21.90 per hour last year and has kept climbing. Compensation was roughly $15 an hour in 2020, he said.

Contract deboning businesses are booming, though Donohue was skeptical that labor shortages are the reason chicken prices are up. He pointed to the recovering economy, increasing demand, and the gradual return to dining out.

The share of food spending for meals eaten at home jumped from 48% to 66% between February and April 2020. By this June that figure had fallen to 49%.

"It's coming back to somewhat more normal," Donohue said.



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