Over the last three decades a remarkable transformation of the U.S. chicken industry has taken place. From an industry that produced mostly whole and cut-up bone-in chicken in the 1980s it transformed itself into the boneless skinless breast industry. The transformation took place at a heady pace. From a few hundred million pounds in 1985, production of boneless skinless breast soared to 6 billion pounds in 2010 and shows no signs of slowing down even in the face of punishingly low prices.
Part of the reason for this remarkable transformation is, of course, consumer demand for convenient foods both at home and away from home. In addition, the industry has gotten really good at producing the stuff. Breeding companies developed fast growing birds that produce a large percentage of breast meat with an ever better feed conversion, veterinarians have kept the birds healthy and nutritionists fine tuned the diet. The chicken companies themselves took advantage of economies of scale to produce boneless skinless breast at ever lower cost. As a result of all this effort, the wholesale price of boneless skinless breast fell dramatically in the last 30 years from $4.50 per pound to just about $1.25 recently (both in 2010 dollars).
In the last year the combination of high grain prices and economic recession resulted in boneless skinless breast prices lower than the cost of production. Despite losses, the industry continued to increase the production of the largest chicken in 2011 (most going to deboning) while cutting back only on the smaller chickens (all other uses). This trend will continue despite this temporary setback.
On the surface, the behavior of the industry in sustaining losses in boneless skinless breast appears to be suicidal. However, it may not be irrational. The great recession will end in due time and the demand for boneless skinless breast will soar. The U.S. is now eating 20 pounds per capita of boneless skinless breast. By 2030, 325 million people in the U.S. will be eating, as a conservative estimate, 30 pounds of boneless skinless breast requiring production of at least 10 billion pounds. To paraphrase Clint Eastwood, this is only halftime in the development of the boneless skinless breast chicken industry.
