US chicken breast prices now globally competitive
The falling price of corn will enable the price of skinless boneless breasts to reach a (profitable) $1 per pound this year, completing an 80 percent drop in price in 30 years.
The first processing plant dedicated to breast deboning all of the chickens going through the plant opened in the U.S. in 1985. It was a bold and novel idea and the precursor to what is now called a "big bird plant." In those days, the wholesale price of skinless boneless breast (SBB) was $5 per pound in today's dollars. It was a luxury product sold in small quantities to the wealthy who could afford to buy an exceptionally high-value-added product.
Over the next 30 years, the price of SBB dropped steadily and is likely to average just $1 per pound in 2015. Now bone-in products are becoming exotic while boneless breast is standard and consumed in high quantities by people in all income categories. This remarkable improvement in productivity rivals any in the American economy in recent years, particularly given the fact that the industry faced gale-force headwinds from grain prices.
On the road from $5 to $1 per pound, three remarkable changes took place in the U.S. First, the number of chickens deboned for breast meat increased from 500 million in 1984 to 4 billion. Second, the average live weight of chicken deboned for breast meat increased from 5 pounds to 8 pounds. Finally, the yield of boneless breast increased from just 15 percent of the 1985 live chicken to 24 percent of the 2015 chicken. The combination of greater numbers, increased weight and higher yield combined to boost production from 300 million pounds in 1985 to approximately 7 billion pounds in 2015, a 2,300 percent increase in 30 years.
One-dollar-a-pound skinless boneless breasts
The falling cost and price of SBB was assisted recently by the increased value of leg quarters, wings and paws. The price of leg quarters, for example, doubled in the past 10 years from $450 to $900 per metric ton. With the back half of the bird covering more of the cost, breast meat can be sold for a lower price. In 2014, the falling price of corn, and hopefully soybean meal as well, will enable the price of SBB to reach a (profitable) $1 per pound, completing an 80 percent drop in price in 30 years.
The 21st century world of low-cost U.S. SBB will be very different from the 20th century. In that century, the U.S. was highly uncompetitive in the world market for SBB. Now, with product nearing $2,200 per metric ton, the U.S. is coming into alignment with the international price of SBB. It is becoming such a value that the international price actually may provide a floor for U.S. domestic prices, a situation that could hardly be imagined in 1985.