COVID-19 disrupted much of 2020. As always, the resilient poultry industry developed ways to cope.
New challenges for 2021
The poultry industry dealt with both price and supply challenges early in 2021.
On the price side:
- The U.S Bureau of Labor Statistic’s Consumer Price Index (CPI) was up 0.8% in April 2021 and 4.2% over the past 12 months, the highest inflation level for more than a decade.
- May 2021 corn prices were up a $1.40 from April 2021 to reach $5.70 per bushel, a 50% increase from a year ago and the highest level since 2012.
- May 2021 soybean prices were up $2.60 per bushel (to $13.85 per bushel).
- Building supply costs skyrocketed.
- Gas and diesel prices rose.
On the supply side:
- Chicken prices climbed with strong demand from retail, foodservice, and export markets.
- Tyson Foods Inc., the largest integrator in the U.S., labeled their male breeding selection a “bad decision” contributing to broiler supply challenges.
- Worker shortages in both processing and transportation restrained the ability of the industry to respond.
Impacts on the industry
Out of this environment came two high-profile announcements. First, Jennie-O Turkey Store, the second largest turkey company in the U.S., reported its second quarter profits were down 54% even though net sales were up 2%. Then, Joe Sanderson Jr. – CEO of Sanderson Farms Inc. – announced they will temporarily forgo building a needed processing facility and have had difficulty fulfilling their orders for wings. We imagine many in the industry are in a similar situation.
Despite these potential negatives, the industry remained positive.
The WATT/Rennier Poultry Confidence Overall Index for the second quarter of 2021 was 135 (1985 baseline = 100), up from 125 in the first quarter of 2021. The Present Situation Index – assessing current business and labor market conditions – increased from 115 to 140 during the same period. The Expectations Index – based on a short-term outlook for business activity, labor, and profits – stayed the same (from 133 to 132).
These findings paralleled the Conference Board’s Consumer Confidence Index for April 2021 which stated, “consumer confidence has rebounded sharply over the last two months and is now at its highest level since February 2020”.
Summary
Although the industry faced new and renewed obstacles, it remained optimistic, focusing more on the positives – general economic recovery, stabilization of market factors and a hopefully expanded labor pool – than the negatives.
