The turkey industry will likely not be profitable in 2021 due to new and old circumstances.

In a WATT Poultry Chat interview, Dr. Thomas Elam, president of FarmEcon LLC, reviewed the financial performance of the two publicly traded companies in the turkey industry, Jennie-O Turkey Store, and Butterball. Jennie-O is part of Hormel Corp. Butterball is partially owned by Seaboard Corp. Their performance is a strong indicator for the overall performance of the industry. 

Thomas Elam: It's been an interesting year, needless to say, and today, I'd like to talk about what's going on with industry profitability.

There are only two turkey producers in this country that are owned or partially owned by publicly traded companies that report sales and profits. Those are Jennie-O and Butterball. So I've pulled out some numbers from their latest financials that I could get ahold of that report their turkey segments because they are owned by companies that do a lot more than just turkeys. In particular, they're owned by companies that are big in pork production as well. They're very similar companies. They both produce both whole turkeys for Thanksgiving and Christmas and a lot of further processed products, such as lunch meats and deli items and so forth. And they are big suppliers to both retail and foodservice. So in a lot of respects, they're very direct competitors. But not every turkey company is like that. There are turkey companies that sell only to foodservice. There are turkey companies that do not sell, in fact, very much either food service or retail, they sell to other turkey companies to fill in their needs.

So keep in mind that we're looking at a diversified turkey company that belongs to another company and produces a wide range of products. But still, I think it gives us a good overall feel for what's going on in the industry. 


First of all, we're going to look at Jennie-O, so pull up that slide. This is Jennie-O sales and segment profit. The first three quarters of their fiscal year that ended back in late July. The results for the Jennie-O segment, they belong to Hormel. Wow. So turkey prices were up, and their sales were pretty significantly, $83 million. But if you look at the segment profit, it was down and way down. As their costs were higher, more than offset the increase in turkey prices. So their selling prices went up but their cost went up more. And you can see the quote down there from the Jennie-O management about the higher feed costs and increase in freight costs and probably other costs as well, that more than offset their higher sales. 

So the next company we're going to look at is Butterball. This company is owned by Seaboard Corp. They're also a big pork producer, one of the biggest in the country. And we can look at their sales. But the latest detailed report we have, and they only do this once a year and it was December 31. And we can only imagine that things have gotten worse since then. If we look at their 2020 operating loss $6 million, that was better than the year before. But the company hasn't made money for three years here. And I think what that tells us is that when we get to the end of 2021, and this gets reported again, by Seaboard and they own 50% of the company, we're gonna see even bigger losses for Butterball. 

The bottom line is that these companies, if they were making money last year, they made less this year. If they weren't making money last year, they're going to be even worse off this year because of these higher feed costs that are going to more than offset the gains that we saw in selling prices. The costs have come down now and come down significantly. So hopefully the situation will be better in 2022.

This transcript edited for length and clarity.