2021 was the fifth straight year of declining turkey production, according to U.S. Department of Agriculture metrics. 

In a WATT Poultry Chat interview, Dr. Thomas Elam, president of FarmEcon LLC, reviewed what market indicators said about the turkey market in 2021 and what they predict for the year ahead. 

Austin Alonzo: Let's talk about turkey production in 2021. How was it? 

Thomas Elam: It was down again. Over the last five years, we've seen a 6.5 percent decline in total turkey production in this country. And last year was right on track with that, it was 1.3% for one year. So, we've been trending downward for five years on production. And that's been reflected in per capita consumption, which was also down 6.5% over the last five years. And came in according to the latest U.S. Department of Agriculture numbers at 15.4 pounds per person. That's the lowest it's been since 1987.

Austin Alonzo: What's the forecast for 2022?

Thomas Elam: A mild rebound in production and pretty much flat per capita consumption. That's based on some assumptions about feed costs and turkey prices obviously. 

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I'd like to talk about a couple of slides: The first one is weighted average turkey prices and feed costs from 2010 to December 2021. Right in the middle of that is this big surge in turkey prices during the 2015 avian flu outbreak. After that production rebounded very quickly, prices sank to well below what they were before the HPAI outbreak.

As a result of that, for four or five years after that we had very depressed margins. And then just as we were starting to recover, in 2019, 2020 margins are starting to go up, then came in 2021, a big surge in feed cost and the margins declined again. So it's been a tough five years for the for the turkey business in terms of margins. That's a part of what has been going on with our production numbers. If we break that down into parts and feed costs, the next chart is U.S. Department of Agriculture turkey parts prices and feed costs, and that's from 2014. So, here again, we can look at 2015, see that big surge in prices for breast meat, and other parts didn't quite respond as much. 

But then after 2016, those prices have all been very flat. The top blue line there is feed costs. And you can see what happened in 2021. Last year, in terms of the parts market, it was a disaster because we had flat prices and we saw feed costs go up by as much as 20 cents per pound. That was really, really bad years for the parts markets and prices just did not reflect the increased feed costs. 

The final slide is whole bird prices. And here we've seen over the last couple of years since 2019, we saw a steady increase and this has been the salvation of the turkey industry. And those prices have stayed fairly strong. But of course, this is just the Thanksgiving market. Basically, Thanksgiving and Christmas, and it doesn't account for even 40% of the turkey business. 

So, we're hoping that we'll see some recovery in those parts prices, the feed costs will remain. They've come down recently, we hope that they continue to stay at more reasonable levels and they were at the peaks and last year, and that will lead to some improvement in profitability and hopefully some slightly smaller increase in production because it's really been a tough five years in this business and the production numbers really reflect that.

This transcript edited for length and clarity.