With inflation at a 30-year high and turkey prices soaring,
Thanksgiving dinner in 2021, might end up being one of the
priciest holiday meals on record.
I joke but I'm not really joking that every step of our supply
chain has been under stress and has certainly seen increases in
cost.
U.S. turkey farmers have been battered by a range of supply
chain issues, including labor shortages in processing plants,
and higher costs in everything including feed, transportation,
and packaging materials. Those disruptions have caused turkey
prices to spike. As of November 2021, the wholesale price of
frozen whole tom turkey weighing 16 to 24 pounds was $1.36 per
pound, 18% higher than a year earlier. And according to
analysts, turkeys are also in shorter supply.
There's definitely concern that there's going to be some
shortages of fresh turkeys, especially this holiday. So
we've seen quite a bit of increased demand. One thing
that you probably will notice that the grocery store this year
is more bare shelves as we move into the holiday season. That
doesn't necessarily mean that we haven't produced enough. It just
means that the supply chain disruptions have created more
uncertainty along the system.
In October 2021, the supply of turkeys in cold storage was down
20% from a year earlier. More than 109 million Americans are
expected to travel for Thanksgiving in 2021 and 65% of
Americans expect COVID-19 to impact their Thanksgiving
celebrations. So what can consumers expect when they shop
for their Thanksgiving turkey this year? And what impact will
the supply chain crisis have on the nation's turkey farmers.
Brandon Koch is a fourth generation turkey farmer in
eastern Pennsylvania. His family got its start selling turkeys
out of a pickup truck in 1939. By 2021, the farm was processing
about 1.2 million birds annually. While no longer just a
holiday seasonal business, Thanksgiving remains a critical
time of year for the Koch family.
This time of year, you know, October, November, we kind of
ramp-up production.
But 2021 has brought with it an array of issues for turkey
farmers. Feed which accounts for roughly two thirds of the cost
of raising a turkey has more than doubled in price between
June 2020 And July 2021, in some parts of the country. On
average, it takes 75 to 80 pounds of feed, including cor
The grain market has been especially volatile, diesel,
propane, packaging materials, cardboard saw a big increase in
price.
Those extra costs have led to rising prices for the holiday
staple. In September 2021, the wholesale price for frozen whole
hen turkeys averaged $1.36 per pound, the highest monthly price
since the series began in 2006.
We're actually seeing really, really high fertilizer costs,
pesticide costs, energy costs to produce anything on farm and
that has to be passed on to the turkeys, which is then passed on
to the consumer when we reach our Thanksgiving table.
And it's not just higher costs that have impacted farmers.
Shortages in trucking and labor are hurting their business too.
Trucking is a big, big challenge. We've seen the
trucking costs go up almost, almost double.
We are dramatically increasing our capacity this time of year
and we typically bring on a lot of seasonal help and that has
been very hard to do.
Those disruptions in turkey production are leading to fewer
birds in stock. At the end of August 2021 there were 425.6
million pounds of turkey meat in cold storage, a 20% decrease
from a year earlier. During that same period, turkey production
declined 2%.
It's not that we necessarily are producing too little, it's that
we have a supply chain disruption that makes that
supply chain take a different number of days to actually reach
the end consumer. It's okay if it's 100-day window, so long as
it's 100-day window that finishes the day before
Thanksgiving. If it's 102-day window and it finishes the day
after Thanksgiving, well then we're in trouble.
The U.S. is the world's largest producer and exporter of turkey
goods with more than 5.3 billion pounds of products made
annually, according to the National Turkey Federation. In
2020, U.S. turkey production was valued at $5.1 billion, by the
USDA, up 20% from a year prior. And while a significant slice of
that activity centers on small family farms, turkey production
is largely concentrated in the hands of the nation's biggest
protein producers.
Virtually all the turkeys tha are produced and sold in grocer
stores come from fairly larg integrators meaning companie
that own the processing plan but also contract with farmer
to grow out those turkeys
Butterball, the nation's top turkey producer, runs the
country's biggest processing plant in Mount Olive, North
Carolina, handling 17 million turkeys annually. Jennie-O
Turkey Store, a subsidiary of Hormel Foods, and based in
Willmar, Minnesota is another top producer. With the
Coronavirus pandemic impacting its food service business and
increased supply chain costs, Jennie-O Turkey Store saw net
sales rise in the fiscal year ending October 25 2020 to $1.3
billion, a 0.7% increase from the year prior. Other leading
turkey producers include Cargill Protein, Farbest Foods, Tyson
Foods and Kraft Heinz. In 2020 the pandemic forced Americans to
downsize their Thanksgiving plans. Retail turkey prices that
year were the lowest since 2010. But rising costs could make
nearly every part of the traditional Thanksgiving meal
more expensive this year.
If you can name the product, odds are there's probably some
unique supply chain disruption that's happening to that
product, everything from cranberries to the tin that
we're actually putting our turkey in to cook, this is t
e pallets that you have to lo d onto the truck that gets to t
e grocery stor
In October 2021, the Consumer Price Index jumped 6.2% from the
previous year, according to the Labor Department, a 30-year
high. The price of meat, poultry, fish and eggs surged
almost 12%. The American Farm Bureau's annual Thanksgiving
dinner survey saw a steep rise to. It said a holiday feast for
a family of 10 featuring turkey, stuffing, sweet potatoes and
pumpkin pie cost $53.31 in 2021, a 14% increase over the previous
year. The cost of a 16 pound turkey was up 24%. But are
turkeys really getting more expensive? Rising prices are
only half the story, according to Jason Lusk, a professor of
Agricultural Economics at Purdue University, who says inflation
tends to creep prices up every year. Comparing turkey prices
with wages, Lusk calculate that in 1980 it took a worker making
a median weekly salary almost three hours to earn enough to
buy a 20 pound turkey. It took a 2019 worker making the median
weekly salary an hour and 15 minutes. According to analysts,
industrial farming techniques implemented in the 1980's have
allowed turkey growers to produce and process the birds
much more efficiently, keeping costs down.
Turkey production is an incredible story of agricultural
technology. If you look at the cost that it takes to produce a
turkey now versus in the 1980's it is absolutely shocking how
much that price has come down. I think that's probably one of the
most interesting parts about the turkey industry to me. We are
seeing this increasing consumption but it's not just
because people are liking turkeys more, it's because the
price is lower.
Turkey status at the center of the holiday table was in large
part thanks to the poultry industry's marketing tactics
following World War II. About 240 million turkeys are raised
annually on about 2,500 U.S. farms. Each Thanksgiving,
Americans consume roughly 40 million turkeys. And by the
early 2020's about 88% of U.S. families were eating turkey on
Thanksgiving Day. But why is the Thanksgiving favorites still
America's fourth most popular source of protein behind
chicken, beef and pork. U.S. turkey consumption has nearly
doubled since 1965 as the industry has transformed from a
single holiday product to a vast array of food options, including
sausages, bacon, burgers and deli meats. In 2020 per capita
consumption of turkey, was just 15.8 lbs, compared to 58.4 lbs
for beef, 97.6 lbs per chicken and 52 lbs per pork.
We're just waiting for some entrepreneur to create the
turkey sandwich wars out there. Culture plays a big role in
these things, sometimes it's what our mom fed us when we were
young and that tends to influence what we prefer over
time. But it doesn't mean we can't change and you look at the
course of chicken over the last 40 or 50 years went from a meat
that was consumed less than beef and pork and now is the most
consumed meat in the United States. It is
also benefited as Americans embraced a healthier lifestyle
and viewed turkey as a more nutritious substitute for ground
beef. Organic is another trend. In the mid-1990's the Koch
turkey farm began experimenting with birds raised with an all
vegetarian diet, free of antibiotics. Today, it's organic
turkeys are sold at premium grocers like Whole Foods.
We don't pack our barns full of turkeys to get as many pounds as
we can through. We found that to go great turkey you need fresh
air, clean litter, clean environment, clean water and a
good quality feed.
As a consumer you're not eating any growth hormones, pesticides,
antibiotics, you also have a concern for the animal that it
had a good quality of life.
But despite those higher costs and more limited supply of
turkeys this year analysts say three things consumers can do to
keep Thanksgiving dinner prices down are shop early, look for
deals and share costs.
So agricultural production is just very unique. It's one of
these industries that it looks easy on the front end, but the
more you actually dig into all of the different moving parts
that happen on farm it really does highlight why small farmers
have such a hard time fighting through an industry.