Winner Winner Chicken Dinner!

Beef and pork supplies are down. As the supplies dwindle, prices rise. As prices rise, consumers are now turning to chicken – a cheaper meat alternative – to get their protein fix. As a result, profits are now up for chicken processors. In fact, the soaring prices for U.S. beef burgers and pork chops might just render 2014 the most profitable year ever for chicken producers. This unanticipated demand has boosted profits for many processors, including Tyson Foods Inc., and left others, like Ozark Mountain Poultry, unable to keep up.

With grocers selling cut-up fryers at $1.40/lb, breast meat for $2.40/lb, and leg quarters at $1.00/lb, it’s no wonder shoppers are more likely to pick poultry in lieu of beef, which averages $5.40/lb, or pork, which averages $3.80/lb. Fast-food restaurants, including Yum! Brands Inc. and McDonald’s Corp., are also following the chicken over beef/pork trend, adding more chicken-inspired items to their menus.

In light of the growing beef and pork scarcity, there is a growing demand for more chicken. As a result, chicken processors are expected to produce 2% more meat in 2014 than last year. But as demand increases, don’t expect this “cheaper” alternative to remain so cheap. As always, higher demand equates to higher prices, and already, the national composite wholesale price is up 15 cents since January 1st, 2014, averaging about $1.11/lb. Though not cheap, chicken will continue to be the less-expensive protein, and hence, the protein of consumer choice.

To keep up with the growing demand, many poultry farms are expected to expand supplies, but not too rapidly – the expansion will be modest to avoid major losses. Adding hens to the breeding flock won’t occur too quickly, as farmers want to avoid losing money from overproduction. What’s more, rising feed costs limit expansion efforts.

All this considered, chicken remains one of the go-to proteins and it’s going to be a great year for the poultry industry!

AgAmerica Lending is proud to be the only ag lending company in the Southeast authorized to offer AgAmerica farm loans. AgAmerica ag loans cover all facets of farming, including poultry farming. When it’s time to add more hens, buy more feed, or make operational resets, these agriculture loans are an excellent choice!