US Chicken Supply Faces Challenges, Prices May Rise

With American consumers increasingly opting for chicken over beef due to high supermarket prices and a significant drop in US cattle herds, a looming crisis is on the horizon. One of the world's leading chicken producers has warned that chicken prices may be on the rise soon.

Issues at Hatcheries

According to Bloomberg, Pilgrim's Pride Corp., along with the entire industry, is facing 'hatchery issues'. This means a large number of eggs in incubators are not hatching as expected.

CEO Speaks on the Issue

In a recent earnings call, Pilgrim's CEO Fabio Sandri informed investors that the hatchery issues are primarily due to a new breed of rooster that requires more careful management, leading to a decrease in fertility rates across the industry.

"We lack the housing to separate the males by weight. We also lack the manpower to weigh each male to ensure they are at the ideal weight for reproduction," Sandri explained.

Projected Growth in Chicken Production

Pilgrim's Pride Corp. has projected that due to these hatchery issues, the growth in chicken production nationwide will be significantly less than the 1.5% estimate given by the US Department of Agriculture.

USDA Data on Egg Hatching

Data from the USDA reveals that the number of eggs hatched began to decline following the Covid pandemic in late 2020, dropping from 81.5% to 76.5%. This is in stark contrast to the average hatching rate of over 80% in the past decade.

Consumer Shift to Poultry

Bloomberg notes that this production challenge comes at a time when consumers are increasingly turning to poultry as a cheaper alternative to beef.

Rising Chicken Prices

Retail prices of boneless chicken breast, as measured by the USDA, rose from around $3 per pound in early 2020 to $4.75 per pound in September 2022. This increase was mainly due to commercial farms culling large flocks because of bird flu. Prices have since dropped to around $4.1 per pound, but there is a risk of them rising again due to lower production trends.

Beef Prices and Herd Size

Meanwhile, consumers have been taken aback by the soaring beef prices as the size of the nation's herds recently fell to a 73-year low.

Global Food Index and US Economy

Additionally, the UN's global food index may rise again as signs of stagflation emerge in the US economy. This could make meat prices prohibitively expensive for low-income households.

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