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Food & Beverage

Thanksgiving brings few blessings this year to troubled turkey industry

November 17, 2008
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Meat producers have been struggling this year with higher costs for key ingredients like corn, soybeans and oil, part of why the cost of beef and chicken has risen so much. Turkey producers are facing all the same pressures, but don''t have the same economies of scale and have to plan a year in advance for the one day a year they count on most. According to the Associated Press, some 46 million turkeys will be eaten on Thanksgiving Day, about the same as in previous years. Consumers will see good prices this year, since retailers will heavily advertise turkey at prices where they may not make any money on the deal in hopes that shoppers drawn in by the lower price will buy lots of other products. It''s prime turkey-eating time in an industry that produced about $13.9 billion worth of product last year. But even the seasonal sales boost won''t ease the industry''s sagging profit margins. Too much meat on the market, high prices for commodities and fuel and weaker demand from restaurants have sliced into profits. Turkeys are in trouble, but on a smaller scale compared to other meats since people eat more beef, chicken and pork overall. Turkey producers say prices edged up slightly, but not enough to recoup the costs of raising the gobblers this year. About 29 percent of all turkey consumed during the year is eaten during the holidays, industry figures show, though that''s down from 50 percent in 1970 as more people ate turkey year-round, especially in the form of sandwiches and ground turkey. Turkey producers must plan far in advance for the Thanksgiving holiday, where they sell the majority of whole birds for the year. The eggs for the turkeys being consumed this Thanksgiving were laid in July just as commodity prices approached record highs. Just like beef, pork and chicken companies, turkey producers have been announcing production cuts as a way to boost prices. But those won''t take effect in time for the holiday. Hormel said in August it was cutting Jennie-O''s production by 5 percent after its turkey segment saw feed and fuel costs rise $53 million in the third quarter. Butterball shut down slaughtering operations at a plant in Longmont, Colorado this year, eliminating about 490 jobs. Given the amount of turkey meat in storage, it will take until at least April or May to get all that out of inventory.

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