For those planning to feature the classic American bird in upcoming holiday meals, some strategy may be in order as industry watchers predict U.S turkey prices will be up significantly over last year and those fat gobblers are going to be harder to come by.
A new Wells Fargo report breaks down market conditions that are already bumping up turkey prices and could lead to record-high prices by the time home cooks are out laying in supplies for holiday get-togethers.
“The turkey price in 2021 is starkly higher compared to prior years,” Wells Fargo analysts wrote. “Late September turkey prices this year are running nearly 25% more than the prior year, and nearly 50% higher than a prior five-year average.
“In other words, a whole turkey for this holiday season is going to cost you nearly double what it did just a couple of years ago.”
What the average U.S. household spent on turkeys, as well as the complete holiday spread, in 2020 was among the lowest in years, according to an American Farm Bureau national survey conducted last November.
The 2020 version of the Farm Bureau’s annual report found the average cost of last year’s Thanksgiving feast for 10 came in at $46.90 or less than $5 per person. That was $2.01 below 2019’s average of $48.91 to serve turkey and the traditional sides to a table of 10.
That cost drop was driven in large part by turkeys, typically the most expensive single expenditure for menus featuring the big birds, going out the doors of local grocers at rock-bottom prices or even for free.
“The average cost of (2020’s) Thanksgiving dinner is the lowest since 2010,” said American Farm Bureau Chief Economist Dr. John Newton when last year’s report was released. “Pricing whole turkeys as ‘loss leaders’ to entice shoppers and move product is a strategy we’re seeing retailers use that’s increasingly common the closer we get to the holiday.”
Much of the current surge in turkey prices boils down to the simple economics of supply and demand, according to the Wells Fargo report. So, those dirt-cheap or free-with-a-coupon birds of 2020 will not be finding places to roost this time around.
“The steady decline in production in the last five years resulted from several years of challenging economic conditions,” the report reads. “Some U.S. whole-bird turkey production shut down in 2019 and 2020.”
It was a business economic necessity. All of those low-priced turkeys or free turkeys in prior years that consumers took for granted didn’t make much money for the turkey companies, so eventually some turkey processing plants closed.
“The impact of those closures simply means that fewer turkeys have been produced for the 2021 market,” according to the report.
Unfortunately for U.S. consumers, it appears price increases for 2021 holiday groceries and sundries will likely be up across the board in the coming months.
The latest consumer price index report from the U.S. Bureau of Labor Statistics found food prices in September were up some 4.6% over the same time in 2020 and the cost of meats, poultry, fish and eggs rose 2.2% from August to September.
Last week, the New York Times reported the likelihood of bigger holiday gatherings amid decreasing concerns over COVID-19 issues and particular challenges for those looking for top-quality turkeys to share with family and friends.
The Times reported Kroger executives are anticipating more of what marketers call the “premiumization” of Thanksgiving ingredients, with many cooks shopping for turkeys that are fresh, organic, free-range or processed in ways that elevate them beyond an inexpensive frozen bird.
“Customers aren’t necessarily going out to restaurants, so they are upping their game in terms of products,” Stuart Aitken, the company’s chief merchant told the Times.
The Times report also noted elevated holiday-related costs will create tougher challenges for individuals and families who are already tightening their budgets.
“I can buy that this will be the most expensive Thanksgiving ever, but there’s an income-inequality story here that matters a lot,” Trey Malone, an agricultural economist at Michigan State University, told the Times. “The rich are going to be spending more on Thanksgiving than they have ever spent before, but not everyone is going to be able to do that.”
Last year, U.S. farms grew some 224 million turkeys with some of the biggest volumes coming from states like Minnesota, North Carolina and Arizona that produce 30 million or more birds every year, according to U.S. Department of Agriculture data. Utah is on the lower end of the spectrum nationally but still accounts for around 4 million to 5 million turkeys each year according to the USDA (though state level data has been withheld in recent years from the annual Utah Department of Agriculture and Food report.)
Utah Department of Agriculture and Food Commissioner Craig Buttars said Utah turkey farmers are facing a host of challenges this year that include increased feed prices due to ongoing drought conditions, supply chain issues, labor shortage challenges and particularly so in staffing processing facilities.
Buttars noted that increases in consumer prices don’t necessarily reflect increased profits for local farmers.
“The profit margins in this industry are small, even in better market conditions,” he said. “Our producers are probably not going to make any more this year even with consumers paying more at their grocery stores.”
Supply chain bottlenecks are also impacting wider holiday shopping plans across the country as some consumers are already running into issues finding the items on their wish lists.