Chicken and Pork Prices Expected to Rise

US - According to the Tennessean, it is likely that the US will be getting yet another dose of inflation, with the rise in chicken and pork prices.
calendar icon 7 May 2008
clock icon 3 minute read

Overall food inflation could double this year, lifted by the rising costs of fuel, corn and soybeans, some analysts predict.

Food inflation hit four per cent last year, up from 2.4 per cent in 2006.

While beef prices were already high, chicken and pork prices didn't reflect record costs for feed and fuel.

That's poised to change as chicken and pig producers who have been losing money slaughter more animals to decrease the supply and raise the prices they can charge.

U.S. shoppers spent 5.8 per cent of their income on food in 2006, according to the U.S. Department of Agriculture, a lower proportion than in any other nation. In the United Kingdom, consumers spent 8.7 per cent of their income on food, and in most of the world it's at least 10 per cent.

But the U.S. portion seems certain to rise, as chicken and pig producers say prices have to go up as feed costs increase.

"American consumers are only just beginning to feel the impact of sharply higher food prices," said Pilgrim's Pride Corp. Chief Executive Clint Rivers.

Tyson Foods Inc., the world's biggest meat producer, forecasts that its expenses will rise $1 billion this year, including $600 million for corn and soybean meal and $100 million on grain.

Pork farm losses, though, may total $3.8 billion for 2008, one-quarter of total production, according to Chris Hurt, an agricultural economist at Purdue University.

He calls the industry "a financial disaster in progress."

The biggest driver to prices is grain costs, which have been affected by the rise in ethanol production and strong export demand due to the weak dollar.

Corn costs have more than doubled over the last two years from $2.50 a bushel to $6.

Smithfield said in February that it would slaughter four per cent to five per cent of its breeding sows.

A smaller breeding population and a wave of expected hog farm failures will boost pork prices by 2009, Hurt predicted.

View the Tennessean story by clicking here.

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