US 'Frankenchicken' Supply Hit With 'Hatchery Issues' As Production Woes May Send Prices Higher

Tyler Durden's Photo
by Tyler Durden
Friday, May 03, 2024 - 02:35 PM

As US consumers shift from beef to chicken due to elevated supermarket prices, exacerbated by a rapid decline in US cattle herds, one of the world's largest chicken producers has issued a dire warning that chicken prices could soon increase. 

Bloomberg reports that Pilgrim's Pride Corp. and the industry as a whole have developed 'hatchery issues', which means a large number of eggs in incubators aren't hatching. 

On Thursday, Pilgrim's Chief Executive Officer Fabio Sandri told investors during an earnings call that the hatchery issues stem from a new breed of rooster (Frankenchickens?) that requires closer management, indicating this is the primary cause of the decline in fertility rates industrywide. 

"We don't have the housing to separate the males by weight. We don't have the labor to individually weigh all those males to make sure that they are at the optimal weight for reproduction," Sandri said.

Pilgrim said because of hatchery issues, chicken production nationwide is projected to grow much less than the US Department of Agriculture's 1.5% estimate. 

USDA data shows that the number of eggs hatched began dropping right after the Covid pandemic in late 2020, from 81.5% to now 76.5%. That compares with averages above 80% over the last decade. 

"The hurdle to expand production comes at a time when consumers are turning to poultry as they seek cheaper alternatives to beef," Bloomberg noted. 

Retail prices of chicken boneless breast, measured by USDA, surged from about $3 a pound in early 2020 to $4.75 a pound in September 2022, primarily due to commercial farms culling large flocks due to the bird flu. Prices have since subsided to about $4.1 a pound but risk moving higher on lower production trends. 

Meanwhile, consumers have been shocked by skyrocketing beef prices as the nation's herd size recently plunged to 73-year lows. 

And the UN's global food index risks turning back up as stagflationary threats emerge in the US economy. 

Meat prices are becoming super expensive for working poor households. Bill Gates is getting his wish...