Gobble-up prices for turkeys
For turkey tycoons, the coming holidays will provide little cause for thanksgiving. The industry is moving into its peak selling season with the New York wholesale price around 57 cents a pound, 20 cents under last year's wholesale price.
The pricing picture is good news for consumers but ''producers are losing 10 cents a pound,'' estimates Lou Walts, executive director of the National Turkey Federation.
''With prices this bad, it is not a moneymaker at all,'' adds Harry McLaughlin, vice-president of the Grange Company, the largest turkey processor on the West Coast. For normal profitability, ''wholesale prices have to be at the 70 cents per pound level,'' Mr. McLaughlin says.
Turkey prices have tumbled due to larger than normal supplies and lower prices for competing meat products.
By Sept. 30, some 531 million pounds of turkey had landed in cold storage - 33 percent more than last year, according to Alan Baker, an economist with the US Agriculture Department.
The stock of frozen birds was fatter than normal as 1981 began. Some 200 million pounds of frozen turkey were on hand in January - 21 percent more than when 1980 began.
In addition to entering the year with a large frozen flock, ''there were not as many turkey specials (in supermarkets) in the first three quarters (of 1981), so . . . we have added a lot of turkeys to frozen stocks,'' Mr. Baker says.
One reason supermarkets have not offered as many turkey specials is that the price of competing meat sources has been depressed. ''The chicken market has been down for 21/2 years,'' notes Stan Stallings, a poultry marketing specialist in the North Carolina Agriculture Department. North Carolina is the nation's largest turkey producing state.
''Chicken, turkey, and pork coexist on price. So when you have depressed chicken prices, turkey producers have a problem,'' Mr. Stallings says.
For turkey producers the immediate problem is that the supply of frozen and fresh turkeys this November is expected to be 20 to 25 percent higher than last year.
The resulting pressure on prices is fueling a trend toward ''greater integration (of the industry) with one company controlling a substantial number'' of processing operations, Mr. Walts says.
''In the last five years there have been dramatic improvements in confinement growing'' techniques for turkeys, notes Michael McDonnell, vice-president and general manager of Esmark Inc.'s Swift Poultry Division, the nation's largest marketer of whole turkeys. The move to growing turkeys in houses ''creates a need for investment which in turn creates a need for'' higher production levels. ''These economic forces are creating greater concentration.
For instance, in California, the nation's third largest turkey producing state, there have been ''drastic changes'' in the industry's makeup over the past several years, says Michael Gorham, agricultural research director at the Chicago Mercantile Exchange.
A study he made while employed at the San Francisco Federal Reserve Bank found a significant number of turkey producers leaving the business, unable to match the lower production costs of larger operators. ''It was an economies of scale thing,'' Mr. Gorham says.cho
While small operators struggle to survive, large turkey producers have been culling their flock of processing plants. ''Armour & Co. and Swift have dropped plants in Texas, and Swift has closed a plant in Sioux City, Iowa,'' Turkey Federation executive Walt notes.
Plant closing have occurred as a result of a combination of slumping sales and increased production efficiency at remaining facilities.
Of course, cost cutting is not a permanent solution to the industry's woes. Turkey titans would like to make the feathered foul a year-round staple of the US diet and not just a seasonal favorite.
Turkey advocates have had some success boosting nonholiday appetites for the bird. In 1980, Americans gobbled down 10.6 pounds of turkey, vs. 10.1 pounds in 1979, and 9.3 pounds in 1978. During the last three months of the year ''consumption has remained about four pounds,'' Mr. Walts says, ''so where we are making the increase is in times other than holidays.''
''When you have a whole bird, you have got to prepare a banquet,'' notes North Carolina agriculture official Stallings. So turkey boosters have been pushing turkey parts and smaller birds that take less time to prepare.
For example, on a national basis Swift sells Butterball brand turkey breasts as well as Li'l Butterballs, turkeys weighing 10 pounds or less. Marval Poultry Inc. in Dayton, Va., is marketing fresh turkey parts on the East Coast with the slogan, ''Think of what you can do with it when you think of it as meat.''
Surprisingly, Marval has been one of the few turkey producers to take its marketing campaign to the airwaves. Marval accounts for only 7 percent of annual US turkey production. But as a result of TV advertising, it has increased its market share for the first six months of this year to 18 to 20 percent, according to Marval marketing vice-president Robert Broaccia.
While increased use of television may help turkey suppliers in the long term, for the short term their prospects are bleak. As one agricultural economist says , ''If you want to bring turkey supplies into balance, purchase two birds this November.''