Calling fowl: Are manufacturers really facing a turkey shortage?
It’s that time of year again when turkey tops many grocery lists and rumors of a turkey shortage make headlines. This year, a turkey shortage has been particularly believable after a bird flu outbreak struck turkey farms throughout the Midwest, killing millions of potential Thanksgiving centerpieces and sources for manufacturers’ turkey-based products.
Even with the bird flu outbreak, these fears of a shortage are unfounded once again, according to USDA data and many turkey processors and manufacturers.
Has any of this impacted turkey processors and manufacturers?
Hormel’s Jennie-O Turkey Store brand contracts with several Minnesota turkey farmers, and some were hit hard by the outbreak, which has contributed to lower sales numbers this year since. For that brand, profit decreased 45% and sales fell 12% for the third quarter of fiscal year 2015, and in May, Hormel temporarily cut 233 jobs from a Jennie-O plant in Minnesota. The company predicted a 15% drop in sales for the brand in the fourth quarter.
However, about two-thirds of Jennie-O’s turkey farms had been repopulated as of August, and Hormel expected to complete repopulating the turkey farms during the past quarter, according to Hormel’s CEO, president, and chairman Jeffrey Ettinger. Jennie-O has been able to offset some of its flock losses by purchasing some turkey meat from other suppliers.
The same issues may not exist for other major companies that either process turkey exclusively or use turkey in their products.
According to a Foster Farms spokesperson, the company "does not anticipate any impact to its company turkey supply this season." A Perdue Farms spokesperson said, "None of the areas where we raise our source turkeys were affected by the avian influenza this year, so we are not experiencing shortage issues."
Manufacturers often contract with turkey farmers directly for their supplies, so as long as a manufacturer’s direct suppliers weren’t hit by the outbreak, then the company should be able to continue processing and producing turkey products with little to no interruption.
The only other place this could come into play is for smaller, local turkey processors and manufacturers that are located in the states hit hardest by the bird flu, such as Minnesota. It’s likely that a small Minnesota turkey processor works exclusively with local or regional farms which may have been impacted by the bird flu, so those types of processors or manufacturers could see a reduction in supplies.
Turkey processors and manufacturers are on track for this Thanksgiving holiday, and the headline scares of an imminent shortage are settling. But bird flu or no bird flu next year, there’s always a chance those headlines will emerge again in 2016.
What does the turkey data say?
Just how badly the bird flu and other factors impacted the turkey supply can be seen in data from the USDA and the National Turkey Federation (NTF). As major as the outbreaks seemed, the turkey supply has been reduced by only about 3%, with losses concentrated mainly in the upper Midwest, according to USDA data. Other top turkey states, including North Carolina (No. 2), Arkansas (No. 3) and Indiana (No. 4) continued to produce.
But whether turkeys will be available for Thanksgiving is consistently the central concern surrounding the holiday. In total, the USDA reports that the country will produce about 228 million turkeys in 2015, while U.S. consumers only eat about 46 million turkeys at Thanksgiving, according to the National Turkey Federation (NTF). Taking those numbers into consideration, this does not equate to a shortage.
This is due to two important factors: First, the turkey population was, again, only reduced by 3% this year, and second, many of the birds to be used around Thanksgiving were flash frozen and put into cold storage before the bird flu ramped up in March. This assured the supplies of frozen turkey for the holiday, as frozen turkeys represent about 85% of the market, according to the NTF.
Also, because of developments in practical cold storage and refrigeration technology as well as the development of railroad refrigerated shipping containers and interstate commerce, manufacturers with a national production and distribution system should, for the most part, not be heavily impacted by the slight reduction in the U.S. turkey supply, the NTF said.
Manufacturers and retailers may have been hit in another way, which could explain some of the headlines earlier this year about grocery stores and delis running out of turkey to sell. Turkey hens are generally preferred for Thanksgiving dinner, while turkey toms are raised for products like ground turkey, turkey tenderloin, and turkey bacon, and turkey toms were disproportionately affected by the reduction in the turkey supply, according to NTF.
For an actual turkey shortage to happen, the NTF said, "A consistent loss well above the current low loss of the turkey population would have to occur – or an extremely abrupt increase in the cost of corn diverted into corn ethanol (as in previous years) driving up the price of our corn and soybean feed to a point where turkey producers cut back on the size of their flocks and don’t grow as many turkeys. Otherwise, severe cold that occurred winter 2014 in conjunction with propane distribution shortages would have to get so bad that it would kill turkeys in the barns from freezing temperatures – again at numbers well above the 3 percent loss.
"None of that has happened, and corn prices are at moderate levels for feed. The propane distribution/freezing weather has been addressed with the pipeline companies and federal authorities."
Recap: Bird flu rocks the Midwest
In the beginning, the bird flu, specifically the H5N2 strain, hit the Pacific Northwest area, including Washington and Oregon, though commercial farms were not at first affected. In January, China stopped importing U.S. poultry and egg exports due to concerns about the bird flu outbreak.
The outbreaks of H5N2 eventually moved to the Midwest in early 2015, and by the spring, a hash of contaminations were reported at dozens of farms in the region. This included states like Minnesota, the country’s top turkey producer with a $600 million state turkey industry that produces about 46 million turkeys per year.
Minnesota and other states, including Iowa and Wisconsin, were forced to declare a state of emergency over the spring as a result of the outbreaks. However, as bad as the bird flu may have seemed and with the outbreaks drawing to a close, Minnesota had only lost about 2% of its annual turkey production.
The bird flu ended up killing about 48.1 million birds as of late June, costing the country $191 million in dead poultry. Some farms began restocking their flocks in June, and as farms enter the recovery phase, many are now back online. While the worst of the outbreaks had ended by early June, experts feared that the outbreaks could begin again this fall, though a new series of outbreaks has yet to be reported.