Frozen meat and poultry products are jamming cold-storage warehouses across the country because of increased production and slowing demand caused by export tariffs, The Wall Street Journal reported.
Agricultural analysts said more than 2.5 billion pounds of beef, pork, chicken and turkey are currently stockpiled, and U.S. domestic demand can't keep up with the supply. Pork exports are slowing due to retaliatory Mexican and Chinese tariffs responding to those from the Trump administration.
While the situation might end up lowering retail prices for domestic consumers, restaurants and retailers, producers and processors stand to lose profits the longer it goes on and the larger the stockpiles get.
According to cold-storage data released July 23 by the U.S. Department of Agriculture's National Agricultural Statistics Service, poultry supplies hit record levels last month. Frozen chicken supplies were up 2% from May and 10% from the same period last year, while turkey supplies jumped 5% from last month. Beef stocks were up 8% from a year ago, and frozen pork supplies were up slightly from last year.
While plenty of U.S. consumers have been adding meatless items to their diets, it isn't nearly enough to account for the such large stockpiles of meat and poultry. More than one-third of Americans practice meat-free days, according to Mintel, and 35% of consumers get most of their protein from sources other than red meat. However, only 6% of North Americans have a vegetarian diet, and fewer than 3% of them are vegan.
Barring an end to the administration's current trade disputes with Canada, Mexico, China and the European Union, it's hard to tell what actions might alleviate the problem. Meat and poultry producers could lower prices to reduce some of the stockpile, and it's possible that USDA might buy some of the frozen items for use in nutritional initiatives, including the school lunch program. The Wall Street Journal noted that storing frozen products can eventually become too pricey for meat and poultry companies, at which point items may be turned into fats or pet food ingredients.
No doubt the many consumers looking for more protein in their diets would appreciate lower retail prices for meat and poultry, and retailers might be able to feature special sales on the frozen products in time for Labor Day picnics or other late-summer celebrations. If meat and poultry were to become really cheap, it could potentially attract some people who may have bought plant-based products.
The current stockpiles are likely to fuel another cycle of reductions from meat and poultry producers looking to lower the supply and raise prices. However, if they sell too many of their herds or flocks, there could eventually be a shortage, which would then prompt another surge of overproduction, and the cycle starts over again. Such boom-and-bust practices don't encourage players to get into, or stay in, the meat and poultry industries, leading to fewer producers and higher prices over time — a scenario unlikely to appeal to either consumers or retailers.