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NOVEMBER 15, 2012 | WWW.PRODUCER.COM | THE WESTERN PRODUCER
CABBAGE PATCH PICKERS
POULTRY | DEMAND
Breasts get squeezed by chicken wing craze Prices to rise | Once a byproduct, now a best seller CHICAGO, Ill. (Reuters) — Chicken wings, those heavily seasoned tidbits served in sports bars and at-home football parties, are giving the chicken industry a lot to crow about. Sales have largely weathered a recession and a doubling of prices. Industry forecasters also predict continued strong demand because sports fans will nosh on wings at sports bars from now through the National Football League’s 2013 Super Bowl in February and college basketball’s March Madness.
Workers at Mayfair Farms at Portage la Prairie, Man., picked a field of cabbage heads in the nick of time. Cold weather, rain and snow followed the first week of November. | JEANNETTE GREAVES PHOTO
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Pilgrim’s Pride Corp., the second largest chicken producer in the United States, recently reported a betterthan-expected quarterly profit, in part because of the nearly $1 per pound increase in wing prices from a year earlier. Breast meat, the industry’s top revenue producer, only increased 20 cents. Analysts expect Tyson Foods Inc. and Sanderson Farms Inc. to post better-than-year ago profits later this fall. The main reason for higher prices is reduced supply because high feed prices have forced the industry to decrease production. Pilgrim’s Pride expects U.S. chicken production to be down two to three percent next year from 2012. While wing prices are expected to increase in coming months and there will be fewer of them, analysts doubt demand will greatly suffer at restaurants and bars. “Wings are relatively inelastic. People want to eat them, they are not so concerned about price,” said Paul Aho, an economist with the consulting firm Poultry Perspective. Wings are also fairly inexpensive when compared with beef, pork and chicken breast meat, which has kept demand strong despite the recession and high gasoline prices. “Even if you lost your job, lost your house, I still think you would still want a beer and wings,” said Aho. Demand has escalated ever since the Anchor Bar in Buffalo, New York, served up a batch of spicy wings in 1964 to launch this food craze, gradually at first and then booming in the 1990s and 2000s. Once an industry byproduct, wings are now the chicken industry’s second largest seller behind breast meat. They account for 25 percent of the industry’s revenue, up from 17 percent eight years ago. Breast meat is 37 percent, down from 53 percent eight years ago. “It is all supply driven,” Mike Cockrell, Sanderson Farms’ chief financial officer, said of the higher wing prices. “Demand (for wings) has remained surprisingly good.” Sanderson Farms said it is operating at 94 percent of capacity and will probably stay there until conditions improve. Feed, which is primarily corn and soybean meal, is the largest cost of production, and prices have soared to record highs this year because of the worst drought in half a century. Corn topped $8.40 US a bushel and soybean meal surpassed $550 per ton. A year earlier, corn was $7.50 and soymeal $380. “The full brunt of this high-priced grain will hit us in October, November and December,” said Cockrell. “From what we hear, everybody has cut back.” U.S. chicken production in September was down 12 percent from August and down eight percent from a year earlier, according to the U.S. Department of Agriculture. Buffalo Wild Wings, one of the largest wing-serving restaurant chains in the country with weekly sales of 21 million, recently reported a 25 percent increase in revenue for the quarter that ended in late September.