Aug 24 2021
The Food Biz Episode 6: Price Mooovement in the Meat Industry
In the sixth episode of the Food Biz, hosts Ryan Nelson and Kristyn Tarpey are joined by Gary Morrison from Urner Barry. Gary is a Vice President at Urner Barry and is responsible for reporting on the box beef market as well as seafood items like shrimp and lobster tail.
Together, the three discuss the price fluctuations that have taken place within the meat industry throughout the pandemic. African Swine Fever, China's buying strategy, and supply chain shock have had a strong impact. Will prices even out? You’re about to find out because we’re recapping the episode now!
Kristyn starts the discussion by asking Gary if he has seen prices rising as a result of labor shortage in the food industry. Gary concurs that, yes, labor shortages are contributing to higher prices and food inflation - but it’s not as simple as that. First there was initial demand shock at the beginning of the pandemic when everyone frantically thought they needed to stock up their freezers and pantries. Three weeks later, we saw covid impact packing plants and supply was cut by about 36% in two weeks. This really pushed prices higher, but then slaughter started to normalize. That was at the beginning of the pandemic but now, prices are rallying even higher because of labor shortages.
The USDA prices hit the highest in June and July at about $7/lb. Gary tells us that in 2019, meat prices were around the high 5’s - low 6’s, but we need to remember that retailers know that consumers right now are cash infused. There were stimulus checks, unemployment checks, people weren’t commuting and buying coffees every day, and families certainly weren’t traveling. When people have extra cash, they tend to spend it on food, specifically better quality food.
Kristyn then asks Gary if he thinks these prices are strictly due to inflation or if he thinks they will stick around. Gary says that with any commodity, prices don’t go up forever, so at some point they will come down, especially due to certain factors. Those factors include the increase of slaughtering and economic factors. We’re seeing oil and lumber come down, so commodities as a whole might start to retreat. Ryan points out that corn prices backing down could contribute to meat prices coming back down as well. Ryan explains that in the beginning of 2021 we saw China coming in and buying a ton of our corn and now that we’re over our APEX, if you look at cmdty’s National Corn Index, he thinks that the USDA is under reporting and we have more than what the USDA thinks.
In regards to the African swine flu, Gary thinks it’s interesting how it got to the Dominican Republic, an island.
Since Puerto Rico is a territory of the U.S., we are grouped together as one. Therefore, the U.S. has concerns for potential bans on U.S. pork if the flu reaches Puerto Rico. Ryan did point out that the African swine flu does not affect humans if they do consume that meat - but still, no one is going to want to buy pork from infected swine.
Kristyn, Ryan, and Gary wrap up the episode by discussing how this could all contribute to the plant-based movement. You can listen to the entire episode now to learn more about where the food industry might be headed regarding health consciousness in consumers. Don’t forget to subscribe to The Food Biz on Spotify or in the Apple Podcasts App! Reach out to us by email at email@example.com with any discussion topics, questions, comments, or overall feedback; Ryan and Kristyn would love to hear from you!