Source: Susan Kelly, MEATINGPLACE, 11/22/17



Wholesale turkey prices have remained below historical averages s

nce January, sliding to 96 cents per pound in the fourth week of September. The last time prices were below $1 per pound as late as September was in 2010, according to USDA. In the spirit of turkey day, Meatingplace asked Joel Brandenberger, president of the National Turkey Federation, for an update on the market’s fundamentals, and how his group is working to stimulate demand.

Meatingplace: Wholesale turkey prices declined through summer and fall, instead of rising into Thanksgiving as they normally do. Why is this happening?

BRANDENBERGER: The events of 2015 have had a lasting effect on the market. Highly pathogenic avian influenza was a long-term market-distorting event. Just shy of eight million turkeys were lost to high-path AI — roughly 3 percent of the anticipated production for that year. We lost a lot of breeder stock. That has a further ripple effect down the chain, where there was uncertainty about when that breeder stock needed to be replaced.

Turkey production, you don’t turn the ship around quickly. Companies were trying to return to their original production schedules as quickly as possible, but you also had a lot of uncertainty in the market, particularly the export markets. You are trying to decide, am I going to cut back too much at the moment, if some of these export markets start to resolve? You did have a case where production overtook demand because of this uncertainty.

Meatingplace: What is the outlook for turkey production and pricing in 2018?

BRANDENBERGER: We now have two full years of post-AI experience behind the industry. We think the market has absorbed the aftershock and is beginning to rationalize the production now. You have a better picture of which export markets are returned to normal, versus which are still going to be a challenge. You sense that the industry feels like it has a good handle on where it needs to go, but how quickly it is going to be reflected in the prices we don’t know.

Meatingplace: What steps are being taken to stimulate demand?
BRANDENBERGER: We have, for three years, been working on what we have labeled the Turkey Demand Project. Members have paid additional funds, beyond their normal dues, and we’ve used that money to try a number of exercises to help educate users on how to use turkey, working with retailers, working with chefs to try to raise turkey’s profile. In 2018, we are shifting away from some of the broad influencer efforts to drill down to specific areas, to help create a more favorable environment to increase demand.

Working with our friends at USAPEEC, we are going to put some more resources to try to open some new export markets and bring existing markets back to the pre-2015 high-water mark. We will help members prepare animal health tests to determine if markets should reopen. We are going to find new cutting-edge ways to tell our story and put some money into social media activities. We are also looking at product development. We are conducting some events that would show selected market segments, institutional customers — schools, the military, hospitals — some creative new things that can be done there with turkey.

Meatingplace: When will turkey exports return to pre-AI levels?

BRANDENBERGER: High-path AI radically affected our export market. Almost every country that we trade with had a full nationwide ban, like China, or a state or regional ban, as is the case of Mexico. Exports plunged from a record 805 million pounds in 2014 to 533 million in 2015. There has been a steady rebound, to 565 million pounds last year and an estimated 618 million pounds in 2017, but we are still well below previous export levels. In 2018, total exports are expected to increase to 650 million pounds for turkey from the U.S.

Mexico, our biggest export customer, dropped from 509.7 million pounds (also a record) in 2014 to 340 million pounds the following year, and remained flat in 2016 and an expected 371 million pounds in 2017. There is some uncertainty over whether some of the NAFTA deliberation will impact Mexican sales. We don’t expect that it will, but that is something that we will have to watch closely.

Meatingplace: Is China likely to reopen its borders to U.S. turkey anytime soon?

BRANDENBERGER: China, which in 2012 was importing more than 100 million pounds and had become our second-biggest overseas customer, closed its borders entirely to U.S. turkey. They remain closed.

We’ve answered a lot of questions. It’s really hard to predict. We’re certainly focused on trying to make it happen before this year is out or next year, but there could be things that have nothing to do with us that could play a role in how quickly that works out.

Meatingplace: Are lower wholesale turkey prices translating to lower retail prices this holiday season?

BRANDENBERGER: The fourth quarter of the year is not the time to look at retail prices and try to gauge anything about where the industry overall stands. The whole week before Thanksgiving is a lost week — sometimes the birds are discounted below cost. Whether 99 cents a pound, 79 cents a pound or 49 cents a pound, in every instance that is going to be at or below the retailer’s cost for that bird, because of the features. It’s not just this year. If you look at any year, when wholesale prices were high, you would still see prices look like this at the supermarket.

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