Chicken, pork, and beef prices are expected to continue to rise around the country throughout the year largely as a result of greatly increased livestock feed costs.
Investment banking advisory firm Evercore ISI issued a report last week predicting that most protein food prices will “substantially” increase because of the higher feed costs.
Chicken breasts are expected to go up by as much as 70% on a year-over-year basis just in the first half of this year. Pork and ground beef prices could go up as much as 20% during the same period.
Lowered demand for more expensive meat products like steak is expected to lead to level or possibly reduced prices. Consumers are expected to shift aggregate demand to lower-cost food products as the prices paid for all consumer goods continue to rise.
Evercore senior director David Palmer said that ribeye costs could drop by as much as 15% during the first half of 2022.
The primary reason for projected price increases is the surge in grain prices that are used to feed most American livestock. Wheat, soybeans, and corn are all expected to cost much more this year. Wheat prices have especially shot up after the Russian invasion of Ukraine disrupted crop production and led to new economic sanctions.
Palmer said that beef is the domestic meat product least exposed to grain volatility as a result of the war in Ukraine. Cattle feed makes up about 25% of beef production costs, compared to 50% for pork and 70-80% for poultry.
Adding to concerns about rising poultry prices is the outbreak of avian influenza in at least 22 states since the beginning of the year as reported by the U.S. Department of Agriculture.
The spread of bird flu to chickens has been attributed to the droppings of wild birds. Ducks and geese spread the disease while showing no symptoms of illness. The virus is easily tracked into chicken and turkey farms by workers, equipment, and smaller wild birds.
The last major bird flu outbreak in 2015 led to the death of around 50 million chickens and turkeys, leading to price surges in meat and eggs. The poultry industry lost an estimated $3 billion that year.
Bird flu has led to the death of around 7 million chickens and turkeys so far in 2022. The bird flu can destroy large numbers of the nation’s domestic poultry production but is not transmissible to humans through poultry meat or eggs.