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The Future of Food Prices: Meat


When it comes to domestic consumption, the traditional hierarchy of America's favorite proteins may be headed for a shift. Price predictions explain why.

With most global food prices spiking, there's no mystery where meat prices are predicted to go. Prices for red meat, that American culinary staple, have been climbing as though OPEC had gone into the ranching business. USDA predictions suggest continued high prices for all types of meat throughout the decade. But when it comes to domestic consumption, the traditional hierarchy of America's favorite proteins may be headed for a shift. Chicken wings may achieve lift like never before.

According to the Consumer Price Index meat prices climbed 6.2 percent since January 2010, a rate of increase bested only by gasoline. A reduction in herd sizes and an increase in exports have driven cattle prices up by 25 percent since October, while hog prices have risen a remarkable 50 percent in the same period.

The prospect of global grain shortages, particularly catastrophic crop failures in China, are fueling concerns of price increases all along the food chain.

Production is forecast to drop for red meat and poultry through 2012. But longer term predictions from the USDA indicate beef and pork production, sustained by high prices and strong export demand, will increase after 2012 all the way through to 2020. Predictions of healthy export demand suggest that the short term price increases caused by today's smaller herds will be maintained even as herd sizes increase.

Increased export demand for red meat could even come from China as rising income levels continue recent increases in per capita red meat consumption.

Prospects are even better for the mighty chicken. According to USDA predictions the world's favorite flightless fowl is poised to overtake red meat (beef, lamb, pork, and veal) in the US consumer market by 2018. Continued high grain prices will favor the greater feed-to-meat efficiency of chicken production, as well as the shorter period to slaughter. Unlike red meat however, USDA predictions suggest static export levels and therefore static price levels for poultry.

Tyson Foods chief executive Donnie Smith expects healthy export levels in the near term, which will combine with high feed prices to ensure higher prices for chicken.

Bill Lapp, former economist for ConAgra Foods and president of Advanced Economic Solutions, says he believes consumer prices for chicken are set to spike. The poultry industry has so far adjusted the least to higher feed costs, Lapp says, which means a major correction is expected.

But producers expect Americans to buy anyway. Just because everything tastes like it doesn't mean there's any substitute.

SEE ALSO: As Wheat Prices Soar, Domino's Pushes Chicken
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