The effects of recession and high grain costs
etween 2007 and 2012, U.S. per capita poultry and red meat
consumption fell 17 pounds. As would be expected, the bulk of
decline was in the more expensive, less feed-ef;cient red meats,
where consumption dropped by 15 pounds per capita.
However, the effects of high grain costs and recession were so great
that even poultry consumption dropped by 2 pounds over the same
period. To ;nd a decline of similar magnitude you have to go back to
the early 1970s with the oil embargo, recession and grain crisis.
After declines of such magnitude, a rebound can be expected. Sooner
or later, grain prices will fall and economic recession will give way to
a better climate for meat production and consumption.
B
no second recession.
Fixing the ;nancial system problems of 2008
is taking longer than expected and new problems
with sovereign debt have emerged in Europe.
But, U.S. growth should slowly pick up in 2012
and 2013.
A bellwether statistic to watch is unemployment, while unusually slow to drop in this current
weak recovery, it will likely head in the right
direction in 2012. ■
Prospects for lower grain prices
Although grain prices will never return to the levels of ;ve years
ago, the current corn price of $7 per bushel is unsustainable. Corn will
eventually fall because at current levels demand is suppressed (lower
chicken, beef and pork production, and less ethanol), while production
is stimulated.
The only thing holding back a fall in corn prices is a predicted poor
harvest in the U.S. for a second year in a row. By crop year 2012-13, corn
prices should ;nally fall to $5 per bushel on average over the entire year.
After the last few years, $5 per bushel will seem like a miracle.
Paul Aho, Ph.D., Poultry Perspective, phone + 1.860.429.3053 or
email paulaho@paulaho.com
Avg price of corn in Chicago -
$/bushel by crop year
$7.00
$6.00
$5.00
$4.00
Prospects for a better economy
Though the U.S. economy has made signi;cant progress since 2009,
there has been recent concern about the possibility of a double-dip
recession just a few years after the last. Economists’ consensus opinion
is that growth will be disappointing in 2011 and 2012, but there will be
$3.00
$2.00
2009-2010 2010-2011 2011-2012 2012-2013
By crop year 2012-13, the price of corn should fall to $5 per bushel as
an average.
The toll of high grain prices and recession on US
per capita consumption of red meat and poultry
120
116
112
108
104
100
96
92
Red meat Poultry
US unemployment, percentage
10
9
7
8
6
5
4
2010 2007 2008 2009 2011 2012
2007 2008 2009 2010 2011
2012
Unemployment will in all likelihood begin to head in the right direction
in 2012.
