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Thanksgiving Turkey, its origin is Minnesota? November 26, 2008

Posted by Daniel Downs in business, corporations, economy, farms, news, Thanksgiving.
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FedGazette writer Dave Walter claims your Thanksgiving turkey more than likely originated from Minnesota.

In recent years, chances have increased that this Thanksgiving a turkey gracing any given table in America hails from [Minnesota]. By virtually every important measure—birds raised, pounds produced, total value—the district’s turkey industry is growing, and at a faster rate than the industry nationwide.

Last year, district turkey farms raised more than 54 million birds, one-fifth of the nation’s flock of 272 million birds. Much of the increase in the size of the region’s turkey flock has occurred since 2005 and stems from production gains in Minnesota, by far the district’s largest turkey producer.

The strong performance of turkey farmers in the district compares favorably with growth trends in other livestock industries. In the beef industry, cattle and calf production fell 3 percent between 2000 and 2007, and in dairy the number of milk cows raised decreased by 10 percent. Growth in the number of turkeys roughly matched the increase in chicken production, while in terms of pounds produced, the growth rate for turkey was more than twice that for chicken.

Only hog farmers have outdone turkey growers in production growth; between 2000 and 2007, the number of hogs raised in the district increased by about 23 percent. (However, those gains have not translated into higher income for hog farmers, because of dropping hog prices in the past two years.)

Turkey farmers breed and feed today’s birds to grow bigger and quicker (adding as much as two pounds per week to their frames) than their recent ancestors. Careful breeding and nutrition have also produced turkeys of uniform size bearing lots of white breast meat—more desirable to consumers than dark meat.

The supersizing of the American turkey is one indication of how efficient the turkey industry has become at producing large quantities of turkey meat for consumption in the United States and overseas.

Large, uniformly sized turkeys lend themselves to large-scale, automated processing, reducing production costs. Economies of scale extend to turkey hatcheries and farms where turkey hatchlings (called poults) are raised to maturity. The size of turkey “grow-out” facilities in the district varies widely, said Steve Olson, executive director of the Minnesota Turkey Growers Association. But even relatively small farms house 10,000 birds or more, and larger operators raise as many as half a million turkeys at multiple sites.

Efficient production translates into low retail prices. Consumers pay much less per pound for turkey than other meats. In 2007, turkey sold for about half the price of ham and less than half the price of beef (chicken cost about the same). And the price of turkey keeps falling; adjusted for inflation, turkey costs less than it did in 1998. In contrast, the price of beef has risen 26 percent in real dollars over the past decade.

Affordability, together with the development of “further-processed” products such as turkey lunchmeat, sausages and ground meat, has made turkey more of a year-round food item than it was a generation ago. Per capita turkey consumption in the United States rose from 6.3 pounds in 1960 to just over 18 pounds in 1996, according to the USDA. In 2005, turkey consumption fell slightly to 16.7 pounds per person.

American consumers aren’t the only ones eating more turkey; between 1990 and 2007, U.S. exports of turkey meat increased almost eightfold to 554 million pounds. The three leading export countries for turkey are Mexico, China and Russia.

For all its efficiency, the turkey industry is suffering from escalating corn and soybean prices that have increased production costs. Feed accounts for about two-thirds of the cost of raising turkeys. In the summer of 2006, corn prices hovered around $2 per bushel; by last June, they had hit $5 per bushel. The trend for soybeans is similar: Between 2006 and last July, the price more than doubled to almost $12 per bushel. Since then, prices for both commodities have fallen considerably.

So far, processors have eaten the higher costs of feed. Contracts with growers usually stipulate that the processor pays for turkey rations—once a safe bet for processors because before the recent run-up, feed prices had been fairly stable for years. No more; processors are feeling the impact of rising feed prices, which doesn’t bode well for the industry as a whole. The rising price of feed “is first and foremost the thing we think about,” said Burkel of Northern Pride, which has to foot the bill under its contract obligations to member-growers.

Turkeys are extremely efficient at converting feed into meat; just under three pounds of feed are required to grow one pound of turkey—less than half the amount it takes to produce a pound of beef. Even so, processors can be expected to absorb high feed prices only so long before they’re obliged to pass those costs along to consumers or cut production.

The National Turkey Federation in Washington, D.C., has lobbied for a reduction in the federal ethanol mandate for blended gasoline, arguing that the upward pressure it puts on corn prices will ultimately increase turkey retail prices and force some turkey farmers out of business.

The impact of increased ethanol production on feed prices is debatable, but there are already signs of a shake-up in the industry. A Butterball turkey plant in Colorado announced this fall that it would close its slaughtering facility and local turkey raising operations by Thanksgiving, citing “record-high costs for corn, soybean meal and other feed ingredients” for the loss of almost 500 jobs.

The fatter, faster, more efficient turkey and farmers weave a web of independent and corporate growers. Whether it’s all for the birds, I don’t know. I doubt the nutritious value of the birds is as good as marketers want us to believe. Nevertheless, one can only wonder whether the declining economy will further hurt turkey growers. If the above is indicative of current trends, those turkeys in the corporate bird business may need bailed out too. Were more corporate producers to fail altogether, millions of turkeys would have something to be thankful by next Thanksgiving Day.

Can turkeys gobble hallelujah?

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