The End of Cheap Meat

Pilgrim’s Pride, the world’s biggest poultry producer, faced disgrace several years ago when undercover investigators from People for the Ethical Treatment of Animals documented slaughterhouse workers abusing chickens. Here's what investigators witnessed in 2004 at a Pilgrim’s Pride slaughterhouse in West Virginia that was supplying Kentucky Fried Chicken:

[W]orkers were caught on video stomping on chickens, kicking them, and violently slamming them against floors and walls. Workers also ripped the animals’ beaks off, twisted their heads off, spat tobacco into their eyes and mouths, spray-painted their faces, and squeezed their bodies so hard that the birds expelled feces—all while the chickens were still alive.

Essentially the chickens were treated like what they would eventually become: cheap meat.

Roughly nine billion chickens are slaughtered annually in the U.S.—23 million killed each day—in a brutal but efficient system of industrialized animal agriculture. The cheapness of their meat is a function of the huge scale of the operation in which they are raised, reliant on two main ingredients: cheap oil and cheap grain.

The times they are a changing, though. In an age of peak oil, are we also reaching peak meat?

From the Wall Street Journal:

Higher fuel prices cut deeply into the processing side of the industry, which requires birds and meat to be transported across the country. Electricity costs are another big expense for a processing plant.

The ethanol boom, climate issues and a growing demand for grain particularly in India and China, have caused global grain prices to skyrocket impacting the poultry industry, as feed represents about half the cost of growing a chicken. Tyson Foods will be spending $500 million more to feed its chickens this year. Pilgrim’s Pride announced the closing of one of its 37 chicken-processing plants and six of its 13 distribution centers as a result of high feed costs.

It’s hard to imagine these poultry giants pinched for cash. Over the past several decades, the poultry sector has become heavily industrialized and consolidated, its cheap prices crushing competition from small livestock operations. It has  mastered efficiency in production by exploiting cheap labor and implementing fast kill speeds. According to “Happier Meals”, a report from the Worldwatch Institute, through a combination of selective breeding and antibiotic use, chickens today reach their slaughter weight with half the feed and in one-third the time as they did 60 years ago.

The chicken industry has already streamlined its input costs, and has externalized environmental and public health costs affiliated with massive chicken production upon the communities surrounding their cheap meat operations.

Now with rising feed and fuel costs, the industry knows how to do only one thing: pass the buck to the consumer. Clint Rivers, Pilgrim’s Pride CEO, said “food producers will be forced to scale back production of chickens and raise prices.”

The poultry industry is not alone. The dairy industry, which previously profited by increasing herd sizes and milk yields, may have to rethink that strategy. Lowering output and hiking up prices might also be the means of responding to the higher feed costs.

Big Beef still has a couple of tricks up its sleeve to keep costs down. Capitalizing on the waste generated by the ethanol boom, beef producers are feeding cows leftovers from ethanol production as an alternative to pricey feeds even though there’s an increased risk of E. coli contamination.

Further consolidation of the beef industry is also expected to keep costs down, especially if a controversial deal goes through allowing Brazilian meatpacker JBS SA to buy out Smithfield Foods’ beef operations and National Beef Packing Co.  

The deal led analysts and investors to hope the consolidation would allow beef producers more pricing leverage to battle high feed costs.

Sound familiar? Mergers and high prices seem to coexist in another industry that was artificially cheap for too long. Big Oil manages to turn a profit as gas prices soar. Big Meat will no doubt fight to do the same. But perhaps we’re coming to understand that meat like oil can’t be cheap and abundant forever.

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