Poultry producers race to catch up with retail ‘chicken run’
Published 5:00 am Thursday, April 16, 2020
- Although producers of pasture-raised broilers have seen a 70% to 80% decrease in restaurant sales during the pandemic, many are seeing direct-to-consumer sales surge to 500% of last year's sales. Here, a farmer works with pasture-raised broilers at Windy Meadows Farm in Texas.
Poultry processors are ramping up production to restock bare coolers at grocery stores, where consumer demand has surged even as restaurant demand has plummeted during the COVID-19 shutdown.
The pandemic has hit the nation’s poultry industry in checkerboard fashion: specialty and restaurant-focused producers are suffering enormous losses; food giants are diverting poultry from restaurants to retailers; and direct-to-consumer farms are having their day in the sun.
“This is the most significant shift we’ve ever initiated,” Dean Banks, president of Tyson Foods, said in a statement. Tyson is the biggest U.S. meat processor.
Tyson spokesperson Worth Sparkman declined to comment on numbers, but said the company was shifting much of its meat from foodservice to retail channels.
Tyson’s employees are working weekends to fill supermarket orders, but logistics have been challenging. Deep cleaning of facilities has sometimes required “suspending at least one day of production,” said Tyson CEO Noel White in a statement.
Industry leaders say shifting sales venues is complex. Transportation routes differ. Supermarket shoppers prefer different cuts than those restaurants use. Retailers require special packaging. Even the preferred age and weight of birds differs.
Tyson isn’t the only company leaping to meet these challenges.
Sanderson Farms Inc. — which has relied on 60% foodservice sales — has added weekend shifts at several plants that process for grocery stores and is poised to transform other facilities.
According to company statements, Pilgrim’s Pride Corp. is also shifting its supply to retail.
Diana Souder, spokesperson for Perdue Farms Inc., said the company is altering its supply lines to meet a “significant uptick” in both retail orders and orders through Perdue’s new direct-to-consumer e-commerce website.
Even Campbell Soup Co. is cranking out more of its iconic chicken noodle soup cans.
“Consumers have turned to in-home dining,” said Bill Mattos, president of California Poultry Federation, noting the state’s producers moved up to 400% more chicken this March than the same month last year.
Chicken was already America’s most popular meat, according to the National Chicken Council, but the pandemic caused a “chicken run” on supermarkets.
Across the U.S., according to Nielsen Global Media, a market insights company, in the third week of March, fresh chicken sales were 83% higher than the same week in 2019.
In April, poultry panic-buying has slowed.
“Today, we are seeing sales leveling off as consumers settle into a more managed shopping approach,” said Mattos.
Although most companies moved products to supermarkets, said Mattos, the initial losses from the foodservice industry have not yet been offset.
Producers who relied on “white tablecloth” restaurants were especially hard-hit, he said.
According to Vanessa Sink, spokesperson for the National Restaurant Association, in the first three weeks of March, 3% of restaurants closed permanently, 44% closed temporarily and 53% pivoted to takeout and delivery.
Specialty producers of guinea fowl, squabs (young pigeons), ducks, poussins (young chickens) and other poultry sold primarily to fine dining establishments have been crushed.
“It’s been devastating,” said Dalton Rasmussen, president of Squab Producers of California. “Probably 90% of our market was to restaurants. Cash flow has been absolutely horrible.”
But for some producers, COVID-19 has lifted their profits.
According to Mike Badger, executive director of the American Pastured Poultry Producers Association, direct-to-consumer sales of pastured poultry — chickens raised using a rotational grazing system — have bounded by up to 500%.
“I think the good story here,” he said, “is that more people are actually focused on their food, aware of what they’re eating, what it takes to make a good meal. And they’re reconnecting in crazy numbers with the farmers who produce their food.”