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Why Do We Overproduce in Agriculture? (In Other Words, Eat More Turkey!)

It doesn’t matter what segment of agriculture you are in, or even life in general, when things are going good for us, we tend to want more.  It is just simple human nature.  It doesn’t matter if you raise livestock or sell houses; in general, we seem to always be looking for more.  How to cut costs, how to increase efficiencies, how to market products better; all in order to maximize our profits.  I am not saying this is a bad thing, I am just making a very large generalization that, in our society, we tend to measure success by how much stuff we have including, but not limited to, money.

Can we do what we enjoy doing, cash flow and have a little left over to live on? This is the goal of writing any business plan or business start-up.  There are many levels to this statement based on how large or small the business, whether it is privately or publicly owned and so on and so forth but either way businesses still should be profitable long term.

This is the main reason agriculture overproduces. I think agriculture, and even more specifically animal agriculture, the difference between the good and bad years are so drastic that farmers find themselves ramping up production over a couple of years, to the point of overproducing in the good times, in order to make it through the bad. Again, the human nature thing takes over. Add to this the fact that as processors see the opportunity to make profits, they are quick to agree to, or even ask, producers to increase volume.  Also, many processors are also producers so then there is the ability to make it on both the growing and marketing ends of the spectrum.

As we look to the end of 2017 and 2018, I’m not going to sugarcoat it – the outlook is a little grim in the turkey industry. We are coming off a couple years of pretty good profitability, some better than others but overall, good times. As an industry we increased how many pounds we produced in 2016 and year to date in 2017 compared with to the prior 3 year average and projections through year end seem to stay heading in this same direction.  The “MORE is better”, human nature thing again.

Unfortunately, we are now past the point that our supply of turkey is getting larger than the demand.  Also, other meat industries have also increase their production over the same time so the added supply of all meat proteins is pulling down the value for all producers since it is fairly easy to substitute any animal protein into meals. Because of this, it is easy for shoppers in a grocery store to buy whatever is the cheapest meat to make for their families. This isn’t a big deal for us who raise the animals; my wife and I tend to do the same thing when we are shopping. The problem comes when the price wholesale purchasers and retail consumers are willing to pay is less than the cost to produce, process and market it.  This seems to be where we are or will be heading in the very near future in the turkey industry.

There are many factors that might affect this supply and demand problem going forward but the easiest and simplest way is for the demand to increase in the U.S. and/or export markets. Simply said, please add a little more turkey meats to your normal meal plans whether at home or at a restaurant. And while you’re stocking up for the Thanksgiving meal, take advantage of the supermarket sales and add a second or even third turkey to your cart and then stick these in your freezer at home for use this winter. All of us in the turkey industry would greatly appreciate it.

Thanks for reading – and if you have any questions or comments, don’t hesitate to post them here or head over to Minnesota Turkey’s Facebook page and share your thoughts.

Have a safe and Happy Thanksgiving!