Turkey vs chicken supply chains in 2011

An article in the Wall Street Journal (Nov 22, 2011) describes the impact of demand volatility on chicken and turkey manufacturers. Turkey manufacturers are smaller and spread out, while chicken has a few large manufacturers. While chicken manufacturers expanded given current trends, and now have excess capacity that is driving down wholeslae prices, risk averse turkey manufacturers cut capacity and thus see a 26% wholesale price increase this Thanksgiving. But not all of the wholesale price incerase shows up in retail, given customers tendency to buy the turkey and all other items in the same store. Should turkey manufacturers consolidate to better read demand, or is heir fragmented supply chain optimal ? If customers split up their shopping across stores, will turkey prices increase ? As bank lending to small farmers eases, will such drastic supply chain impacts disappear ?

About aviyer2010

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