Foodservice Equipment Reports

Observers Express Concern About Drought’s Effects On Protein Prices

Many observers of the foodservice industry, including Technomic Inc., the National Restaurant Association and others, have been voicing concern about the almost certain impact on food prices, especially proteins, of the severe drought in much of the central part of the U.S. The corn crop, the key feedstock for beef, pork and poultry, has been devastated by the lack of rain and high heat this summer. Futures pricing is already soaring.

One of the best commentaries on the potential impact we’ve seen was published July 19 by Scott Hume in his Burger Business e-newsletter and website. Hume solicited an assessment of the potential fallout from Christopher Hurt, professor of agricultural economics at Purdue University.

Hurt notes that rising prices for corn and other feeds will affect poultry first, pork second and beef third, given the gestation times of each animal group. But the impact on beef prices and availability will also be the longest lasting. Hurt expects higher prices for wholesale beef every year from now out through 2016. Chicken and turkey producers also have the opportunity to rebuild their stocks much more quickly than pork or beef farmers, which could lead operators and consumers to switch aggressively to poultry products.

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