Green Fuel Boom May Bring Down Chicken Prices
After a sharp spike in prices the past couple of years, chicken is finally experiencing some deflation thanks to the green energy industry.
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Why did the chicken cross the road? To get access to cheaper chicken feed, of course.
After a sharp spike in prices the past couple of years, chicken is finally experiencing some deflation. Poultry lovers have the green fuel industry to thank, according to a new Bloomberg report.
Supply Chain Reaction
Inflation may be cooling, but chicken prices have been among the stickiest in the grocery store. The average price of a skinless chicken breast in the US is a few cents over $4, according to Federal Reserve Economic Data — down from a high of about $4.70 per pound late last summer, but still way above the $3-per-pound average of pre-pandemic times.
While most of the cost of chicken comes from the labor, transportation, packaging, and other factors that occur after a chicken leaves the farm, Iowa State University economics professor Chad Hart told Bloomberg, roughly 60% of on-farm costs stem from feed. But chickens love soy feed — and soy feed is a co-product of soy-based fuel. Which means the ascendency of alternative green fuels may just create a chicken-wing trickle-down effect:
- According to an analysis from S&P Global, US demand for renewable diesel fuel is projected to increase to 4 billion gallons in 2030 from 2.7 billion gallons last year.
- As a result, by 2026, soy meal production capacity will be 30% higher in 2026 compared to 2022 levels, Stephens Inc. analyst Ben Bienvenu told Bloomberg.
Can’t Stop, Wing Stop: The falling chicken prices are likely welcome news for everyone (except, well, chickens). The impact of the great fried chicken sandwich wars and chicken wing craze is still being felt. Chicken dishes on restaurant menus have increased over 6% in the past half-decade, according to market research firm Technomic, versus just over 4% for burgers and other beef dishes. Meanwhile, McDonald’s says its McCrispy Chicken sandwich, launched in 2021, now generates about $1 billion in global sales. By 2025, it wants the sandwich available in all territories, and it plans to bring back the crispy chicken-stuffed “Snack Wraps,” too. Fingers crossed that the discontinued Spicy McNuggets are next.