Even as millions of Americans bite into turkey on Thanksgiving, the big turkey industry is getting crushed.
American turkey farms had a total income of $3.57 billion in 2009, down from $4.48 billion the year before, according to the USDA via eatturkey.com.
Turkey farmers suffered from low domestic sales and exports because of the recession, according to Watt Poultry. High commodity prices have also cut into bottom lines at Hormel, Kraft and others.
This year production is expected to decline another 0.5%, according to Watt.
But let’s not be too negative on Thanksgiving. This is still a big American industry that employs thousands of Americans. It involves several public companies, in case you want to get in the game.
First, a little history.
Turkey really was served at the legendary pilgrim and Native American get-together that became Thanksgiving.
By 1860, the fat Thanksgiving turkey had become a symbol of American fertility and abundance, according to a study at St. Olaf College. And by the mid-20th century, an aggressive marketing campaign by turkey producers had created a year-round market for the bird.
Today's turkey is carved at Thanksgiving, sliced for sandwiches, grilled for burgers, and frozen and shipped around the world.
U.S. turkey was a $3.57 billion industry in 2009, based on gross farm revenue. That was a 20.3% decrease from the year before, according to eatturkey.com.
Rising commodity prices have devastated producers. Meanwhile the recession has cut down consumer spending. Turkey producers are responding by increasing or decreasing production, neither with much success for the bottom line, according to Watt Poultry.
The major trend in the U.S. turkey industry has been consolidation.
Big companies dominate the market, and innovation has led to fewer hatcheries and greater production, according to a USDA study, The modern process is typically spread over several farms -- laying facilities, incubators, brooder barn, and slaughterhouses.
One trend to emerge from all this? Fatter birds.
In 1986, the average bird weighed 20 pounds; by 2006 the figure had increased to 28.2 pounds. Which means our turkeys are just like us!
Minnesota, home to Jennie-O and Cargill, leads the country in turkey production at 48 million birds raised in 2008.
North Carolina, home to Butterball, comes in second at 40 million birds for the year.
Arkansas (Tyson) is third at 31 million. Virginia fourth at 21 million. Missouri fifth at 18 million, according to eatturkey.com.
Holiday turkey eating represents only about 29% of total yearly consumption, according to the National Turkey Federation.
Of the 232 million turkeys consumed in the U.S. last year, the NTF estimates that 46 million were eaten at Thanksgiving (20%), 22 million at Christmas (9%), and 19 million at Easter (8%).
Exports now comprise about 10% of turkey production as compared to 1.2% in 1990.
- 358.4 million pounds go to Mexico
- 85.62 million to China
- 26 million to Russia; and
- 22 million to Canada
Unlike other foods, organic isn't taking hold in the turkey industry.
The Toronto Star reports a decline in organic birds because of regulations against outdoor turkey growing (designed to prevent the spread of disease).
Plus, Iowa State University notes that organic turkeys require 25% more space and take 14 weeks to grow to about 11 pounds, compared to 10 weeks in a factory.
By our quick maths, only about 143,000 out of 107 million U.S. turkeys are organic.
Like heirloom vegetables, heritage turkeys look strange, are more expensive -- and taste better.
What's a heritage turkey? A weird breed that gourmands have decided is more authentic.
According to a New York Times review, heritage breeds have 'richer, fuller flavour -- especially in the dark meat -- and were much juicier than the industrial birds, including the free-range version.'
How to invest in the turkey business?
There's no Turkey ETF, but a handful of the top companies are public.
Butterball is a joint venture between Smithfield Foods (SFD) and Goldsboro Milling Co. (private). Jennie-O is owned by Hormel Foods (HRL). Plus, Kraft (KFT) and Sara Lee (SLE) sell turkey products.
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