Despite "tectonic shifts" in consumer eating habits, record high feed costs, labor shortages and supply chain logjams, CoBank says most U.S. animal protein industry segments have posted phenomenal financial performance over the past three years. However, CoBank Knowledge Exchange’s latest quarterly report says this broad-based era of profitability will likely come to an end in 2023.
"On the supply side, the high costs of feed, labor and construction support the prevailing cautionary mood toward expanding production. On the demand side, consumers are reeling from rapidly declining real wages – a trend likely to continue well into 2023," says Brian Earnest, lead economist, animal protein at CoBank. "Add in climate uncertainties, ESG pressures and increasing labor and energy costs and it’s likely that 2023 will be a year when major market participants pause, reflect and guard balance sheets."
Over the past two years, consumer red meat demand has remained steadfast despite the highest inflation in more than 40 years. CoBank notes the following observations in its report:
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