Let’s Talk Turkey

Over the past 50 years, Americans have nearly doubled their annual average turkey consumption from 8.2 pounds per person in 1970 to 16.1 pounds per person in 2019. During this period, many Americans have substituted turkey as a leaner, healthier alternative to other animal proteins such as beef or pork. Despite this steady growth in consumption, the turkey industry stands out from other animal protein markets in one important way. While most meats have a steady sales pattern throughout the year, turkey sales spike in November and December as turkeys become the centerpiece of the dining room table at large gatherings of friends and family.

To prepare for this seasonal surge in demand, turkey producers must begin raising turkeys several months in advance. This also requires producers to have an accurate forecast of turkey demand. In general, seasonal turkey sales follow a fairly predictable pattern. This year, however, with social distancing measures and travel restrictions in place, Thanksgiving celebrations are likely to take place in smaller groups. As a result, fewer families are expected to buy large whole turkeys, and opt for smaller options like turkey breasts, or purchase prepared meals. This leaves producers of whole turkeys, particularly those who sell fresh (as opposed to frozen) turkeys scrambling to figure out what to do with their supply. For many small farmers, if they cannot sell a minimum quantity they may not meet the minimum requirement to send their turkeys to the processing plants.

Discussion/Questions:

1. What are the fixed and variable costs associated with turkey production? What might farmers do to minimize potential losses at this point?
2. Discuss the role that expectations play in markets. How might this year’s market impact next year’s market for Thanksgiving turkeys?
3. Based on the farmers discussed in the article, are whole turkeys considered a homogeneous or differentiated product? Based on your answer, how would price and elasticity of demand be impacted if some of the small farmers went out of business this year?

Sources: Laura Reiley, 10/19/2020, Washington Post, “Turkey farmers fear that, this year, they’ve bred too many big birds.” https://www.washingtonpost.com/road-to-recovery/2020/10/19/thanksgiving-turkey-shortage/?arc404=true. Photo by RODNAE Productions from Pexels.