Selasa, 22 November 2011

The Post Turkey Apocalypse, Part 2

How can a 1.2% decline in the number of turkeys produced result in a 21.9% increase in their price?

That's the question we're tackling today as we continue to survey the post-Turkey apocalypse world. Here, we're going to look at the pre-apocalyptic world of 2007 and compare it with the post-apocalyptic world of 2010. The animated chart below shows what we find when we look at the production of "Big Turkey" (aka "America's 20 largest turkey producers") in before and after snapshots:

U.S. Turkey Producers: Live Weight of Turkeys Processed, 2007 and 2010

In this chart, we can see that turkey production has largely just shifted among the 20 largest producers in the United States between 2007 and 2010.

In fact, if we add up the number of pounds of live turkeys processed by each of the Top 20 turkey producers, we find that this figure increased for "Big Turkey" from 2007 to 2010, from 6,858 million pounds to 6,971 million pounds, an increase of just 1.6% over those four years. So clearly, "Big Turkey" isn't responsible for the decline in the number of turkeys produced in the United States.

But the decline in the number of pounds of turkeys processed by "Combined Smaller Producers" is! Here, we find that these smaller turkey producers account for a decline of 568 million pounds of annual production between 2007 and 2010, as their combined total fell from 704 million pounds in 2007 to 136 million pounds in 2010.

Basically, the fallout from the 2007 recession significantly hurt small turkey producers who, in addition to having to deal with reduced demand for their products from people whose economic livelihoods were most affected by the recession, have also been hit by rising costs of production, especially in the form of higher prices for feed corn, thanks to the government's increasing ethanol mandates.

This double whammy is responsible for hurting the ability of smaller turkey producers to remain in business, as many have been squeezed out of the market for turkeys altogether. And in the absence of competition from those smaller businesses, "Big Turkey" has the ability to significantly hike its prices to American consumers, most of which goes to cover their own increased costs of operations.

That situation could be easily reversed. It only takes a President who pays more than lip service to the needs of typical Americans and small businesses, instead of being out to stack the deck against them!

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