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The Honolulu Advertiser
Posted on: Saturday, May 13, 2006

Food banks benefit from bird-flu fears

By John Schmeltzer
Chicago Tribune

CHICAGO Fears about avian flu have dramatically cut chicken exports, creating a bonanza for the food depositories that serve the nation's poor and hungry.

Tyson Foods, the country's largest processor of chicken and beef, this week announced it is donating 6 million pounds of chicken to Amercia's Second Harvest, the agency that coordinates food donations nationally for the food pantries and depositories. Earlier this year, Purdue Chicken Co. donated more than 1 million pounds to the food agencies.

And, starting next week 11 semis full of chicken quarters, purchased off the market for $32.5 million by the U.S. Department of Agriculture, will begin arriving at local food depositories.

Such donations are rare, and certainly generous, but not entirely altruistic.

The nation's chicken and meat processors are dealing with a glut caused by the fears about avian flu and, to a lesser extent, mad cow disease. Rather than dumping the chicken and meat onto the market and further sinking retail prices, the food companies are donating the products to the food depositories and taking a tax write-off on the charitable contribution.

Massive production surpluses combined with sagging demand amid avian flu fears have sent prices plunging to the lowest levels this decade.

In the Chicago area, leg quarters have been selling for as little as 39 cents per pound, while boneless chicken breasts have been selling for $1.69 per pound.

Prices for chicken leg quarters, one of the least desirable of the cuts on a chicken have fallen 42 percent in the past year while prices for boneless chicken breasts have fallen nearly 30 percent, according to figures compiled by the U.S. Department of Agriculture.

"At those prices people should be filling their freezers," said John Peterson, an economist who focuses on the poultry industry for WATT Publishing Co. Peterson says retail prices "may be close to the bottom."

Supermarkets have cut prices dramatically since the first of the year as producers sought to clear out the oversupply that built up as U.S. exports fell. That's left food banks stacking boxes of chicken in freezer aisles as truckloads arrive from producers trying to secure a tax write-off for chicken they can't sell.

Peterson and Paul Aho, an economist with Poultry Perspectives, said prices and sales started plunging last August when avian flu concerns began spreading through Asia, which imports more than 50 percent of the 7.2 billion in chicken the U.S. exports. Prospects dimmed further two weeks ago when Russia unexpectedly closed its borders to U.S. poultry. Russia buys about 40 percent of U.S. chicken exports.

Exports represented about 15 percent of the 47.9 billion pounds of chicken produced in the United States in 2005.

The USDA in December said there were 176 million pounds of leg quarters being held in cold storage compared with 76 million pounds a year ago.

But the industry's oversupply conundrum and its charitable contributions are a boon for the nation's food depositories.

"This represents a significant donation for us," said Ruth Igoe, a spokeswoman for the Greater Chicago Food Depository. She said that the Chicago agency will receive a 40,000 pound truckload from Tyson on Monday and has been told to expect five truckloads from the USDA. The five truckloads are about 25 percent of the poultry product that the agency received in all of fiscal 20004, she said.