Chicken producers adjust to changes

Restaurant closures, panic shopping hits state’s biggest ag player.

For the past few weeks, shoppers have been emptying grocery stores of chicken, spurred on by fears of coronavirus shortages. Yet wholesale prices for the meat are dropping.

It’s the opposite of what was taught in high school economics classes: When supply is low, prices ought to be high.

What the high school teacher may have left out of the economics lessons are market-moving events like panic buying, or other sudden shifts in buying habits that leave supply chains whipsawed until they can catch up. They may get that chance.

“Consumers who stockpiled are destocking,” said economist Will Sawyer — his way of saying shoppers have stopped buying and are eating what’s piled up in their freezers. Sawyer tracks protein prices for the agricultural lender CoBank.

And many restaurants are closed and have stopped buying, meaning chicken has piled up in warehouses. That is having an effect on prices.

As of last Friday, prices fell to $1.05 a pound, according to the U.S. Department of Agriculture.

“We are seeing price on poultry at the wholesale level down about 20% to 25%,” said Matt Friedman, the founder and chief executive of Atlanta-based Wing Zone, a chain with more than 90 restaurants.

The company buys 6 million pounds of chicken wings a year plus chicken breasts for its restaurants, mostly franchisee-owned and located in the Southeast.

Low prices will send ripples through the Georgia economy. Chicken is the biggest portion of Georgia’s agriculture business, at $3.5 billion in meat sales yearly. About 33,000 people work in processing jobs.

CHRISTOPHER QUINN / CQUINN@AJC.COM Grocery shoppers experienced a shortage of fresh meats when the coronavirus hit Georgia, as buyers snapped up extra food to store in freezers. Georgia’s chicken producers still have plenty of meat in the pipeline, but the supply chain is taking time to catch up.