Navigating the Current Chicken Shortage in the U.S.

Industry Insights: Navigating the Current Chicken Shortage in the U.S.

The U.S. poultry industry is facing a significant supply challenge as the ongoing avian influenza outbreak continues to impact production. This shortage is driving up costs and creating disruptions across the supply chain, affecting distributors, wholesalers, and foodservice operators alike. Understanding the root causes and market implications is critical for industry stakeholders looking to mitigate risks and navigate this volatile landscape.

Key Factors Driving the Chicken Shortage

Avian Influenza and Supply Constraints
The latest outbreak of highly pathogenic avian influenza (HPAI) has devastated commercial poultry operations, leading to the culling of millions of birds. This has not only reduced the available chicken supply but also created a ripple effect throughout the industry. Processing plants are operating below capacity, and tight inventories are exacerbating price increases across all segments, from whole birds to further-processed products.

Escalating Production Costs
Feed costs remain elevated due to global grain market fluctuations, while labor shortages and higher transportation expenses continue to put pressure on margins. With limited supply, chicken processors are prioritizing their largest accounts, leaving smaller distributors and independent restaurants scrambling to secure inventory at competitive pricing.

Market Implications for Distributors and Wholesalers

Rising Wholesale Prices
Boneless, skinless breast prices have surged, surpassing $1.90 per pound—more than double last year’s levels. Wing prices, historically volatile, have also experienced sharp increases. Contract pricing has become more rigid, and spot market availability remains constrained, forcing many buyers to explore alternative proteins to manage costs.

Shift in Buyer Strategies
Retailers, foodservice operators, and further processors are adjusting procurement strategies. Many are diversifying protein offerings, pushing for extended contract terms, or sourcing from secondary suppliers, including imported chicken from South America. However, logistical challenges and regulatory hurdles complicate the ability to scale these solutions quickly.

Opportunities and Strategic Adjustments

Long-Term Outlook
While the USDA is investing heavily in disease mitigation strategies, industry projections indicate that supply constraints and price volatility could persist through the next several quarters. Stakeholders must remain agile, leveraging strategic partnerships, securing long-term contracts where possible, and keeping a close eye on inventory forecasts.

Final Thoughts

The current poultry market disruption underscores the need for proactive planning and industry collaboration. Distributors, wholesalers, and foodservice operators must stay informed, adjust procurement strategies, and prepare for continued fluctuations. By taking a strategic approach to sourcing and pricing, industry players can navigate these challenges while maintaining business stability in an increasingly uncertain market.

At Ritter Foods, we understand the challenges our partners face, and we are committed to working together to find solutions. Whether you’re looking for alternative sourcing options or strategic inventory planning, we’re here to help. Contact us today to discuss how we can support your business in navigating the current market landscape.