By Gerson Freitas Jr.

A strange phenomenon is holding back U.S. supplies of chicken, threatening to send meat prices higher at a time of stubbornly high overall inflation. 

An unusually high number of eggs in incubators, typically used to grow new supplies, aren’t hatching any birds, according to Pilgrim’s Pride Corp.

Pilgrim’s, one of the world’s largest chicken producers, said persistent hatchery issues across the industry mean chicken production this year may grow less than the 1.5% projected by the U.S. Department of Agriculture. 

The problems stem from a new breed of roosters that require closer management — a key cause of the decline in fertility rates that’s slamming the industry, Pilgrim’s Chief Executive Officer Fabio Sandri said Thursday on a conference call with analysts to discuss company earnings. 

“We don’t have the housing to separate the males by weight. We don’t have the labor to individually weigh all those males to make sure that they are at the optimal weight for the reproduction,” Sandri said. 

The number of eggs hatched has steadily declined in recent years and in 2024 has averaged about 77% of total eggs in incubators, according to USDA data. That compares with averages topping 80% a decade ago. 

The hurdle to expand production comes at a time when consumers are turning to poultry as they seek for cheaper alternatives to beef. That’s given companies such as Pilgrim’s an incentive to boost supplies.

This isn’t the first time fertility issues have been raised. In 2021, Sandri said bird breeds used by some of the biggest chicken companies were producing fewer eggs. 

Meanwhile, producers in Brazil and Europe can get better hatchability by better managing  birds, Sandri said. “The industry in the US is not used to that,” he said. 

© 2024 Bloomberg L.P.