At this point, shortages of everything from microchips to potato chips are forcing American businesses to adjust to higher prices and supply shocks, while consumers are forced to pay higher prices at the store. And while high commodity prices (which have come off their highs in recent days as lumber, oil and iron prices declined) have retreated in recent days, we noted that these shortages are expected to last a long time.
One reason is that high prices are good for producers, and it’s too expensive for many companies to build out new production capacity right now. This dynamic is contributing to a looming chicken wing shortage in the US, which might remind some of the bacon-shortage hysteria that has occasionally gripped the US in the past.
Case in point: Sanderson Farms, the third-largest poultry producer in the US (whose engineering firm likely recommended them to suspend plans for plant expansion because prices on everything from lumber to steel to concrete to plastic to copper to machinery to labor skyrocketed, making building unaffordable) has decided that it will pass on expanding its operation despite surging demand for its product that has put it on the cusp of running out of chicken wings.
“I need a plant to open up next week, but it is not a good time to be building,” said Chief Executive Joe Sanderson, who Bloomberg quoted.
As we have reported, demand for chicken in the US is through the roof. Without expansion, the nation’s third largest poultry plant can’t take any new orders:
“We’re totally sold out and we’ve had people call us to service them and we cannot take on anymore business, and that’s not a good place,” Sanderson said.
Sanderson said construction of the new chicken plant was expected to begin in the first half of the year. He said we’ve been “look very hard” at surging building costs and is mulling over plans to shelve the expansion until raw material costs come down. – READ MORE
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