(Bloomberg) — Surging food prices should soon stabilize though higher inflation is here to stay because of supply-chain snags and labor market tightness, said the top executive of one of the largest U.S. meat processors.
“I’m optimistic that we’re going to see a stabilizing and perhaps even a reduction in some prices,” Cargill Inc.’s Chief Executive Officer Dave MacLennan said Wednesday in a Bloomberg TV interview.
Prices for foods including beef and chicken have soared in the wake of the Covid-19 pandemic that initially shuttered production plants and prompted a surge in buying at grocery stores. Some of that supply-chain pressure is easing as output rebounds, though MacLennan no longer sees inflation as transitory.
“It’s here to stay, and so whether it be labor shortages or itinerant disruptions in the supply chain, it’s absolutely here to stay,” he said. “Everyone’s talking about that and everyone sees it.”
Meat processors have been struggling to attract and retain workers amid stiff competition and rising wages for manufacturing jobs. Cargill averted a strike earlier this month at its Canadian beef processing plant in High River, Alberta, which supplies about 40% of that country’s beef, after unionized workers accepted a new labor contract.
MacLennan also took issue with White House assertions that higher meat prices are caused by the industry taking advantage of its position in the highly concentrated sector, where only a few global companies account for a vast majority of meat and poultry processing.
“It is a supply and demand driven market, and so to suggest that there’s manipulation or taking advantage, I just don’t agree with it,” MacLennan said.
Closely held Cargill, already a major beef processor, is buying Sanderson Farms Inc., the third-biggest U.S. chicken producer, in a $4.5 billion deal that also includes Continental Grain Co. The acquisition is expected to close next year.
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