More Food Price Increases? NFL Lockout and Chicken Wings

Well, OK, this isn’t on par with a Japanese earthquake, Libyan oil interruptions, or higher oil prices, but it’s important to some folks.  ABC News Radio tells us:

With NFL owners and players in a standoff, the CEO of one of the nation’s largest chicken farms warns that a long-lasting football lockout would be bad news for a gameday staple, the chicken wing.

“It will be a major blow,” said Joe Sanderson Jr., CEO of Sanderson Farms, the fourth largest poultry company in the U.S. “If we don’t have Sunday football, the demand will go down tremendously, and of course, if that happens, the price will go down.”

Chicken wings are big business. According to Sanderson, wings account for 12 percent of his company’s output, and the National Chicken Council estimates that in 2011, more than 13.5 billion wings will be marketed. Of course, football and wings are inextricably linked.

“We sell about three million pounds of wings a week,” Sanderson said. “And a lot of those wings to go sports bars.”

And while all game days are big business for wings, the “absolute peak,” Sanderson said, comes on Super Bowl Sunday. According to the National Chicken Council, more than 1.25 billion wings were consumed during last Super Bowl weekend.

Pro football owners and the players union are in a disagreement over how much pay players should earn and how long the season should last. If there is no season next year, the effects will be profound, Sanderson said.

While Sanderson says that while the NFL lockout won’t force layoffs at his company, he believes that plenty of other businesses, like restaurants that cater to sports fans, will be in trouble if the season is scrapped.

Actually there’s some lessons here for a micro class. The first is that any action or event in an economy usually has unintended and even unexpected consequences. Often the consequences aren’t the most obvious. Here of course is the possibility that the NFL player lockout (it’s not a strike folks) will affect folks economically other than billionaire NFL owners and millionaire NFL players.  There are the many not-so-well-off workers such as stadium workers who will suffer a loss of income. As the article points out, this could easily spread to restaurants and bars where normally fans would spend money to watch the games.

But there’s other, hidden possible effects. For example, at first pass, we might think that the price of chicken wings might drop because of lowered demand that Sanderson describes. But, assuming that the lowered demand actually translates into lowered total revenue from selling chicken wings (a question of elasticity for which I have no data), then it’s highly probable that the price of other chicken parts will rise. Yes, the NFL lockout might raise the prices of things like boneless chicken breasts and chicken sandwiches.  Why?  Each chicken itself represents a kind of fixed or unit cost to the chicken farmers and producers.  Each chicken comes with a breast and two wings and two legs. Can’t change that (at least not yet!). So if the wings bring less revenue, then either the legs or the breast or back have to pick up the slack.  I wouldn’t be surprised to see boneless chicken prices rise if sales of wings decline.

Of course we could carry this speculation even further. If NFL football doesn’t happen, and chicken wings are preferred snack for NFL football, then what substitutes for either?  If it’s baseball watching that increases as a substitute for NFL, then perhaps demand for hot dogs increases.  Or if college-football with tailgating and NASCAR get a fan boost from the lack of NFL, then perhaps it will be more demand for burgers and sausages on grills?  I think I’m getting hungry.