(Bloomberg) -- A food price surge propelled by supply chain snags, weather woes and pent-up demand is coming to an end, said the top executive of one of the world's largest agricultural companies.
“We're going to see some cresting and perhaps some prices that will start to come down,” Cargill Inc.'s Chief Executive Officer Dave MacLennan said Wednesday in a Bloomberg TV interview, citing the cyclical nature of commodities for part of the easing. “I'm optimistic that we're going to see a stabilizing and perhaps even a reduction in some prices.”
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.
Despite MacLennan's expectations of easing food prices, the CEO said broader worries of higher overall prices remain with the dialogue on inflation now being more permanent than “transitory” -- a position he advocated three months ago in a previous Bloomberg TV interview.
“Clearly I was wrong, it's here to stay,” MacLennan said of higher inflation. “Everyone's talking about that and everyone sees it.”
MacLennan, who oversees one of the largest meat processors in the U.S., cited continued supply chain disruptions and labor shortages as reasons behind his inflationary view. 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.
White House Rebuttal
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.
Read More: Biden Urges Hearings in Congress on Meat Industry Consolidation
“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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