If chicken can in fact be made into more things, I think you’d see the quantity produced being more stable. If demand for chicken in one use falls, firms can just supply more of it to other markets. But that would still cause the price of chicken in all uses to fall. There is more of a buffer, so to speak, for decisions — I see your point on that — but I think that would play out in quantity stability, not price stability.

I would agree with your premise though that chicken is used in more ways.

Then again, my whole argument is based on (with no empirical evidence to speak of) whether or not you believe that chicken can be made into a larger variety of products than turkey can.

To be honest, I’m really not sure. Price controls would seem to improve price stability, and subsidies would increase prices (but the alleged reason for them is drops in prices to begin with that make farming less profitable).

I looked at the prices received by farmers for milk for milk eligible for fluid use (monthly, 1990-2004) and the retail price of a gallon of milk (shorter time period available). I divided the farmer’s price by 5 because the units are different and I wanted the scales to be similar. The retail price is more predictable and has average monthly changes that are about half the size of the wholesale price. (I included the graph at the bottom of the original post since I don’t know how to add graphs to comments.) I’m not really sure what to make of this — throwing subsidies and price supports into the situation, without having a really good knowledge of how they are specifically implemented, leaves me unable to explain what’s going on. I think the retail price is what is regulated by the government, which would explain it being more stable, but I may be wrong about this.

If you want to play around with the data, here’s where I got all of this:
http://ers.usda.gov/Catalog/CatalogByTopicID.asp?PDT=1&ARC=C&SON=TRUE&SBY=TITLE&TID=600