Get Jill's new lazy vegetarian cooking eBook:
Pay what you can

Order Prints:

Specify size
Name of photo
Your Walgreens (pick up photo here)


La Vida Locavore
 Subscribe in a reader
Follow La Vida Locavore on Twitter - Read La Vida Locavore on Kindle

How The Chicken Gets to Your Plate

by: Jill Richardson

Fri Apr 17, 2009 at 13:52:27 PM PDT


Bookmark and Share
Yesterday I posted about factory chicken farmers going broke. I figured that perhaps it would be a good idea to write up an explanation of how the broiler industry works as a whole. What is amazing is that under this system, you can raise an absolutely disgusting and unsustainable amount of chickens and still not make enough to live on.

Source of info in this diary: The Economic Organization of U.S. Broiler Production by James M. MacDonald, USDA ERS

Jill Richardson :: How The Chicken Gets to Your Plate
Increase in Chicken Consumption and Industry Growth
The broiler industry grew dramatically from 1960 until now. In 1960, the U.S. produced less than 10 billion pounds of chicken. That grew to over 50 billion pounds in 2007. That equals 1.53 billion birds slaughtered in 1960 and 8.84 billion birds in 2006. While the number of birds killed increased, so did the size of each bird. An average broiler weighed 3.4 lbs in 1960 and 5.5 lbs in 2006.

The periods with the highest industry growth were 1965-1970, 1980, and the first half of the 1990's. However, growth began slowing after about 1995, particularly after the year 2000.

Some of this industry growth came from increased exports (mostly in the 1990s), some came from increases in U.S. population, and some came from increases in per capita chicken consumption. The most significant periods of increasing per capita consumption were 1960-70 and 1980-90 although per capita consumption has grown throughout the entire period of 1960-now.

In 1960, the average American ate 28 lbs of chicken, 60 lbs of pork, and 65 lbs of beef. In 2006, the average person ate 87 lbs of chicken. Chicken consumption surpassed pork consumption around 1985 (per capita pork consumption slightly declined over time). Meanwhile, beef consumption rose from 1960 until the late 1970's, peaking around 95 lbs per person (a statistic I find totally disgusting). Beef consumption fell since then until about 1990 and stayed more or less stable since then, around 65 lbs per person in 2006 - same as it was in 1960. Chicken consumption surpassed beef consumption in the first half of the 1990's.

The Role of the Integrator

The companies you think of as chicken producers (Tyson, Pilgrim's Pride, Perdue) are known as integrators. Here's what they do:

"Integrators usually own hatcheries, feed mills, slaughter plants, and further processing plants-that is, they may be vertically integrated into all stages except for broiler production, where they rely on networks of growers assembled through production contracts. Integrators also contract with, or own, primary breeder companies that develop poultry breeding stock, and they contract with other farm operations to produce broiler eggs for hatcheries."

The Role of the Grower

The integrators do just about everything except for raise the chickens. That job falls to the growers. While the integrators do quite well financially, the growers often get screwed.

"Broiler production is organized in a distinctive manner. Most farms are linked to an integrator through a production contract, under which the integrator provides chicks, feed, veterinary services, and other inputs to the farmer, who grows the birds to market weight. Besides providing their own labor, farmers invest in specialized poultry housing (along with associated equipment), pay for any hired labor, and bear some or all of the cost of utilities. Because broiler housing is specialized and long-lived, the decision to produce broilers is a long-term commitment, and most producers have worked with their integrator for at least 10 years."

In a survey done by the USDA, over 98% of broiler operations were set up in the way I've just described. And 45% of growers reported that their production contracts only spanned the length of time the current flock was in their houses (5-10 weeks). About a quarter (23%) have contracts that last 1-3 years. In other words, a new grower entering the business is taking an enormous risk to build new houses or buy existing ones when the contracts are short and they have little certainty that they will receive more contracts long enough into the future to pay off their debt.

Investing in Broiler Houses
The broiler houses built today can be over 30,000 square feet apiece and they cost $300,000. Most growers have more than one (70% have between 1 and 4 houses). However, the average house is closer to 17,000 square feet because 2/3 of all houses were built between 1986-2000 when houses were built smaller. The median farm in 2006 produced over 400,000 birds.

"Once a contract has expired, growers may have to retrofit their houses with new capital equipment in order to gain a contract extension. These expenditures can be substantial. Between 2004 and 2006, farms spent a total of $650 million on capital improvements to their broiler enterprises, an average of $38,000 per farm."

How Growers Get Paid
Broiler contracts pays growers based on their performance compared to other growers. You are compared based on any other producer who delivers broilers to the integrator within the same week. The more meat you deliver, the more money you get. The idea is that this shields growers from factors like weather. If a lot of your chicks died, you get paid less; if your chicks are very "feed efficient" (I assume this means your chicks grew to be large, efficiently converting chicken feed into meat) you get paid more. Average price paid per bird? Twenty eight cents - about four cents per pound.

Geographic Concentration and Lack of Competition
Growers tend to locate in clusters, near to processing plants, hatcheries, feed mills, etc. It makes for reduced transportation costs. But it also makes for reduced competition - a grower is usually near only one integrator, and certainly no more than three. There's also increased competition at disposing of chicken litter. 17 states produced 95% of all broilers in 2006.

Chicken Litter

"Litter is bedding material, such as wood shavings, sawdust, or straw, that is spread on the floors of broiler houses. When it is removed, it consists mostly of poultry manure, along with the original bedding, feathers, and spilled feed."

So what happens to the litter after the chickens are no more? In 2006, growers spread 40% of it on their own fields. 22% was sold. About 12.5% was given away for free. To get rid of the rest (about a quarter of all chicken litter), they had to pay (cash or exchanged services) to have it removed. I assume that most of the litter was used for fertilizer, but it might also be fed to cattle (I'm not sure if that's still legal but it certainly was at one point).

Who Are the Growers?
The growers seem to be a surprisingly homogenous bunch. Less than 10 percent are under 40. Less than 10 percent are women. Over 95 percent are white. About half say that high school is their highest level of education. Only 12% graduated college.

How Much Do Growers Make?

The USDA divided growers into 3 categories - small, medium, and large. The "medium" group represents the middle 50%. Just a note before you look at the numbers - the average net incomes are misleading because 25% of growers actually LOSE money.

A small grower has 1-3 broiler houses and produces about 850,000 lbs of chicken per year (that's live chicken, not meat). This group is the oldest in age (average age of 60) and also has the oldest houses (average age 24). On average, they make $44,476 per year gross from their production contracts. With other farm income (crops, other livestock, subsidies, etc), they averaged $63,530 in gross farm income and $18,722 in net farm income. Not much of a living.

The middle 50% of growers have 2-5 broiler houses and produce over 2.2 million lbs of chicken each year. They average $112,693 per year from production contracts (gross), $139,900 in gross farm income and $42,260 in net farm income. It's enough to live on but it's certainly not luxurious.

The largest growers have 4-8 houses and produce 3.8 million lbs of chicken per year on average. They average $191,688 gross from production contracts and $220,246 in gross farm income. Net farm income is $70,862, which is actually a decent income.

Needless to say, it's sad that farms need to get so big to make a decent living. Maybe the implication here is that chicken shouldn't be as cheap as it is and that the integrator-grower model of producing chicken may be economical for the integrators but if we're going to have reasonably sized chicken operations it's not a good idea.

Tags: , , , , (All Tags)
Print Friendly View Send As Email

I'm roasting a chicken (4.00 / 3)
for dinner tonight.  I won't read this until later but it is a free range and all natural chicken.  It's worth the extra money to us.

And it's my first time roasting a chicken, Gary is working today and I'm flying solo.  The leftovers are the best :)


Wow... (4.00 / 3)
Average price paid per bird? Twenty eight cents - about four cents per pound.

Thanks for doing the work on this, Jill.  Great piece, as always!


Remember though (4.00 / 3)
that the farmers don't buy the chicks OR the feed. They are essentially being reimbursed for energy, overhead (the cost of the chicken houses), and babysitting.

"I can understand someone from Iowa promoting corn and soy, but we are not feeding the world, we are feeding animals and soft drink companies." - Jim Goodman

[ Parent ]
And if it weren't for GIPSA (4.00 / 1)
there wouldn't be any contract poultry growers at all. Of course if Tyson, et al, had to invest in all of their production overhead, we might see the prices at the store go up. As it is, they are subsidized by the grower funding the capital costs of the houses, and as is being seen in the case of the dropped Pilgrims Pride growers, sometimes it's the bank that is the ultimate provider of that capital subsidy.

Kind of reminds me of a fellow who wanted to build a slaughter house in the mid 90s. The emu industry was trying to transition from a breeder model/market into the slaughter phase. The breeders had built up a population of birds that could support a small start up slaughter industry, and Harold and I were right in the middle of it. At the time it was difficult to find a slaughter house that would, or even could, handle emu, ostrich and rhea. This fellow came out and tried to convince the growers to borrow a little over one million dollars, build a slaughter house of our own, give him title and he would run it for us. Needless to say, there weren't any takers on his offer.

Normal people scare me. But not as much as I scare them.....


[ Parent ]
History, policy, chickens (0.00 / 0)
How about a discussion of how the other chicken farmers went broke as the chicken factories took over.  Iowa lost it's diversified chicken industry decades ago.  

And why was that?

Ever lower prices for corn and other feedgrains, starting in the 1950s.

And why was that?

Lowering of price floors 1954-1995, and then their elimination.  (and supply management.

And why was that?

The corporate plan to eliminate "excess resources (mainly labor)," to run farmers out of business.  (Committee for Economic Development, "An Adaptive Program for Agriculture."  

See references here:  'Farm "Shock Doctrine?'" Brad Wilson, http://www.zmag.org/blog/view/... and here:  "Crisis by Design:  A Brief Review of Farm Policy," Mark Ritchie and Kevin Ristau, http://www.iatp.org/iatp/publi...

"We're trying to warn this nation of a tidal wave ..., and it's coming your way, whether you want to know it or not...!"  female family farm activist in Iowa warning against agribusiness, Donahue Show, 1985


Can't Wait to Eat... (0.00 / 0)
This is very informative.. thank you. i will prepare my dinner now. lol =)

iPod to Computer

Very Informative (0.00 / 0)
Thanks for putting all of these great ideas into one place. I admit to never thinking of the chicken when I eat. Interesting journey from the egg to the plate

Political Activism Blogs - BlogCatalog Blog Directory
Menu

Make a New Account

Username:

Password:



Forget your username or password?


Notable Diaries
- The 2007 Ag Census
- Cuba Diaries
- Mexico Diaries
- Bolivia Diaries
- Philippines Diaries
- Kenya Diaries
- My Visit to Growing Power
- My Trip to a Hog Confinement
- Why We Grow So Much Corn and Soy
- How the Chicken Gets to Your Plate

Search




Advanced Search


Blog Roll
Blogs
- Beginning Farmers
- Chews Wise
- City Farmer News
- Civil Eats
- Cooking Up a Story
- Cook For Good
- DailyKos
- Eating Liberally
- Epicurean Ideal
- The Ethicurean
- F is For French Fry
- Farm Aid Blog
- Food Politics
- Food Sleuth Blog
- Foodgirl.ca
- Foodperson.com
- Ghost Town Farm
- Goods from the Woods
- The Green Fork
- Gristmill
- GroundTruth
- Irresistable Fleet of Bicycles
- John Bunting's Dairy Journal
- Liberal Oasis
- Livable Future Blog
- Marler Blog
- My Left Wing
- Not In My Food
- Obama Foodorama
- Organic on the Green
- Rural Enterprise Center
- Take a Bite Out of Climate Change
- Treehugger
- U.S. Food Policy
- Yale Sustainable Food Project

Reference
- Recipe For America
- Eat Well Guide
- Local Harvest
- Sustainable Table
- Farm Bill Primer
- California School Garden Network

Organizations
- The Center for Food Safety
- Center for Science in the Public Interest
- Community Food Security Coalition
- The Cornucopia Institute
- Farm Aid
- Farm and Ranch Freedom Alliance
- Food and Water Watch
-
National Family Farm Coalition
- Organic Consumers Association
- Rodale Institute
- Slow Food USA
- Sustainable Agriculture Coalition
- Union of Concerned Scientists

Magazines
- Acres USA
- Edible Communities
- Farmers' Markets Today
- Mother Earth News
- Organic Gardening

Book Recommendations
- Animal, Vegetable, Miracle
- Appetite for Profit
- Closing the Food Gap
- Diet for a Dead Planet
- Diet for a Small Planet
- Food Politics
- Grub
- Holistic Management
- Hope's Edge
- In Defense of Food
- Mad Cow USA
- Mad Sheep
- The Omnivore's Dilemma
- Organic, Inc.
- Recipe for America
- Safe Food
- Seeds of Deception
- Teaming With Microbes
- What To Eat

User Blogs
- Beyond Green
- Bifurcated Carrot
- Born-A-Green
- Cats and Cows
- The Food Groove
- H2Ome: Smart Water Savings
- The Locavore
- Loving Spoonful
- Nourish the Spirit
- Open Air Market Network
- Orange County Progressive
- Peak Soil
- Pink Slip Nation
- Progressive Electorate
- Trees and Flowers and Birds
- Urbana's Market at the Square


Active Users
Currently 0 user(s) logged on.

Powered by: SoapBlox