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With multiplier, poultry has $8-billion economic impact

Run the numbers on the economic impact of the poultry industry in Mississippi, and no matter how you look at it, it is enormous.

“The farm gate value of poultry in Mississippi in round numbers is $2 billion,” said Mississippi Farm Bureau president David Waide. “That is huge.”

Waide said the multiplier impact of the industry as dollars get turned over in the economy is approximately four times the farm gate value. That would give poultry an $8-billion impact on the state’s economy.

“It has been very stable in the industry as far as ag production,” Waide said. “The industry has done well. In recent years, we have seen a little downturn as a result of avian flu market interruptions over in Asia. Other than that, poultry production has been good. We have a pretty limited amount of cold weather here. We need to maintain temperatures somewhere between 75 and 80 degrees, which is fairly economical to do in the Southeast region. Sometimes we do have to heat with LP, which is expensive for producers. But there are a limited number of days you have to use extreme amounts of LP gas.”

Egg production is an important part of the poultry industry impact. The country’s largest egg producer, Cal-Maine Foods Inc., is based in Jackson. For the first six months of fiscal 2007, net sales were $253 million, up from sales of $218 million for the prior-year period.

“All of our operations are running smoothly and egg demand was good during the second quarter, especially during the weeks leading up to Thanksgiving,” said Fred Adams Jr., chairman and chief executive officer of Cal-Maine Foods. “Supplies of eggs were adequate but tight enough to allow strong price increases during the last few weeks of the quarter. We started the third quarter with profitable prices that continued through the Christmas holiday season. Feed costs continue to be high due to demand for ethanol, but we believe higher egg prices will more than offset the increase in feed costs in the year ahead.”

Adams said while the egg business is good with demand continuing to be high, feed costs are dramatically higher due to the demands for corn for ethanol.

“Eggs prices are higher by 20% to 30% due to the high feed costs,” Adams said. “Mississippi farmers planted almost three times as much corn this year as last year, and so we, as well as other poultry producers, will be buying more Mississippi-grown corn this year because of its availability.”

Mike Pepper, president of the Mississippi Poultry Association, said high feed prices are being counteracted somewhat by higher prices for poultry.

“After struggling with low prices caused by increased supply last year, corrections in the market have taken place to allow favorable prices so far this year,” Pepper said. “However, these better prices counter with much higher feed cost mainly in corn and higher energy cost mainly in fuel. Of course, most of our members have other crops, from cattle to timber. We are all part of the agricultural community, which is a large part of this state’s economy. We want all of the agricultural community to succeed and prosper.”

According to recent figures, 24,000 people are directly employed by the poultry industry in Mississippi. These are the growers and people who work for the poultry companies in the state. Another 23,000 people are employed in jobs created as an indirect effect of the economic activity generated by the poultry industry, according to a Mississippi State University study.

One major issue in the industry is immigration. Pepper said he would like to see legal immigration of properly documented workers.

“We face labor challenges like many other industries across the state and nation,” he said. “We support a worker program where employers have timely, reliable and inexpensive method of securing employees.”

The poultry industry is now firmly the state’s largest commodity in terms of value of production.

“The direct impact is very large in this state, larger than any of our other commodities,” said John Anderson, agricultural economist with Mississippi State University Extension Service. “Of course, that varies by the region of the state. From Central Mississippi on down, it is an absolutely vital component of the local economy.”

Although there has been some break in the weather recently, there have been concerns this year about drought impacts on agriculture. For the poultry industry, it is more impacted by indirect rather than direct effects. Poultry growers have enough water for the chickens, but input costs can be affected by drought that raises the cost of feed. While prices of poultry are pretty good right now, there has been a slight downturn in recent weeks. Anderson said that is something the industry will keep an eye on.

While the price for the product is important, it isn’t everything. Profits hinge on the price compared to input costs.

“It takes a lot of fuel to maintain poultry production,” Anderson said. “Feed prices are also a big deal. These birds eat a lot of feed. Feed prices since last fall have been very high, and remain pretty high right now. If we have a drought on the national level that affects feed prices, that is a huge deal for the industry. We have seen significant drought this year in Alabama, Georgia and Mississippi that has recently spread significantly into parts of Tennessee. But what happens in the Southeast isn’t terribly important to the national feed market that is more focused in the Corn Belt states.”

There is some concern drought has spread into the Eastern Corn belt. If drought were to become widespread and consistent, it could affect the feed market. Anderson said in the past few weeks, there has been some increase in corn prices because of concerns about the drought.

“It is going to be a volatile feed market until we see what this crop is going to look like,” he said. “If it is a good crop, things will settle down. If not, for an extended period of time it will be tough for livestock producers. In addition to poultry, it affects hog and cattle producers and dairy producers, as well.”

Mississippi continues to export a significant amount of frozen chicken to countries such as Russia. While port facilities on the Gulf Coast were taken out by Hurricane Katrina, the freezer facilities at the Port of Pascagoula have been repaired and are shipping poultry for export. However, freezer facilities at the Port of Gulfport haven’t yet been restored.

There were problems a few years ago when exports to Russia were curtailed. Anderson said this year exports are down compared to last year.

“But we are still shipping a lot of poultry to Russia,” Anderson said. “The broiler trade is down some from last year but, as much as anything else, that reflects the fact production has been pulled back some in response to high feed prices. That isn’t probably any weakness in international demand. There are no real problems like in 2002 when there were export issues with Russian. We haven’t had any serious negative trade issues to deal with, or fears of avian influenza affecting international demand. We have worked through some big problems in the past few years. The forecast for 2008 is for exports to increase a little bit.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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