Is the sky falling?
Published: September 22,2008
When times get tough for poultry growers and producers, pressure increases to become ever more efficient. That is particularly important in an industry that directly employs an estimated 25,000 Mississippians with 2007 sales of $2.3 billion — an increase of $300,000 from the previous year.
“Feed costs are obviously high,” said John Anderson, Mississippi State University (MSU) ag economist. “Energy costs are obviously high. That affects every aspect of the operation including processing plants and transportation. It significantly affects growers. Those two issues — high fuel and feed prices — really have put a squeeze on the industry.”
Still, wholesale poultry prices have been pretty good. One thing that has kept the increasing production costs from being a very serious situation for the industry as a whole is that exports have been very good. Product demand has been solid.
“That speaks to the importance of the export market,” Anderson said. “If not for that, input costs would be very much more damaging.”
While input costs are an immediate concern, the flare up with Russia recently has been troubling for the industry because the strong export market has been critical to countering the impact from higher production costs.
“Obviously if Russia wants to, they can hurt us there because they are a huge market for our exported poultry,” Anderson said. “It is a warning of the fragile economic condition of the industry right now.”
The strengthening dollar is another concern. A weak dollar has made U.S. exports more affordable in foreign countries. Anderson said the strengthening dollar could not only impact exports of poultry but other meat products such as pork, which has had tremendously strong exports because of the weak dollar.
“As the dollar strengthens it will be interesting to see how exports hold up,” Anderson said. “How exports fare will be critical for poultry as well as the pork and beef industries as they continue to deal with, for foreseeable future, these high input costs.”
Can’t pass the costs along
Mark Leggett, president, Mississippi Poultry Association, said the growers and processors are getting hit with price increases for all the different fuels they use including diesel, natural gas, propane and electricity.
“It is all related, and all of it is going up,” Leggett said. “They are not able to pass it on. The price of chicken is not going up that much, so they have to adjust their production. This is a national problem. Although we haven’t had any layoffs in Mississippi, in some places they have had layoffs.”
It doesn’t help that the industry is in the season where not as much chicken is sold as in the summer. Consumer demand shifts more to hams and turkeys in the fourth quarter.
“So it is not a time you can raise prices,” Leggett said.
Combating soaring energy costs
Poultry producers and growers are investing in steps to reduce costs as much as possible. One of the most important strategies to maximize the efficiency of a poultry house is to employ the use of winterization techniques.
“With rising energy costs, it is imperative that house tightness be taken into account,” said Dr. Vanessa Kretzschma-Waugh, poultry specialist with the MSU Extension Service. “Some growers are utilizing solid-sided walls to aid in the prevention of heat loss through cracks. It is equally important, from a production standpoint, to properly clean, inspect and repair any ventilation equipment to ensure that it is operating at its most cost-effective capacity. These practices will not only help keep production costs manageable, but may assist in growing a uniform flock.”
A technique called double brooding is being tested by poultry giant Tyson to reduce fuel costs.
“We understand the concerns of contract poultry growers since we face some of the same high input costs and operate in an industry with very narrow profit margins,” said Gary Mickelson, director of media relations, Tyson Foods. “We invest a lot in their success and strive to make them aware of new innovations and efficiencies.”
Tyson has more than 6,700 contract growers throughout the country who raise chickens for Tyson. One of its biggest expenses is the cost of fuel. In an effort to help them reduce their fuel bill, Tyson has been testing double brooding.
After chicks are hatched, they need to remain in a warm environment. For example, the recommended house temperature for day-old chicks is 90 degrees. When the chickens are delivered to a poultry farm, they are kept in one-half of a divided chicken house where a warm temperature is maintained. As the birds grow, the temperature is gradually reduced, the divider is removed and the chicks can move freely throughout the building.
“Double brooding involves doubling the number of chicks initially placed in the divided chicken house and then, after a period of 10 to 14 days, moving half of them to another, nearby house,” Mickelson said. “This process reduces the number of houses that must be heated at a high temperature when the chicks first arrive. This practice has been implemented by a growing number of Tyson contract growers around the country since last spring and has been found to be effective in conserving fuel and reducing expenses. As a result, we’ve decided to encourage all Tyson broiler growers to use double brooding. Tyson covers the cost of moving the chicks after their first 10-14 days on the farm.”
Mickelson said the company was surprised by a full-page newspaper advertisement recently that was a letter from Arkansas growers to Don Tyson, the former president and CEO of Tyson Foods who retired in 2001. The ad asks Tyson to intervene on their behalf to put the double brooding proposal on hold until an adequate cost benefit analysis can determine if it benefits all parties.
“This practice will undoubtedly increase the work load of growers and make management of houses more intensive with increased chance of disease in part due to bird density,” states the ad signed by growers for Tyson Foods. “‘This goes against everything we have learned about raising chickens’,” said one field tech. He went on to say the stress of moving the birds plus the bird density itself before they are moved cannot help but be detrimental to performance.”
Mickelson said the company believes the double brooding initiative will be beneficial to growers. “In fact, so far, we’ve found that growers who have implemented this practice have been satisfied with the results,” he said.
Contact MBJ contributing writer Becky Gillette at email@example.com.
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