Poultry producers feeling more optimistic
ACROSS MISSISSIPPI — Mississippi’s poultry industry is cautiously optimistic that the economic doldrums of the last two years, brought on by the high costs of energy, feed and debt, may finally be over.
Insider talk of expansion, new export markets and domestic consumption of eggs and breast meat may be indicators the upswing has begun.
“We’re gearing up for 2010,” said Mark Leggett, president of the Mississippi Poultry Association. “Both 2008 and 2009 were rough times for the industry. People are telling me they think they are doing better and are ready to roll.”
Although poultry has been the state’s No. 1 agricultural commodity in terms of economic value for more than a decade, the people who make up the industry have struggled. In 2008, gasoline and diesel prices hit $4 per mark, increasing transportation costs. Consumers cut back on dining out because of expensive gasoline prices, and many restaurants went under when customer numbers dropped.
That same year, corn prices hit $8 a bushel, which caused feed prices to increase.
Rising energy costs in 2008 did not help the industry either.
Then, in 2009, industry participants spent considerable time and money repaying debt that accrued from the high production costs of the previous year.
“The poultry industry is cyclical,” Leggett said “When times are good, the tendency is to produce more quantities, and prices start going down because of increased supply. Companies scale back production and when demand goes back up, they have to gear up production again.”
The poultry industry also has its eye on new markets because of world trade issues from two of its biggest export markets, Russia and China.
Russia is the No. 1 market for U.S. poultry, particularly leg quarters. Its government is considering strengthening domestic production to become less reliant on poultry imports, which caused sales of U.S. poultry to decline.
China is America’s second largest export market, which includes high demand for chicken feet, or paws. China imposed two sets of tariffs on U.S. poultry because of a trade disagreement, and U.S. poultry sales there fell.
Increasing domestic demand for chicken wings also will help the market outlook for poultry. Consumer purchases of breast meat and eggs is holding steady, which supports prices, too.
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