Poultry and Poultry Products

Industry Snapshot

In 2010, the industry employed 25,446 workers in its 1,465 establishments, according to analysts at Dun & Bradstreet. More than half of these businesses employed fewer than five people; however, like much of the U.S. wholesale industry, poultry distribution was rapidly consolidating, shifting focus to value-added services such as inventory and display management. Poultry wholesalers generated approximately $4.3 billion in revenues in 2009.

Different kinds of poultry meat commanded vastly different prices. The wholesale price of chicken breasts, for example, was generally twice that of dark leg meat. While purchasing whole chickens was generally the cheapest option per pound, consumer trends were driving away from this option, as demand skyrocketed for more easily prepared and more controlled meat types, such as ready-to-eat boneless breast fillets.

Background and Development

The U.S. poultry industry started on small farms, where chickens and eggs provided family income. Hatcheries, feed stores, and poultry processing facilities sprang up in grain-producing regions of the Midwest, connected to markets by collection and distribution centers. Integration developed as feed dealers and manufacturers merged with hatcheries and processors. Large wholesalers began to dominate the market in the mid-1940s in response to consumer demand and the ability to preserve and ship fresh products.

In the late 1990s and early 2000s, the industry was beset by a series of disease-related health concerns, including salmonella and bird flu. In 2003, Asia was hit with a widespread case of bird flu--originating, according to experts, among ducks and other waterfowl--and migratory birds were in danger of spreading the virus to the United States' poultry farms, beginning in Alaska. After a series of salmonella cases in the late 1990s, the industry was panicky about potential for the problem to intensify, and so it focused on ways in which such outbreaks could be quickly contained before they had a chance to spread through an increasingly centralized food industry.

The U.S. government challenged food industries, including poultry wholesalers, to develop methods of detecting salmonella and other food-borne pathogens, some of which had developed resistance to antibiotics. Industries were asked to design controls for all production phases--including transportation, shipping, tracking, and shelving--focusing on temperature, prior cargoes, and sanitation. Methods either in use or under study included sturdier machine-assembled reusable shipping containers doubling as retail shelves, computerized order placement, and tracking and bar coding. Pathogen eradication and tracking technology included food irradiation and genetic "fingerprinting." Control points could monitor temperatures and times with package sensors both en route and during loading and storage. Pathogen source control might involve such ideas as coating chicken feed with red pepper to repel rodents.

The poultry industry also came under fire from medical and regulatory authorities who argued that the industry's alleged overuse of antibiotics to maintain healthy stocks had given rise to evolving food-borne germs that could resist high-strength medicines, thus running the risk that major diseases could rip through the food chain. In response to such concerns, the largest U.S. poultry product producer, Tyson Foods Inc., announced in 2002 its intentions to wean its chicken populations of antibiotics. However, in 2008 the firm faced charges from rivals Perdue Farms, Sanderson Farms, and Foster Farms as well as a class-action lawsuit filed by consumers that said the advertised "antibiotic-free" chickens had actually been fed ionophores, which the U.S. Department of Agriculture (USDA) classified as an antibiotic. In 2010 Tyson agreed to pay affected consumers up to $5 million to settle the lawsuit.

Poultry experienced a surge in popularity in the late twentieth century and into the twenty-first. For example, between 1989 and 2001 U.S. consumer demand for chicken jumped 60 percent, which Supermarket Business attributed in large part to the industry's aggressive development and marketing of value-added, case-ready products, such as boneless breast strips, shredded chicken in a tub, grilled fillets, and diced and shredded breast meat, often preseasoned and packaged with flavor-enhancing sauces. USDA statistics revealed that U.S. consumers ate 70 percent more chicken in 2001 than 20 years earlier. Figures from the National Cattlemen's Beef Association showed that U.S. per capita consumption of chicken had risen to 80 pounds by 2009.

Current Conditions

The United States produced about 43 billion pounds of poultry meat annually in the early 2010s, according to the USDA. Of this, about 80 percent was broiler meat, with most of the remainder attributable to turkey meat and a small fraction to other chicken meat. States responsible for production of the most broiler meat were Georgia, Arkansas, Alabama, Mississippi, and North Carolina.

The United States was also a major producer of eggs, about 75 percent of which were for human consumption. About 25 percent of eggs were for the hatching market. The top five egg-producing states in 2010 were Iowa, Ohio, Pennsylvania, Indiana, and Texas. Together, U.S. farms produced $20 billion worth of poultry products in 2009.

According to a 2010 report by IBISWorld, the wholesale poultry industry in the United States was holding its own as the second decade of the twenty-first century began. The report stated that "While many industries are suffering under the threat of wholesale bypass, egg and poultry wholesaling has remained relatively calm." The industry was expected to experience stable growth through 2015, as consumers become more aware of the health benefits of egg and chicken consumption. Other positive trends for the industry included increased consolidation and technological improvements.

Industry Leaders

One of the industry leaders in the early 2010s was Foster Poultry Farms of Livingston, California. The firm had expanded in the early 2000s by purchasing assets of rival Zacky Farms. Foster Farms, which recorded annual sales of around $2.0 billion in 2009, operated its own hatcheries, grow-out ranches, feed mills, and processing plants in addition to its distribution operations. Other industry players included Sanderson Farms of Laurel, Mississippi, with revenues of $1.7 billion in 2009, and Perdue Inc. of Salisbury, Maryland, with 2009 sales of $1.0 billion, as well as large, diversified companies such as Tyson Foods Inc. and Cargill Inc.

America and the World

The United States was the largest producer of poultry products in the late 2000s and early 2010s. It was also the second largest exporter of poultry and poultry products (behind Brazil), with about 18 percent of production exported in 2009. The largest markets for U.S. poultry imports were Russia, China (including Hong Kong), and Mexico. Together, these three countries accounted for more than half of all U.S. broiler product exports, according to the USDA.

The U.S.-Russia poultry trade relationship soured briefly when Russia, ostensibly to force U.S. poultry producers to erect a barrier between the slaughter and processing segments of the industry, slapped an embargo on U.S. poultry imports in 2002. The country later backed off, but the embargo caused a temporary decline of U.S. exports to Russia.

Another key trading partner was Mexico, to which U.S. poultry producers exported chicken legs and thighs in exchange for the breast meat favored by U.S. consumers. In the early 2000s, the two countries scored a series of deals to regulate tariffs through the middle of the decade under the rules of the North American Free Trade Agreement (NAFTA). These deals allowed both countries to protect their domestic industries with 99 percent tariffs in 2003, which then declined by about 20 percent per year for five years.