Wednesday, February 21, 2024

Chicken industry looking ahead at health and regulations

By Mike Brown National Chicken Council

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WASHINGTON — Although net margins for the broiler industry have been generally positive in recent months, producers have reacted cautiously to this favorable market signal in terms of stepping-up production for several notable reasons. USDA estimates a less than one percent increase in broiler pounds in 2023 and a one-plus percent gain in 2024.

Certain analysts explain that the broiler industry now needs to recognize that it has moved into a mature business phase and future growth in broiler meat consumption is much more dependent on total population increases rather than rising per capita consumption gains. Other analysts argue quite the opposite, noting the innovative nature of chicken producers to create and market successful new products and find new outlets. This should not be underestimated.

An important aspect of production increases for the past several decades has been the continual shift toward larger birds for deboning. Much of the trend has been at the expense of the smallest size birds usually marketed for quick service cut-up and rotisserie. This development results in the reported average weight of broilers ratcheting-up year after year. USDA’s production data in recent months suggests this trend may be nearing a pause, or even more than a pause.

Additionally, hatchability rates are measurably below historical levels. This aspect of live production continues to stymie breeder operations. Optimism prevails that the next generation of broilers will begin to demonstrate an improved rate for the number of chicks per hundred eggs set. And, of course, with no sacrifice for feed efficiency and related productivity.

Beef

A significant decline has occurred in beef production and the trend downward is clearly slated for beef output for the next two years, according to USDA. This major event offers an opportunity for chicken. When the bottom of the current beef cycle occurs, this depends less on cow/calf ranchers’ profits and feedlot favorable revenues and more on Mother Nature. Until drought conditions in cow/calf country are in the rearview mirror, cattle ranchers are going to continue to experience an extended period of sending more heifers and brood cows to slaughter.

When Mother Nature does provide much more favorable weather for pasture, range, and hay, cow/calf ranchers will begin to withhold heifers and cows from the marketplace. During that time, beef supplies will tighten even further.

While the likely coming gap in competing meats should encourage consumers to give chicken more attention, innovating with tasty further processed products will be necessary to keep the consumption trend upward, both at retail grocery and foodservice.

As David Meloni with Datum FS said at the 2023 Chicken Market Summit, “I don’t know if the chicken industry has ever been in a better position to provide value to foodservice over the next 18 months.”

Highly pathogenic avian influenza

HPAI has not gone away as a threat to poultry and egg operations. Although the disease has fallen more on turkey and layers, broiler and breeder farmers are re-doubling their biosecurity measures to better ensure their flocks are protected. With broiler supplies in close balance with demand, any major HPAI outbreak impacting this sector would further exacerbate market disruption.

There has been much debate in Washington and globally about vaccine use to help combat HPAI. Currently, the National Chicken Council does not support the use of a vaccine for HPAI for a variety of reasons – primarily due to exports and trade. Most countries, including the U.S., do not recognize countries that vaccinate as free of HPAI due to concerns that vaccines can mask the presence of the disease. Therefore, these countries do not accept exports from countries that vaccinate.

The U.S. broiler industry is the second largest exporter of chicken in the world, exporting about 17 percent of our chicken meat production valued at more than $5 billion annually. If the U.S. poultry and egg sector were to start vaccinating for HPAI, the broiler industry will lose most of our ability to export which will have a significant impact on the industry and the export losses would also have a devastating impact on thousands of growers.

Even if one sector (eggs, turkeys) moves forward with a vaccine, the broiler industry will be most significantly impacted as our trading partners view all poultry (egg layers, turkeys, broilers, ducks, etc.) the same.

In addition, a vaccine will not eliminate the virus. Birds can still contract HPAI and may not show signs of having the virus which allows the virus to replicate and spread (known as masking).

During the current outbreak, of the birds affected, about 73 percent have been commercial egg-laying birds, 18 percent turkeys and only six percent broilers and broiler breeders. The rest have been ducks, backyard chickens and game birds. So, the U.S. poultry sector that least needs a vaccine would have the most to risk from using one.

We support ongoing discussions about a vaccination program, and we support USDA’s policy of eradication. We believe that, right now, this is the best approach to control and eliminate HPAI in the U.S.

The Healthy Poultry Assistance and Indemnification Act

NCC is supporting legislation in Congress that would expand the USDA Animal and Plant Health Inspection Service (APHIS) compensation program to all poultry growers and layer operations within a highly pathogenic avian influenza control area, rather than only those whose flocks are infected.

Specifically, the HPAI Act, introduced by Senators Chris Coons (D-DE) and Roger Wicker (R-MS), would:

· Expand USDA-APHIS compensation to all poultry farmers in an HPAI control area. The program currently only compensates farmers whose flocks test positive, not those in the control area who are disallowed from placing flocks until the virus is contained, which sometimes takes months.

· Simplify the calculation of indemnity. The payments to farmers will be calculated based on the average income they earned from the last five flocks. This method is more transparent and ensures that farmers will not face a cash shortfall in the face of an HPAI outbreak in their area.

2024

The chicken industry has pulled through hurricanes, droughts, HPAI, high feed costs, record inflation and input costs, and COVID, but the biggest obstacle to our continued success might just be our own government.

The chicken industry is a model of American innovation and efficiency. There is no more important food source in America.

But overzealous and misguided regulations coming out of USDA threaten to take chicken off the plate for millions. The implementation of unsupported Salmonella regulations, the slowing down of production, or the threat of more frivolous lawsuits could all mean less (and thus more expensive) chicken, and less chickens for growers to raise.

The National Chicken Council will continue to work to ensure that any federal regulatory requirements are based in science and common sense, are achievable, and do not jeopardize the industry efficiency we have worked so hard to build.

 

Mike Brown is president of the National Chicken Council headquartered in Washington, D.C.

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