Economic Impact of the Mississippi Poultry Industry At the Year 2000

This publication examines the Mississippi poultry industry at the turn of the century. The study looks at the structure of our industry, farms, processors, employment and jobs, feed purchases, and environmental stewardship.

G. Wallace Morgan, Professor and Head, Department of Poultry Science

Steve Murray, Business Analyst, Food and Fiber Center, Extension Service
Mississippi State University

Poultry Facts

• The poultry sector is the first agricultural sector in Mississippi to exceed $1.5 billion in sales at the farm gate.

• Total sales of poultry products by Mississippi processors in 1999 exceeded $2.2 billion.

• Mississippi produces 726 million broilers per year, or 1,347 broilers per minute.

• On any given day in Mississippi, there are 100 million broilers in broiler houses.

• If all the corn consumed by broilers in Mississippi were brought in by rail, it would take more than 22,400 jumbo hopper cars, or a train with 62 cars of corn each day.

• In 1999, China was the largest purchaser of U.S. poultry; in 1998, Russia was the largest purchaser. This shift reduced exports through U.S. ports on the Gulf of Mexico and the Atlantic Ocean.

• The tonnage of poultry shipped from Gulfport in FY1999 was only 42% of that shipped in FY1998.

• Corn and soybeans genetically engineered to provide optimum nutrients for poultry will soon be available.

Structure of Mississippi's Poultry Industry

The industry in our state began its initial growth in the 1940s and 1950s following a pattern that had previously occurred on the eastern shore, specifically Delaware, Maryland, and Virginia. Today, this pattern is called "vertical integration." This type of production system is extremely efficient and is the underlying reason the poultry industry has been so competitive and successful. In this system, individual independent growers build chicken houses and provide the labor under contract to large poultry companies. The companies provide technical assistance, baby chicks, feed, and medications. They catch and transport the birds to the processing plant and then process, further process, and market the birds. In this system, each party is responsible for doing their part, and each party is dependent upon the other.

The industry continues to grow and become ever more complex in its day-today operations. Mergers and buyouts have created changes from the farms where the birds are produced, to the plants where they are processed, and to the marketplace where they are sold. To provide service for all sectors of the industry and remain at the cutting edge, the Mississippi Poultry Association changed its constitution and bylaws to provide for grower members to serve as directors, officers, and committee members.

An Industry That Responds to Its Customers

In the beginning, the primary product was an ice-packed whole bird. The broiler industry differentiated itself early from other meat sectors by developing products wanted by the consumer. At first, whole chickens were cut up and sold as whole, cut-up birds. Later they were packaged and sold as all breasts, leg quarters, thighs, etc. Today, the retail consumer has a wide choice of fresh, frozen, marinated, and precooked products. With the advent of the fast-food industry in the 1960s, the broiler industry developed another array of products. A third line of products was developed for institutional sales. The result of the effort of the poultry industry to develop products that met the needs of its customers was an increase in consumption of chicken.

Products designed for a specific customer require that the broiler fall within a specific size range. For example, companies producing deboned products need large chickens. The equipment in the plant must be set up to debone birds of a specific size. Birds that fall outside that range cannot be processed efficiently. Another example is the marinated whole chicken product sold at many delicatessens and fast food stores. To produce this product, a smaller chicken is needed. The farmer must produce a chicken of a specific size and the processing plant must be set up to process that chicken so that the customers' orders for a specific product can be filled. When the customers' orders change, often the farmer and the processing plant must adjust too.

Poultry production in the United States continues to increase. In 1978, the average American consumed 87 pounds of beef, 47 pounds of pork, and 56 pounds of poultry. In 1999, per capita consumption was 69 pounds of beef, 54 pounds of pork, and 96 pounds of poultry. Poultry includes both broilers and turkeys. Per capita broiler consumption in the U.S. went from 71.9 pounds in 1997 to 77.6 pounds in 1999. It is expected to increase again in 2000 to 81.9 pounds, according to the USDA's Economic Research Service.

Economic Impact of the Mississippi Poultry Industry: 1998

Table 1. Broilers Produced in Mississippi

The number of broilers grown in Mississippi continues to increase. Several Mississippi plants have added new processing lines in the past 2 years.

Mississippi ranked 4th in the nation in 1998 based on number of broilers produced. However, the average broiler produced in Mississippi is smaller than that produced in North Carolina, so Mississippi ranked 5th in total pounds of broilers produced.

Table 2. Broilers Production, 1998

The Mississippi broiler industry affects many groups in the state. Small farmers grow broilers in Mississippi. Broilers are processed in Mississippi factories. Corn grown on Mississippi farms is a major ingredient in broiler rations. Mississippi construction workers are employed building broiler houses and processing plants. Broiler exports, especially through the ports of Gulfport and Pascagoula, create jobs for Mississippi truckers and longshoremen and generate income for stevedoring firms and state-owned ports. The broiler industry has a significant direct impact in more than half Mississippi's counties.

Broiler Production

In 1998, Mississippi farmers grew more than 722 million broilers. The farm-gate value was about 39 cents per pound, or $1.4 billion. Farmers contract with broiler companies, known as integrators, to raise broilers. Under this arrangement, the integrator supplies the chicks, feed, and veterinary supplies to the farmer at no cost. The farmer provides labor, utilities, and the broiler houses.

Farmers are paid about 4 cents per pound (live weight) for the broilers they raise. The total paid by integrators to Mississippi farmers exceeded $144 million in 1998. A typical farmer has three or four houses. Each house holds about 23,000 birds. A flock of chickens reaches a 5-pound market size in about 6 weeks. The replacement value of today's modern broiler house is about $125,000.

Broiler production is concentrated in central Mississippi. In 1998, about 1,400 farmers in 34 counties contracted with broiler integrators. The exact number is hard to determine because some contract farmers own many houses and hire family members or other individuals to manage groups of houses. As a rule of thumb, one person can manage three houses if working full-time.

Table 3. County Estimates of 1998 Broiler Production

Map 1. Number of Broilers Produced by County, 1998.

Mississippi Poultry Farms

The U.S. Department of Agriculture conducts a Census of Agriculture every 5 years. The most recent census was conducted in 1997. The results were released in 1999. This is probably the world's most accurate farm survey. In 1997, there were 1,393 farms that reported broiler sales. Most of the farms reported selling 200,000 to 499,999 broilers that year. Since a house holds about 20,000 birds, this means that farmers in this category sold 10 to 25 houses of chickens.

Table 4. Number of Broilers Sold in Mississippi by Farm Size, 1997

Broiler Processing and Further Processing

Most broilers grown in Mississippi are processed in Mississippi plants Seventeen plants in Mississippi slaughter broilers. Very few broilers are sold as whole birds to the final consumer. Most undergo "further processing," which may include cut-up, de-boning, forming, marinating, breading, cooking, and specialty packaging. All slaughter plants do some further processing. Some plants in Mississippi do only further processing.

Exact data on poultry sales by the plants are not available since many companies are privately held. However, the industry average for sales revenue per bird processed is about $2.75 to $3.00. Most of the chickens undergo further processing. Using these figures, the total sales from Mississippi processing plants are roughly $2.2 billion.

Two plants in the state process spent hens. Spent hens are female chickens that are used to lay eggs for broilers or for table eggs. Valley Fresh in Water Valley employs about 300 persons and produces canned chicken meat. In addition, there are many hatcheries and feed mills in the poultry-growing areas that are not shown in Table 5.

Table 5. Mississippi Poultry Processing Plants

Map 2. Location of Mississippi Poultry Processing Plants

Employment in the Mississippi Poultry Industry

In 1998, integrated poultry firms in Mississippi directly employed almost 19,000 people in processing, feed manufacture, and hatchery operation. Data were obtained from the Labor Market Information Section of the Mississippi Employment Security Commission for firms that report their activity as poultry-related. The total payroll for these jobs was more than $419 million. These data are presented in Table 6. Of special significance is average annual wage reported under SIC 2015, poultry slaughtering and dressing, which is $16,606. This represents employment in processing plants. Wages paid for poultry related industries other than processing are higher.

Table 5. Employment in the Mississippi Industry, 1998.

Egg Production

One of the largest U.S. companies involved in the production, cleaning, grading, packaging, and sale of fresh shell eggs established its corporate headquarters in Hinds County, Mississippi, in 1963. At that time the company employed about 200 people. Today, Cal-Maine employs more than 1,800 people and maintains facilities in 15 states. Under the leadership of Chairman and CEO Fred Adams, Jr., Cal-Maine has experienced steady growth, and it now produces 426 million dozen eggs per year. These eggs are produced by some 18.4 million laying hens. The hens are predominantly Single Comb White Leghorns, the favorite breed for production of table eggs in the U.S.

Cal-Maine is a fully integrated producer and controls every aspect of production, processing, and distribution in its modern facilities, where the company carefully controls temperature, lighting and humidity. At its in-line processing and distribution plants, Cal-Maine gathers, cleans, grades, and packages the eggs mechanically, so that no human hands touch them. On a normal day, the company processes about 300 cases (30 dozen per case) each hour.

To ensure freshness and quality, Cal-Maine has a large fleet of trucks that delivers eggs to customers in 26 states in the Southeast, Southwest, Midwest, and mid-Atlantic regions of the U.S. Cal-Maine is a quality Mississippi-based corporation, and it is determined to maintain its leadership position in the egg industry.

Environmental Stewardship and the Poultry Industry

The poultry industry has been a food industry leader in managing processing by-products. Improved practices are being adopted in Mississippi's poultry industry because it is committed to preserving our natural resources. What are some of these changes?

• Mortality will no longer be placed into burial pits.
• Mortality will be incinerated or composted.
• Special permits, approved by complex, will allow freezing of mortality at the farm.
• All new poultry farms must develop approved waste management plans to ensure that soil nutrients are applied at approved rates.
• Poultry Industry Waste Management Committee, including growers, poultry company scientists, Mississippi State University scientists, and the private sector, is working to find the best and most economical ways to use the nutrient by-products of poultry production. Several options are under consideration:
  • Bio-remediation;
  • Transport to areas where nutrients are needed for plant production;
  • Feeding to livestock;
  • Pelleting and selling as soil amendment through lawn and garden centers;
  • Potential use with turfgrass and on golf courses; and
  • Adding nitrogen (N), phosphorus (P), and potassium (K) to make poultry litter comparable to commercial fertilizer.

Food Safety and Mississippi Poultry

Mississippi's poultry industry is committed to staying on the forefront of food safety by participating in national programs, sponsoring research, and volunteering its facilities for field testing of new products and techniques. The industry has been among the leaders in testing innovations to enhance food safety.

• The first plant to try a new product rinse to reduce bacterial load is in Mississippi.
• Two of the pilot plants selected by USDA for testing the newest Inspection System are in Mississippi.
• The current level of Salmonella-positive product has been greatly reduced from the 1996 levels.

Major Poultry-Producing Countries

Mississippi's poultry industry is a major player on the world poultry market. Events occurring in foreign countries impact the Mississippi industry.

The U.S. led the world in poultry production with more than 15.9 million metric tons in 1999. China is second to the U.S., and its production is increasing. Brazil is third. While China is a relatively poor country, its population is more than 1 billion, and its people will eat chicken whenever it is available. Even small increases in per capita consumption cause large changes in demand for imported chicken. Exports to China have increased in the past 2 years. This fact gives Mississippi a good outlet for its dark meat and for specialty items such as chicken feet. But this shift hurts Gulf of Mexico ports since most of the chicken exported to China will be shipped from Pacific ports.

Brazil is a major player in the world poultry market. It has the needed grain production to feed chickens and has an ample supply of labor to grow and process the birds. It also has access to the same technology found in U.S. plants.

U.S. Poultry Exports

The U.S. consumer usually prefers white chicken meat. Dark chicken meat is often sold on the export market. Prices of the two products are different. For example, on Nov.29, 1999, the Georgia dock price of whole breasts was 73 cents per pound. The selling price of leg quarters was 20.5 cents per pound.

Recent economic troubles in Asia and Russia severely reduced U.S. chicken exports. From 1994 through 1998, Russia was the biggest customer for U.S. chicken. In 1997, Russia imported 990,459 metric tons of U.S. chicken. In the fall of 1998, an economic crisis caused Russian imports almost to stop. During the first 8 months of 1999, Russia imported only 114,395 metric tons of U.S. chicken with a value of $53 million. Also, the value of U.S. poultry exports (all) fell from 47 cents per pound in 1997 to 32 cents per pound in 1999.

In 1999, China was the biggest buyer of U.S. chicken. Chicken reported as imported by Hong Kong is usually bound for China.

Table 8. Value of U.S. Exports of Poultry, by Country, 1995-99.

Mississippi Ports

In FY 1999, 238,277 tons of poultry were exported through Gulfport, and 188,502 tons were exported through Pascagoula. Much of this was poultry from outside Mississippi that was consolidated in this state for export. However, the tonnage through Gulfport for FY 1999 (July 1998 through June 1999) was only 42% of the FY 1998 amount. This loss of business severely affected the Port of Gulfport.

Table 10. Poultry Exports

Ancillary Industries

Other industries benefit directly from the Mississippi poultry industry:

• Freezers and refrigerated warehouses that store poultry;
• Trucking firms that transport finished product;
• Vendors of farm equipment and plant equipment;
• Vendors of packaging; and
• Construction contractors building plants, plant additions, and chicken houses.

Mississippi State University Serves the Poultry Industry

Three units at Mississippi State University cooperate to serve Mississippi's poultry industry:

• The Department of Poultry Science offers the B.S. and M.S. degrees with several areas of specialization. The department also conducts research on issues faced by Mississippi farmers and integrators. Workshops are regularly offered to address specific problems affecting the industry and to keep poultry professionals up-to-date on latest advances in poultry science.
• The USDA South Central Poultry Research Laboratory works very closely with Mississippi State University and is providing extremely valuable information on management inside broiler houses to improve production. In addition, the laboratory is providing useful information of environmental influences on production, and is has a premier program in Mycoplasma research that has the potential to save our industry millions of dollars in losses related to this disease.
• The College of Veterinary Medicine conducts research on diseases affecting poultry flocks and provides assistance to integrators when problems arise.

Current research projects underway at Mississippi State include efforts to:

• Improve fertility and hatchability of broiler breeders;
• Develop a new and more efficacious coccidiosis vaccine for broilers;
• Identify the best ways to manage poultry litter so the industry can be a good steward of our environment;
• Contribute to an increased basic knowledge of factors related to eggshell formation;
• Increase shelf life of poultry and poultry products;
• Establish a greater understanding of basic poultry nutrition;
• Expand knowledge about and use of probiotics to improve food safety and reduce odors associated with live production;
• Reduce negative impact of Mycoplasma in layers; and
• Find new sources of bedding material to improve nutrient balance of the used litter.

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Information Bulletin 364, January 2000
A publication of the Mississippi Agricultural & Forestry Experimentation Station, Mississippi State University,
Vance H. Watson, Director.

Mississippi State University does not discriminate on the basis of race, color, religion, national origin, sex, age, disability, or veteran status.

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