The poultry industry has done well to sustain itself while saddled with low grain supplies, high feed costs and a global recession, but it still hasn’t tapped its full potential, said FarmEcon president Thomas Elam.
“What we have done with meat production in the face of these limits in feed supply is nothing short of remarkable,” Elam said during a presentation January 31 at the 2013 International Production and Processing Expo in Atlanta. “We may have to continue that over the next 12 or 24 months.”
While all sectors of animal agriculture are waiting to see if the Midwestern drought will lift, Elam said that the odds of the price of corn being $5 a bushel in November are about equal to the odds that the price will be $10. And $5 corn will be very appealing to the feed industry’s biggest rival, ethanol producers. Elam gave ethanol at least part of the blame for the bankruptcy filings of eight poultry companies since 2008, though most of those facilities are now operating under new ownership.
But along with the uncertainty comes optimism.
“Where’s all the opportunity? There will be more distressed assets for sale. There have been great opportunities for companies to pick up production facilities at really, really reasonable costs,” Elam said.
He also noted there were opportunities in flexible-price contracts based off a feed-price formula, in product innovation, in export markets and in continued improved efficiency.