Top US chicken producers compete for conscious consumers

Top U.S. broiler chicken producers are investing to compete on sustainability, as reflected in WATT PoultryUSA’s Top Poultry Companies Rankings.

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(faithiecannoise, Bigstock.com)
(faithiecannoise, Bigstock.com)

WATT Poultry USA’s 2017 broiler chicken rankings and poultry company profiles show an industry increasingly focused on the socially conscious consumer, the so-called “conscious consumer,” whose purchasing is driven by health, environmental and other social lifestyle issues.

Consumer issues (antibiotic-free, vegetarian fed, free-range birds and the need to protect the environment) are shaping the U.S. poultry industry’s investments and growth. The conscious consumerism is reflected in the capital investments and acquisitions at the top of the broiler producer rankings.

No. 1-ranked Tyson Foods, the largest producer of broiler chicken in the U.S., launched a capital ventures fund in 2016 to invest as much as $150 million in food start-ups in alternative proteins. The company reduced chicken production for a second year in a row, as the company – like a number of industry competitors – focused on the consumer value equation and improving margins in its chicken business.

Tyson Foods lowered ready-to-cook (RTC) weekly chicken production from 175.60 million pounds in 2015 to 174.29 million pounds in 2016, a decrease of 1.31 million pounds or 0.75 percent.

The ventures fund, Tyson New Ventures LLC, will focus on alternative proteins, ventures to eliminate food waste or employ new technology. In October 2016, Tyson announced a 5 percent ownership stake in plant-based start-up Beyond Meat.

No. 2-ranked Pilgrim’s announced a definitive agreement to acquire GNP Company, a leading provider of premium branded chicken products in the Upper Midwest, in an all-cash $350 million transaction. GNP is known for its environmentally conscious poultry operations and antibiotic-free chicken production. Pilgrim’s RTC chicken production increased by only 0.37 percent to 142.20 million pounds.

No. 4-ranked Perdue Foods increased RTC chicken production by 1 percent and expanded its $68 million investment in nutrient recycling on Delmarva with the addition of a $12 million capital investment in the AgriSoil composting facility. The investment increases the company’s capacity to handle surplus poultry litter from Delmarva chicken farms and adds the capability to recycle other agricultural by-products that were previously land-applied.

5 fastest-growing broiler producers

While the focus on the conscious consumer shows up in the acquisitions and investments at the top of the WATT PoultryUSA broiler producer rankings, the trend most striking is in the production volume of a number of smaller producers.          

The five broiler producers with the largest percentage growth in RTC production are smaller companies focusing on the socially conscious consumer with a range of product lines, including No Antibiotics Ever (NAE), 100 percent vegetarian fed, organic and free-range chicken. Production increases for these socially-conscious chicken producers are as follows:

  • No. 22-ranked OMP Foods – 97 percent increase
  • No. 28-ranked Hain Pure Protein – 77 percent increase
  • No. 31-ranked Empire Kosher Poultry – 48 percent increase
  • No. 30-ranked Miller Poultry – 40 percent increase
  • No. 21-ranked Allen Harim Foods – 29 percent increase

Compare the double-digit increases in RTC chicken production for the smaller socially conscious producers to the median percentage change among all the top broiler companies of +1 percent.

broiler-industry-consolidation-2001-16

The U.S. broiler industry is consolidating slowly among mid-size producers in the last 10 years. After the top five firms gained market share in the years from 2001 through 2006, their market share fell over the last decade while firms ranked six through 10 gained 6 percent market share. 

Sanderson Farms counters the trend

One of the fastest-growing U.S. broiler chicken producers is No. 3-ranked Sanderson Farms, which reported a 9.4 percent increase in RTC chicken production. The company defends its judicious use of antibiotics in its broiler production programs with a high-profile ad campaign.

Sanderson Farms’ big bird deboning complex in Texas reached full production in October 2016. The company began operations at a new complex in St. Pauls, North Carolina, which is expected to reach full production during the first calendar quarter of 2018.

Other U.S. broiler producers with double-digit percentage increases in RTC production included:

  • No. 8-ranked Peco Foods reported weekly RTC chicken production of 29.21 million pounds, an increase of 2.68 million pounds or 10.1 percent.
  • No. 10-ranked Keystone Foods reported weekly RTC chicken production of 23.6 million pounds, an increase of 2.8 million pounds or 13.5 percent.
  • No. 11-ranked Amick Farms reported weekly RTC chicken production of 21.8 million pounds, an increase of 2.2 million pounds or 11.2 percent.         

Live production management trends

Increases in average live weight per bird moderated somewhat in 2016. The incidence of woody breast syndrome, which impacts heavier broilers, caused some companies to reduce increases in bird weights. Companies also may be using weight reductions to moderate increasing number of pounds of meat on the market.

Several companies reported reductions in their numbers of breeder farms/houses and increases in the numbers of broiler farms/houses. The industry has resolved the broiler breeder issues hampering productivity the past several years during which time older or additional farms/houses may have been kept in service or brought into service to make up for the lost productivity. Also, broiler companies are using larger farms/houses and more productive technologies as older facilities are retired.

 

Learn more about the Top Broiler companies: www.WATTAgNet.com/directories/80

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