Struggles with broiler breeder productivity and higher than normal levels of mortality and condemnation may hamper the expansion of the broiler industry as the U.S. economy recovers from COVID-19

In a WATT Poultry Chat interview, Mark Jordan, executive director of LEAP Market Analytics, analyzed factors restraining national chicken supply growth going forward. 

Austin Alonzo:  Mark, I know that you want to discuss factors that are currently limiting growth in the U.S. broiler industry.

Mark Jordan: Based on some things that have happened over the past, we'll say six, seven months or so, pricing on the front half of the bird. There's a lot of peppering and discussions of the word shortage, not enough chicken to go around. And the question that gets asked a lot is when are we going to get more. Especially from an end user perspective. Well,  wings are at a record high price, boneless white meat, even boneless thigh meat are getting very strong valuations either record high or approaching record highs in some cases. 

So, the big question is: When are we going to get more chicken to go around here? And certainly if you look at the very top line indicator, the breeder flock, you might get the impression that the industry is at least trying to expand. 

You go back just a couple of months, the breeder flock was at a record high above 64 million hens. Now we have seen just a little bit of retracement in the breeder flock since then, but it's still running about 5% above year ago levels. So, looking at that alone, we would think that we should be looking at pretty solid growth from the broiler industry and that's really just not happening. And it really boils down to productivity at the breeder end of the supply chain.

Looking at productivity measured as chicks hatched per layer. Basically, how many eggs are leaving these breeder farms, once they run through the hatcheries, the incubators, and then how many chicks are then leaving the hatcheries and going to these growout farms. 

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Looking at that measure, that number is well off of recent averages. It plunged initially at the outset of the pandemic. There were a lot of things going on there where hatchery managers were put in a very difficult position of having to cull this young stock, whether it be fertilized eggs, or in some cases, chicks because of the downstream uncertainty. 

But what we've seen over the last several months, even as we've gotten here into 2021, and market signals have really been calling for more chicken, is that this metric has further eroded. Certainly, there's been some on-going factors. There was a winter storm outbreak back in February that did a lot of damage to the industry. And that has created some additional restraint. But you've also got an issue that's really hard to get our hands on right now but a lot of voices in the industry talking about an issue with rooster fertility

So, we've got hatchability or hatchings per layer, however you want to define that, is well off as to historical norms and keeping keeping growth at a standstill. Now, I do think that we start to get this issue repaired: Some changes, there are some efforts to get that fixed. But this is going to draw things out and not see the kind of growth growth we've historically seen from the broiler industry. 

We're gonna pivot here. This is a little more subtle factor. But still something restraining growth. Look back at implied mortality and condemnation, we can take a metric of how many birds the industry is slaughtering and comparing that to up-front placements and measure total loss. If you go back to prior to the early 2000s, and 2003 was actually the best year, in terms of lowest mortality and condemnation. That metric had been improving for decades. So just a longstanding part of the productivity improvement process for the industry. 

We have gone the other way, in the last 15 to 20 years. There's some speculation as to what might be behind this. But a lot of people think that this is maybe related to some of the antibiotic free adoption. This is somewhat, now obviously not in a substantial way a half a percent to a percent or so, made some shifts in terms of flock health. Mortality rates are up, another constraining factor. 

So, getting to this larger supply base has just been a little bit of a struggle coming out of COVID with these productivity issues. 

This transcript edited for length and clarity.