Broiler producers benefit from higher meat prices in 2021

The integrated chicken industry benefited from historically high meat prices in 2021 but paid higher prices itself for nearly everything. Facing the ongoing challenge of the COVID-19 pandemic, the top U.S. broiler chicken companies expanded production and prepared to grow in the future. 

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Two chicken or young broiler chickens on isolated white background.
Two chicken or young broiler chickens on isolated white background.
The domestic broiler industry could become much more private in 2022. (singaevskagalina | Bigstock.com)

The integrated chicken industry benefited from historically high meat prices in 2021 but paid higher prices itself for nearly everything. Facing the ongoing COVID-19 pandemic, the top U.S. broiler chicken companies expanded production and prepared to grow in the future. 

Industry performance at a glance 

According to WATT Global Media’s annual Top Broiler Companies survey, the top broiler companies produced 985.26 pounds of ready-to-cook chicken (RTC) on a weekly basis in 2021. That’s 520,000 pounds more than the 984.74 million pounds produced on a weekly basis in 2020.

According to survey responses and industry research, 13 of the 32 companies included among the top broiler companies increased production between 2020 and 2021. Another 11 companies did not change production and eight companies produced less. 

COVID continues

The COVID-19 pandemic continues to affect the world, as well as the operations of the domestic chicken industry. 

Several vaccines were rolled out early in the year and many companies strongly encouraged, or incentivized, its employees to take it. By the end of 2021, Tyson Foods Inc. achieved greater than 90% vaccination after requiring it for employment. 

Although the pandemic continues, demand for chicken, and the U.S. economy, normalized in 2021 as vaccination rates grew and consumers resumed their pre-pandemic behaviors. 


Raw Chicken Wings On Cutting BoardChicken prices reached an all-time peak in 2021 driven by strong demand for parts like wings. (singaevskagalina | Bigstock.com)


High prices 

Chicken prices reached an all-time peak in 2021, according to Mark Jordan, executive director of LEAP Market Analytics. According to his estimated cutout value, the implied averaged weighted chicken cutout wholesale price of $1.10 per pound was the highest price ever by a wide margin. 

The previous record, he said, was set in 2013 when the same price was 91 cents per pound. The 20-year average price is 75 cents per pound. 

According to the survey responses, much of the industry reported greater total revenues in 2021. Some companies producing less meat than the year before reported higher revenue than the previous year, too.

Chicken companies paid elevated prices for nearly everything. High corn prices, scarcities created by the pandemic and a ransacked global supply chain added to inflationary pressures. 

Top Broiler Companies 2022

Consolidation and privatization

The domestic broiler industry could become much more private in 2022. 

In August 2021, Cargill and Continental Grain Co. reached an agreement to form a joint venture and acquire Sanderson Farms Inc. for $4.53 billion. The combined company would be led by Wayne Farms CEO Clint Rivers. The deal is not yet closed as of January 2022. 

If combined, the companies would have produced 144.85 million pounds of RTC chicken on a weekly basis in 2021. This would place the combined company just behind Pilgrim’s Pride Corp. in terms of total production and would create a sizeable gap between the weekly production of the top three chicken companies and the rest of the industry. 

Also in August, JBS, the majority stakeholder of Pilgrim’s, offered to buy all remaining shares of the company and make it a wholly owned subsidiary. At the time, JBS held 80% of its shares. In September 2021, Pilgrim’s board of directors formed a special committee of independent directors to review and evaluate the proposal.

If both transactions are completed in 2022, Tyson Foods Inc. will be the only publicly traded top poultry company in the U.S. 

Antibiotics use reduction

According to their survey responses, 14 of the top chicken producers are producing 100% antibiotic-free (ABF), no-antibiotics-ever chicken (NAE) or placing a percentage of their overall flock on an ABF or NAE program. 

According to responses from the 2020 and 2021 surveys, the following companies all raise 100% ABF or NAE birds: 

  • Fieldale Farms
  • Claxton Poultry Farms
  • Allen Harim Foods
  • Harrison Poultry Inc.
  • Farmers Pride Inc.

Pilgrim’s, Peco Foods, House of Raeford Inc., Amick Farms LLC, Foster Farms, Simmons Foods Inc., Case Foods Inc., Miller Poultry and FreeBird all said a percentage of their flock is raised ABF or NAE. 

Suits and settlements

2021 was a turbulent year for the poultry industry on the legal front. Along with the usual claims and actions aimed at the industry, some top poultry companies were formally indicted by federal authorities for alleged anticompetitive practices.

In December 2021, a federal case involving current and former employees at Claxton, Pilgrims, Tyson, Case, Koch Foods, George’s Inc and Purdue Farms ended in a mistrial. Jurors could not decide if any of the defendants violated any antitrust laws, following a seven-week trial and nearly four days of deliberation. That trial ended a year of investigation by the U.S. Department of Justice into the practices of the chicken industry. 

In January 2021, Pilgrim’s Pride agreed to pay $75 million to its buyers to settle claims stating the company colluded with other poultry producers to fix chicken prices and rig bids. In February 2021, it pleaded guilty to federal charges stating it participated in a conspiracy to fix prices and rig bids for broiler chicken products. At least $361 million in Pilgrim’s Pride sales were affected in the scheme that began as early as 2012 and continued until at least 2017. It paid criminal fines amounting to $107.9 million.

Expansion and renovation

Keeping the trend of the past several years, the chicken industry continued to invest in new facilities or modernizing its existing infrastructure. 

New facilities

  • In April 2021, Tyson opened a new, $425 million poultry complex in Humbolt, Tennessee. It includes a processing plant, feed mill and hatchery. It will produce pre-packaged trays of fresh chicken for retail grocery stores in the U.S.
  • Farmers Pride Inc. opened a $330 million poultry processing facility in Fredericksburg, Pennsylvania in 2021.
  • Harrison Poultry opened a $58 million live production complex in 2021.
  • House of Raeford added a new $45.6 million feed mill in Simsboro, Louisiana in 2021.

Improving infrastructure

  • In 2021, Tyson announced numerous expansions: a $48 million expansion of its cooked products plant in Pine Bluff, Arkansas that was expected to be complete in 2021; a $61 million investment in its fully cooked chicken plant in Vicksburg, Mississippi to increase the facility’s production capacity and $58 million on expansion of its poultry processing plant in Seguin, Texas. 
  • In January 2021, Koch Foods announced a $15.9 million expansion of its poultry plant in Gadsden, Alabama. In September 2021, according to local media reports, Koch Foods was planning on spending $140 million on improvements at its complex in Fairfield, Ohio to expand the building and purchase new equipment.
  • In 2021, Case Foods conducted $65 million worth of improvements at its Winesburg, Ohio processing facility.
  • Allen Harim added $10 million worth of facility and equipment additions, as well as $2 million in wastewater improvement in 2021. 
  • Harrison Poultry spent $4.2 million on fully automated breast deboning technology and packing improvements.  
  • In its 2021 survey response, Shenandoah Valley Organic LLC said it completed work on a packaging and shipping facility in 2021.

Announcements

  • In August 2021, Tyson announced plans to build a $300 million cooked chicken plant in Danville, Virginia expected to open in 2023.
  • In January 2021, Mountaire obtained permits to build a new wastewater plant, and conduct related upgrades, valued at $120 million. 
  • In January 2022, Simmons Foods announced a $100 million expansion of its prepared foods operation in Van Buren, Arkansas. 
  • In 2022, Allen Harim plans on spending a combined $4.5 million on dark meat deboning and refrigeration improvements, according to its 2021 survey response. 

Weekly average broiler slaughter liveweight

Federal trial of poultry executives ends in hung jury, www.WATTAgNet.com/articles/44177 

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