“On the national scale, it is the overall conclusion of this study that the chicken industry is a competitive and thriving sector,” said Dr. Thomas Elam, an agricultural economist and president of FarmEcon LLC. “Intense competition among chicken companies leads to product innovation and lower prices for consumers. The vertically integrated structure of the industry has given it an advantage compared to its competitors and allowed it to respond quickly to changing consumer demand.”
The major current issue relates to cancelation of single-flock contracts due to a decline in demand for product or the need for an integrator to restructure. In the event of a cancelation without due cause, the contractor is invariably faced with the liability represented by a mortgage on the broiler, pullet, breeder or egg production house which may extend over fifteen years. Protection is afforded to contractors by the USDA Grain Inspection, Packers and Stockyards Administration. This federal agency has oversight of aspects of contract growing including the relationship between contractors and integrators especially with regard to payment.
Elam’s study was commissioned by the National Chicken Council and released in preparation for an upcoming workshop on competition in agriculture to be held at Alabama A&M University by the U.S. Department of Justice and the U.S. Department of Agriculture.