A word that often comes to mind when discussing performance trends in the U.S. broiler industry is “efficiency.” For several decades, technological innovation, the adoption of best management practices and improvements through genetic selection have helped make the sector a standard-bearer when it comes to doing more with less. Lower feed conversion and mortality rates at the growout phase of the production cycle have been the two most visible changes in the industry to reflect this push, but there have been other, more subtle improvements along the way to further the goal of cost reductions. For many years, this included increasingly efficient outcomes in the breeding segment; however, for close to a decade now, those gains have been unwinding.
Measuring breeder efficiency
The most optimal measure of breeding efficiency is the average number of chicks hatched per breeder hen as it reflects total productivity at this level of the supply chain. It captures not only fertilized egg production per breeder hen but hatchability as well.
Illustrating how impactful this metric can be, back in 2012 when integrators were staring down a margin shock as a result of soaring feed costs, breeding hen inventories were slashed 5% as a defensive gesture. Intuitively, however, it was the least-productive hens targeted for removal from the supply chain. That same year, then, the average number of chicks hatched per breeder hen spiked 4% percent to an all-time high of 176.2 on an annualized basis. The surge in productivity almost completely negated the inventory reduction as ready-to-cook (RTC) production declined less than half a percent overall from 2011.
It was understandable that average hatchings per breeder hen might back away from the all-time high achieved in 2012 once the industry’s financial landscape improved enough to facilitate expansion efforts. By 2015, the average number of chicks hatched per breeder hen had already fallen to 168.1, but that was followed by a very slight rebound through 2017.
Breeder productivity wavered again, however, and plunged more noticeably in 2020, with the average number of chicks hatched per breeder hen that year down to 161.8. Disruptions at the outset of the pandemic took much of the blame for that setback, but with the decline extending into 2021, rumors surfaced that the U.S. broiler industry was also plagued by a rooster fertility issue in its breeder ranks. Following a very modest rebound last year, average hatchings per breeder hen have resumed a downward trajectory in 2023 and are on track to reach their lowest point overall this year since 1999.
What the future holds in terms of breeding efficiency is unclear, but the trend that has been in place for roughly a decade now is disconcerting for not only broiler industry stakeholders but also buy-side market participants. Integrators have already lost considerable ground in an area that once delivered opportunities for efficiency gains and cost improvements. If the trend continues, it could ultimately prove restrictive enough on production capabilities to where serious market imbalances appear as a result.