Impacts of Impacts of Integrated Poultry and Hog Integrated Poultry and Hog Production/Processing: Production/Processing: The Economic Story The Economic Story Jim Pease (Virginia Tech/AAEC) Jim Pease (Virginia Tech/AAEC) Dennis Robinson (U of Missouri/CPAC) Dennis Robinson (U of Missouri/CPAC) Verel Benson (U of Missouri/FAPRI) Benson (U of Missouri/FAPRI) Verel Tom Johnson (U of Missouri/CPAC) Tom Johnson (U of Missouri/CPAC) National Public Policy Education Conference National Public Policy Education Conference Fayetteville, Arkansas Fayetteville, Arkansas September 17- -20, 2006 20, 2006 September 17
Food Purchases Share of Personal Disposable Income, 1946-2004 25.0 20.0 15.0 % 10.0 5.0 0.0 1946 1956 1966 1976 1986 1996 Source: USDA/ERS, http://www.ers.usda.gov/Data/FoodMarketIndicators/, accessed Aug 1, 2006
US Per Capita Meat Consumption, 1910- -2005 2005 US Per Capita Meat Consumption, 1910
Reported Benefits Reported Benefits of Integrated Livestock Production Production of Integrated Livestock Production/processing efficiencies Production/processing efficiencies � � Reduced consumer consumer prices prices Reduced � � Decreased supply variability, , i increased variety/quality ncreased variety/quality Decreased supply variability � � of products of products Profitable and low risk and low risk farm enterprise farm enterprise Profitable � � Increased local tax revenues Increased local tax revenues � � Export earnings Export earnings � � Substitution of manure for imported fertilizer Substitution of manure for imported fertilizer � � nutrients nutrients
Reported Costs Reported Costs of Integrated Livestock Production Production of Integrated Livestock Loss of independent producers and impacts on local Loss of independent producers and impacts on local � � supply businesses supply businesses Low returns and financial risk returns and financial risk for producers for producers Low � � Health impacts on production workers Health impacts on production workers � � Decreased property values and poorer and poorer quality of life quality of life Decreased property values � � for rural neighbors for rural neighbors Deteriorating water quality water quality Deteriorating � � Decreased wages/employment in processing Decreased wages/employment in processing � � Low- -paying processing jobs paying processing jobs Low � � Social and local government problems in urban areas Social and local government problems in urban areas � � around processing plants around processing plants
Spatial Economic Impacts Spatial Economic Impacts Processing Consumers Inputs Farms Leakages
US Economy Perspective US Economy Perspective
Background US Hog Industry Background US Hog Industry � 185 million hogs and pigs (sows, boars, piglets, feeders, 185 million hogs and pigs (sows, boars, piglets, feeders, � and market hogs) were sold from 82,000 producing and market hogs) were sold from 82,000 producing farms in 2002. In 2003, US hog production hit a record farms in 2002. In 2003, US hog production hit a record 20 billion pounds. 20 billion pounds. � Between 1987 Between 1987- -2002 census years, farms producing hogs 2002 census years, farms producing hogs � & pigs fell by 65% while total hogs & pigs sold & pigs fell by 65% while total hogs & pigs sold increased by 92% increased by 92% � Sales of total hogs & pigs from farms producing more Sales of total hogs & pigs from farms producing more � than 5,000 head increased from 17% (1987) to 81% than 5,000 head increased from 17% (1987) to 81% (2002) (2002) � Approximately 13% of US production was exported in Approximately 13% of US production was exported in � 2005. 2005.
US Pork Production US Pork Production
US Pork Export Values, 1996-2005 $2,500 $2,000 Million $ $1,500 $1,000 $500 $0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: USDA Foreign Agricultural Service BICO reports, http://www.fas.usda.gov/scriptsw/bico/bico_frm.asp, accessed Aug. 28, 2006
Where the Hogs Are… … Where the Hogs Are
Top US Hog Companies, 2004 Top US Hog Companies, 2004 2004 Company Headquarters # Sows 2004 Company Headquarters # Sows Rank 2004 Rank 2004 1 808,000 1 Smithfield Foods Smithfield Foods Smithfield, VA Smithfield, VA 808,000 2 Premium Standard Farms Kansas City, MO 225,000 2 Premium Standard Farms Kansas City, MO 225,000 3 Seaboard Farms Shawnee Mission, KS 213,600 3 Seaboard Farms Shawnee Mission, KS 213,600 4 Christensen Farms Sleepy Eye, MN 144,000 4 Christensen Farms Sleepy Eye, MN 144,000 5 Iowa Select Farms Iowa Falls, IA 130,000 5 Iowa Select Farms Iowa Falls, IA 130,000 6 Prestage Farms Farms Clinton, NC 130,000 6 Prestage Clinton, NC 130,000 7 7 The Pipestone System Pipestone, MN 100,000 100,000 The Pipestone System Pipestone, MN 8 8 Cargill Minneapolis, MN 99,000 99,000 Cargill Minneapolis, MN 9 76,000 9 Goldsboro Hog Farm Goldsboro, NC 76,000 Goldsboro Hog Farm Goldsboro, NC 10 The Hanor Hanor Company Company Spring Green, WI 73,500 10 The Spring Green, WI 73,500
Total Pigs & Hogs Sold, Total Pigs & Hogs Sold, by Type of Producer, 2002 by Type of Producer, 2002 16% 41% Independent Contractor Company Number of Farms: Independent: 71,932 Contractor: 10,370 Company 934 43% Source: Census of Agriculture
U.S. Broiler Industry 2005 2005 U.S. Broiler Industry � 32,000 p 32,000 producers roducers � � 8.9 billion birds 8.9 billion birds produced produced � � 35.4 billion pounds 35.4 billion pounds � � Value of Production Value of Production � � Farm Farm value value $20.9 billion $20.9 billion � � R Retail value $43 billion etail value $43 billion � � 5.1 billion pounds 5.1 billion pounds e export xported ed (15% (15% of of � production), valued at $2.75 billion ), valued at $2.75 billion production
US Broiler Production 1960-2005 40,000 35,000 30,000 25,000 '000 lbs 20,000 15,000 10,000 5,000 0 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8 0 2 4 6 6 6 6 6 7 7 7 7 7 8 8 8 8 8 9 9 9 9 9 0 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 Source: Agricultural Outlook, Statistical Indicators. USDA/ERS http://www.ers.usda.gov/Publications/Agoutlook/AOTables/, accessed Sept 15, 2006
US Poultry Export Values, 1996-2005 $3,000 $2,500 $2,000 Million $ $1,500 $1,000 $500 $0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: USDA Foreign Agricultural Service BICO reports, http://www.fas.usda.gov/scriptsw/bico/bico_frm.asp, accessed Aug. 28, 2006
Where the Broilers Are… … Where the Broilers Are
Top 10 US Broiler Processors, 2005 Top 10 US Broiler Processors, 2005 Tyson Foods 151.30 Tyson Foods 151.30 Pilgrim's Pride Corp. 109.06 Pilgrim's Pride Corp. 109.06 Gold Kist 61.79 Gold Kist 61.79 Perdue Farms Inc. 51.32 Perdue Farms Inc. 51.32 Sanderson Farms 30.39 Sanderson Farms 30.39 Wayne Farms LLC 28.95 Wayne Farms LLC 28.95 Mountaire Farms Inc. Farms Inc. 23.44 Mountaire 23.44 Foster Farms 16.51 Foster Farms 16.51 OK Foods Inc. 15.80 OK Foods Inc. 15.80 Peco Foods Inc. Foods Inc. 15.60 Peco 15.60 Source: US Poultry and Egg Association, http://www.poultryegg.org/EconomicInfo/index.html, accessed Aug. 27, 2006 Millions of ready-to-cook pounds
Missouri Agriculture Agriculture Missouri
Missouri Agriculture 2002 Missouri Agriculture 2002 Sales Percent of Item Farms ($1,000) Rank Total Sales Total sales 106,797 4,983,255 (X) 100.0 Grains, oilseeds 24,793 1,546,535 1 31.0 Cattle and calves 57,957 1,285,288 2 25.8 Poultry and eggs 3,103 784,986 3 15.8 Hogs and pigs 3,752 570,551 4 11.4 Milk 3,233 300,460 5 6.0 Other crops 21,460 139,973 6 2.8 Cotton 596 137,378 7 2.8 Nursery, 932 101,316 8 2.0 greenhouse
Missouri Poultry Missouri Poultry
Missouri Poultry/Broiler Poultry/Broiler Industry Industry Missouri � 812 producers 812 producers (2002) (2002) � � 273 million birds (2002) 273 million birds (2002) � � Principal integrators: Tyson (SW, Central & SE), Principal integrators: Tyson (SW, Central & SE), � George’ ’s (SW), and Simmons (SW). Broiler processing s (SW), and Simmons (SW). Broiler processing George employment is about 7700, payroll $157m. employment is about 7700, payroll $157m. � Poultry production increased by almost seven times Poultry production increased by almost seven times � over 1987- -2002. 50% increase in number of farms 2002. 50% increase in number of farms over 1987 producing ½ ½ million or more broilers million or more broilers producing � State slaughters 50% more broilers than it produces, State slaughters 50% more broilers than it produces, � because of cross- -state poultry complexes. Nearly 2400 state poultry complexes. Nearly 2400 because of cross broiler processing jobs from imported birds. broiler processing jobs from imported birds.
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