Dynamics and patterns of the U.S. broiler industry Part 2 - Changing spatial patterns in production and trade

The USA have been the leading broiler meat producing country for several decades. In 2002, they shared 17% in the global production volume. Ranking second behind Brazil, they contributed 19% to the global broiler meat trade. In a first paper (Zootecnica International 9/2021) the development over the past fifty years was documented, in this paper, the spatial patterns of production and trade will be analysed.

A centre of broiler meat production developed in the Southeast

Before the Second World War, the Midwestern States were the leading production region for chicken meat, based on the availability of feed, but as early as the late 1940s, a spatial shift of production to the states in the Southeast and at the Mid Atlantic began. It ran parallel to the origin of vertically integrated companies. In 1946, Lonnie Pilgrim and his brother opened a feed store in Pittsburg (Texas) and supplied small farmers with oneday old broiler chicks. From these early beginnings originated one of the largest broiler meat companies of the USA. The Southeast was predestined for the development of such companies. The westward movement of cotton growing from the former Cotton Belt was a result of the high economic losses caused by the cotton boll weevil. Severe economic and social problems in the rural areas were the consequence. Most of the farms were small, the share of the mainly Afro-American tenants was high, the soil was degraded and the educational level of the population was low. The challenge was to find new jobs and incomes for thousands of such farmers.

A first step was a shift of the slaughterhouses from the Midwest to the Southeast, where a cheap and non-unionised workforce was available. A series of laws (from 1957 on) requested the federal control of the slaughterhouses, quality control, labelling of the products and treatment of the sewage from the abattoirs. Many owners of the old slaughterhouses were not able to meet the legal regulations in their old facilities and decided to build new ones in the Southeast. Besides the cheap workforce, the favourable climate, which resulted in lower construction costs for the chicken houses, and the low freight rates, which the railroad companies offered for shipping the feed components from the Corn Belt to the Southeast, were additional steering factors for the spatial shift.

The combination of these factors in addition to the fast increase in broiler meat demand of the quick-serve restaurants (initiated by Kentucky Fried Chicken in 1952) explains the dynamical development. A continuous delivery of high-quality products became necessary. Broiler meat production became more and more industrialised and vertically integrated (Perdue 2014). The leading companies had their headquarters in the Southeast and at the Mid-Atlantic States, a sub-centre developed in California. The sectoral concentration stabilised the regional concentration (Windhorst 1989, p. 96-99).

Table 1 shows that in 2020 eight of the ten leading broiler companies head their headquarters in the Southeast and the Mid-Atlantic States. Pilgrim’s Pride, the second largest company, was purchased by the Brazilian company JBS in 2009. JBS transferred Pilgrim’s headquarter from Pittsburg (Texas) to Greeley (Colorado), where it had bought Swift & Company (former Montfort of Colorado) in 2007. Broiler growing, slaughter and further processing are still concentrated in Texas and Georgia. In 2020, the ten leading companies shared almost 80% in the total broiler meat production of the USA. The spatial pattern of slaughtering and processing reflects the centres of broiler growing (Table 2).

From 1970 on, the leading four states shared over 50% in the total production volume. Their composition did not change over the past fifty years, but their ranking changed because of the fast growth of broiler meat production in North Carolina. Because of disclosed data, California is no longer listed among the top ten producing states. If data were available, it would rank in the lower third of the table and replace Maryland.

Considerable changes in the trade pattern

The first paper showed that beside the increasing domestic demand the development of the export volume was a second steering behind the remarkable dynamics of the broiler industry over the past fifty years. Exports increased from only 43,000 t in 1970 to 3.3 mill. t in 2020. The highest absolute and relative growth occurred between 1990 and 2010 (Figure 1).

Table 3 documents the remarkable changes in the composition of the ten leading countries of destination for the exports. In 1970, broiler meat was exported to many countries despite the small volume. Beside Eastern Asian and Caribbean countries, Switzerland and Greece in Europe were countries of destination. From 1997 on, exports to the EU were no longer possible because of an import ban for meat, which stemmed from chlorine-disinfected broilers. Exports to Baltic countries were still possible in 2000, as they became EU members not before 2004. Russia ranked in first place with a share of 25.7%, followed by Hong Kong and Mexico. Together, these three countries imported 51.5% of the total exports. The high share of Russia was a result of the far-reaching economic changes after the collapse of the former USSR which led to massive problems in supplying the population with meat from own production.

Because of the political tension and the sanctions against Russia by the USA and the EU in consequence of the annexation of the Crimean peninsula and the military conflicts in the eastern part of Ukraine, Russia stopped imports of several foods from these countries. The result was the loss of the leading market for the U.S. broiler meat exports. Table 4 shows the drastic impacts of the import ban. As early as 2010, new markets for 500,000 t of broiler meat had to be found, in 2014, even for 700,000 t.

The U.S. Poultry & Egg Export Council was able to increase exports to markets in Asia, Africa as well as South and Central America and to develop new markets. The fast increase of the export volumes to Mexico, China and Taiwan is remarkable. The dynamical development of exports to Mexico and Canada was a result of the North American Free Trade Agreement, which became effective in 1994 (USMCA from 2020 on). Within a few years, Mexico became the leading country of destination. The growing share of Asian countries is a consequence of the fast increase in broiler meat demand as well as of several outbreaks of the Avian Influenza. The four Asian countries, listed among the top ten countries of destination, shared 23.7% in the total export volume in 2020. It is worth noting that Cuba was importing broiler meat from the USA again. For years, the trade between the two countries had come to an almost standstill because of the political tensions. Of interest is also the export of broiler meat to Columbia where a modern poultry industry has developed over the past decade, resulting in a fast increasing consumption of eggs and broiler meat. Obviously, the domestic demand could not be met despite the dynamical development.

Summary and perspectives

The preceding analysis showed that after the Second World War a shift in broiler meat production from the Midwest to the Southeast and the Mid Atlantic occurred. It began

with a westward movement of cotton growing from the Cotton Belt to western states, and caused the shift of abattoirs and further processing plants from the Midwest to the Southeast. The new production centres could profit from a cheap workforce and the mild climate, which reduced construction costs for the chicken houses. The new vertically integrated broiler companies were able to supply the large food retailers and the quick-serve restaurants continuously with a high-quality product. The sectoral concentration in production had a parallel in the regional concentration of broiler growing. The high efficiency of the production systems made it not only possible to meet the increasing domestic demand but also to export growing volumes and make the USA the leading broiler meat exporting country. It was not before the middle of the last decade that Brazil replaced the USA in the top position. It can be expected that the USA and Brazil will be the winners in the globally increasing demand for white meat. The spatial pattern of the trade flows could change within a few years if the USA were able to export broiler meat to EU member countries. Russia will not become a major country of destination again as it has developed a very efficient poultry industry. It is not only able to meet the domestic demand but can also export considerable amounts of broiler meat.

References and suggestions for further reading

Lasley, F. A. et al.: The U.S. Broiler Industry. USDA, ERS Report No. 591. Washington, D. C. 1988. https://ageconsearch.umn.edu/record/305460. National Chicken Council. https://www.nationalchickencouncil.org/about-the-industry/statistics. Perdue, M.: Tough Man, Tender Chicken. o. O. 2014. https:// www.amazon.de/Tough-Man-Tender-Chicken-Business/ dp/0990757412. USDA, FAS: Global Agricultural Trade System. https:// apps.fas.usda.gov/GATS/default.aspx. USDA, NASS: Poultry Production and Value. https://usda. library.cornell.edu/concern/publications/m039k491c. Windhorst, H.-W.: Die Industrialisierung der Agrarwirtschaft (The Industrialisation of Agriculture). Frankfurt am Main 1988. Windhorst, H.-W.: The Champions League of the chicken meat producing countries. In: Zootecnica international 42 (2020), no.7/8, p. 22-26.