SIC 2015
POULTRY SLAUGHTERING AND PROCESSING



This industry includes establishments primarily engaged in slaughtering, dressing, packing, freezing, and canning poultry, rabbits, and other small game, or in manufacturing products from such meats, for their own account or on a contract basis for the trade. This industry also includes the drying, freezing, and breaking of eggs.

NAICS Code(s)

311615 (Poultry Processing)

311999 (All Other Miscellaneous Food Processing)

Industry Snapshot

Beginning in the early 1930s, the poultry industry was dominated by many small growers and processors. The U.S. poultry business evolved into a vertically integrated industry in the mid-1930s, in which a few top companies accounted for most of the country's broiler chicken) and turkey production. Vertical integration combined the previously independent and fragmented operations of feedmills, hatcheries, farms, slaughterers, and processors into giant conglomerates that managed all stages of production.

Broilers, which are chickens raised specifically for table consumption, represented by far the largest component of the industry, with the value of production exceeding $14.1 billion in the late 1990s, compared to $2.8 billion for turkey. In 2001, production increased to roughly 8.3 billion broilers with an estimated weight of nearly 42 billion pounds, compared to 7.76 billion broilers, the equivalent of 37.5 billion pounds of broiler meat, produced in 1997. It is anticipated that the amount of broilers produced per year will continue to rise. The value of egg production increased 1.5 percent in 2001; production in this segment is expected to grow as well.

Broiler production was concentrated in 17 southeastern states on the eastern seaboard and Gulf of Mexico. This so-called "broiler belt" was the source of 90 percent of production. Georgia, Arkansas, Alabama, and Mississippi were the top four producers of broilers in 2001. No such regional concentration existed in the turkey sector. The top four turkey producing states were North Carolina, Minnesota, Virginia, and Arkansas.

Organization and Structure

According to the U.S. 1992 Census of Manufacturers, there were 593 establishments in the poultry and egg processing business. Additionally, many red meat processing plants also slaughter poultry. In 1998 there were 6,500 federally-inspected and 2,550 state-inspected slaughtering and processing plants in the United States.

Most broilers (99 percent) in the 1990s were produced under contractual arrangements in which the broiler company provided a grower with day-old chicks, and the grower then raised the birds in the carefully controlled environment of the grow-out house. Protected from disease and predators in an enclosed system, the birds would be fed mostly a diet of vitamin- and mineral-fortified corn and soybean meal during the six-and-a-half week period it took to bring them to market weight of about four pounds. Prior to being sent to the processing plant, the birds might be tested for traces of pesticides, toxins, or antibiotics in the ongoing United States Department of Agriculture (USDA) residue monitoring program. In 1935 it took approximately 16 weeks for a 3.5 to 4.5 pound broiler to be fully produced. In the 1990s, with advanced technology, that time has been reduced to six to seven weeks.

The five primary product categories handled within the poultry processing industry were: chicken, turkeys, ducks, geese, and egg products. Available chicken types included young broilers/fryers weighing an average of 3 pounds; specially grown, 6- to 8-pound young roasters; capons, surgically desexed male birds weighing more than 9 pounds; heavy hens (often called stewing hens), over a year old and weighing 4 to 6 pounds; and Rock Cornish or Cornish game hens, young chickens weighing about 1 to 2 pounds. About 18 percent of ready-to-cook chickens were sold as whole birds; the rest were sold as broiler parts or as boneless chicken breasts or thighs.

Annual per capita consumption of turkey stabilized in 1997 to about 17.6 pounds per person. Total annual turkey production for 1998 was 2.83 billion turkeys. The methods used in breeding, raising, slaughtering, and processing turkeys were almost identical with those used for chicken. Turkey hens reached maturity at about 16 weeks, with a market weight of 16 to 18 pounds. Toms took 19 weeks to reach market weight of 28 to 30 pounds. Most turkeys were sold whole, either fresh or frozen. The USDA ranked North Carolina as the number one state for turkey production in 1998.

The White Pekin was the most popular duck breed for mass production in the 1990s. Annual production was about 21 million ducks, which were generally packaged and sold whole and frozen. Duck feathers and down used by bedding manufacturers were valuable by-products. According to the Duckling Council, consumption of White Pekin increased 11.5 percent between 1995 and 1998. The total population of geese in the United States rarely exceeded 5 million: most were raised in Minnesota and Iowa.

Egg production in the United States during 1998 was over 79.9 billion, and was valued at $4.35 billion dollars. The average cost of a dozen eggs was 65.5 cents. Egg consumption increased in the late 1990s, to 255 eggs per person in 1999.

In 1998 egg exports were 2.62 million, a 4 percent decrease from 1997. This represented 33 percent of the global trade, down from 36 percent in 1997 and 48 percent in 1996. This was due in part to low EU egg prices, and a downturn in the Asian economy decreasing demand. Hong Kong and Canada were the largest importers of U.S. egg products.

Background and Development

History. Poultry processing was one of the nation's first agribusinesses, characterized by many small farms. In the early days, raising meat and poultry was secondary to egg production. One of the first stages in the mechanization of poultry processing was the accelerated development in the 1920s of incubators that could hold thousands of eggs. Farmers could start with 500 chicks and no longer depended on hens to hatch them.

Prior to World War II, home cooks were likely to buy chickens live. After the war, more and more consumers purchased either "New York dressed" chickens—with only the blood and feathers removed—or in some areas, "dressed and drawn" birds—with head, feet, and intestines removed. The change had far-reaching effects, transferring the preparation of poultry to the processing plant, which consumers trusted to be as clean as their own kitchens.

Starting in the 1940s, the poultry industry went through three major changes: an increasing rate of vertical integration, which was largely completed by the mid-1950s; the phasing out of small operations and the concentration of production among a few large firms; and the movement of processing operations to the southeastern states to be closer to the broiler supply.

Regulations. Since mandatory federal inspection began in 1957, all commercially produced chickens were inspected by the USDA for wholesomeness before going to market. Traditionally, inspection took place in the processing plant, conducted by a USDA inspector who relied on sight, touch, and smell to determine the wholesomeness of each bird as it passed by on a swiftly moving conveyer line. In 1978, USDA introduced a faster, modified system in which three inspectors divided the task. One inspected the bird's exterior, another its viscera, and a third made a final inspection of the bird. A more scientific system, Pathogen Reduction and Hazard Analysis and Critical Control Points (HACCP), was imposed in 1996 by the Food Safety and Inspection Service (FSIS). Under this program, inspectors identify hazards, determine the points at which they can be controlled, and recommend corrective action. In December 1996 the USDA's FSIS completed its ruling on the validity of labeling poultry as "fresh." Starting in December 1997, poultry could only carry the "fresh" label if the chicken had not been chilled below 26 degrees Fahrenheit. These rulings were part of the truth in labeling issues that changed food labeling throughout all industries.

In terms of processing, USDA regulations required that washed and eviscerated chickens be submerged in a water-filled chill tank that quickly reduced the birds' body temperatures to 40 degrees or lower to prevent multiplication of salmonella and other microorganisms commonly found on chicken skin. The regulations further required that the water in continuous chill systems be replaced at a rate of one-half gallon per chicken as birds were added to the system.

Food safety continued to be an issue for poultry processors in the 1990s. Following an outbreak of food-borne illnesses, the USDA required a new labeling policy under which safe-handling instructions explain the need to refrigerate poultry until it is cooked, cook it thoroughly, refrigerate or discard leftovers immediately, and keep work areas clean. In issuing the new labeling recommendations, the USDA cited surveys that revealed consumer ignorance of such basic food safety procedures. The government also cited data from the Centers for Disease Control (CDC) in Atlanta, Georgia, which showed that one-third of at-home food poisoning incidents were caused by undercooking, and another 12 percent resulted from holding precooked food at unsafe temperatures. Safe-handling instructions were publicized by the leading industry associations, the National Broiler Council and the National Turkey Federation. The USDA has also instituted a new ad campaign entitled "Fight Bac" to instruct consumers in safe handling of meat products.

In 1992, the USDA ruled that fresh or frozen uncooked whole carcasses or parts could be treated by irradiation. In 1993 irradiated, packaged poultry became commercially available, albeit in only four independently owned retail stores. Irradiation eliminated up to 99.9 percent of salmonella and 100 percent of campylobacter organisms, and probably any listeria bacteria as well. Irradiation of food continues to be controversial in the public. In 1999 the USDA proposed extending ionizing irradiation to refrigerated and frozen meats. The proposed rule required labeling of irradiated meat and meat products sold at retail.

Current Conditions

The value of shipments in the poultry processing industry increased from $32.3 billion in 1999 to $32.7 billion in 2000. In the late 1990s, broiler production increased to $15.1 billion dollars. The average price per pound was 39.9 cents. In 2001, the industry produced 42 billion pounds in live weight equivalent.

In 2002, America's annual per capita consumption (PCC) of chicken increased to 81.5 pounds and turkey consumption was 18.4 pounds per person. In the same period, red meat PCC, which included beef, pork, veal, and lamb, dropped to 118.5 pounds, down from a high of 136.7 pounds in 1980. Starting in 1992, chicken consumption for the first time surpassed that of beef, America's former top meat choice, and this trend continued into the twenty-first century.

A survey by the National Broiler Council in the late 1990s cited that 50 percent of consumers eat chicken at least twice a week. The survey cited taste, healthfulness and versatility as the top three reasons consumers choose chicken. The USDA predicts that pork and poultry per capita consumption will continue to increase.

Industry leaders continue to grow and acquire vertically related businesses. For example, Tyson Foods, the world's largest single producer of chicken products, boasts its vertical integration to be "from the egg to the finished product on your table," including genetics, hatchery, growing, and processing facilities. Tyson chickens, like most of the nation's poultry, are primarily produced on small, family-owned farms, and in 1999 Tyson also began an incentive program to small growers to maintain environmentally friendly farms.

In the 1990s the chicken parts markets became increasingly segmented, with separate destinations for white and dark meat. Nearly all of the white meat remained in the United States, while the dark meat was much more likely to be exported. Poultry exports are expected to increase into the early 2000s.

Industry Leaders

The United States is the largest poultry meat producer in the world. The nation's leading producer, processor, and marketer of poultry and poultry products throughout the 1990s was Arkansas-based Tyson Foods, Inc. Sales in fiscal 1998 reached $7.36 billion, up from $6.45 billion in fiscal 1996. In 1998 approximately 85 percent of sales came from chicken products. Predictions estimate that by the year 2005, annual sales for Tyson will reach $10 billion.

In 1995 Tyson acquired McCarty Farms' and Cargill's broiler-chicken processing operations. In 1998 they acquired the large-scale poultry operations of Hudson Foods, formerly one of its largest competitors in the chicken business. In 1999, Tyson had 83 plants in 20 U.S. states, exported products to over 55 countries, and was the United States' number one poultry exporter. In a 1999 press release, Tyson stated that it believed "cold pasteurization (irradiation) has been scientifically proven to be a safe process, which dramatically reduces harmful bacteria in food products including poultry," and intended to offer clearly labeled irradiated products as long as there is consumer demand.

Started in 1933 as a cotton cooperative, Georgia-based Gold Kist Inc. was the second-ranked poultry processor in 1998 with annual sales of $1.65 billion dollars, processing 14 million broilers per week. It is a leading exporter, with about 8 percent of its production sold in international markets throughout the world. Total employment exceeded 16,500 people in 1998. The cooperative operated 11 processing plants in Georgia, Alabama, Florida, and the Carolinas.

Yet another leading broiler company in the United States was Perdue Farms Incorporated, producing 42 million pounds of chicken products and 3.5 million pounds of turkey products each week. Annual sales in 1999 were $2.2 billion dollars.

Another Arkansas-based company, ConAgra, ranks third in broiler production. Annual sales in 1999 exceeded $24.5 million dollars. ConAgra reorganized in the late 1990s, closing more than 20 production plants. Con-Agra has operations in 35 countries and employs over 82,000 people. Products included Country Pride Roasted Chicken and a line of 20 premium boneless and bone-in Butterball products.

The largest turkey producers in 1997 were Butterball Turkey Corp., owned by ConAgra, producing 900 million pounds of product; Jennie-O Foods, owned by Hormel, producing 766 million pounds of product and Wampler, owned by WLR Foods, Inc., producing 685 million pounds.

Workforce

The poultry processing industry has become increasingly automated, yet still employs a large number of cutters, trimmers and packers. This is repetitive work, and the industry is notorious for its high rate of repetitive motion injuries. OSHA announced new ergonomic guidelines in 1999 in an attempt to address the situation. The industry is also prone to high rates of injury in the processing plants.

Low wages were characteristic of the poultry industry, with meat cutters' median weekly earnings of $370 in 1998. While the industry employs a high proportion of low-wage production workers, it also requires highly skilled personnel in research and development and to manage and maintain the increasingly efficient and technologically advanced processing operations.

America and the World

The year 2000 was projected to be a better year for world trade than the mid to late 1990s. At the time the global economy appeared to be recovering after economic slowdowns in both Asia and Russia.

Despite difficult economies in Asia and Russia, broiler exports for 2000 were projected at 4.68 billion, a slight increase over 1999. Exports of other chicken totaled 270 million pounds in 1999, down 4 percent from 1998. However, strong foreign competition, weak demand in Russia due to the devalued ruble, and competition from pork depressed prices. As Asian markets recovered somewhat at the end of the 1990s, exports to Hong Kong and China increased. In 1999, exports continued to be highest to Japan, Mexico, Canada and Hong Kong.

Turkey exports in 2000 were expected to be up from 1999, but still far below mid 1990 levels. Mexico was the largest importer of U.S. turkey in 1999, having a large effect on the overall export totals.

Egg exports appeared to be suffering greatly from decreases in the markets to Mexico and Hong Kong. Exports to Mexico fell 72 percent during the first 8 months of 1999. However, exports were expected to rise in 2000, and were projected at 170 million dozen.

Research and Technology

New processing and packaging technologies facilitated the poultry industry's rapid growth in the last half of the twentieth century. Over the years, numerous automated processes have taken the place of manual labor at various stages of production. For example, mechanized killing machines capable of killing five birds per second, five times more than a skilled worker could accomplish with a sharp knife, were introduced in the 1960s. Defeathering operations were also automated.

Mechanical eviscerating machines came into use in the 1970s. At about the same time, mechanized cutting of the birds into parts was increasingly performed in processing plants rather than by meatcutters in retail outlets. The late 1970s also saw the introduction of automatic deboning machines capable of processing up to 800 pieces of chicken a minute and separating edible meat from bonier parts. The machines also collected meat scraps from partially defleshed carcasses; the scraps were used in the further processing of patties, soups, luncheon meats, and other products.

By the 1990s, as consumers began to expect the ready-to-cook convenience of portioned chicken, ultra-thin, high-pressure waterjet cutting and shaping delivered it. Video cameras sensed the changing pattern from a light projected on a partially prepared carcass. A computer received the information, calculated the best cutting patterns, and sent directions to waterjet nozzles, which then made precise cuts, trimming and portioning the chicken at the same time. Another machine used pistons to force chopped chicken through molds that created three-dimensional formed products. The possibilities included geometric shapes, concave patties, and pieces that looked like boneless breasts.

Since sanitation has always been a concern, the poultry processing industry continued research into chemical cleansers and new dispensing techniques in the 1990s. For example, some firms experimented with low-cost robots that could transfer a variety of poultry products from conveyer belts to other processing areas. Also, improved inspection methods instated in 1996 and the use of irradiation have increased poultry safety.

Further Reading

Hoovers Online, 2000. Available from http://www.hoovers.com .

Hyatt, Dale. "The U.S. Poultry Industry." Available from http://gallus.tamu.edu/fsis/fsman1.html .

Meat & Poultry: Business Journal of the Meat and Poultry Industry Available from http://www.meatpoultry.com .

National Cattlemen's Association. Cattle and Beef Industry Statistics, 1999. Available from http://www.beef.org .

Statistics: "Per Capita Consumption of Poultry and Livestock, in Pounds, 1960 to Estimated 2002." Economic Research Service, USDA. Available from http://www.eatchicken.com .

United States Bureau of Labor Statistics. Occupational Outlook Handbook. Butchers and Meat, Poultry, and Fish Cutters, 1999. Available from http://www.bls.gov .

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

United States Department of Agriculture. National Agricultural Statistics Service Publications, 1999. Available from http://www.usda.gov .

USA Poultry and Egg Export Council. Industry Web Site, 1999. Available from http://www.usapeec.org .



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